One-Time Charges Yield Second-Quarter Loss For Sterling

Sterling Financial Corp. reported a net loss for the second quarter Thursday due to costs associated with the takeover of 33 KeyBank branches, higher provisions for bad loans and losses from the sale of securities.

Excluding those charges, the Spokane-based thrift earned $2.7 million, or 35 cents per diluted share.

Converting the KeyBank branches, which brought Sterling’s total to 73, cost $2 million.

The thrift also brought its provision for loan losses to $2.9 million to reflect, in part, a possible slowdown in business related to trade with Asia.

The securities loss was $681,000.

Those factors created a quarterly net loss of $959,000, or 13 cents per share, compared with net income of $2.3 million, or 30 cents per share, for the second quarter of 1997.

For the first six months of the year, earnings before the various charges were $5.4 million, or 70 cents per share. The charges reduced net income to $1.7 million, or 22 cents per share.

Sterling earned $4.6 million, or 59 cents per share, during the same period last year.

Despite the associated costs, Chairman Harold Gilkey said the purchase last month of the KeyBank branches will broaden Sterling’s role as a community bank while increasing operating efficiencies.

“It provides a tremendous springboard for the additional development of our company,” he said.

Second-quarter loan originations increased almost 50 percent compared with year-ago levels. Assets were $2.1 billion on June 30, up from $1.7 billion a year earlier.

Return on equity increased to 10.3 percent. Return on assets was steady at .56 percent.

Dain Rauscher analyst R. Jay Tejera said the results were in line with expectations. With the KeyBank branch purchase, he added, Sterling is well-positioned for accelerated growth.

Sterling stock closed Thursday at $22, down 50 cents.