Sterling Financial (STSA) in Spokane, Wash., fell short of fourth-quarter earnings expectations because of a hefty charge for early repayment of debt.
The $9.2 billion-asset company reported that its earnings rose 41%, to $20.9 million, compared with the fourth quarter of 2011. But per-share earnings of 33 cents were 20 cents below the expectations of analysts polled by Bloomberg.
Sterling absorbed a $32.7 million penalty for prepaying $250 million of debt. The company sought "to reduce costly borrowings in order to improve our profitability in future periods," Chief Executive Greg Seibly said Thursday.
Sterling's net interest income rose 6%, to $76.1 million, as a 40% decline in deposit-interest expense more than offset a 3% decline in interest income. Its net interest margin increased by 23 basis points, to 3.49%. It made no provision for loan losses, after setting aside $4 million in the fourth quarter of 2011. Chargeoffs declined 60%, to $7.6 million.
Noninterest income declined 5%, to $31.2 million, as the $32.7 million prepayment penalty wiped out a combined $22 million increase in mortgage banking income and gains on sales of securities.
The bank also recorded an $8.4 million gain on the sale of its Montana branches, and a $2 million charge from the tentative settlement of a class action.