Heritage Oaks Bancorp (HEOP) in Paso Robles, Calif., has agreed to repurchase the stock warrants it issued through the Troubled Asset Relief Program.

Heritage Oaks will pay the Treasury Department $1.6 million for warrants that cover 611,000 shares of the $1.1 billion-asset company's common stock for $5.15 a share. The repurchase is expected to take place on Aug. 7.

Last month, Heritage Oaks repurchased the preferred stock it issued through Tarp, plus accrued dividends, for $21.3 million. The company received $21 million through the program in March 2009.

"Our ability to repay with internal resources and still maintain strong regulatory capital ratios reflects the financial strength of our organization and marks another major milestone in our return to financial health," Simone Lagomarsino, Heritage Oaks' president and chief executive, said in a press release.

Banks have been racing to redeem their Tarp debt before the dividend rate rises to 9% from 5% on the five-year anniversary of the securities' issuance.

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