The Treasury announced Wednesday that it has received net proceeds of $15.4 million from the sale of warrants it obtained as part of its investment in Washington Federal Inc. (WFSL) through the Troubled Asset Relief Program (TARP) during the height of the financial crisis. In May 2009, WFSL repaid the entire $200 million of bailout money it had received from the government.

The Treasury auctioned 1.71 million warrants at $9.15 each. The final price was above the floor price of $5 per warrant set by Treasury.

The current move will completely free WFSL from government intervention. The auction for WFSL warrants follows Bank of America Corp.‘s (BAC) warrants sale last week. The government received record net proceeds of $1.5 billion from the sale of Bank of America warrants.

The amount received from the auction of Bank of America warrants exceeds $1.1 billion raised from the sale of Goldman Sachs (GS) warrants earlier.

Bank of America is the first and WFSL is the second among four banks whose warrants are scheduled to be sold via auctions this month. The other two banks are Texas Capital Bancshares (TCBI) and Signature Bank (SBNY).

In similar transactions during December 2009, the Treasury received $1.1 billion from the sale of warrants of JPMorgan Chase & Co. (JPM), Capital One Financial Corp. (COF) and TCF Financial Corp. (TCB). The government expects to conduct similar auctions in the future for other warrants it holds in approximately 254 banks.

We think that the repayment of government money and repurchase of warrants can be viewed as a sign of recovery of the institutions as well as the economy. According to the Treasury, losses on TARP investments are likely to be significantly trimmed with the improvement in the overall financial condition.

Zacks Investment Research

1. (SBNY) U.S. Treasury Sells Warrants of Signature BankThe Treasury announced Thursday that it has received net proceeds of $11.2 million from the...
2. (BAC) U.S. Treasury Gets $1.5B from Bank of America WarrantsThe Treasury has received net proceeds of $1.5 billion from the sale of warrants that...
3. (BAC) U.S. Treasury Sells Warrants of Four BanksThe U.S. Treasury Department is planning to auction off its warrant positions in four banks,...
4. (TCB) U.S. Treasury to Sell TCF Financial Corporation WarrantsThe U.S. Treasury Department said on Monday that it will auction 3.2 million warrants to...
5. (JPM) U.S. Treasury Sells JPMorgan Chase WarrantsJPMorgan Chase (JPM) warrants held by U.S. government’s bank bailout program were sold for $936.1...
6. (COF) U.S. Treasury Department Sells Capital One Financial WarrantsThe U.S. Treasury Department said on Tuesday that it will auction 12.7 million warrants to...

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