The shares of Sterling Financial Corp. have risen to all-time highs in the last several days after the Spokane-based bank holding company reported strong third-quarter earnings.
Sterlings stock jumped to a closing price of $38.84 a share last Thursday, Nov. 4, after the company reported Oct. 26 third-quarter earnings of $15.3 million, or 66 cents a share, up from $8.6 million, or 52 cents a share, in the year-earlier quarter.
Earnings had been stuck in the mid-50 cents for several quarters, says Jim Bradshaw, a Lake Oswego, Ore.-based vice president and senior research analyst for D.A. Davidson & Co., the Great Falls, Mont.-based regional brokerage firm. We had been expecting earnings in the mid-60 cents in the third quarter, and they came in at that.
Bradshaw attributes Sterlings share-price rise to cost savings investors had seen after Sterling completed its merger with Klamath First Federal Savings & Loan Association.
Also, Bradshaw says, Sterling, which owns Sterling Savings Bank, reported solid internal growth in loans and deposits through the third quarter. Sterling completed its merger with Klamath, which had 57 branches in Oregon and two branches in Washington, on Jan. 2.
D.A. Davidson now projects that Sterlings earnings in the fourth quarter will come in at 67 cents a share, up from 57 cents a share in the year-earlier quarter, Bradshaw says.
Harold Gilkey, Sterling Financials Chairman and CEO, says that as of the end of last week, Sterlings stock had risen by more than $15 a share since the Spokane company announced last July that it would merge with Klamath First Federal.
Yet, Gilkey says, Its not just an acquisition story. Through September, our growth in assets from a year ago was $2.6 billion.
Sterling added $1.5 billion in assets in its merger with Klamath First Federal, and that really means weve had internal growth of $1.1 billion in assets, Gilkey says. Our growth in loans and deposits were significant. We were particularly pleased that our new branches in Oregon contributed to that.
In a report on Sterlings quarterly earnings, D.A. Davidson says the bank holding company suffered less than half of the runoff, or expected loss of assets, in its integration of Klamath First Federals branches into its own system after the merger was complete.
Loans jumped a robust $270 million in the quarter, an annualized increase of 29 percent, the brokerage firm says. Residential lending, commercial real estate, construction, and business banking were the source of the growth in this quarter, with residential real estate the strongest.
Meanwhile, the report says, Sterlings deposits rose more rapidly than the industrys growth rate, and asset quality is solid.
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