Banking on Change

Sterling Bank had another impressive adventure today. For a while it has managed to keep its stock at a substantially higher price than Citigroup (at least percentage wise). Citigroup is generally thought to be insolvent except for the fact that the U.S. Treasury thinks it’s too big to fail. But yesterday, Sterling announced plans to expand its ‘shelf registration’ to $500 million. That means it is asking the SEC to permit it to sell, as it needs to, up to a half billion dollars worth of stock, bonds, or whatever else it might have around to sell. At $2 and change per share, that would be a lot of stock. This would seem to suggest that its managers are thinking they’re going to be needing to raise more capital (sort of failing their own stress test?).

The market responded today by knocking off the Sterling Financial share price by 22%, putting it back down under Citigroup by about 16 cents (at $2.49: not as bad as it was in December of 2008, of course). I keep reading that community banks everywhere are about to be hit by commercial real estate loans gone bad. The FDIC keeps putting banks into receivership (but very few, so far, in the Northwest generally or Washington specifically.) Almost 60 banks closed so far this year, but that is nothing compared to what happened in the 1930’s depression. So, maybe it’s just another up and down for Sterling, and they’re just waiting, now, for the up part.

On the other hand, up here on the Sunshine Coast, we are now into another week of Festivals, and the sun keeps shining. Partying on!