The parent of Five Star Bank said Wednesday that it has completed the sale of $37.5 million in preferred shares and warrants to buy common stock to the U.S. Treasury Department as part of the government's Capital Purchase Program.

Warsaw-based Financial Institutions sold 7,503 shares of preferred stock and a warrant for Treasury to buy up to 378,175 shares of common stock at an exercise price of $14.88 per share. The transaction was completed on Tuesday.

"We are pleased to announce the closing of this transaction, which has occurred only three weeks from our preliminary approval," Peter G. Humphrey, president and CEO, said in a press release. "This additional capital will allow us to continue our lending to small- and medium-sized businesses and consumers, which will assist our local market business owners and consumers as our economy recovers."

With the purchase, Financial Institutions becomes the latest local bank to receive money from the government as part of the $700 billion Troubled Assets Relief Program approved by Congress earlier in the fall. Bank of America Corp., Citigroup and J.P. Morgan Chase & Co. each received $25 billion, while KeyCorp took in $2.5 billion and First Niagara Financial Group got $186 million. M&T Bank Corp. has also been approved for $600 million.

HSBC Bank USA and Citizens Financial Group, as foreign-owned institutions, are not eligible. Evans Bancorp, Community Bank System, Cattaraugus County Bank and Tompkins Financial Corp. declined to take money, while Northwest Bancorp and Lake Shore Bancorp are on hold until the federal government sets rules governing banks with their unique corporate structure.

e-mail: jepstein@buffnews.com

Originally published by NEWS BUSINESS REPORTER.

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