The U.S. Treasury on Aug. 17 completed a public offering of the $381.5 million in M&T TARP preferred shares held by the government. The preferred shares have a 5.00% coupon, which is scheduled to rise to 9.00% in February 2014 for the remaining $230 of the bank's original TARP bailout, with the coupon on the $151.5 million in assistance originally provided to Provident Bancshares rising to 9.00% in November 2013.

M&T on Aug. 20 made proposed an innovative amendment under which the dividend rate on all of the former TARP preferred shares will rise to 6.375% on November 15, 2013. The amendment needs to be approved by common shareholders, who will be sure to do so, since it will reduce the possibility of a dilutive common equity raise. The amendment also needs to be approved by the new preferred shareholders, who are likely to give the plan the nod, because 6.375% is a decent rate in the current environment, especially when the issuer is a strong, consistent earner like M&T.

If M&T's preferred shareholders approve the lower rate increase, M&T won't redeem the preferred share until November 15, 2008. Otherwise, the company will probably redeem the shares in 2013, leaving the investors to pursue dividend income elsewhere. The big icing on the cake for M&T is that the former TARP preferred shares qualify as regulatory Tier 1 capital.

In other financial industry news, the Federal Reserve, Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency announced that they were "considering changes to the implementation timeline for the annual company-run stress test requirements required by the Dodd-Frank Wall Street Reform and Consumer Protection Act," to "delay implementation until September 2013 for bank holding companies, state member banks, and savings and loan holding companies with between $10 billion and $50 billion in total consolidated assets."

Banks with over $50 billion in assets are already required to participate in regulator-run annual stress tests.

The broad indexes ended mixed on Monday, as investors looked ahead to the economic summit in Jackson Hole, Wyo., this weekend, which will feature presentations by Federal Reserve Chairman Ben Bernanke and European Central Bank president Mario Draghi.

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