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Business Guide - Sterling Savings Bank 

by Pia K. Hansen


When Harold Gilkey and Bill Suppee got together to start Sterling Savings and Loan back in 1983, they got off to a fast start. They set up office at 120 N. Wall St. -- not far from where Sterling's new downtown headquarters is located today -- and went into business with $2.2 million in assets. Yet even before the new bank opened its doors, it had acquired the Lewis and Clark Savings and Loan Association in Clarkston, Wash., setting a business trend that has continued since then, with the latest acquisition being Klamath First Bancorp, Inc., in July of last year.


"That first acquisition did set a stage for our growth pattern," says Harold B. Gilkey, chairman of the board of Sterling Financial Corporation. "We reached $90 million in the first year of business. Is that fast? Yes, that is faster than fast. But Bill and I had excellent backgrounds, and we staffed the company with people we knew. It was a time when the savings and loan industry was being beat up, yet we were profitable when most S & amp;Ls were not."


From 1983 to '89, Sterling Savings grew to become a $730 million company.


From 1989-90, Sterling Savings faced some challenges stemming not from bad business decisions but from Congress. Some of the acquisitions Sterling had made were insured by the federal government, but as the nationwide savings and loan scandal unraveled, the Federal Institutions Reform, Recovery and Enforcement Act of 1989 was passed. This meant that over the next 18 months, in order to meet the new regulatory standards, Sterling had to add $14 million in tangible capital -- in other words, cash.


"In May of '90, we sued the federal government and we got a temporary restraining order," recalls Gilkey. It was a gutsy legal maneuver, and it was the only thing that kept Sterling Savings in business.


"We went from a positive net worth of $25 million to a negative net worth of $25 million," says Gilkey. "In '91, we re-capitalized the company. We were forced to sell some 80 percent of the company. We lost employees. It was very difficult, but we remained profitable."


Why didn't they just give up, cut the losses and move on?


"Bill and I had a tremendous obligation to the stockholders," says Gilkey. "We had individually sold the stock."


Toughing it out was the right thing to do: Today, Gilkey says, Sterling is approaching an asset base of $6 billion -- that's billion with a "b." The bank has 134 branches in Washington, Oregon, Idaho and Montana, as well as subsidiaries Action Mortgage (with 19 branches), Intervest (with five branches) and Harbor Financial Corporation.


Of the current 1,650 employees, 380 work in the Spokane area.


"We'll add approximately 150 more employees, here in Spokane during 2004," predicts Gilkey. Then, with a smile, he adds "It's been quite a ride."


Aside from the fight with the feds, Gilkey attributes Sterling's success to some old-fashioned but very solid business rules.


"We hire people who like other people," he says. "What does that mean? That they communicate well and work well with others -- but basically, I think you hire people who are like you."


But that's not enough -- you also have to be able to deliver a great product.


"You can be friendly all you want, but you must have the product people need," he says. "We call it 'hometown friendly.' The strategy has always been to provide two things: a great relationship with our customers -- they want to be treated like people, not numbers, when they come in and see us -- and for the company to have the right products." Recently Sterling opened an international banking center because clients were asking for those types of services.


Gilkey doesn't worry about attracting qualified staff to fill the new positions.


"I chose to live in Spokane, so other people will choose to live here," he says. "I know there's a myth that people see this as maybe not a desirable place. But if you allow myths to get in your way, you will not grow."


He only has good things to say about the local workforce. "People are well educated, and they want to work," says Gilkey. "They have a high work ethic."


Sterling executives and staff have held leadership positions in countless organizations, such as the Economic Development Council, the Downtown Spokane Partnership, the Chamber of Commerce and SIRTI.


"My presumption is that these organizations have helped us, but it's been a direct result of our own involvement," says Gilkey.


City government, however, hasn't been that welcoming. "The city of Spokane has not treated us that well," says Gilkey. "We have jumped a lot of barriers to stay in Spokane, and we've certainly had many opportunities to move elsewhere. Other towns offered incentives, but here there were many hurdles when we acquired this building and decided to remodel it."


Internally, Gilkey says, allowing for personal growth and new opportunities is the key to keeping employees happy.


"We provide our employees with opportunity to grow into new jobs -- up the ladder, if you will," says Gilkey. "We have a relatively flat organization -- you know, we operate on an open-door policy. Anyone can walk in any time. There's a lot of trust between management and staff. And we delegate heavily."


Sterling also provides traditional benefits such as a 401K, health programs and retirement plans.


"I think we give good pay, bonuses and personal recognition -- all traditional good values," says Gilkey. "The jobs we provide are good jobs, and we continue to do so at a time when Spokane's economy is at best mixed and at worst difficult."





Publication date: 02/26/04
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