Treasury gets $11.15M by selling Signature Bank warrants

Posted 30m ago

WASHINGTON (AP) — The Treasury Department has received $11.15 million from the sale of warrants it received from New York's Signature Bank as part of the support it provided during the financial crisis.

The Treasury said Thursday that it sold 595,829 warrants in an auction with a price of $19 per warrant. Warrants are financial instruments that allow the holder to buy stock in the future at a fixed price.

The auction was the second of three scheduled this week and followed an auction last week that raised a record $1.54 billion from the sale of warrants the government has received from Bank of America .

On Tuesday Treasury auctioned warrants of Seattle's Washington Federal , which raised $15.39 million for the government. The Treasury is holding a third auction Thursday for warrants of Texas Capital Bancshares. The results will be announced Friday.

The $19 price received for the warrants of Signature Bank was above the $16 minimum bid Treasury had set.

Under terms of the auction, owners of the warrants will have the right to buy Signature Bank stock at a price of $30.21 a share until Dec. 12, 2018. Under those terms, the stock price will have to be above $49.21 for investors to break even in terms of getting back the amount paid for the warrant plus the amount the investor would pay for the stock at a strike price of $30.21.

Signature Bank shares closed at $38.75 on Wednesday.

Sale of the warrants represents the last link that Signature Bank had with the government's $700 billion bailout fund known as the Troubled Assets Relief Program.

Financial institutions have been eager to exit the TARP program to escape various restrictions imposed on institutions receiving government support including limitations on executive compensation. ... ants_N.htm