After spending the second half of last year exchanging its long-term expansion plans for extra capital, Boston Private Financial Holdings Inc. announced it received approval from the Treasury Department to begin repaying the $154 million in outstanding Series C preferred stock that was issued to the Treasury as part of its Capital Purchase Program.

The redemption of $50 million of preferred stock was completed Wednesday. The company said that this redemption will result in annual savings of $2.5 million, or $0.04 per share, due to the elimination of the associated preferred dividends. However, a one-time, non-cash, after-tax reduction in earnings per share of $0.04 will be incurred in the company’s first quarter earnings.

In September, Boston Private sold Gibraltar Private Bank and Trust Co. in Coral Gables, Fla., to private investors for $93 million in cash, and sold Rinet Co. LLC an advisory firm in Boston for the ultra-wealthy, to its management team for $6 million. In October, Boston Private said it would complete the sale of Westfield Capital Management Co. to the company's management team by the end of this quarter, rather than in 2014. That sale is expected to generate $59 million.

As recently as two years ago Boston Private's strategy was to establish hubs nationally by buying regional wealth managers and private banks. Analysts said it averaged a deal every 18 months and had its eye on expanding into 12 to 15 other regions.

“We’ve taken deliberate actions during the past several quarters to improve our capital position and fortify our balance sheet to the point where we are now able to pay off the Tarp funds altogether,” said Timothy L. Vaill, Boston Private's chairman and chief executive. “However, in an abundance of caution, we’ve elected to repay a portion at this time rather than the entire amount.”

In recent months, regulators have been hesitant to allow banks to fully repay Tarp. As of Jan. 4, 65 companies had returned $162 billion of Tarp funds, according to data provided by SNL Financial. Most redeemed all of their outstanding shares, but an increasing number are making partial payments.

Besides Magna Bank , the nearly $22 billion-asset City National Corp. in Los Angeles repaid half of the $400 million it was issued and the $167 million-asset FPB Financial Corp. in Hammond, La., repaid $1 million, or almost a third of the government's investment.

A spokesman said that Boston Private specifically requested to repay $50 million.

Vaill said in an interview in October that the company could repay “tomorrow” the full $154 million, but the extra capital is a good "insurance policy" that it wants to maintain for as long as economic conditions remain questionable.

Vaill said in a press release Wednesday that the company “will continue to assess the pace of the nation’s economic recovery going forward and will seek approvals to repay additional amounts in 2010 when we feel the timing is appropriate.”

“We continue to consider the CPP capital as a high-quality, relatively low-cost form of financial strength, and believe that repaying these funds in stages is prudent and in the best interests of our shareholders,” he said. “We are pleased to have been able to use this capital to increase our lending and thus contribute to the improving economy as the program was originally intended.”