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Sterling Financial Acquiring Source Capital

SPOKANE, WA-The locally based savings and loan holding company has an agreement to buy the locally based commercial real estate lender for $7.50 per share, or $9.75 million. Both companies' boards have approved the merger and shareholders are expected to follow suit.

By Brian K. Miller | Updated on June 28, 2001

SPOKANE, WA-Local commercial real estate lender Source Capital has agreed to be acquired by locally based Sterling Financial Corp. in an stock transaction valued at about $9.75 million, or about $7.50 for each of Source Capital’s 1.3 million outstanding shares.

The purchase agreement states that the $7.50 per share figure is an initial price that will float within a range based upon the trading prices of Sterling’s common stock prior to the completion of the merger. On June 25, two days before the announcement, Source’s shares were trading at $4.60 apiece and Sterling’s stock price stood at $15.80. On Thursday, the day after the announcement, Source’s share price closed up $2.40 at an even $7 and Sterling’s closed up 30 cents at $15.30.

Source Capital President and Chief Executive Officer D. Michael Jones says his company was “unable to execute (its) business plan … due to market conditions and the lack of reasonable financing.” Sterling Chairman and Chief Executive Officer Harold B. Gilkey says Source Capital will beef up the company’s loan-servicing and lending group and allow the company to increase lending opportunities.

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