Sterling Paves Way For Change Spokane-Based Thrift Boosts Consumer, Business Lending

Sterling Financial Corp. has dramatically increased consumer, business and private lending as it prepares for conversion to a commercial bank, officials of the Spokane thrift said Tuesday.

President William Zuppe said consumer lending climbed 47 percent to $101.4 million in the fiscal year that ended June 30, while business and private banking more than doubled to $103.6 million.

“That’s what the future is,” Zuppe said following Sterling’s annual meeting of shareholders.

Sterling’s total loan portfolio is $1.1 billion.

Thrifts must keep 65 percent of their assets in single-family residential mortgages. Legislation now before Congress would eliminate that requirement when the savings and loans adopt commercial bank charters, a step they would have to take by Dec. 31, 1997.

“We feel the one-charter system will be very positive for your company,” said Chairman Harold Gilkey.

Besides giving managers more flexibility deploying assets, he said, financial markets always have valued bank earnings more highly than those produced by thrifts.

For Sterling, the downside will be a one-time $8 million payment to shore up the underfunded pool that insures thrift deposits as its assets are consolidated with those backing bank deposits, Gilkey said.

But deposit insurance premiums will drop substantially once the funds are combined, he added, which will allow Sterling and other thrifts to recover gradually from the initial hit.

Zuppe noted that the thrift-related legislation is part of a 20,000-page budget bill that President Clinton has threatened to veto.

Also pending is a $90 million claim Sterling has against federal regulators. How much the thrift will collect is unknown, but Gilkey said investors in a unique stock offering by a Los Angeles thrift are betting judgments or settlements in similar cases will average about 25 percent of the claim.

If U.S. Court of Appeals rulings in favor of the thrifts are not appealed to the U.S. Supreme Court, some litigation could be resolved by the end of 1996, he said.

But Congress then would have to authorize appropriations to cover the claims, which could cost more than $15 billion, he said.

, DataTimes