Valuing the First Negotiated Repurchase of the TARP Warrants

Abstract

On May 11, 2009, Old National Bancorp was the first publicly traded bank to buy back its Capital Purchase Program warrants.  It paid $1.2 million, which is below the low-end of this note’s estimates of the fair market value of the warrants.  This note estimates the warrants are worth between $1.5 and $6.9 million.  This low negotiated price from the perspective of taxpayers indicates that the U.S. Treasury would probably get a better price marketing the CPP warrants to third party investors.