September 20, 2012

Re: Capital Purchase Program – Additional Information Regarding Opt-Out Auctions

As you know, the United States Department of the Treasury (Treasury) has been winding down 

the Capital Purchase Program (CPP) investments, in part through a series of auctions of its 

investments which began in March 2012 and will continue into next year. In June, we sent you a 

letter informing you that Treasury was considering including its investment in your institution as 

part of a series of pooled auctions of CPP investments. At that time, we also stated that an

institution would have the opportunity – assuming it has regulatory approval – to opt-out of the 

pooled auction if it made a qualifying bid to repurchase all its remaining outstanding CPP 

securities. Additionally, the institution could also designate a single outside investor (or single 

group of investors) to make a bid to purchase all their outstanding CPP securities. Any such bid 

would have to be above a minimum price set by Treasury.

Additionally, Treasury informed you that the decision to initially remove an investment from a 

pooled auction does not mean that the institution, or its designated bidder, is entitled to purchase 

the investment at the submitted bid price and that Treasury would determine whether to conduct 

an individual auction or other process to ensure good value for taxpayers. Furthermore, Treasury 

reserved the right to place an institution back into a pooled auction process if, at the time of any

individual auction or other purchase, the final and best submitted bid does not meet Treasury’s 

minimum.

We also noted as part of that letter that we would provide additional information from time to 

time regarding the entire sale process, including the sale process for those institutions that 

successfully opt-out of the pooled auctions. 

This letter is to inform you that Treasury anticipates that the first of these “opt-out” auctions, 

covering a set of qualifying institutions, will occur as early as October 2012. We expect to 

conduct several of these “opt-out” auctions, each time covering a few institutions, over the next 

several months. 

Similar to our other recent CPP preferred auctions, we expect that these “opt-out” auctions will 

be structured as a sealed bid, modified Dutch auction. Several investments would be auctioned 

on a given day, but each investment is bid on and sold separately. The rules will be similar to 

our prior auctions except for two differences: (i) auctions will be conducted over the course of

two days; and (ii) if the clearing price in the auction is equal to the minimum price, the 

institution and/or its designated bidder will be allocated the entire position. Institutions selected 

to be auctioned will be contacted by our strategic advisor, Houlihan Lokey, with specific details 

regarding next steps, timing and the preparation process for these auctions.
Please note, Treasury may update and, in its sole discretion, modify these procedures from time 

to time. Furthermore, Treasury retains the right, at all times, to decide whether, when and at what 

price it will sell the CPP investments. In addition, Treasury reminds potential participants in any 

sale of CPP investments, that the purchasers are responsible for compliance with all applicable 

laws, including the Bank Holding Company Act of 1956, as amended, and the Investment 

Company Act of 1940, as amended.

As we have noted before, we believe that the procedures we have outlined to wind down the 

Capital Purchase Program will help support our nation’s community banks and protect taxpayer 

interests.

We’ll continue to communicate with you regularly about the pooled auction process and provide 

additional information on the procedures moving forward. If you have any questions, please feel 

free to contact us at cpp@treasury.gov.

Best regards,

Michael Harris

Director of the Capital Purchase Program