Acquisition boosts Sterling Financial

SEATTLE — With its planned acquisition of Golf Savings Bank in Lynnwood, Spokane’s Sterling Financial could vie to become the second-largest financial institution based in Washington.

The combined company would have $8 billion in assets and 180 branches and loan offices spread across seven Western states.

“It’s one of the defining moments in the growth of our organization,” Harold Gilkey, chairman and CEO of Spokane-based Sterling Financial, said during a conference call earlier this week.

The mortgage-lending expertise of Golf Savings will help Sterling become “a significant force in regional mortgage lending,” he said.

Golf Savings has become a mortgage-lending juggernaut under the leadership of self-described “hippie banker” Charles Ainslie. Its $1.7 billion in mortgages made it the fifth-largest mortgage originator in the state last year.

The bank is strong in construction lending in the area north of Seattle along the Interstate 5 corridor. That’s an area where Sterling, which has 10 branches in the Puget Sound area, sees an opportunity to expand given continued economic growth related to Boeing, Gilkey said.

Sterling is already the state’s third-largest financial institution, ending 2005 with $7.6 billion in assets, behind Washington Federal Savings at $8.3 billion and Washington Mutual’s $343.1 billion.

Golf’s assets have grown at a blistering rate — 79 percent in the past year — so quickly that it doesn’t have the capital to expand apace. It needed capital to continue making new loans.

Sterling plans to pay $65.3 million for Lynnwood Financial Group, the holding company of Golf Savings and Golf Escrow, both named for founder Ainslie’s favorite sport. Golf Savings will become a wholly owned Sterling subsidiary with its own leadership and will retain its own name.

Ainslie stands to receive nearly $15.8 million in cash, plus Sterling stock, a five-year consulting contract and a seat on Golf Savings’ board of directors.

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