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.

Additionally, Sterling announced today that it has commenced a publicoffering of up to $50 million in shares of its common stock. The Companyintends to use the proceeds from the equity offering for general corporatepurposes.

Morgan Stanley & Co. will serve as sole book-running manager for theequity transaction, with Sandler O'Neill & Partners, L.P. serving asco-manager. The underwriters will have a 30-day option to purchase up to anadditional 15 percent of the offered amount of common stock from Sterlingat the offering price, less underwriters' discounts and commissions.

"We are extremely pleased to be the first bank in Texas, and among thefirst banks in the country, to repay the TARP investment," commented J.Downey Bridgwater, Sterling's Chairman, President, & Chief ExecutiveOfficer.

"The additional $50 million of capital that we are raising will enhanceour already strong capital position, and will better position us to takeadvantage of compelling growth opportunities," Bridgwater continued. "Weexpect these opportunities to come in the form of: hiring talented bankersand attracting new customers from institutions that have recently beenconsolidated in our markets, acquiring failed banks through regulatoryassisted transactions, purchasing branch divestitures from out of statebanks exiting Texas, as well as from selectively pursuing in-state, bankacquisitions," added Bridgwater.

Sterling has filed a registration statement (including prospectus) withthe Securities and Exchange Commission for the equity offering to whichthis communication relates. Before you invest, you should read thepreliminary prospectus supplement and accompanying base prospectus andother documents Sterling has filed with the Securities and ExchangeCommission for more complete information about Sterling and the equityoffering./************* DO NOT ALTER ANYTHING BELOW THIS LINE ! **************/var s_code=s.t();if(s_code)document.write(s_code);//-->

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