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For Release July 20, 2000--12:00 noon PST Contact: Heidi B. Stanley
(509) 358-6160
STERLING FINANCIAL CORPORATION
OF SPOKANE, WASHINGTON, ANNOUNCES
2000 SECOND QUARTER EARNINGS
Spokane, Washington--July 20, 2000--Sterling Financial Corporation (NASDAQ:STSA)
today announced earnings of $3.4 million, or $0.42 per diluted share, for the
three months ended June 30, 2000. This compares with earnings of $3.2 million,
or $0.40 per diluted share for the prior year's comparable quarter. Net income
for the six months ended June 30, 2000 was $6.7 million, or $0.82 per diluted
share, which compares with net income of $6.1 million for the six months ended
June 30, 1999, or $0.74 per diluted share. The increase in earnings for both
periods primarily reflected an increase in net interest income and other income.
Operating cash earnings were $4.3 million, or $0.52 per diluted share, and $4.1
million, or $0.51 per diluted share, for the three months ended June 30, 2000
and 1999, respectively. Operating cash earnings were $8.5 million, or $1.04 per
diluted share, and $7.9 million, or $0.97 per diluted share, for the six months
ended June 30, 2000 and 1999, respectively.
Harold B. Gilkey, Chairman and CEO, said, "Sterling continues to enhance its
presence as a community bank by increasing its business banking, construction,
consumer and commercial real estate lending while increasing its retail
deposits, particularly transaction accounts. This change in the mix of assets
and liabilities is contributing to the increases in net interest income and fee
income."
Net interest income was $20.1 million for the three months ended June 30, 2000,
compared with $19.4 million for the three months ended March 31, 2000 and $18.8
million for the same period in the prior year. For the six months ended June 30,
2000, net interest income was $39.5 million, an increase of 8.1%, compared with
$36.5 million for the same period in 1999. The increases in net interest income
for the current three-month and six-month periods were primarily due to an
increase in the volume and change in the mix of loans and deposits. For the
current quarter, the net interest margin increased modestly to 3.30%, compared
with 3.29% in the March 31, 2000 quarter, although it has declined from 3.39%
for the three months ended June 30, 1999.
Mr. Gilkey added, "Sterling continues to provide personalized, quality financial
services to its customers as is exemplified by our "Hometown Helpful"
philosophy. The beginning of the second quarter marked the launching of Internet
banking through our website, www.sterlingsavingsbank.net. Customers also
requested image statements, a service that only Sterling offers in most of our
markets. Our customers received their first image statements during the third
quarter. We believe Sterling's success is a direct result of our ability to
respond to our customers' needs."
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Sterling Financial Corporation
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July 20, 2000
Other income, which consists primarily of fees and service charges, loan
servicing fees and income from mortgage banking operations, increased
approximately 20% to $3.7 million during the most recent quarter, compared to
$3.1 million during the prior year's comparable period. Other income for the six
months ended June 30, 2000 was $7.0 million, compared to $6.6 million during the
same period last year.
Total assets increased 6.0% to $2.66 billion at June 30, 2000, compared with
$2.51 billion at June 30, 1999. Total deposits increased 2.6% to $1.65 billion
at June 30, 2000, compared with $1.61 billion at June 30, 1999.
Total loan production for the quarter ended June 30, 2000, was $305.9 million,
down from $314.3 million for the same period a year ago, primarily as a result
of lower one- to four-family residential mortgage loan originations. Total loan
production for the six months ended June 30, 2000, was $554.6 million, compared
with $655.0 million during the same period a year ago. Community banking
originations, which include business banking, construction, consumer and
commercial real estate loans, were strong for this period.
Operating expenses were $17.3 million for the three months ended June 30, 2000,
compared with $15.7 million for the three months ended June 30, 1999. Operating
expenses were $33.7 million and $31.6 million for the six months ended June 30,
2000 and 1999, respectively. The higher level of operating expenses was
primarily a result of expanded staffing in Sterling's branch delivery network
and the full implementation of the Bank's item processing operations.
Asset quality measures remained at acceptable levels. Nonperforming assets were
0.69% of total assets at June 30, 2000, compared with 0.68% at March 31, 2000
and 0.53% at June 30, 1999. Nonperforming assets were $18.3 million at June 30,
2000, compared with $17.7 million at March 31, 2000 and $13.4 million at June
30, 1999.
Return on average equity was 11.3% for the three months ended June 30, 2000,
compared with 10.7% for the same period in 1999. Return on average equity for
the six months ended June 30, 2000 was 11.2%, compared with 10.1% for the same
period in 1999. These increased returns on average equity were a result of
higher net income. Return on average assets was 0.52% for the three months ended
June 30, 2000, compared with 0.54% for the same period in 1999. Return on
average assets was 0.52% for the six months ended June 30, 2000, compared with
0.51% for the six months ended June 30, 1999.
Operating cash return on average equity was 14.2% for the three months ended
June 30, 2000, compared with 13.7% for the same period in 1999. Operating cash
return on av erage equity for the six months ended June 30, 2000 was 14.2%,
compared with 13.2% for the same period in 1999. Operating cash return on equity
excludes amortization of intangible assets, net of related income taxes.
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Sterling Financial Corporation
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July 20, 2000
Sterling's Goodwill Litigation, which had been stayed for almost ten years, is
proceeding with the discovery phase of the case. Although it is impossible to
accurately predict when this effort will be concluded, it is anticipated that
the discovery stage will take most or all of 2000 and that Sterling's case will
be scheduled for trial by late 2001. Because of the increased level of effort
required to bring the case to conclusion, Sterling has seen an increase in legal
expenses, which is expected to continue over the next few years.
Sterling Financial Corporation of Spokane, Washington, is a savings and loan
holding company which owns Sterling Savings Bank. Sterling Savings Bank is a
Washington State-chartered, federally insured stock savings association which
opened in April 1983. Sterling Savings Bank, based in Spokane, Washington, has
branches throughout Washington, Idaho, Oregon and western Montana. Through
Sterling's wholly owned subsidiaries Action Mortgage Company and
INTERVEST-Mortgage Investment Company, it operates loan production offices in
Washington, Oregon, Idaho and western Montana. Sterling's subsidiary Harbor
Financial Services, Inc., provides non-bank investments, including mutual funds,
variable annuities, and tax-deferred annuities, through regional representatives
throughout Sterling Savings' branch network.
ANY TREND OR FORWARD-LOOKING INFORMATION INCLUDED IN THIS PRESS RELEASE IS
SUBJECT TO NUMEROUS POSSIBLE RISKS AND UNCERTAINTIES. THESE INCLUDE, BUT ARE NOT
LIMITED TO: THE POSSIBILITY OF ADVERSE ECONOMIC DEVELOPMENTS WHICH MAY, AMONG
OTHER THINGS, INCREASE DEFAULT AND DELINQUENCY RISKS IN STERLING'S LOAN
PORTFOLIOS; SHIFTS IN INTEREST RATES WHICH MAY RESULT IN LOWER INTEREST RATE
MARGINS; CHANGES IN ACCOUNTING POLICIES; CHANGES IN THE MONETARY AND FISCAL
POLICIES OF THE FEDERAL GOVERNMENT; CHANGES IN THE REGULATORY AND COMPETITIVE
ENVIRONMENT, AND OTHER RISKS. STERLING'S FUTURE RESULTS MAY DIFFER MATERIALLY
FROM HISTORICAL RESULTS AS WELL AS FROM ANY TREND OR FORWARD-LOOKING INFORMATION
INCLUDED IN THIS RELEASE.
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