Spokane-based Sterling Savings Must Raise $725 million

A. Carnegie & Lord Weardale (LOC)

Image by The Library of Congress via Flickr

The $9.7 billion-asset Sterling’s consolidation was not a panacea but an incremental move to stay afloat. The company, which has acknowledged doubts about its viability, has lost nearly $1 billion in the past 18 months and needs to raise $725 million by Sept. 1 to comply with a regulatory order.

Source: To Score Capital, Community Banks Dig into the Playbook – US Banker.

Sterling Savings has missed previous deadlines to raise capital, was unable to buy down its trust preferred securities by offering 20 cents on the dollar, but convinced the U.S. Treasury to give up 75% of their TARP money generously loaned to Sterling. The company’s stock has been this year at plus or minus 60 cents per share; new capital raising will dilute existing shareholders.

Sterling’s August 9th SEC 10-Q filing.

Update: As of August 20th, they indicate they have closed deals to raise $730 million, including the $303 million taxpayer loan that was converted from the TARP “preferred shares” into common stock. They will issue 4.2 billion of new stock shares. It is interesting that the taxpayer contribution amounts to 41% of the deal. What percent ownership the US Treasury has of the bank is not clear.

One Response to Spokane-based Sterling Savings Must Raise $725 million

  1. Pingback: Bank of Whitman ordered to raise funds or find a merger partner within 90 days « Spokane Economic And Demographic Data

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