SPOKANE, Wash. -- Sonoma Bank parent company Sterling Financial Corporation announced a capital infusion of $134.7 million from a private equity firm, helping Sterling meet the requirements of a federal regulatory order in October of last year.
The letter agreement is with Boston-based Thomas H. Lee Partners. In March, federal officials said that Sterling would have to raise $650 million.
According to the document filed with the Securities and Exchange Commission, “THL’s investment and the U.S. Treasury transaction … would be conditioned upon each other and on other closing conditions, including Sterling raising a total of at least $720 million (inclusive of the THL investment), which will enable it to meet all of its regulatory capital requirements.”
Under the terms of agreement, THL Managing Director Scott Jaeckel will join the Sterling board of directors.
Sterling President and Chief Executive Officer Greg Seibly said, “We are extremely pleased to be partnering with THL on our recapitalization efforts. THL has a long and successful track record of investing across the financial services landscape. Additionally, we appreciate the continued support of the Treasury as the exchange transaction is a critical component of the overall plan to improve our capital position."
First-quarter financial results were reported along with the recapitalization plan.
A net loss of $88.8 million was reported including provision for losses of $88.6 million.
Total assets are $10.6 billion, down from the $12.8 billion reported in the same quarter of last year.
Deposits for the quarter totaled $7.6 billion, down from the $8.5 billion reported last year.
Loans are $542.2 million, down from $970.5 million in 2009.
In the Northern California market, Sterling Financial had non-performing assets in residential construction of $19.4 million compared with the $2.8 million reported in the same quarter of last year.
The total for Sterling is $399.8 million.
Commercial non-performing assets totaled $31.1 million for the period ending March 31, down from the $53.2 reported in the same period last year.
Total for the company is $194.1 million.
Sterling stock is trading at $1.15. The 52-week range is $0.43 to $5.15.