Two years after converting the preferred shares it owned in Sterling Financial (STSA) into common stock, the Treasury Department is now looking to sell those shares on the open market.

The Treasury announced Tuesday that it has filed a registration with the Securities and Exchange Commission to sell its 5.7 million of Sterling shares at a price of $20 each. The $9.6 billion-asset Sterling, based in Spokane, Wash., said it would receive no proceeds from the stock sale, which would net about $113.3 million.

The Treasury initially acquired the preferred shares in late 2008 through the Troubled Asset Relief Program and then converted the shares to common stock in August 2010 as part of Sterling's $730 million recapitalization. The company, which was battered by losses on real estate loans, raised roughly $342 million from private-equity investors and another $388 million in a private placement.

The Treasury's plan to sell the common stock is consistent with its overall plan to unwind its Tarp investments. Over the last several months it has sold its stakes in about 20 banks through a series of public auctions and it recently announced its intention to divest its stakes in roughly 200 banks through a series of pooled auctions.

The Treasury said it expects its sale of Sterling stock to be completed Aug. 20. The investment banks FBR Capital Markets and Sandler O'Neill & Partners are co-managing the offering.

Following the stock sale, the Treasury would still hold warrants to purchase 97,541 shares of Sterling stock.

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