Sterling Financial Corporation Long Term Shareholder Investigation

An investor in Sterling Financial Corporation (Public, NASDAQ:STSA) filed a lawsuit on behalf of purchasers of Sterling Financial Corporation (NASDAQ:STSA) securities during the period between July 23, 2008 and January 13, 2009, over alleged violations of Federal Securities Laws by Sterling Financial Corp. and others. Meanwhile an investigation on behalf of current long term shareholders in Sterling Financial Corporation (NASDAQ:STSA) concerning possible mismanagement was announced.

An investor in Sterling Financial Corporation has filed a lawsuit in the United States District Court for the Eastern District of Washington alleging that Sterling and certain of its officers and directors violated the Securities Exchange Act of 1934 by issuing between July 23, 2008 and January 13, 2009 materially false and misleading statements regarding the its business and financial results and by engaging between July 23, 2008 and January 13, 2009 in improper behavior which harmed Sterling Financial’s investors by failing to disclose the extent of seriously delinquent commercial real estate loans and construction and land loans.

Sterling Financial Corporation also failed to adequately and timely record losses for its impaired loans, causing its financial results and its Tier 1 capital ratio to be materially false, so the complaint, and as a result of defendants’ false statements, Sterling’s stock traded at artificially inflated prices between July 23, 2008 and January 13, 2009, reaching a high of $14.72 per share on October 1, 2008.

Then, on January 13, 2009, Sterling Financial issued guidance for the fourth quarter and year end 2008, announcing it anticipated reporting a loss for both the fourth quarter and the year ended December 31, 2008. According to Sterling Financial, the loss would be due in substantial part to an anticipated increase in its allowance for loan and lease loss reserves of approximately $230 million and an expected goodwill impairment charge of between $275 million to $325 million. Sterling Financial further announced that it would be suspending its quarterly cash dividend. On this news, so the complaint, Sterling’s stock (STSA) declined $3.05 per share to close at $3.40 per share on January 14, 2009, a one-day decline of 47% on high volume. After announcing losses for both the fourth quarter 2008 and the year ended December 31, 2008, on October 15, 2009, Sterling disclosed that it had received an order from the Federal Deposit Insurance Corporation and Washington Department of Financial Institutions requiring the Company to achieve and maintain a Tier I leverage capital ratio of not less than 10% by December 15, 2009. On October 22, 2009, Sterling announced a third quarter loss of $463.7 million, due in part to an increase in its allowance for loan and lease losses, as well as to additional charges for impaired goodwill and a valuation allowance charge against the Company's deferred tax assets.

Sterling Financial Corporation, located in Spokane, WA, is a bank holding company. Its principal operating subsidiaries are Sterling Savings Bank and Golf Savings Bank. During the year ended December 31, 2008, the principal operating subsidiary of Sterling Savings Bank was INTERVEST-Mortgage Investment Company. Sterling Financial Corp had in 2007 Total Assets of $12.14977billion with a Net Income of $93.29million and in 2008 Total Assets of $12.79072billion with a Net Loss of $335.53million. Shares of Sterling Financial (STSA) traded recently at $0.620 per share, down from its 52weekHigh of $9.18 per share, $14.32 per share in September 2008, $19.41 per share in February 2008, and over $34 per share in 2007.