The $9.2 billion-asset company said late Tuesday that it earned $11.3 million for the quarter, compared to a profit of $7.6 million in the second quarter and a loss of $48 million in last year's third quarter. Its earnings per share of 18 cents rose six cents from the prior quarter and beat consensus analysts' estimates by seven cents.
Sterling had lost hundreds of millions of dollars in recent years on problem real estate loans, but turned itself around after receiving a $730 million capital infusion in August 2010 from institutional, private equity and other investors.
In a news release, Sterling President and Chief Executive Officer Greg Seibly attributed the third-quarter results to improved asset quality, lower funding costs and strong growth in its multi-family loan portfolio.
With net chargeoffs declining 61% year over year, to $29.9 million, Sterling was able to lower its provision for loan losses by 64%, to $10 million.
Total deposits fell 6% since Sept. 30, 2010 as the company let high-priced certificates of deposit run off, but the upshot was that its cost of deposit fell 41 basis points, to 0.86%.
On the loan side, the company originated nearly $894 million of loans during the third quarter, including $203 million in the multi-family portfolio, a key area of growth for the company. In last year's third quarter Sterling originated no multi-family loans.
Sterling Financial is the parent of Sterling Savings Bank, which operates 178 branches in Washington, Idaho, Oregon, Montana and California.
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