Sterling Financial Corp. of Spokane, a company dinged by high credit costs and a failed acquisition attempt, said Thursday that it has lowered its fourth-quarter earnings forecast.
The company, whose previous forecast was in line with analysts' expectations, now expects to report net income of 31 to 34 cents a share for the quarter and $1.84 to $1.87 for the full year. Analysts on average had forecast earnings of 53 cents a share for the quarter and $2.09 for the full year, according to a Thomson Financial poll.
Sterling forecast fourth-quarter credit costs of about $13 million. It cited weak residential construction markets and the broad credit crunch that has crimped a slew of banking companies.
In addition, Sterling said it will take a $1 million charge related to its unsuccessful bid to acquire North Valley Bancorp of Redding, Calif. North Valley called off the $196 million deal this month after federal regulators said that Sterling, which had completed a string of acquisitions over the past two years, had grown too fast and needed to add corporate staff before completing the North Valley deal.
Sterling's chairman and chief executive, Harold Gilkey, cautioned that 2008 will be a tough year.
"Along with other financial institutions across the country, Sterling is dealing with challenging market conditions, which we expect will continue into the next few quarters," he said in a press release.
The company's shares were down more than 11% at around 1 p.m.
Sterling plans to report its fourth-quarter earnings Jan. 28.