HOUSTON — Sterling Bancshares, Inc. announced today that it has fully redeemed all of the preferred stock it sold to the U.S. Department of the Treasury in December of 2008. The preferred stock was issued to the Treasury Department pursuant to the Capital Purchase Program established under the Troubled Asset Relief Program. The Company paid $126.6 million to theTreasury to redeem the preferred stock, which includes the original investment amount of $125.2 million plus accrued and unpaid dividends of $1.4 million. Sterling was approved to pay the funds back without any conditions from regulators.
Related to this redemption, the Company will record a charge ofapproximately $6.9 million in the second quarter of 2009 in the form of anaccelerated dividend to account for the difference between the originalpurchase price for the preferred stock and its redemption price. Inaddition to this $6.9 million charge, the Company will also report apreviously scheduled cash dividend on the preferred stock of approximately$600 thousand, for a total effective dividend of $7.5 million during thesecond quarter of 2009. The Company also intends to negotiate therepurchase of the warrants issued to the Treasury as part of the CPP.