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Umpqua Holdings Buys Sterling Financial

Sterling ($28.40) has a buy rating according to ValuEngine and a one-year price target at $30.11, just below the deal price. The daily chart profile is positive with the stock well above its 50-day SMA at $26.05. Monthly and quarterly value levels are $25.23 and $24.21 with a semiannual risky level, now a pivot at $28.26.
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The daily chart below shows some funky price action going into Aug. 30 and also in the days that followed. The deal was priced off the close of Aug. 30 and the stock was declining going into that day and bottomed that day with a low of $24.02 and close at $24.20. Note the spiky trading pattern that began with a high of $29.76 on Sept. 9, three days before the deal was announced.

Chart Courtesy of Thomson/Reuters
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Based upon FDIC data the combined community bank will have assets at about $21 billion and still be overexposed to CRE loans versus the regulatory guideline of 300% of risk-based capital. The overall CRE loan commitment would be considered well-managed.

In my opinion this merger is just the first among the 90 focus community banks that I profiled Wednesday.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Richard Suttmeier has an engineering degree from Georgia Tech and a master of science from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. In 1981 he formed the Government Bond Department at LF Rothschild and helped establish that firm as a primary dealer in 1986. Richard began writing market research in 1984 and held positions as market strategist at firms such as Smith Barney, William R Hough, Joseph Stevens, and Rightside Advisors. He joined in 2008 producing newsletters covering the U.S. capital markets, and a universe of more than 7,000 stocks. Richard employs a "buy and trade" investment strategy and can be reached at
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