Wells Fargo repays $25 billion that it received from TARP

Posted: Thursday, December 24, 2009

SAN FRANCISCO - Wells Fargo & Co. said it repaid $25 billion the bank got from the Troubled Asset Relief Program in the midst of the financial crisis last year, freeing it from government restrictions on compensation.

Wells Fargo redeemed the $25 billion of Series D preferred stock that it had sold to the Treasury Department under TARP's Capital Purchase Program.

As part of repurchase, the bank said it also paid accrued dividends of $131.9 million, bringing total dividends paid to U.S. taxpayers to $1.441 billion since Wells accepted government support in October 2008.

Exiting TARP means Wells Fargo won't have to pay $1.25 billion in future annual preferred-stock dividends. However, Treasury continues to hold warrants to purchase approximately 110 million shares of Wells common stock at an exercise price of $34.01 a share.

Wells was in the first group of large U.S. banks to get TARP money, although it was reluctant to take it and became more uncomfortable with the program as it became clearer that tough compensation limits would accompany government support.

Wells said as recently as September that it would repay TARP without selling new stock and diluting shareholders' existing stakes further. The bank argued that it was generating enough capital internally to exit the program.

However, on Dec. 18, Wells ended up selling 489.9 million new shares of common stock at $25 each, raising $12.25 billion to help repay government support.

"With repayment of the TARP investment, we can intensify our focus on what we do best: helping consumers and businesses achieve financial success," Wells Chief Executive John Stumpf said in a statement. "We thank the U.S. government and taxpayers for their support of our financial system at a critical time for our nation."

Wells shares slipped 1 percent to $26.90 during midday action Wednesday.

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