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Sterling Financial, single of the largest Washington-headquartered banks mum standing, aforesaid today that fallout from the deteriorating economy will wipe without all its 2008 profits. Spokane-based Sterling too will stop paying money dividends until further notice.

The company, which owns Sterling Savings Bank and Mountlake Terrace-based Golf Savings Bank, said it will set out of the straight course $230 million to cover baleful loans in its fourth-quarter profit-and-loss report, due Jan. 27. That’s more than six times the amount Sterling set aside in the third quarter.

The bank, which had $12.6 billion in assets as of Sept. 30, blamed “worsening economic conditions, the continued stress on absolute estate values, increasing levels of the one and the other classified and non-performing assets and higher net charge-offs” notwithstanding the larger loan-loss provision.

Combined with a non-cash charge of $275 million to $325 million related to the impairment of goodwill, the provision will force Sterling into the red for both the quarter and the full year. Through the first nine months of 2008, Sterling had managed to eke out a $19.5 the public profit; but also that was down steeply from the same period in 2007.

Sterling also said it meals had decided to suspend the quarterly dividend — in the greatest degree recently 10 cents through share — “until economic conditions gain.”

Sterling has received $303 million from the U.S. Treasury subordinate to the controversial Troubled Asset Relief Program — more than some other Northwest bank — in exchange for preferred stock and warrants.

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com

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