Great Southern Bancorp has sold 58,000 shares of perpetual preferred stock to the U.S. Treasury for $58 million, the bank said today.
The sale is part of the Treasury's Capital Purchase Program, which altogether is buying $250 billion in public and private financial institution stock as a way to increase lending and confidence in the industry.
The Treasury's purchase of Great Southern stock represents about 3 percent of the Springfield-based bank's risk-weighted assets as of Sept. 30, according to a news release. The bank also issued the Treasury a warrant that allows it to purchase 909,091 shares of common stock at $9.57 per share, or $8.7 million.
The Treasury will receive a 5 percent dividend, or $2.9 million, on the preferred stock annually for five years and a 9 percent dividend per year after that. The dividend, plus profits made on any common stock it may choose to purchase, means the Treasury likely will make money on its investment, according to Great Southern Chief Financial Officer Rex Copeland.
"The Treasury has some things built into this that they should actually make money for the taxpayer," Copeland said. "It's not like they're giving this money out the door and never getting it back."
Copeland also reiterated that Great Southern is well-capitalized even without the capital infusion. Participating in the Treasury program enhances the bank's lending abilities and bolsters its position during economic uncertainty, the release said.
As of Sept. 30, all of Great Southern's regulatory capital ratios were above benchmarks for well-capitalized financial institutions. With the additional $58 million in capital, the bank's tier one risk-based capital ratio based on Sept. 30 figures increases to 13.26 percent from 10.36 percent; that's compared to a well-capitalized threshold of 6 percent. The total risk-based capital ratio, meanwhile, increases to 14.5 percent from 11.61 percent, compared to a well-capitalized threshold of 10 percent, according to the release.
Great Southern shares (Nasdaq: GSBC) closed Friday at $8.15 and were trading up at $9.14 as of 10:45 this morning. The 52-week range is $7.03 to $24.54.[[In-content Ad]]
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