Sterling’s profits hurt by problem loans
Problems with residential construction loans continue to sap earnings at Sterling Financial Corp.
The Spokane-based bank Tuesday reported a third-quarter profit of $5 million, or 10 cents per share, compared with $26.5 million, or 51 cents per share, for the third quarter of 2007.
For the first nine months of 2008, the bank earned $19.5 million, or 38 cents per share, compared with $76.4 million, or $1.54 per share, in 2007.
The bank’s construction loan portfolio shrank by $145 million, and originations plunged 83 percent from the 2007 quarter, to $97.2 million. Overall loan originations fell to $759.5 million, down from $1.1 billion in the second quarter and $1.4 billion for the second quarter of 2007.
Chairman Harold Gilkey attributed some of the loan losses to disruptions in the Northwest economy caused by the Boeing Co. strike and dislocations in the financial services industry, but added that the region remains strong compared with the rest of the United States.
Sterling remains well-capitalized, he said.
Deposits increased 4 percent to a record $8.1 billion, and tangible book value rose 3 percent to $13.45 per share.
Sterling’s shares closed Tuesday at $10.44, down 10 percent.