Sterling Savings & Loan Assn. of Irvine posted net income of $2.3 million for 1985, compared with $364,096 the previous year, when it first opened for business.
In the fourth quarter Sterling's net income fell to $73,000 from $204,000 in the previous year's final quarter.
The lower earnings in the fourth quarter came as a result of the S&L;'s decision to add to its loan loss reserves, change its income tax estimates and write off most of its carrying costs and overhead for a subsidiary company, Sterling Builders, said Robert K. Parker, the S&L;'s president and chief executive officer.
About 64%, or $1.5 million, of Sterling's net income for the year came from its wholly owned service company, Sterling Builders. Most of those earnings came from the sale of an El Toro apartment complex that the service company had developed.
As of Dec. 31, Sterling had assets of $89.9 million, an 88% increase over assets of $47.8 million a year earlier. Its net worth, which federal regulators use as a measure of an institution's soundness, was 12%. Regulators require new S&Ls; such as Sterling to maintain a 7% net worth in the first year, 6% the second year and 5% thereafter, said Jim Hilbert, Sterling's vice president.
Sterling's total loans in 1985 were $41.4 million, a 38% increase over total loans of $29.9 million in the first 10 months of operations in 1984. Total deposits rose 93.5% to $35.6 million from $18.4 million.
Parker said 1986 has started out well with net profits of $100,000 in the first two months. Sterling Builders lost about $60,000 in the first two months, he said, but it is now selling homes in two housing projects it developed in Lake Forest and in Riverside County's Moreno Valley, formerly known as Sunnymead. Construction companies typically earn money in spurts throughout the year and the first few months of the year are generally slow, he said.