October 23, 2007 in Business

Sterling job

Staff writer
Dan Pelle photo

Bill Zuppe is retiring from Sterling Savings after a long run of co-managing the corporation.
(Full-size photo)

Third quarter earnings

Sterling Financial Corp. reported third quarter earnings of $26.5 million, or 51 cents per share.

The results, announced Monday, compared to earnings of $19.3 million, or 52 cents per share, for the third quarter of 2006.

Harold Gilkey, chairman and chief executive officer, described the third quarter as “challenging for many financial institutions, including Sterling.” Disruptions in the mortgage market affected business in several ways, particularly in relation to loan originations and the volume and price of loan sales into the secondary market, he said.

In other news, Sterling’s pending acquisition of North Valley Bancorp in Redding, Calif., is expected to close during the fourth quarter.

From staff reports

William Zuppe, retiring co-founder and chief executive officer of Sterling Savings Bank, has a hint of daredevil in him.

Earlier this month, he treated a childhood friend to a ride in a couple of 1960 hydroplanes. Experienced hydroplane racers drove them for the first two laps and then Zuppe and his friend took over – topping out at 140 miles per hour as they raced around Lake Chelan.

“Obviously, we didn’t grow up,” the 66-year-old Zuppe joked.

The same moxie that steered Zuppe toward hydroplanes and taking a class in race car driving likely played a role in his ability to access and manage risk.

In the past 24 years, the Spokane-based Sterling Savings Bank has successfully acquired 21 financial institutions and has gone from a single-branch thrift offering two types of checking accounts to a bank with $11.75 billion in assets and nearly 200 branches.

“This is one that I pinch myself on: Sterling now has an international banking department. I’d stack up everything we have against anyone,” said Zuppe, during an interview at his downtown Spokane office last week.

The CEO, who founded the bank with Harold Gilkey, is stepping down at the end of December, but will retain his positions as chairman of the bank’s board, and director of the bank’s parent company, publicly traded Sterling Financial Corp. Heidi Stanley has been appointed president and chief executive officer of Sterling Savings Bank.

Zuppe led the bank through a rocky time in which Congress changed banking laws regarding savings and loans, and in the aftermath regulators tried to shut Sterling down. In a resulting lawsuit, Sterling prevailed and the amount of damages has yet to be decided.

He has also seen the company through a period of tremendous growth. Zuppe, who characterized mergers as fun, is likely working on his last acquisition – the 25-branch North Valley Bank. Based in Redding, Calif., the merger will double the number of branches that Sterling has in California, he said.

“It took me awhile to come to grips that I was going to make a change and would be giving up a lot,” Zuppe said.

The only merger that hasn’t gone as planned was the acquisition of Clarkston, Wash.-based FirstBank NW. Sterling filed a lawsuit claiming that a former executive of FirstBank NW Corp. violated a non-compete clause after going to work for the Bank of Whitman.

“We have had only this one set of regrettable disagreements,” Zuppe said of the success of the 21 mergers.

When they first started acquiring branches, Zuppe made a point to visit each bank at the beginning of every quarter. Now, he said, with so many branches those quarterly visits are more than any one executive can handle.

“My title hasn’t changed much but the dynamic of what we’re asked to do, and need to do, is quite different.”

Brad Williamson, director of the Division of Banks for the Olympia-based Washington state Department of Financial Institutions, said Zuppe has done a great job of keeping the company independent while bringing acquisitions into the fold.

Mergers can be challenging, he explained, because you must retain a high percentage of key executives and customers to make the move successful.

“I think Bill is known as being a straight shooter and he’s known as being a good guy,” Williamson said.

As CEO of the largest Washington state-chartered bank, Zuppe has had “a positive, long-term impact,” said the director, who also praised Zuppe’s long-term involvement in state and national banking associations.

While Zuppe, who grew up in Tacoma, finished just two years of college, he has pursued classes in banking and finance throughout his career. After going to work at age 20, Zuppe said, he never looked back.

Harold Gilkey, co-founder of Sterling and CEO of Sterling Financial Corp., the holding company for the bank, described his longtime friend and co-worker as a good communicator who grasps facts well and turns them into action.

The two met 32 years ago while working at Old National Bank of Washington and opened Sterling together in 1983.

“I think clearly in our business you need to be a global thinker with an attention to detail and Bill certainly has both of those qualities,” said Gilkey.For the past 25 years, the men, who are both in marriages that have lasted about 45 years, get together in January with their spouses, Carole Zuppe and Priscilla Gilkey, to celebrate Christmas.

They know each other so well that one year they gave each other nearly identical presents – custom paintings from a two-day trip to Augusta National Golf Course, the Georgia course where the Masters tournament is played. The paintings showcased a specific hole that each man had bogeyed and then parred the next day.

They implemented a corporate philosophy, Hometown Helpful, meaning a culture of taking care of customers that has helped 3,400 employees define their daily work. In the end, Zuppe said, he has been pleased with the people he has encountered.

“It’s been my experience that more often people surprise you pleasantly than unpleasantly.”

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