Sterling Financial Corp. has scheduled a special meeting for shareholders here Sept. 21 to seek their approval of a new ceiling on the number of shares of common stock the company's board of directors can issue.

The Spokane company, which owns Sterling Savings Bank, is asking its shareholders to authorize its board to issue up to an additional 650 million shares of common stock, although it says in a proxy statement its board currently has no plans to issue stock.

Sterling CFO Dan Byrne, asked whether the company planned to raise capital, says he couldn't respond to that because Sterling is in a quiet period after filing a shelf registration in July that would allow it to issue a certain dollar level of securities. He says Sterling meets established thresholds for capital.

Currently, the company's board is authorized to issue up to 100 million shares of common stock, and 52.4 million of those shares are outstanding already, Sterling says. Another 10.2 million shares have been reserved to fulfill stock options under Sterling's stock-option plans or other outstanding stock awards plus a warrant issued to the U.S. Treasury under the government's Troubled Asset Relief Program (TARP).

Sterling obtained $303 million in capital through TARP earlier. If shareholders reject the company's request for authorization to issue a greater number of shares, that would leave "only" 37.4 million shares the board could issue, Sterling says.

The company says that if shareholders approve its request, it could issue up to 650 million additional shares to meet future business and financing needs, including raising additional capital, increasing the regulatory capital of its subsidiary banks, making possible acquisitions, repaying the $303 million Sterling received under TARP "should we elect to do so in the future," or other purposes.

The proxy statement says shareholder approval of the proposal would enable the company's board to issue shares from time to time without delay, including "in transactions that might discourage, delay, or prevent an unsolicited acquisition of control of Sterling or make such an unsolicited acquisition of control more difficult or expensive." The proxy adds, though, that the company's board "has no plans to utilize the authorized shares in that manner and is not aware of any effort by any third parties to acquire control of Sterling."

The proposal needs to receive a simple majority vote of shareholders to gain approval, the proxy statement says. The meeting, in the Wall Street conference room of the company's downtown headquarters at 111 N. Wall, starts at 9 a.m.

The nation's financial crises have left banks in a weakened condition, and after the stock market closed on Monday, Sterling said its stock was priced at $2.12 a share, and at that price its market capitalization was $111 million.

"Obviously, we would like to move that to a higher level," Byrne says. "Given where our share price is, we would need to issue shares to take advantage of any opportunity" that became available in the marketplace, he says.

At the end of the second quarter, the company had $12.4 billion in assets, including $8.44 billion in net loans receivable and $2.84 billion in cash equivalents and investment-grade securities.

The proxy says that as of July 31, Barclays Global Investors, of San Francisco, owned 8.3 percent of Sterling's common shares, while FMR LLC, of Boston, owned 7 percent, and Sirios Capital Management LP, of Boston, had almost 5.3 percent.

On Aug. 19, Sterling announced that in order to maintain a solid balance sheet and a strong liquidity position, it had deferred regularly scheduled interest payments on outstanding junior subordinated notes and quarterly cash dividend payments on the $303 million in preferred stock issued by Sterling to the government in the TARP financing, preserving $5.7 million in cash per quarter.