Sterling Financial Corp. in Spokane said Monday it has reached an agreement in which it will receive a combined $278 million from Warburg Pincus LLC and Thomas H. Lee Partners LP as it continues with a recapitalization effort.

Under the agreement, Warburg Pincus will pay $139 million for stock and warrants representing about 20.5% of the $10.5 billion-asset Sterling. Thomas H. Lee, a Boston private-equity firm, had agreed last month to invest about $135 million for as much as a 25% stake assuming warrants were converted, but will revise its agreement to match the terms under the Warburg deal.

Sterling, which owns Sterling Savings Bank and Golf Savings Bank, said Warburg will be able to appoint a director to its board.

The Warburg deal requires regulatory approvals. The agreements also require the closing of the Treasury Department's exchange of $303 million in holdings of Sterling's preferred stock for an equivalent amount of mandatory convertible preferred stock.

The Washington bank was hit hard by the real estate downturn and has had losses from commercial and residential mortgage loans. Sterling said in April that its first-quarter loss narrowed significantly from a year earlier as it started "to see results from its efforts to address credit-quality issues."

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