Sterling Financial

Wall Street credit woes have not yet filtered down to Riverside Avenue in Spokane or Sherman Avenue in Coeur d’Alene, Inland Northwest financial leaders said last week. Loans for restaurants, income properties or construction may be problematic, but money is readily available for other business purposes. Demand remains solid.

Sterling Financial Corp. on Tuesday reported second-quarter earnings off substantially from 2007 but an improvement on first-quarter numbers. In a report issued after markets closed, the Spokane-based bank said it earned $11.7 million, or 23 cents per share, for the three months ended June 30, compared with $27 million, or 52 cents per share, for the 2007 period. During the 2008 first quarter, earnings had slumped to $2.9 million, just 6 cents per share.

Attorneys from the U.S. Department of Justice have notified the U.S. Court of Federal Appeals they will appeal a Feb. 19 decision that awarded Sterling Financial Corp. barely $1 million of a claim for more than $58 million. The filing Friday in Washington, D.C., did not specify the grounds for challenging the ruling by Judge Thomas Wheeler. But the appeal will also address 2002 and 2003 rulings that set up a two-week damages hearing in Spokane last July.

Sterling Financial Corp. announced Thursday that its first-quarter earnings will fall far short of earlier projections largely because it set aside $35 million to $40 million to cover potential loan losses. Instead of the 38 cents to 42 cents a share bank officials projected early this year, and the 36 cents a share anticipated by analysts, the Spokane bank will likely show returns of just 4 cents to 6 cents when it releases first-quarter numbers April 21, according to a statement released after markets closed.

Sterling Financial Corp. this week was awarded barely more than $1 million in damages from the federal government, a small fraction of the amount sought by the Spokane bank and less than its costs of litigating the matter over almost 18 years. In his Feb. 19 ruling, U.S. Court of Claims Judge Thomas Wheeler called Sterling a "superbly managed institution," adding that the conduct of its federal regulators deserves reprimand, but said bank witnesses had not established a foundation for Sterling claims for more than $58 million in lost profits and other damages.

Sterling Financial Corp. Monday reported that a $13 million provision for loan losses dragged results for the year and fourth-quarter 2007 below the levels for 2006 on a per-share basis. Net income increased 26 percent for the year, to a record $93.3 million, to $1.86 per share, compared with 2006. Core earnings, which exclude costs associated with merger activity, and other non-recurring costs, increased to $96.5 million, or $1.92 per share, compared with $74.4 million, or 2.02 per share, in 2006.

Sterling Financial Corp. lost one to the regulators last week. After rolling up more than 20 other financial institutions in a 22-year-long growth spurt, officials at the Spokane bank announced Monday that a merger agreement with North Valley Bancorporation had been terminated. At the Nov. 30 deadline for closing the transaction, Redding, Calif.-based North Valley invoked its right to call the marriage off.

Sterling Financial Corp.'s plans to buy North Valley Bancorp of Redding, Calif., have fallen through, the Spokane-based company announced in a news release Monday. Sterling received notice that North Valley had decided to terminate the agreement for the merger, the release said. Either party had the right to do so if the proposed merger had not been completed by Friday.