Junior Subordinated Debentures

3 Months Ended

Mar. 31, 2012

Junior Subordinated Debenture Owed to Unconsolidated Subsidiary Trust [Abstract]

Junior Subordinated Debentures

Junior Subordinated Debentures:

Sterling has raised regulatory capital through the formation of trust subsidiaries and the assumption of similar obligations through mergers with other financial institutions. The trusts are business trusts in which Sterling owns all of the common equity. The proceeds from the sale of the securities were used to purchase junior subordinated debentures issued by Sterling. Sterling’s obligations under the junior subordinated debentures and related documents, taken together, constitute a full and unconditional guarantee by Sterling of the trusts’ obligations. The junior subordinated debentures are treated as debt of Sterling. The junior subordinated debentures generally mature 30 years after issuance and are redeemable at the option of Sterling under certain conditions, including, with respect to certain of the trusts, payment of call premiums. During the third quarter of 2009, Sterling elected to defer regularly scheduled interest payments on these securities, and has continued to defer these payments through March 31, 2012. As of March 31, 2012 and December 31, 2011, the accrued deferred interest on junior subordinated debentures was $17.3 million and $15.6 million, respectively. Sterling is allowed to defer payments of interest on the junior subordinated debentures for up to 20 consecutive quarterly periods without triggering an event of default.

Details of the junior subordinated debentures are as follows:

Subsidiary Issuer	Issue Date	Maturity Date	Next Call Date	Rate at March 31, 2012			Amount
	(in thousands)
Sterling Capital Trust IX	July 2007	Oct 2037	April 2012	Floating	1.98%		$46,392
Sterling Capital Trust VIII	Sept 2006	Dec 2036	June 2012	Floating	2.10		51,547
Sterling Capital Trust VII	June 2006	June 2036	June 2012	Floating	2.00		56,702
Lynnwood Capital Trust II	June 2005	June 2035	June 2012	Floating	2.27		10,310
Sterling Capital Trust VI	June 2003	Sept 2033	June 2012	Floating	3.67		10,310
Sterling Capital Statutory Trust V	May 2003	June 2033	June 2012	Floating	3.72		20,619
Sterling Capital Trust IV	May 2003	May 2033	May 2012	Floating	3.65		10,310
Sterling Capital Trust III	April 2003	April 2033	April 2012	Floating	3.80		14,433
Lynnwood Capital Trust I	Mar 2003	Mar 2033	June 2012	Floating	3.62		9,443
Klamath First Capital Trust I	July 2001	July 2031	July 2012	Floating	4.54		15,225
					2.64%	*	$245,291
* Weighted average rate.