UPDATE: Raft Of Financial Firms Latest To Unveil Stock Sales

(Updates with Capital One pricing, details on TARP repayment, share prices)

 
   DOW JONES NEWSWIRES 
 

A handful of financial companies announced plans to collectively sell more than $7 billion in stock as they look to raise cash during a period of investor interest, with some of the companies using the proceeds to pay back funds from the government's Troubled Asset Relief program.

U.S. Bancorp (USB), Capital One Financial Corp. (COF), KeyCorp (KEY), Principal Financial Group Inc. (PFG) and BB&T Corp. (BBT) announced offerings Monday morning while U.S. Bancorp said it also may offer medium-term notes along with stock.

Many banks have said they will pay back TARP funding as quickly as possible in order to avoid strict regulations on their activity - particularly related to executive pay - imposed by the government.

Banks that underwent the government's recent stress tests that want to pay back TARP also need to prove that they can raise money in the investment-grade corporate bond market without leaning on the Federal Deposit Insurance Corp. for backing. Since FDIC started the program to insure bank debt last year, the majority of issuance from banks has been guaranteed by the agency. Such a guarantee results in much cheaper finance costs.

Capital One's shares were recently down 11% at $27.88 in trading just after the opening bell. U.S. Bancorp was off 6.2% to $19.26. BB&T's was 5% lower at $25, Principal was down 8.7% to $21.62 and KeyCorp was 4.7% lower at $6.64. The stocks are down after the surge most of the shares have seen the past several months, including last week as the results of the government's stress tests were unveiled.

Capital One priced its offering of 56 million shares at $27.75 each, an 11% discount to Friday's closing price. The company has 392.7 million shares outstanding.

Meanwhile, U.S. Bancorp plans to sell $2.5 billion. BB&T, in addition to its $1.5 billion offering, announced a widely expected dividend cut.

The three banks weren't among the banks the U.S. government said last week needed to raise additional capital, but many banks that got a clean bill of health from the government have been taking advantage of increasing investor demand anyway. The three companies plan to use the funds, if approved, to buy back preferred stock and warrants sold to the Treasury Department as part of TARP.

KeyCorp, though, was told it needed to raise $1.8 billion. The Ohio-based bank announced plans to sell at least $750 million in stock. The company's market value is about $3.3 billion.

Meanwhile, life insurer and asset manager Principal announced it will sell 42.3 million shares as it looked to take advantage of a two-month surge in its share price. Not including the 15% over-allotment of the offer's proposed size, Principal would boost shares outstanding by 16%.

The life-insurance sector has been roiled by troubles in investment portfolios and annuities, both heavily exposed to the downbeat financial sector. But Principal should get some help from TARP, because the Treasury decided earlier this year to include life insurers among the financial companies eligible for such aid.

The amount of stock actually sold for all the companies may be more than they expected, as many other companies have been boosting the size of their offerings recently due to strong demand for shares.

-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; [e-mail]