Interest payments on notes deferred
Sterling also to put off some stock dividends
Spokane-based Sterling Financial Corp. saw its stock price drop more than 20 percent Thursday after announcing it would defer paying interest on outstanding junior subordinated notes.
The holding company for Sterling Savings Bank also said it would defer regular quarterly dividends on its $303 million in preferred stock.
“These are all essential elements of realizing our long-term growth potential,” Harold Gilkey, chairman and CEO, said in a statement.
“We believe our actions in this challenging economic environment are in the best long-term interest of our shareholders and customers.”
Sterling can defer payments of interest on junior subordinated notes for up to 20 consecutive quarters without default, the company said.
It expects to save about $5.7 million per quarter by deferring payments.
Sterling in July reported a second-quarter loss of $29.5 million as loan losses, expenses related to managing nonperforming real estate and increased Federal Deposit Insurance Corp. premiums more than offset gains from fees and income from mortgage operations.