UPDATE: Treasury to Auction Off Stakes in 11 Banks That Took TARP Aid

--Treasury plans to auction preferred stock it holds in 11 smaller banks

--Stock sales part of Troubled Asset Relief Program wind-down

--Of 11 banks, largest investment in Blue Ridge Bancshares Inc. of Missouri

(Adds the amount of the Treasury's investment in each bank, starting in the third paragraph, and provides the most recent Congressional Budget Office estimate of TARP's cost in the seventh paragraph.)

 
   By Eric Morath 
 

WASHINGTON--The U.S. Treasury announced Thursday it plans to sell stakes in 11 smaller banks as part of the department's continued wind down of the Troubled Asset Relief Program, or TARP.

The department plans to auction off all of the preferred stock it holds in the banks or bank holding companies on Monday, or shortly after.

Of the 11 institutions, the largest investment was made in Blue Ridge Bancshares Inc. of Independence, Mo., which received $12 million from the TARP program.

These are the other banks whose shares will be up for auction, and the amount of the Treasury's original investment:

--First Gothenburg Banschares, Inc., Gothenburg, Neb. ($7.57 million)

--Blackhawk Bancorp Inc., Beloit, Wis. ($10 million)

--Germantown Capital Corporation, Inc., Germantown, Tenn. ($4.97 million)

--CenterBank, Milford, Ohio. ($2.25 million)

--Oak Ridge Financial Services, Inc., Oak Ridge, N.C. ($7.7 million)

--Congaree Bancshares Inc., Cayce, S.C. ($3.29 million)

--Metro City Bank, Doraville, Ga. ($7.7 million)

--Peoples Bancshares of TN, Inc., Madisonville, Tenn. ($3.9 million)

--The Little Bank, Incorporated, Kinston, N.C. ($7.5 million)

--HomeTown Bankshares Corp., Roanoke, Va. ($10 million)

Each of the 11 banks has submitted an offer to the Treasury to buy back their own preferred shares, but other investors will be able to place bids at the auction.

The sales, if successful, will allow taxpayers to see a continued recovery from TARP bank programs. So far, the Treasury has recovered $267 billion from TARP's bank investments.

Still TARP, which also included housing, auto and insurance rescues, will likely end up costing taxpayers. Earlier this month, the Congressional Budget Office estimated the final price tag at $24 billion, down from a $32 billion spring estimate. The lower cost was largely due an increase in market value of the government's investments American International Group Inc. (AIG).

Treasury continues to hold stakes in 291 financial institutions through TARP's Capital Purchase Program.

Write to Eric Morath at [e-mail]