Tuesday, May 20, 2014

U.S. to sell CommunityOne shares bought in bailout

Charlotte-based CommunityOne Bancorp is one step closer to exiting the U.S. government's financial crisis-era bailout program after the lender said Monday the U.S. Treasury Department will sell about 1.1 million of its shares.

CommunityOne is the last bank based in the Charlotte area still in the Troubled Asset Relief Program, known as TARP.

In 2009, the bank, then known as FNB United Corp., sold the Treasury Department $51.5 million in preferred stock under the Troubled Asset Relief Program. As part of the bank's recapitalization two years later, the Treasury Department converted the preferred stock to common stock at a 75 percent discount.

The Treasury Department said Tuesday it is selling the shares for $9.35 per share, the price at which the stock closed Monday. The Treasury Department is expected to receive $10.1 million from the sale.

After the sale, the Treasury Department will no longer own common shares of CommunityOne but will continue to hold rights to purchase 22,072 shares of the bank's common stock.

FNB United Corp.'s name was changed to CommunityOne Bancorp last year after it completed the merger of its two banks, Granite Falls-based Bank of Granite and CommunityOne Bank, as part of an effort to help it return to profitability.

The lender has struggled to be profitable since the financial crisis. But that is changing: It posted a profit in the first three months of this year, its third profitable quarter in a row.

CommunityOne Bank has $2 billion in assets and 50 branches in North Carolina, including in the Charlotte metropolitan area.

It’s not unusual for the Treasury Department to sell TARP investments for less than the original value as it unwinds the program. According to the government, it has made a profit on the bailout program overall. On Tuesday, it said it has recovered more than $273 billion from TARP’s bank bailout programs compared with the $245 billion initially invested.