UNITED STATES DEPARTMENT OF THE TREASURY

OFFICE OF FINANCIAL STABILITY

Warrant Disposition Report

Troubled Asset Relief Program

Office of Financial Stability

Update June 30, 2010
2 Warrant Disposition 
Warrant Disposition Report - Update June

The United States Department of the Treasury (Treasury) is pleased to present this supplement to the 

Warrant Disposition Report dated January 20, 2010 with information about the 6 warrant repurchases and 11 

warrant auctions that Treasury’s Office of Financial Stability (OFS) conducted under the Troubled Asset Relief 

Program (TARP) in the six months ending June 30, 2010. 1

Executive Summary 

The Emergency Economic Stabilization Act of 2008 (EESA) requires that in most circumstances Treasury receive 

warrants in connection with the purchase of troubled assets. Treasury’s warrant sales provide additional returns 

beyond dividend payments from Treasury’s preferred stock investments. Treasury’s successful warrant dispositions 

have significantly benefited taxpayers. During the six months ending June 30, 2010, Treasury received more than 

$3 billion in gross proceeds from the disposition of 17 warrant positions in 16 financial institutions.2

 

Major parts of TARP were the Capital Purchase Program (CPP) and the Targeted Investment Program (TIP). Under 

these programs, Treasury invested $245 billion in 707 financial institutions. 

Since the program’s inception, Treasury has received more than $7.0 billion in gross proceeds from the disposition 

of warrants associated with 50 CPP investments and 1 TIP investment, consisting of (i) $2.9 billion from issuer 

repurchases at agreed upon fair market values and (ii) $4.1 billion from auctions. For the 50 fully repaid CPP 

investments representing $131.8 billion in capital, Treasury has received an absolute return of 4.2% from dividends 

and an added 4.4% return from the sale of the warrants for a total absolute return of 8.6%.3

 For the $20 billion 

TIP investment in Bank of America Corporation, Treasury received an absolute return of 7.2% from dividends and 

an added 6.3% return from the sale of the warrants for a total absolute return of 13.5%.3

 These returns are not 

predictive of the eventual returns on the entire CPP and TIP portfolios. 

Repurchases

Upon repaying its TARP preferred stock investment, a financial institution may repurchase its warrants at an 

agreed upon fair market value. In all such cases, Treasury follows a consistent evaluation process to ensure that 

taxpayers receive fair market values for the warrants. In the six months ending June 30, 2010, Treasury received 

$32 million from 6 banks through warrant repurchases at agreed upon fair market values.

Auctions

If an institution decides not to repurchase its warrants, Treasury has determined to dispose of the warrants as soon as 

practicable. Treasury has been successful in effectively disposing of warrants at fair market values through public auctions. In the 14 warrant auctions held to date, investor demand above Treasury’s minimum price has exceeded the supply 

of warrant shares by an average of 6.5 times with oversubscription rates ranging from 2.7 to 18.3 times. Auctioned 

warrants are actively traded on national exchanges, providing a liquid secondary market and observable market pricing 

for long-dated warrants. In the six months ending June 30, 2010, Treasury auctioned 11 warrant positions, generating 

over $3 billion in proceeds.

Remaining Positions

As of June 30, 2010, Treasury held warrants to purchase common stock in 15 financial institutions that have 

fully repaid their CPP investments and in 214 publicly traded companies in which the CPP investment is still 

1 TARP’s Warrant Disposition Report is posted on the OFS website at the following link: http://www.financialstability.gov/latest/reportsanddocs.html 

2 Treasury held two separate auctions for Bank of America Corporation CPP and TIP warrants. In addition, the repurchases of warrant preferred 

shares associated primarily with private institutions that Treasury exercised at the time of purchase are excluded from these numbers. In the six 

months ending June 30, 2010, 5 private banks repurchased their warrant preferred shares. Since the program inception, 11 private banks have 

repurchased their warrant preferred shares. See table on page 16. 

3 Returns are not annualized. 
2 Warrant Disposition Report - Update Jun

outstanding.4 Treasury intends to continue to execute a consistent and transparent disposition process which 

achieves fair market values and protects taxpayer interests. 

The table below sets forth proceeds from the 6 warrant repurchases and 11 warrant auctions completed during 

the first six months of 2010.5

 

Summary of Gross Proceeds from Sale of Public Warrants since January 1, 2010

Institution Name Ticker

Preferred 

Redemption 

Date

Preferred 

Amount 

Redeemed

($thousands)

Warrant 

Repurchase/ 

Auction Date

Gross Warrant 

Proceeds

($thousands)

QEO? (i.e. 

warrants 

cut by 

50%)

REPURCHASES

City National Corporation CYN 3/3/2010 $400,000 4/7/2010 $18,500 - 

SVB Financial Group SIVB 12/23/2009 235,000 6/16/2010 6,820 Yes 

Umpqua Holdings Corp. UMPQ 2/17/2010 214,181 3/31/2010 4,500 Yes 

First Litchfield Financial Corporation FLFL 4/7/2010 10,000 4/7/2010 1,488 - 

OceanFirst Financial Corp OCFC 12/30/2009 38,263 2/3/2010 431 Yes 

Monarch Financial Holdings MNRK 12/23/2009 14,700 2/10/2010 260 Yes 

TOTAL 6 $912,144 $31,999 4

AUCTIONS

Bank of America Corporation (TIP) BAC 12/9/2009 $20,000,000 3/3/2010 $1,255,639 - 

Wells Fargo & Company WFC 12/23/2009 25,000,000 5/20/2010 849,015 - 

PNC Financial Services PNC 2/10/2010 7,579,200 4/29/2010 324,196 - 

Bank of America Corporation (CPP) BAC 12/9/2009 25,000,000 3/3/2010 310,572 - 

Comerica Incorporated CMA 3/17/2010 2,250,000 5/6/2010 183,673 

Washington Federal, Inc WFSL 5/27/2009 200,000 3/9/2010 15,623 - 

Signature Bank SBNY 3/31/2009 120,000 3/10/2010 11,321 - 

Texas Capital Bancshares, Inc. TCBI 5/13/2009 75,000 3/11/2010 6,709 - 

Valley National Bancorp VLY 12/23/2009 300,000 5/18/2010 5,572 - 

First Financial Bancorp FFBC 2/24/2010 80,000 6/2/2010 3,116 Yes 

Sterling Bancshares, Inc. SBIB 5/5/2009 125,198 6/9/2010 3,008 - 

TOTAL 11 $80,729,398 $2,968,444 1

4 Treasury also holds warrants for common shares in public companies in connection with other TARP programs. For example, Treasury holds 

warrants in Citigroup Inc. associated with CPP (210.1 million shares with an exercise price of $17.85), TIP (188.5 million shares with 

an exercise price of $10.61), and AGP (66.5 million shares with an exercise price of $10.61). In addition, Treasury held exercised warrant 

preferred shares in 417 CPP institutions as of June 30, 2010.

5 Treasury held two separate auctions for Bank of America Corporation warrants: one for the 150,375,940 warrant shares with an exercise 

price of $13.30 acquired under TIP and one for the 121,792,790 warrant shares with an exercise price of $30.79 acquired under CPP. In 

addition, the repurchase of the warrants by First Litchfield Financial Corporation was completed as part of a cash acquisition of the bank by 

a private institution.
Warrant Disposition Report - Upda

Background 

As required by EESA, Treasury received warrants from TARP banks to provide taxpayers with an additional 

potential return on the government’s investment. 6

 

For each CPP and TIP investment in a publicly traded company, Treasury received warrants to purchase, at a 

fixed exercise price, shares of common stock equal to 15 percent of the aggregate liquidation preference of the 

senior preferred investment. The per share exercise price was set at the 20-trading day trailing average of the 

bank’s common stock price as of the time it was given preliminary approval for the TARP investment. The 

warrants may be exercised at any time over a ten year period. These public warrants include certain customary 

anti-dilution provisions for Treasury’s protection. 

For CPP investments in a privately-held company, an S-corporation, or certain mutual institutions, Treasury 

received warrants to purchase, at a nominal cost, additional preferred stock (warrant preferreds) or subordinated 

debentures (warrant sub debt) equivalent to five percent of the aggregate liquidation preference of the primary 

CPP investment. These warrant preferreds and warrant sub debt securities pay a higher dividend or interest rate 

than the primary CPP investment. Treasury exercised these kinds of warrants at the closings of the investments.

Institutions may repay Treasury for its CPP investment under the conditions established in the CPP purchase 

agreements as amended by the American Recovery and Reinvestment Act of 2009 (ARRA). The repayment 

price is equal to what Treasury invested, plus any unpaid dividends or interest. Originally, the CPP contracts 

provided that an institution could not redeem the investment within the first three years except with the proceeds 

of a “qualified equity offering” (QEO), which is an offering of securities that would qualify as Tier 1 capital. The 

repayment terms of the contracts were later effectively amended by the ARRA, which provides that an institution 

can repay from any source of funds and without regard to any waiting period. For TIP investments, an institution was required to first redeem its CPP investment before being able to redeem the TIP preferred stock.7

 

In addition, in order to encourage institutions to seek additional private capital, the CPP contracts provided that 

participants could halve the number of shares subject to their warrants by completing one or more QEOs before 

December 31, 2009 with aggregate gross proceeds equivalent to the value of Treasury’s CPP investment. Thirtyeight CPP participants completed a QEO in time to reduce their warrants. 

The CPP and TIP contracts further provide that once the preferred investment is redeemed or sold by Treasury, 

the institution has a right to repurchase its warrants at the fair market value. In addition, Treasury has the 

contractual right to sell the warrants. 

The ARRA affected Treasury’s authority to dispose of warrants, as it provided that when an institution repaid, 

“the Secretary shall liquidate warrants [of such institution]... at the current market price.” The ARRA was 

subsequently amended in May 2009 through the Helping Families Save Their Homes Act of 2009 (HFSTHA), 

which provides that the Secretary “may liquidate the warrants” following repayment. 

6 EESA provides that the Secretary may establish a “de minimus” exception to the requirement to issue warrants in the case of an 

institution that receives less than $100 million in TARP funds. Treasury has exercised that authority by not requiring warrants in 

the case of investments in Community Development Financial Institutions in order to encourage their participation in CPP.

7 Bank of America redeemed both its CPP and TIP at the same time on December 9, 2010. Citigroup was able to redeem the TIP investment 

on December 23, 2009 while Treasury still held a CPP investment in the bank because of the agreement reached with Treasury to exchange its 

CPP preferred stock in Citigroup for common stock and its TIP investment for Trust Preferred Securities. 
4 Warrant Disposition Report - Update June 30, 201

Warrant Disposition Process

Upon redemption of the preferred stock issued to Treasury, an institution has a contractual right to repurchase 

its warrants at the fair market value.8

 The banks have 15 days from repayment of the preferred stock to submit 

a bid, and Treasury then has 10 days to respond. In June 2009, Treasury announced that, in the event that an 

issuer does not repurchase its warrants, Treasury would sell the warrants to third parties “as quickly as practicable” and, when possible, by public auction.

Issuer Repurchases

If a company wishes to repurchase its warrants, the issuer and Treasury must agree on the warrants’ fair market value. Accordingly, Treasury has established a methodology for evaluating a bank’s determination of fair 

market value. As described below, Treasury’s evaluation of an issuer’s bid is based on three categories of input: 

(i) market quotes, (ii) independent, third party valuations, and (iii) model valuations.

If the issuer and Treasury fail to agree on a price, an appraisal procedure may be invoked by either party within 

30 days following Treasury’s response to the issuer’s first bid. In the appraisal process, each party selects an 

independent appraiser. These independent appraisers conduct their own valuations and attempt to agree upon 

the fair market value. If they agree on a fair market value, that valuation becomes the basis for repurchase. If 

these appraisers fail to agree, a third appraiser is hired, and subject to some limitations, a composite valuation 

of the three appraisals is used to establish the fair market value. To date, no institution has invoked the appraisal procedure. 

Even if an agreement is not reached within the specified timeframe, a bank that has repaid its preferred stock 

may bid to repurchase its warrants at any time, and Treasury will determine whether to accept the bid. 

Sale to Third Party

Treasury retains the right to sell the warrants to a third party at a mutually agreed upon price. Following repayment of the preferred stock, if a bank notifies Treasury that it does not intend to repurchase its warrants or 

cannot agree with Treasury on the fair market value, Treasury intends to dispose of the warrants, when possible, 

through public auctions. 

Treasury held the first warrant auctions in December 2009 and has held 14 auctions to date. These auctions 

were conducted as public modified “Dutch” auctions which were registered under the Securities Act of 1933. 

Only one bank’s warrants were sold in each auction. In this format, bidders were able to submit one or more 

independent bids at different price-quantity combinations and the warrants were sold at a uniform price that 

cleared the auction.

8 Privately-held companies, S-corporations, and certain mutual institutions typically redeem their warrant preferreds or subordinated 

debentures at par when redeeming the primary CPP investment. (See Appendix I for table of warrant preferred repurchases as of 

June 30, 2010.)
Warrant Disposition Report - Update June 30, 2010 5Treasury

Treasury’s Evaluation of Issuer’s Bid

Treasury adheres to a consistent process for evaluating bids from institutions to repurchase their warrants. Upon 

receiving a bid for a warrant repurchase, Treasury utilizes (i) market quotes, (ii) independent, third party valuations, and (iii) model valuations to assess the bid. 

(i) Market Quotes

There is little comparable market data for long-dated options. In order to perform its valuation analysis, Treasury 

seeks indications of value from various market participants active in the options markets. The range of estimated 

valuations is included in Treasury’s analysis along with the average of the market indications collected. Treasury 

also utilizes the market information from the trading of auctioned TARP warrants as another indication how of 

the market values long-dated warrants.

(ii) Third Party Valuations

Treasury engages outside consultants or external asset managers to provide independent, third party valuations 

for the warrants. The third party provides Treasury with an estimated valuation along with a range of potential 

values given a reasonable variance in the assumptions underlying their models. 

(iii) Model Valuations

Treasury uses a number of financial models to estimate warrant valuations. Primarily, Treasury uses a binomial 

option model adjusted for American style options, which is a well-accepted method for valuing options by both 

academics and market participants. Valuation estimates generated from the binomial model are presented in 

the Treasury’s analysis along with a range of potential values given a reasonable variance in key model inputs, 

such as assumptions about the expected future volatility and dividend yield of the underlying stock. Treasury’s 

internal valuation modeling was reviewed by Dr. Robert Jarrow, an options expert and professor at Cornell 

University, who concluded that “the Treasury’s modeling methodology for valuing the warrants is consistent with 

industry best practice and the highest academic standards.” More information on Treasury’s internal valuation 

modeling and the report written by Dr. Jarrow can be found at www.FinancialStability.gov/roadtostability/

CapitalPurchaseProgram.html. 

Treasury and its external asset managers use the 20-trading day trailing average stock price of a company in their 

valuations to minimize the effects of day-to-day market fluctuations. Market participants who provide Treasury 

with market indications utilize the stock price at the time that they provide the valuation. If the discussions with 

an institution continue over an extended period of time, Treasury and its external asset managers will update their 

estimates as necessary. Treasury may also collect new market quotes or adjust the market quotes based on changes 

in market conditions from when the quotes were collected. (See Appendix I for information on the timing of 

issuers’ bids.)

Determination by Warrant Committee

Based on the range of estimated warrant values provided by these sources, a committee of Treasury officials within 

the Office of Financial Stability (OFS), who comprise the OFS Warrant Committee, makes a recommendation to 

the Assistant Secretary for Financial Stability as to whether to agree with the bank’s determination of fair market 
6 Warrant Disposition Report - Update June 30, 2010 Treasury

value. Each member of the Warrant Committee and the Assistant Secretary weigh the three valuation metrics 

as they deem appropriate. 

Additional factors presented to the Warrant Committee, along with the three valuation metrics discussed 

above include: 

• how quickly Treasury would have to monetize the warrants if the issuer does not repurchase based on 

legislation in place at the time as discussed in the “Background” section of this report,

• the expertise and experience of the outside consultant providing the third party valuation,

• the quality and number of market indications received, 

• any significant movements in the stock price of the issuer since market indications were collected, 

• deviations of the current stock price from the 20-trading day trailing average of the company’s stock price,

• the size of the warrant position and potential investor interest in the warrants, 

• the liquidity of the underlying common stock, and

• fixed transaction costs associated with selling the warrants to a third party.
Warrant Disposition Report - Update June 30, 

Repurchases of Warrants

Treasury began selling warrants back to banks that had repaid the TARP investment in May 2009. In 

aggregate, as of June 30, 2010, Treasury has realized $2.9 billion in gross proceeds from 37 warrant repurchases. This compares favorably to initial bids of $1.7 billion and estimates of aggregate value of $2.2 billion based 

on market indications, $2.8 billion based on third party estimates, and $2.6 billion based on Treasury’s internal 

financial model. Warrants repurchased by the issuer have yielded an absolute return of 7.0% on Treasury’s 

investment. 

When selling warrants back to the issuer, Treasury has achieved fair market values and protected the taxpayer. 

Dr. Jarrow noted that “[Treasury’s] valuation process results in a warrant valuation that is fair to both the 

participating banks and the U.S. taxpayers.” Further, the Special Inspector General for the Troubled Asset 

Relief Program (SIGTARP) audit released on May 15, 2010 entitled Assessing Treasury’s Process to Sell Warrants 

Received from TARP Recipients concluded that Treasury successfully negotiated prices from institutions that 

wished to repurchase their warrants that were at or above Treasury’s estimated range of fair market value for 

such warrants.9

 The report also described the valuation methodology to estimate fair market value and offered 

no suggestions for modifying that methodology.10

9 SIGTARP report, Assessing Treasury’s Process to Sell Warrants Received from TARP Recipients, dated May 15, 2010.

10 SIGTARP offered some suggestions regarding documentation of the negotiation process, and regarding insuring consistency in the 

information provided to issuers seeking to repurchase their warrants. Treasury reviewed these suggestions carefully and has made 

appropriate changes to its procedures for recording Warrant Committee meeting minutes and conversations with banks regarding the 

repurchases of their warrants. 
8 Warrant Disposition Report - Update June 

Auctions of Warrants

Following repayment of its preferred stock, if a bank notifies Treasury that it does not intend to repurchase its 

warrants or cannot agree with Treasury on the fair market price, Treasury disposes of the warrants, when possible, 

through public auctions. Since December 2009, Treasury has auctioned 14 warrant positions in 13 financial 

institutions, generating aggregate proceeds of approximately $4.1 billion.11 Demand in the warrant auctions 

has exceeded the number of warrant shares being auctioned by an average of 6.5 times with an oversubscription 

range of 2.7 to 18.3 times. Warrants sold through auctions have yielded an absolute return of 3.7% on Treasury’s 

investment. 

The auctions have also provided valuable insights into how the market values long-dated warrants, as scores of 

different bidders have placed hundreds of unique bids in each auction. The auctions have resulted in estimated 

placements of approximately 48% to fundamental institutional investors, 24% to convertible-focused investors, 

19% to derivative-focused investors, and 9% to individual investors. Typically, many of the fundamental institutional investors who buy warrants in an given auction are also holders of the bank’s common stock.

Active secondary trading in the warrants has further validated the auction prices and provides ongoing 

observable market prices for long-dated warrants. Each of the warrants sold through public auction has been 

listed on the New York Stock Exchange or the NASDAQ. Trading volumes tend to be very high during the first 

few days following an auction and then to fall into a lower range. Excluding the first five trading days after each 

auction, the daily trading volume of the warrants has averaged 0.9% of the outstanding securities. This is within 

the normal range of daily turnover for other equity securities including common stock. Across the 14 TARP 

warrant positions currently outstanding with public investors, several million warrants change hands on a typical 

trading day. 

In a Treasury report entitled Treasury Analysis of Warrant Auction Results, the OFS and the Office of Economic 

Policy have also examined three CPP warrant auctions and one TIP warrant auction, each of which generated 

proceeds in excess of $100 million.12  This report concluded that no single bidder had a large impact on the 

final clearing price in these four auctions.  Further, the report showed that increasing the amount of smaller 

bidders participating in the auctions would not have had a material impact on the final clearing price.  These 

two results suggest that the auctions were robust and achieved a fair market price. 

Treasury has successfully disposed of warrants through the auction process. Clearing prices have been set 

through robust competition between a large number of bidders, and fair market value has been achieved for 

taxpayers. Additionally, an active and liquid secondary market for the warrants has been established, providing 

greater confidence in the market value of the total Treasury warrant portfolio and thereby supporting future 

auctions. 

11 Treasury held two separate auctions for different Bank of America Corporation CPP and TIP warrants. See footnote 5.

12 The report Treasury Analysis of Warrant Auction Results can be found on the Treasury website: 

http://www.ustreas.gov/offices/economic-policy/reports/Auction-Analysis-3-18-2010.pdf
Warrant Disposition Report - Update June 30, 20

Modified “Dutch” Auctions For the first three warrant auctions, 

Treasury utilized modified “Dutch” 

auctions to dispose of the warrants. 

The public auctions were registered 

under the Securities Act of 1933. 

Only one bank’s warrants were sold 

in each auction. With advice from 

its external asset managers and the 

auction agent, Treasury publicly 

disclosed a minimum bid and 

privately set a reserve price for each 

auction. Bidders were able to submit 

one or more independent bids at 

different price-quantity combinations 

at or above the set minimum price. 

The auction agent did not provide 

bidders with any information about 

the bids of other bidders or auction 

trends, or with advice regarding 

bidding strategies, in connection 

with the auction. The issuers of the 

warrants were able to bid for their 

warrants in the auctions. Bids were 

accepted by the auction agent from 

8:00 a.m. to 6:30 p.m. on the day of 

the auction. The warrants were sold 

to all winning bids at the uniform 

price that cleared the auction. 

Deutsche Bank Securities Inc. was 

Treasury’s auction agent for the first 

three auctions. Deutsche Bank 

received fees equal to approximately 

1.4% of the gross proceeds ($56.3 

million) which is significantly below 

typical secondary equity offering 

fees that run around 3.5% to 4.5% 

depending on the size of the offering. 

For illustrative purposes only, Figures 

1 and 2 are example charts of the 

demand in a theoretical auction of an 

8 million share position with a minimum price of $3.00 per share and a 

clearing price of $5.75 per share.

Modifie

Figure 1: Illustrative Cumulative Auction 

Demand by Price 

Figure 2: Illustrative Auction Demand by Price

0	
  

5	
  

10	
  

15	
  

20	
  

25	
  

30	
  

$3.00	
   $3.25	
   $3.50	
   $3.75	
   $4.00	
   $4.25	
   $4.50	
   $4.75	
   $5.00	
   $5.25	
   $5.50	
   $5.75	
   $6.00	
   $6.25	
   $6.50	
   $6.75	
   $7.00	
   $7.25	
   $7.50	
   $7.75	
   $8.00	
  

Example	
  of	
  Cumula-ve	
  Demand	
  by	
  Price	
  

Example	
  Auc7on	
  Clearing	
  Price	
  $5.75	
  	
  
10 Warrant Disposition Report - Update June 30, 2010 A

Analysis of TARP Warrant Sales

One metric Treasury employs to measure the value it receives for warrant dispositions is implied volatility. 

While implied volatility incorporates several assumptions, generally, the higher the implied volatility of a 

transaction, the greater the value Treasury receives. To date, Treasury has only conducted warrant auctions in 

which the value of the warrants has exceeded $3 million. In the bilateral warrant negotiations in which warrant 

proceeds exceeded $3 million, Treasury received an average implied volatility of 35%. In the warrant auctions, 

in which the market sets the price, Treasury received an average implied volatility of 33%. Comparing implied 

volatilities suggests that Treasury received slightly better pricing in its negotiated transactions than it received in 

its warrant auctions.

In addition, the size of the warrant disposition has impacted the implied volatility. Treasury received an average 

implied volatility of 28% for all warrant dispositions below $10 million in proceeds. Alternatively, Treasury received an average implied volatility of 34% for all dispositions at or above $10 million in proceeds. Therefore, 

the smaller warrant positions received a lower implied volatility. The 6% volatility differential may be from a 

number of factors, including a larger liquidity discount and relatively higher transaction costs that would be 

incurred for smaller warrant position auctions. 
Warrant Disposition Report - Update June 30, 2010 11Appendix I – Detailed Tables of Warr

Appendix I – Detailed Tables of Warrant Repurchases and Auctions 

Issuer Bids Date of Issuer Bids

Company Ticker

CPP 

Preferred 

($thousands)

Redemption 

Date Bid #1 Bid #2 Bid #3 Bid #4

Final 

Price 

($thousands) Bid #1 Bid #2 Bid #3 Bid #4

Warrant 

Repurchase 

Date

Old National Bancorp ONB $100,000 3/31/2009 $559 $1,200 $1,200 4/15/2009 5/6/2009 5/8/2009

IBERIABANK Corporation IBKC 90,000 3/31/2009 620 1,200 1,200 4/14/2009 5/12/2009 5/20/2009

Sun Bancorp SNBC 89,310 4/8/2009 1,049 2,100 2,100 4/21/2009 5/19/2009 5/27/2009

FirstMerit Corp FMER 125,000 4/22/2009 3,186 5,025 5,025 5/15/2009 5/21/2009 5/27/2009

Independent Bank Corp INDB 78,158 4/22/2009 880 2,200 2,200 5/2/2009 5/21/2009 5/27/2009

Alliance Financial Corporation ALNC 26,918 5/13/2009 320 900 900 5/26/2009 6/12/2009 6/17/2009

SCBT Financial Corporation SCBT 64,779 5/20/2009 694 1,400 1,400 6/3/2009 6/16/2009 6/24/2009

Berkshire Hills Bancorp BHLB 40,000 5/27/2009 875 1,040 1,040 6/8/2009 6/17/2009 6/24/2009

Somerset Hills Bancorp SOMH 7,414 5/20/2009 193 275 275 6/4/2009 6/17/2009 6/24/2009

First Niagra Financial Group FNFG 184,011 5/27/2009 1,500 2,700 2,700 6/4/2009 6/19/2009 6/24/2009

HF Financial Corp. HFFC 25,000 6/3/2009 465 600 650 650 6/9/2009 6/29/2009 6/29/2009 6/30/2009

State Street Corporation STT 2,000,000 6/17/2009 60,000 60,000 6/22/2009 7/8/2009

U.S. Bancorp USB 6,599,000 6/17/2009 115,000 131,000 139,000 139,000 6/18/2009 7/1/2009 7/8/2009 7/15/2009

BB&T Corporation BBT 3,133,640 6/17/2009 20,854 41,707 64,925 67,010 67,010 6/24/2009 7/8/2009 7/14/2009 7/14/2009 7/22/2009

Goldman Sachs Group, Inc. GS 10,000,000 6/17/2009 600,000 900,000 1,100,000 1,100,000 6/17/2009 7/20/2009 7/21/2009 7/22/2009American Express Company AXP 3,388,890 6/17/2009 230,000 260,000 340,000 340,000 7/1/2009 7/20/2009 7/27/2009 7/29/2009

Bank of New York Mellon BK 3,000,000 6/17/2009 79,000 118,000 130,000 136,000 136,000 6/30/2009 7/29/2009 7/30/2009 7/31/2009 8/5/2009

Morgan Stanley MS 10,000,000 6/17/2009 500,000 800,000 900,000 950,000 950,000 6/30/2009 8/3/2009 8/4/2009 8/5/2009 8/12/2009

Northern Trust Corporation NTRS 1,576,000 6/17/2009 37,000 75,000 87,000 87,000 6/18/2009 8/17/2009 8/19/2009 8/26/2009

Old Line Bancshares OLBK 7,000 7/15/2009 175 205 225 225 7/29/2009 8/19/2009 8/20/2009 9/2/2009

Bancorp Rhode Island, Inc. BARI 30,000 8/5/2009 857 1,125 1,400 1,400 8/19/2009 9/16/2009 9/21/2009 9/30/2009Manhattan Bancorp MNHN 1,700 9/16/2009 63 63 9/29/2009 10/14/2009

CenterState Banks, Inc. CSFL 27,875 9/30/2009 168 212 212 10/9/2009 10/20/2009 10/28/2009

CVB Financial Corp. CVBF 130,000 9/2/2009 1,002 1,307 1,307 9/17/2009 10/21/2009 10/28/2009

Bank of the Ozarks, Inc. OZRK 75,000 11/4/2009 2,161 2,650 2,650 11/5/2009 11/18/2009 11/24/2009

Wainwright Bank and Trust WAIN 22,000 11/24/2009 569 569 12/3/2009 12/16/2009

LSB Corporation LSBX 15,000 11/18/2009 500 560 560 12/4/2009 12/8/2009 12/16/2009

Wesbanco, Inc. WSBC 75,000 9/2/2009 825 950 950 950 9/22/2009 10/20/2009 12/11/2009 12/23/2009

Union Bankshares Corporation UBSH 59,000 11/18/2009 400 450 450 11/24/2009 12/16/2009 12/23/2009Flushing Financial Corporation FFIC 70,000 10/28/2009 597 700 860 900 900 11/10/2009 12/14/2009 12/23/2009 12/28/2009 12/30/2009

Trustmark Corporation TRMK 215,000 12/3/2009 8,167 9,200 9,600 10,000 10,000 12/23/2009 12/28/2009 12/28/2009 12/29/2009 12/30/2009OceanFirst Financial Corp. OCFC 38,263 12/30/2009 431 431 1/21/2010 2/3/2010

Monarch Financial Holdings, Inc. MNRK 14,700 12/23/2009 209 250 260 260 1/6/2010 1/22/2010 2/1/2010 2/10/2010

Umpqua Holdings Corp. UMPQ 214,181 2/17/2010 2,055 3,610 4,250 4,500 4,500 3/2/2010 3/19/2010 3/22/2010 3/22/2010 3/31/2010

City National Corporation CYN 400,000 3/3/2010 11,900 17,500 18,500 18,500 3/17/2010 4/5/2010 4/6/2010 4/7/2010First Litchfield Financial Corp. FLFL 10,000 4/7/2010 1,488 1,488 4/7/2010 4/7/2010

SVB Financial Group SIVB 235,000 12/23/2009 3,800 6,200 6,820 6,820 2/18/2010 6/4/2010 6/8/2010 6/16/2010

Total 37 $42,167,839 $1,687,562 $2,948,985 

Issuer Bids and Warrant Sales Ordered by Sale Date

Note: The first bid date is the date that an issuer submitted its bid. Subsequent bid dates are the dates the Warrant Committee met to consider those bids.
12 Warrant Disposition Report - Update June 30, 2010 Analysis of TARP Warrant Sales Issuer Bids Date of Issuer Bids Company Ticker CPP/TIP Preferred ($thousands) Redemption Date Bid #1 Bid #2 Bid #3 Bid #4 Auction Proceeds ($thousands) Bid #1 Bid #2 Bid #3 Bid #4 Auction Date Capital One Financial Corp. COF 3,555,199 6/17/2009 $46,500  $148,731 6/30/2009 12/3/2009 JPMorgan Chase & Co. JPM 5,000,000 6/17/2009 825,539  950,318 6/17/2009 12/10/2009 TCF Financial CorporationTCB 361,172 4/22/2009 3,200  9,600 5/5/2009 12/15/2009 Bank of America Corporation (CPP) AC 25,00,000 12/9/2009 N/A  310,572  N/A 3/3/2010 Bank of America Corporation (TIP) AC 20,000,00 12/9/2009 N/A  1,255,639  N/A 3/3/2010 Washington Federal, Inc WFSL 20,000 5/27/2009 N/A  15,623  N/A 3/9/2010 Signature Ban SBNY 10,000 3/31/2009 N/A  11,321  N/A 3/10/2010 Texas Capital Bancshars TCBI75,000 5/13/2009 N/A  6,709  N/A 3/11/2010 PNC Financial Services Group, Inc.PNC 7,57,200 2/10/2010 N/A  324,196  N/A 4/29/2010 Comerica IncorporatedCMA 2,25,000 3/17/2010 N/A  183,673  N/A 5/6/2010 Valley National Bancorp LY 300,000 12/23/2009 2,291  5,572 1/7/2010 5/18/2010 Wells Fargo & Company WFC 2,000,00012/23/209 593,600  700,000  750,000  849,015 1/7/2010 2/12/2010 2/22/2010 5/20/2010 First Financial Bancop FFBC 80,000 2/24/2010 N/A  3,116 N/A 6/2/2010 Sterling Bancshares, Inc.SBIB 125,198 5/5/2009 4,000  3,008 6/5/2009 6//200 Total 14 $109,645,769  NA  $4,077,093 Issuer Bids and Warrant Auc
Warrant Disposition Report - Update June 30, 2010 13A

Decision Date

Institution Name Ticker

Decision 

Date

Payment 

Date

Expiration 

Date

Strike 

Price 

QEO? (i.e. 

warrants

 cut by 

50%)

Final Warrant 

Shares

Warrant 

Repurchase 

Price/Share

Warrant 

Repurchase 

Proceeds

Estimated

Implied

Volatility*

Stock 

Price

20-day 

Avg 

Stock 

Price

Warrant 

Price / 

Stock 

Price

Underlying 

/ Strike

Goldman Sachs Group, Inc. GS 7/21/2009 7/22/2009 10/28/2018 $122.90 - 12,205,045 $90.13 $1,100,000,000 40.6% - 44.5% $159.80 $148.16 0.56 1.30 x

Morgan Stanley MS 8/5/2009 8/12/2009 10/28/2018 22.99 - 65,245,759 14.56 950,000,000 33.3% - 38.7% 31.05 28.16 0.47 1.35 x

American Express Company AXP 7/27/2009 7/29/2009 1/9/2019 20.95 - 24,264,129 14.01 340,000,000 37.6% - 40.7% 28.38 25.71 0.49 1.35 x

U.S. Bancorp USB 7/8/2009 7/15/2009 11/14/2018 30.29 - 32,679,102 4.25 139,000,000 39.3% - 42.6% 16.59 17.69 0.26 0.55 x

Bank of New York Mellon BK 7/31/2009 8/5/2009 10/28/2018 31.00 - 14,516,129 9.37 136,000,000 35.7% - 39.6% 27.34 27.98 0.34 0.88 x

Northern Trust Corporation NTRS 8/19/2009 8/26/2009 11/14/2018 61.81 - 3,824,624 22.75 87,000,000 31.1% - 35.9% 60.38 60.00 0.38 0.98 xBB&T Corporation BBT 7/14/2009 7/22/2009 11/14/2018 33.81 - 13,902,573 4.82 67,010,402 32.0% - 35.1% 21.65 21.64 0.22 0.64 x

State Street Corporation STT 7/1/2009 7/8/2009 10/28/2018 53.80 Yes 2,788,104 21.52 60,000,000 37.9% - 43.8% 47.35 46.98 0.45 0.88 x

City National Corporation CYN 4/6/2010 4/7/2010 11/21/2018 53.16 - 1,128,668 16.39 18,500,000 23.5% - 27.9% 55.70 53.90 0.29 1.05 x

Trustmark Corporation TRMK 12/29/2009 12/30/2009 11/21/2018 19.57 - 1,647,931 6.07 10,000,000 19.0% - 22.9% 22.80 20.84 0.27 1.17 x

SVB Financial Group SIVB 6/8/2010 6/16/2010 12/12/2018 49.78 Yes 354,058 19.26 6,820,000 39.2% - 44.7% 42.24 45.32 0.46 0.85 xFirstMerit Corp FMER 5/21/2009 5/27/2009 1/9/2019 19.69 - 952,260 5.28 5,025,000 34.9% - 38.3% 17.54 19.27 0.30 0.89 x

Umpqua Holdings Corp. UMPQ 3/22/2010 3/31/2010 11/14/2018 14.46 Yes 1,110,898 4.05 4,500,000 25.1% - 29.4% 13.60 12.87 0.30 0.94 x

First Niagra Financial Group FNFG 6/19/2009 6/24/2009 11/21/2018 14.48 Yes 953,096 2.83 2,700,000 28.5% - 31.7% 11.93 12.05 0.24 0.82 xBank of the Ozarks, Inc. OZRK 11/18/2009 11/24/2009 12/12/2018 29.62 - 379,811 6.98 2,650,000 20.9% - 25.1% 27.48 24.46 0.25 0.93 x

Indpendent Bank Corp INDB 5/21/2009 5/27/2009 1/9/2019 24.34 - 481,664 4.57 2,200,000 28.5% - 31.6% 19.60 19.92 0.23 0.81 x

Sun Bancorp SNBC 5/19/2009 5/27/2009 1/9/2019 8.27 - 1,620,545 1.30 2,100,000 16.0% - 19.9% 6.25 6.36 0.21 0.76 x

First Litchfield Financial Corporation FLFL 4/7/2010 4/7/2010 12/12/2018 7.53 - 199,203 7.47 1,488,046 N/A 14.95 14.65 0.50 1.99 x

Bancorp Rhode Island, Inc. BARI 9/21/2009 9/30/2009 12/19/2018 23.32 - 192,967 7.26 1,400,000 21.9% - 26.6% 24.66 25.57 0.29 1.06 x

SCBT Financial Corporation SCBT 6/16/2009 6/24/2009 1/16/2019 32.06 - 303,083 4.62 1,400,000 24.1% - 27.4% 23.16 23.45 0.20 0.72 xCVB Financial Corp. CVBF 10/21/2009 10/28/2009 12/5/2018 11.68 Yes 834,761 1.57 1,307,000 26.4% - 29.2% 8.81 7.73 0.18 0.75 x

IBERIABANK Corporation IBKC 5/12/2009 5/20/2009 12/5/2018 48.74 Yes 138,490 8.66 1,200,000 17.5% - 20.8% 47.22 48.23 0.18 0.97 x

Old National Bancorp ONB 5/6/2009 5/8/2009 12/12/2018 18.45 - 813,008 1.48 1,200,000 20.3% - 23.6% 14.33 14.18 0.10 0.78 x

Berkshire Hills Bancorp BHLB 6/17/2009 6/24/2009 12/19/2018 26.51 - 226,330 4.60 1,040,000 24.0% - 28.0% 20.17 21.38 0.23 0.76 x

Wesbanco, Inc. WSBC 12/11/2009 12/23/2009 12/5/2018 25.61 - 439,282 2.16 950,000 38.1% - 40.7% 12.41 12.71 0.17 0.48 x

Alliance Financial Corporation ALNC 6/12/2009 6/17/2009 12/19/2018 23.33 - 173,069 5.20 900,000 13.8% - 17.0% 26.61 25.50 0.20 1.14 x

Flushing Financial Corporation FFIC 12/28/2009 12/30/2009 12/19/2018 13.97 Yes 375,806 2.39 900,000 22.4% - 25.9% 11.73 10.92 0.20 0.84 x

HF Financial Corp. HFFC 6/29/2009 6/30/2009 11/21/2018 12.40 - 302,419 2.15 650,000 18.3% - 21.5% 11.95 12.08 0.18 0.96 x

Wainwright Bank and Trust WAIN 12/11/2009 12/16/2009 12/19/2018 8.46 - 390,071 1.46 568,700 27.8% - 30.7% 7.00 6.75 0.21 0.83 xLSB Corporation LSBX 12/8/2009 12/16/2009 12/12/2018 10.74 - 209,497 2.67 560,000 22.1% - 25.3% 11.28 11.00 0.24 1.05 x

Union Bankshares Corporation UBSH 12/16/2009 12/23/2009 12/19/2018 20.94 Yes 211,318 2.13 450,000 30.3% - 33.0% 11.93 11.93 0.18 0.57 x

OceanFirst Financial Corp OCFC 1/28/2010 2/3/2010 1/16/2019 15.07 Yes 190,427 2.26 430,797 31.2% - 34.2% 10.45 10.97 0.22 0.69 x

Somerset Hills Bancorp SOMH 6/17/2009 6/24/2009 1/16/2019 6.82 - 163,065 1.69 275,000 14.8% - 18.4% 7.80 7.73 0.22 1.14 x

Monarch Financial Holdings MNRK 2/1/2010 2/10/2010 12/19/2018 8.33 Yes 132,353 1.96 260,000 27.8% - 32.4% 6.40 6.48 0.31 0.77 x

Old Line Bancshares OLBK 8/20/2009 9/2/2009 12/5/2018 7.40 - 141,892 1.59 225,000 26.3% - 30.1% 6.10 6.21 0.26 0.82 x

CenterState Banks, Inc. CSFL 10/21/2009 10/28/2009 11/21/2018 16.67 Yes 125,413 1.69 212,000 34.9% - 38.2% 7.47 7.64 0.23 0.45 x

Manhattan Bancorp MNHN 10/9/2009 10/14/2009 12/5/2018 8.65 - 29,480 2.15 63,364 29.7% - 34.8% 6.60 6.53 0.33 0.76 xTOTAL 37 11 $2,948,985,309

Warrant Sales Ordered By Amount of Proceeds

* Volatility implied by the repurchase price using stock price on decision date and UST estimates for dividend yield and borrow cost; reflects discounts to a modeled valuation for illiquidity, risk of cash takeout, etc.
14 Warrant Disposition Report - Update June 30, 2010 Analysis of TARP Warrant Sales Institution Name Ticker Announce Date Auction Date Expiration Date Strike Price QEO? (i.e. warrants cut by 50%) Warrant Shares Warrant Auction Price Per Share Warrant Auction Gross Proceeds Estimated Implied Volatilty* Decision Date Stock Price 20-day Avg Stock Price Warrant Price / Stock Price Underlying / Strike Bank of America Corporation (TIP) BAC 3/1/200 /3/2010 1/162019 $3.30  -  150,375,940  $8.35  $1,255,39,099 32.1% - 36.8% $16.37  $15.59 0.51 1.23 x JPMorgan Chase & Co. JPM 12/8/20091210/2009 10/8/201842.42  -  88,401,697  10.75  950318,243 23.8% - 27.5% 41.27  42.24 0.26 0.97 x Wells Fargo & Company WFC 5/18/201 520/2010 10/2/201834.01  -  110,261,688  7.70  849014,998 30.6% - 34.0% 28.69  32.21 0.27 0.84 x PNC Financial Services PNC 4/27/201 429/2010 12/3/201867.33  -  16,885,192  19.20  324195,686 27.6% - 31.3% 66.06  64.68 0.29 0.98 x Bank of America Corporation (CPP) BAC 3/1/200 /3/2010 10/2/201830.79  -  121,792,790  2.55  310571,615 30.9% - 33.5% 16.37  15.59 0.16 0.53 x Comerica Inc. CMA 5/4/200 /6/2010 11/4/201829.40  -  11,479,592  16.00  183673,472 28.6% - 32.3% 41.43  42.21 0.39 1.41 x Capital One Financial Corp. COF 12/1/200 1/3/2009 11/4/201842.13  -  12,657,960  11.75  148731,030 34.6% - 38.2% 36.92  38.66 0.32 0.88 x Washington Federal, Inc WFSL 3/8/200 /9/2010 1114/208 17.57  -  1,707,456  9.15  15623,222 48.6% - 53.5% 19.38  19.41 0.47 1.10 x Signature Bank SBNY 3/8/201 310/2010 2/12/218 30.21  -  595,829  19.00  11320,751 23.1% - 29.0% 38.75  36.83 0.49 1.28 x TCF Financial Corporation TCB 12/14/20091215/2009 1114/208 16.93  -  3,199,988  3.00  9599,964 28.8% - 32.1% 13.22  12.78 0.23 0.78 x Texas Capital Bancshares, Inc. TCBI 3/8/200 /11/20101/16/019 14.84  -  758,086  8.85  6709,061 24.4% - 29.9% 18.41  17.06 0.48 1.24 x Valley National Bancorp VLY 5/17/201 518/2010 1114/208 17.77  -  2,532,542  2.20  5571,592 25.1% - 27.5% 14.80  15.49 0.15 0.83 x First Financial Bancorp FFBC 6/1/200 6/2/2010 1/23/210 12.90  Yes 465,117  6.70  3116,284 39.9% - 43.8% 15.87  16.81 0.42 1.23 x Sterling Bancshares, Inc. SBIB 6/7/201 6/9/2010 2/12/018 7.18 -  2,615,557  1.15  ,007,891 30.1% - 34.2% 5.00  5.41 0.23 0.70 x TOTAL 14 1 $4,077,092,908 Warrant Auctions Ordred by Amount of Proceeds *  Volatility implied by the repurchase price using stock price on auction date and UST estimates for dividend yield and borrow cost; reflects discounts to a modeled valuation for illiquidit
Warrant Disposition Report - Update June 30, 2010 15A

Institution Ticker

 Auction 

 Date

Warrant 

Shares

 Gross 

 Proceeds 

 ($millions)

 Underwriting 

 Fees 

 ($millions)

Minimum 

Bid

Clearing 

Bid

Number

 of

 Bids

Number of 

Bidders

Coverage 

Ratio1

Market 

Orders Share 

of Demand2

Warrants 

Repurchased 

by Bank

 in Auction

Daily Liquidity Turnover3

Capital One Financial Corp. COF 12/3/2009 12,657,960 $148.7 $2.231 $7.50 $11.75 604 174 13.3x 0.2% - 0.39%JPMorgan Chase & Co. JPM 12/10/2009 88,401,697 950.3 14.255 8.00 10.75 754 381 6.5x 0.3% - 0.72%TCF Financial Corporation TCB 12/15/2009 3,199,988 9.6 0.150 1.50 3.00 470 135 18.3x 1.8% - 0.91%Bank of America Corporation (TIP) BAC 3/3/2010 150,375,940 1,255.6 18.835 7.00 8.35 1,489 535 4.4x 1.0% - 0.97%Bank of America Corporation CPP) BAC 3/3/2010 121,792,790 310.6 4.659 1.50 2.55 1,246 570 10.7x 1.7% - 0.81%Washington Federal, Inc WFSL 3/9/2010 1,707,456 15.6 0.234 5.00 9.15 708 413 14.5x 8.3% - 0.71%Signature Bank SBNY 3/10/2010 595,829 11.3 0.170 16.00 19.00 409 68 8.2x 0.7% - 0.59%Texas Capital Bancshares, Inc. TCBI 3/11/2010 758,086 6.7 0.150 6.50 8.85 326 61 7.0x 0.9% - 0.21%PNC Financial Services PNC 4/29/2010 16,885,192 324.2 3.918 15.00 19.20 1,450 181 5.5x 2.5% - 1.51%Comerica Inc. CMA 5/6/2010 11,479,592 183.7 2.571 15.00 16.00 518 120 2.7x 1.9% - 0.55%Valley National Bancorp VLY 5/18/2010 2,532,542 5.6 0.150 1.70 2.20 183 34 6.6x 1.2% - 0.69%Wells Fargo & Company WFC 5/20/2010 110,262,688 849.0 8.640 6.50 7.70 859 297 3.9x 2.3% 70,165,963 0.94%First Financial Bancorp FFBC 6/2/2010 465,117 3.1 0.150 4.00 6.70 142 66 10.3x 2.0% - 0.53%Sterling Bancshares, Inc. SBIB 6/9/2010 2,615,557 3.0 0.150 0.85 1.15 211 67 6.9x 3.6% - 0.71%Total 14 $4,077.1 $56.262 9,369 222 6.5x 1.4% 0.86%

Warrant Auction Statistics

 1) Coverage Ratio = Gross Demand / Warrant Shares 2) Market Orders Share of Auction = Total Market Orders / Gross Demand  A market order is a bid that specifies the number of warrants the bidder is willing to purchase without specifying the price it is willing to pay and is treated as a bid at the highest price received from any other bidder in  the auction.3) Daily Liquidity Turnover = Average Daily Trading Volume / Warrants Outstanding  The liquidity calculation excludes the first five trading days after the auction which typically have higher than normal volume and uses data through June 30, 2010. The data source is Bloomberg. Note: Totals for Coverage Ratio, Market Orders and Daily Liquidity are weighted averages. Total for Number of Bidders is a simple average. 
16 Warrant Disposition Report - Update June 30, 2010 A

Issuer Repurchases of Warrant Preferreds or Warrant Sub Debt

Institution Name Repurchase Date

CPP Investment

($thousands)

Warrant 

Repurchase

Gross Warrant Proceeds

($thousands)

Centra Financial Holdings, Inc. 3/31/2009 $15,000 4/15/2009 $750 

First Manitowoc Bancorp, Inc. 5/27/2009 12,000 5/27/2009 600 

First Southern Bancorp, Inc. 6/16/2010 10,900 6/16/2010 545 

Midland States Bancorp, Inc. 12/23/2009 10,189 12/23/2009 509 

1st United Bancorp, Inc. 11/18/2009 10,000 11/18/2009 500 

First ULB Corp. 4/22/2009 4,900 4/22/2009 245 

Hilltop Community Bancorp, Inc. 4/21/2010 4,000 4/21/2010 200 

Texas National Bancorporation, Inc. 5/19/2010 3,981 5/19/2010 199 

FPB Financial Corp. 6/16/2010 3,240 6/16/2010 162 

The First State Bank of Mobeetie 4/14/2010 731 4/14/2010 37 

Midwest Regional Bancorp 11/10/2009 700 11/10/2009 35 

TOTAL $75,641 $3,782 
Warrant Disposition Report - Update June 30, 2010 17Appendix II –

Appendix II – Warrant Disposition Details 

Institution Ticker Decision Date on Issuer’s Final Bid

OceanFirst Financial Corp. OCFC January 21, 2010

Monarch Financial Holdings, Inc. MNRK February 1, 2010

Umpqua Holdings Corp. UMPQ March 22, 2010

City National Corporation CYN April 6, 2010

SVB Financial Group SIVB June 8, 2010

Institution Ticker Auction Date

Valley National Bancorp VLY May 18, 2010

Wells Fargo & Company WFC May 20, 2010

Sterling Bancshares, Inc. SBIB June 9, 2010

The chart below demonstrates the three elements of Treasury’s warrant valuation analysis together with an 

institution’s bid for the warrants, using Northern Trust Corporation as an example. The market quotes are 

presented as a range from the low to the high estimate of value provided by market participants (black bar) 

as well as the average of all the market indications collected (red point). The third party estimate of value 

(red point) is presented along with a reasonable range (black bar) that is also prepared by the third party. 

Treasury’s estimate of value (red point) based on its internal model is presented along with a reasonable 

range (black bar). The ranges of estimates presented below show the final estimates utilized by Treasury 

officials to analyze the bank’s final bid. 

Appendix II presents charts for all of the CPP warrant sales, in which the bank submitted a bid to 

repurchase its warrants, from January 1, 2010 through June 30, 2010. As with the example below, all of the 

valuation estimates presented in Appendix II represent the final estimates used by Treasury officials when 

analyzing a repurchase request. Appendix II also notes additional relevant factors that were presented to the 

Warrant Committee.

Graphical Representation of Treasury’s Warrant Valuation Analy

Example of Treasury’s Warrant Valuation Analysis

$30,000 

$40,000 

$50,000 

$60,000 

$70,000 

$80,000 

$90,000 

$100,000 

$110,000 

$120,000 

Northern Trust (NTRS) 

Fair Market Value Estimates of Treasury's Warrant Position 

First Bid - $37,000,000 

Final Bid - $87,000,000

Second Bid - $75,000,000

Market Quotes Third Party Model Valuation 

$ Thousands
18 Warrant Disposition Report - Update June 30, 2010 Appendix II –

OceanFirst Financial Corp. (OCFC) 

Repurchase of OCFC Warrant

OCFC

Valuation Estimates for Warrant

($thousands) Low High Estimate Details

Market Quotes $152 $392 $281 Three market indications 

Third Party $308 $468 $388 External asset manager's valuation estimates

Model Valuation $269 $508 $381 Binomial option model adjusted for American style options

On January 21, 2010, OceanFirst Financial Corp. (OCFC) agreed to pay $430,797 for the warrant 

held by Treasury which entitled the holder of the warrant to purchase 190,427 shares of OCFC at 

an exercise price of $15.07 per share. The warrant had an expiration date January 16, 2019. 

$50 

$150 

$250 

$350 

$450 

$550 

Market Quotes Third Party Model Valuation 

OceanFirst Financial Corp. (OCFC) 

$ Thousands Fair Market Value Estimates of US Treasury's Warrant Position 

Final Bid - $430,797 
Warrant Disposition Report - Update June 30, 2010 19Appendix II –

Monarch Financial Holdings, Inc. (MNRK) 

Repurchase of MNRK Warrant

On February 1, 2010, Monarch Financial Holdings, Inc. (MNRK) agreed to pay $260,000 for the warrant 

held by Treasury which entitled the holder of the warrant to purchase 132,353 shares of MNRK at an exercise 

price of $8.33 per share. The warrant had an expiration date December 19, 2018. 

MNRK

Valuation Estimates for Warrant

($thousands) Low High

Market Quotes $132 $394 $263 Two market indications 

Third Party $201 $297 $260 External asset manager’s valuation estimates

Model Valuation $230 $321 $275 Binomial option model adjusted for American style options

Estimate Details

$0 

$50 

$100 

$150 

$200 

$250 

$300 

$350 

$400 

$450 

$ Thousands

Market Quotes Third Party Model Valuation 

Monarch Financial Holdings, Inc. (MNRK) 

Fair Market Value Estimates of US Treasury's Warrant Position 

First Bid - $209,117.74 

Second Bid - $250,000 

Final Bid - $260,000 
20 Warrant Disposition Report - Update June 30, 2010 Appendix II –

UMPQ

Valuation Estimates for Warrant

($thousands) Low High Estimate Details

Market Quotes $3,210 $3,444 $3,327 Two market indications 

Third Party $3,255 $5,088 $4,155 External asset manager's valuation estimates

Model Valuation $3,361 $5,103 $4,227 Binomial option model adjusted for American style options

Umpqua Holdings Corporation (UMPQ)

Repurchase of UMPQ Warrant

On March 22, 2010, Umpqua Holdings Corporation (UMPQ) agreed to pay $4.5 million for the warrant 

held by Treasury which entitled the holder of the warrant to purchase 1,110,898 shares of UMPQ at an 

exercise price of $14.46 per share. The warrant had an expiration date November 14, 2018. 

$1,000 

$1,500 

$2,000 

$2,500 

$3,000 

$3,500 

$4,000 

$4,500 

$5,000 

$5,500 

$6,000 

Market Quotes Third Party Model Valuation 

$ Thousands Umpqua Holdings Corporation (UMPQ) 

Fair Market Value Estimates of US Treasury's Warrant Position 

First Bid - $2,055,161.30 

Second Bid - $3,610,419 

Third Bid - $4,250,000 

Final Bid - $4,500,000 
Warrant Disposition Report - Update June 30, 2010 21Appendix II –

CYN

Valuation Estimates for Warrant

($thousands) Low High Estimate Details

Market Quotes $12,585 $15,338 $14,278 Three market indications 

Third Party $14,298 $21,800 $18,016 External asset manager's valuation estimates

Model Valuation $14,816 $21,947 $18,365 Binomial option model adjusted for American style options

City National Corporation (CYN) 

Repurchase of CYN Warrant

On April 6, 2010, City National Corporation (CYN) agreed to pay $18.5 million for the warrant 

held by Treasury which entitled the holder of the warrant to purchase 1,128,668 shares of CYN at an 

exercise price of $53.16 per share. The warrant had an expiration date November 21, 2018. 

$9,000 

$1 1,000 

$13,000 

$15,000 

$17,000 

$19,000 

$21,000 

$23,000 

$25,000 

$ Thousands

Market Quotes Third Party Model Valuation 

City National Corporation (CYN) 

Fair Market Value Estimates of US Treasury's Warrant Position

First Bid - $11,900,000 

Second Bid - $17,500,000 

Final Bid - $18,500,000 
22 Warrant Disposition Report - Update June 30, 2010 Appendix II –

SIVB

Valuation Estimates for Warrant

($thousands) Low High Estimate Details

Market Quotes $4,483 $6,289 $5,524 Three market indications 

Third Party $7,690 $9,040 $8,364 External asset manager's valuation estimates

Model Valuation $5,704 $7,897 $6,782 Binomial option model adjusted for American style options

SVB Financial Group (SIVB) 

Repurchase of SIVB Warrant

On June 8, 2010, SVB Financial Group (SIVB) agreed to pay $6.8 million for the warrant held by 

Treasury which entitled the holder of the warrant to purchase 354,058 shares of SIVB at an exercise 

price of $49.78 per share. The warrant had an expiration date December 12, 2018. 

$2,000 

$3,000 

$4,000 

$5,000 

$6,000 

$7,000 

$8,000 

$9,000 

$10,000 

Market Quotes Third Party Model Valuation 

$ Thousands SVB Financial Group (SIVB) 

Fair Market Value Estimates of US reasury's Warrant Position 

First Bid - $3,800,000 

Second Bid - $6,200,000 

Final Bid - $6,820,000 
Warrant Disposition Report - Update June 30, 2010 23Appendix II –

VLY

Valuation Estimates for Warrant

($thousands) Low High Estimate Details

Market Quotes $723 $3,714 $1,801 Three market indications 

Third Party $4,607 $7,791 $6,160 External asset manager's valuation estimates

Model Valuation $2,723 $6,564 $4,616 Binomial option model adjusted for American style options

Valley National Bancorp (VLY)

Sale of VLY Warrant

On May 18, 2010, Treasury auctioned the Valley National Bancorp (VLY) warrant for $5.6 million 

in gross proceeds. The warrant entitled the holder to purchase 2,532,542 shares of VLY at an exercise 

price of $17.77 per share and expired on November 14, 2018. 

NOTE: The above analysis was done to evaluate VLY’s bid on 1/7/10 and is not directly comparable to the auction results on 5/18/10 as market conditions changed over the intervening five months. 

$500 

$1,500 

$2,500 

$3,500 

$4,500 

$5,500 

$6,500 

$7,500 

$8,500 

First Bid - $2,291,348 

Market Quotes Third Party Model Valuation 

$ Thousands Valley National Bancorp (VLY) 

Fair Market Value Estimates of US Treasury's Warrant Position 
24 Warrant Disposition Report - Update June 30, 2010 Appendix II –

WFC

Valuation Estimates for Warrant

($millions) Low High Estimate Details

Market Quotes $496 $871 $686 Seven market indications 

Third Party $690 $1,071 $879 External asset manager's valuation estimates

Model Valuation $551 $946 $739 Binomial option model adjusted for American style options

Wells Fargo & Company (WFC)

Sale of WFC Warrant

On May 20, 2010, Treasury auctioned the Wells Fargo & Company (WFC) warrant for $849 million 

in gross proceeds. The warrant entitled the holder to purchase 110,261,688 shares of WFC at an exercise price of $34.01 per share and expired on October 28, 2018. Wells Fargo repurchased 70,165,963 

warrant shares in the auction. 

NOTE: The above analysis was done to evaluate WFC’s bid on 2/22/10 and is not directly comparable to the auction 

results on 5/20/10 as market conditions changed over the intervening three months. When considering Wells Fargo’s 

offer to repurchase its warrant, Treasury concluded the market value realized through an auction would likely be in 

the high end of the valuation range. The results of past auctions have indicated that warrants associated with large well 

know companies, such as Wells Fargo, attract high levels of investor interest and competitive bidding. 

$300 

$400 

$500 

$600 

$700 

$800 

$900 

$1,000 

$1,100 

$1,200 

Market Quotes Third Party Model Valuation 

$ millions Wells Fargo & Company (WFC) 

Fair Market Value Estimates of US Treasury's Warrant Position 

First Bid - $593,600,000 

Second Bid - $700,000,000 

Third Bid - $750,000,000 
Warrant Disposition Report - Update June 30, 2010 25Appendix II –

SBIB

Valuation Estimates for Warrant

($thousands) Low High Estimate Details

Market Quotes $2,877 $6,120 $4,467 Five market indications 

Third Party $6,828 $9,092 $7,955 External asset manager's valuation estimates

Model Valuation $5,491 $6,458 $5,988 Binomial option model adjusted for American style options

Sterling Bancshares, Inc. (SBIB)

Sale of SBIB Warrant

On June 9, 2010, Treasury auctioned the Sterling Bancshares, Inc. (SBIB) warrant for $3 million in 

gross proceeds. The warrant entitled the holder to purchase 2,615,557 shares of SBIB at an exercise 

price of $7.18 per share and expired on December 12, 2018. 

NOTE: The above analysis was done to evaluate SBIB’s bid on 6/5/09 and is not directly comparable to the 

auction results on 6/9/10 as market conditions changed over the intervening twelve months. Specifically, SBIB’s 

stock price declined 28% from $7.02 on 6/5/09 to $5.00 on 6/9/10. 

$2,000 

$3,000 

$4,000 

$5,000 

$6,000 

$7,000 

$8,000 

$9,000 

$10,000 

Market Quotes Third Party 

$ Thousands Sterling Bancshares, Inc. (SBIB) 

Fair Market Value Estimates of US Treasury's Warrant Position 

Model Valuation 

First Bid - $4,000,000 
26 Warrant Disposition Report - Update June 30, 2010 App

Appendix III – Warrant Portfolio

Institution Name Ticker

Preferred 

Repurchase 

Date

Preferred 

Investment

($thousands)

Warrant 

Shares

Strike 

Price

QEO? (i.e. 

warrants cut by 

50%)

Hartford Financial Services Group HIG 3/31/10 $3,400,000 52,093,973 $9.79 - 

Discover Financial Services1 DFS 4/21/10 $1,224,558 20,500,413 $8.96 - 

Lincoln National Corporation LNC 6/30/10 $950,000 13,049,451 $10.92 - 

Boston Private Financial Holdings Inc BPFH 6/16/10 $154,000 2,887,500 $8.00 - 

F.N.B. Corporation FNB 9/9/09 $100,000 651,042 $11.52 Yes 

Westamerica Bancorporation WABC 11/18/09 $83,726 246,640 $50.92 - 

Lakeland Financial Corp LKFN 6/9/10 $56,044 198,269 $21.20 Yes 

The Bancorp, Inc. TBBK 3/10/10 $45,220 980,202 $3.46 Yes 

First Community Bancshares, Inc. FCBC 7/8/09 $41,500 88,273 $35.26 Yes 

Bank of Marin Bancorp BMRC 3/31/09 $28,000 154,242 $27.23 - 

Shore Bancshares, Inc. SHBI 4/15/09 $25,000 172,970 $21.68 - 

Middleburg Financial Corporation MBRG 12/23/09 $22,000 104,101 $15.85 Yes 

Bar Harbor Bankshares2 BHB 2/24/10 $18,751 52,455 $26.81 Yes 

LCNB Corporation LCNB 10/21/09 $13,400 217,063 $9.26 - 

Commerce National Bank CNBF 10/7/09 $5,000 87,209 $8.60 - 

TOTAL 15 $6,167,199 6

Warrants Held in Institutions That Have Fully Redeemed CPP 

Investment as of June 30, 2010

1) Discover Financial Services repurchased its warrant for $172 million on July 7, 2010.

2) Bar Harbor Bankshares repurchased its warrant for $250,000 on July 28, 2010.