October 16, 2009 in City

Q and A: Sterling’s next steps

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Q. What do regulators want Sterling Financial to do?

A. The biggest requirement calls for the bank holding company to raise $300 million within 60 days.

Q. How can it do that?

A. Through private investment or by being acquired by another bank.

Q. What happens if it doesn’t raise the money?

A. Although unlikely, regulators could take over.

Q. Didn’t Sterling take federal bailout money?

A. Yes, Sterling borrowed $303 million through the Troubled Asset Relief Program.

Q. Does it have to pay that money back, too?

A. Yes.

Q. How did Sterling get into trouble?

A. Like many banks, Sterling loaned against real estate that’s now worth less than the principal.

Sources: Staff research, Sterling Financial Corp., Yahoo Finance

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  wcnupe on October 18 at 1:17 a.m.

  You guys (along with Management) are pretty optimistic. Sterling's chances of emerging from this intact are small. They have 60 days to raise $300 million? I've never heard of such a thing even when the economy was good and the money was there. Even the other troubled banks are at least getting 120 days to raise their capital levels. I believe the regulators are giving Sterling one last “Hail Mary”, before they shut it down or merge it with some other financial institution (Umpqua Bank) with a loss share deal. It would be much easier for investors to give a healthy bank $300 million to take over Sterling with a government loss guarantee than to risk that kind of money with a bank that hasn't even released its 3rd qtr. earnings.

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