6. Sterling Financial

Shares of Sterling Financial ( STSA) of Spokane, Wash., closed at $12.32 Wednesday, down 35% year-to-date.

The company had $9.2 billion in total assets as of June 30, with a nonperforming assets ratio of 5.38%, declining from 6.72% the previous quarter and 10.47% in June 2010, according to SNL Financial.

The company received $303 million in TARP money in December 2008. The Treasury's preferred shares in Sterling Financial were all converted to common shares in August of last year.

Second-quarter net income was $7.6 million, or 12 cents a share, compared to a loss to common shareholders of $58.2 million, or $73.91 a share, in the second quarter of 2010, when the company took a $70.8 million provision for loan losses, while selling a significant portion of its nonperforming loans. The second-quarter 2010 EPS figure reflects a 66-for1 reverse stock split that took place in November.

The provision for loan losses was $10 million during the second quarter, which was the same as in the first quarter.

Sterling's second-quarter annualized ratio of net charge-offs to average loans was 2.23% and reserves covered 3.66% of total loans as of June 30, "staying ahead of the pace" of loan losses. The company's regulatory total risk-based capital ratio of 18.20% as of June 30 was the highest among this group of bank and thrift holding companies.

The shares trade for 12.5 times the consensus 2012 EPS estimate of $1.09, among analysts polled by FactSet, and 0.9 times their June 30 tangible book value of $12.80, according to SNL.

Two of the three analysts covering Sterling Financial rate the shares a buy. The remaining analyst has a neutral rating.

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