* Pays $26.6 mln to redeem all preferred issued to Treasury
* Says payment to cut Q1 net income by $1 mln
Jan 12 (Reuters) - Washington Banking Co WBCO.O said it redeemed all 26,380 preferred shares issued to the U.S. Treasury under the Troubled Asset Relief Program (TARP).
The Oak Harbor, Washington-based lender paid a total of $26.6 million to the Treasury under the redemption and said the payment will reduce its net income available to common shareholders by $1 million in the first quarter of 2011.
Analysts on average were expecting the company to earn $2.98 million, or 18 cents per share, for the quarter ending March 31, according to Thomson Reuters I/B/E/S.
The company said it also issued a warrant to the Treasury to purchase 492,146 common shares at an exercise price of $8.04 per share.
As a result of the company’s completion of a Qualified Equity Offering, the amount of the warrant was reduced by half to 246,082 shares, it said.
The holding company for Whidbey Island Bank said it intends to negotiate for the repurchase of the warrant.
Washington Banking shares, which have lost about 2.5 percent of their value in the past three months, closed down 2 percent at $13.39 on Wednesday on Nasdaq. (Reporting by Abhinav Sharma in Bangalore; Editing by Gopakumar Warrier)