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30 TREASURY NETS $35 MILLION IN SECURITIES AUCTION AS PART OF TARP WIND DOWN As part of a continuing effort to wind down the government's Troubled Asset Relief Program (TARP) to bail out banks devastated by the financial crisis of six years ago, the U.S. Department of Treasury recently auctioned off preferred stocks for three institutions, gaining $35.6 million in aggregate gross proceeds. e auction was part of Treasury's ef- fort to recover remaining investments in the Capital Purchase Program (CPP). Treasury had outstanding investments in 39 CPP institutions heading into last year's auction. As part of the auction, Treasury sold shares for the following institutions: » First United Corporation of Oakland, Mary- land–30,000 shares of fixed rate cumulative perpetual preferred stock (series A) at $1,002.01 per share for a total of slightly more than $30 million in aggregate gross proceeds; » Lone Star Bank of Houston, Texas–3,072 shares of fixed rate non-cumulative perpetual preferred stock (series A) at $621.25 per share and 154 shares of fixed rate non-cumulative perpetual preferred stock (series B) at $600.01 per share for total aggregate gross proceeds of slightly more than $2 million; and » Porter Bancorp of Louisville, Ken- tucky–35,000 shares of fixed rate cumulative perpetual preferred stock (series A) at $100.00 per share for aggregate gross proceeds of $3.5 million. Shares of Liberty Shares, Inc., located in Hinesville, Georgia, were up for sale, but they did not sell because none of the bids were above the minimum price set for the securities ac- cording to the auction procedures, according to Treasury. e aggregate gross proceeds for the three institutions total about $35.6 million. Closings for the auctions are expected to occur on or about December 4. Signed into law by the Bush administra- tion, TARP was created in 2008 at the height of the nation's financial crisis in order to implement programs to stabilize the financial system during the financial crisis of 2008. Treasury initially invested $245 billion in TARP's bank programs, and to date Treasury has recovered $275 billion through repayments, dividends, interest, and other income. e $30 billion overage has resulted in a significant profit for taxpayers. e Small Business Lend- ing Fund (SLBF) has resulted in the repay- ment of about $2.2 billion in TARP funds by CPP institutions that refinanced their repay- ments under the SLBF. Congress created the SBLF as a way for CPP institutions to repay TARP funds. Every dollar raised from this point forward, including the $35.6 million raised by the recent auction, is profit for taxpayers. Treasury originally outlined a strategy for winding down its remaining TARP bank investments in May 2012 "in a way that protects taxpayer interests and preserves the strength of our nation's community banks." e strategy to recover Treasury's investments includes using a combination of repayments, restructurings, and sales. SEC GRANTS BANK OF AMERICA PARTIAL RELIEF FROM ADDITIONAL SANCTIONS IN SETTLEMENT e U.S. Securities and Exchange Com- mission (SEC) agreed to partially waive the additional sanctions that could have been imposed on Bank of America following a record settlement in August of last year over the sale of residential mortgage-backed securities, accord- ing to sources familiar with the case in a report from Bloomberg News. Bank of America reached a settlement in August 2014 with the U.S. Department of Justice for the amount of $16.65 billion. e bank had requested a waiver for the additional sanctions, arguing that the penalties would adversely affect the bank's asset management business and ability to raise capital. e five SEC commissioners had reached a standstill over whether or not to impose the additional sanctions on Bank of America, with the two Republican commissions in favor of granting relief and the two Democrat- ic commissioners against it, while the committee chair sat out of the discussions due to a conflict. e disagreement among the SEC commis- sioners had stalled the settlement from moving forward while a deadline approached for a judge to sign off on the settlement. Both parties had asked for the deadline to be extended, according to the sources. Banks that enter into settlements with the government normally seek waivers from three main sanctions. e two major ones involve a ban on managing mutual funds and a ban on banks raising money for private companies. e third and less consequential penalty prevents banks from issuing its own shares or bonds un- less the SEC gives prior approval. e sources familiar with the case said the SEC granted Bank of America a full waiver on what would have been the harshest penalty, which would have banned the bank from con- tinuing to manage mutual funds. On the other two issues, the commission voted not to waive the penalty banning the bank from raising capi- tal for private companies without the approval of financial regulators, and the commission granted a partial waiver regarding the selling of private shares to help such bank clients as hedge funds and start-ups raise capital, according to the sources. Bank of America will be allowed to continue selling private shares for clients for 30 months, during which time they will be required to hire an independent consultant to monitor their compliance in this area, according to the sources. e bank will need to reapply with the SEC in order to receive a full waiver on this sanction. Percentage of all mortgages in serious delinquency (90 days or more overdue) in October 2014, a total of slightly more than 1.6 million mortgages. Source: CoreLogic STAT INSIGHT 4.2%

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