Sterling Financial Corporation of Spokane, Washington, Revises Estimated Range for...

Sterling Financial Corporation of Spokane, Washington, Revises Estimated Range
for Fourth Quarter Earnings, Reports Increased Charge for Credit Costs

SPOKANE, Wash., Dec. 26 /PRNewswire-FirstCall/ -- Sterling Financial
Corporation (Nasdaq: STSA) announced today that it is revising its estimate
for earnings for the fourth quarter of 2007 as a result of an increased charge
for credit costs, a charge to prepay some high fixed rate trust preferred
securities and other charges during the fourth quarter. Sterling now expects
to report earnings in the range of $0.31 to $0.34 per diluted share for the
quarter ended December 31, 2007. For the year ended December 31, 2007,
Sterling expects earnings to be in the range of $1.84 to $1.87 per diluted
share.
Sterling continues to closely monitor its loan portfolio, with particular
focus on residential construction lending, and is taking a measured approach
to provide adequate loan loss provisions. As a result, Sterling expects to
report an approximately $13.0 million provision for credit costs for the
fourth quarter. Management indicated that residential construction lending in
its primary markets in the Puget Sound region and Portland area is generally
healthy, but is being monitored on a regular basis. Other segments of the
loan portfolio generally continue to perform well throughout Sterling's
footprint.
Also during the fourth quarter, Sterling intends to prepay a $24.0 million
trust preferred securities issue that carries a 10.25 percent fixed-rate
coupon, and replace it with existing cash resources that have a significantly
lower cost. This early extinguishment of the trust preferred securities will
trigger a prepayment premium that will result in a charge of approximately
$2.1 million that was not previously budgeted for the fourth quarter. This
prepayment is ultimately expected to result in a positive impact on earnings
into future periods. Management has indicated that the Company's capital will
exceed levels required to remain "well-capitalized" for regulatory compliance
purposes.
Sterling expects to incur merger-related costs of approximately $1.0
million associated with the proposed acquisition of North Valley Bancorp,
which, as previously announced, was terminated by North Valley during the
quarter following unexpected delays in obtaining regulatory approval.
Harold Gilkey, Sterling's chairman and chief executive officer, stated,
"Along with other financial institutions across the country, Sterling is
dealing with challenging market conditions, which we expect will continue into
the next few quarters. Although we believe that these credit conditions will
work themselves out over time, our seasoned management team, based on their
experience with similar downturns before, is taking an aggressive stance on
asset quality and being proactive in working with our customers to find
solutions. We continue to execute on our business plan in order to position
Sterling to take advantage of opportunities in future periods."
Sterling plans to report its results for the fourth quarter and year ended
December 31, 2007 on January 28, 2008. Management will provide guidance for
2008 at its conference call the next day, on January 29, 2008.
ABOUT STERLING
Sterling Financial Corporation of Spokane, Washington, is a bank holding
company, of which the principal operating subsidiaries are Sterling Savings
Bank and Golf Savings Bank. Sterling Savings Bank is a Washington
State-chartered, federally insured commercial bank, which opened in April 1983
as a stock savings and loan association. Sterling Savings Bank, based in
Spokane, Washington, has financial service centers throughout Washington,
California, Oregon, Idaho and Montana. Through Sterling Savings Bank's wholly
owned subsidiaries, Action Mortgage Company and INTERVEST-Mortgage Investment
Company, it operates loan production offices throughout the western region.
Sterling Savings Bank's subsidiary Harbor Financial Services provides non-bank
investments, including mutual funds, variable annuities and tax-deferred
annuities and other investment products through regional representatives
throughout Sterling Savings Bank's branch network.
Golf Savings Bank is a Washington State-chartered and FDIC insured savings
bank. Golf Savings Bank's primary focus is the origination of single-family
residential mortgage loans.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements, which are not historical
facts and pertain to Sterling's future operating results. These
forward-looking statements are within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements may include,
but are not limited to, statements about Sterling's plans, objectives,
expectations and intentions and other statements contained in this report that
are not historical facts. When used in this report, the words "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates" and
similar expressions are generally intended to identify forward-looking
statements. These forward-looking statements are inherently subject to
significant business, economic and competitive uncertainties and
contingencies, many of which are beyond Sterling's control. In addition, these
forward-looking statements are subject to assumptions with respect to future
business strategies and decisions that are subject to change. Actual results
may differ materially from the results discussed in these forward-looking
statements because of numerous possible risks and uncertainties. These include
but are not limited to: the possibility of adverse economic developments that
may, among other things, increase default and delinquency risks in Sterling's
loan portfolios; shifts in interest rates that may result in lower interest
rate margins; shifts in the demand for Sterling's loan and other products;
lower-than-expected revenue or cost savings in connection with acquisitions;
changes in accounting policies; changes in the monetary and fiscal policies of
the federal government; and changes in laws, regulations and the competitive
environment.
Investor Contact: Daniel G. Byrne
EVP, Chief Financial Officer
509-458-3711

Media Contact: Jennifer Lutz
Public Relations Administrator
509-368-2032

SOURCE Sterling Financial Corporation

Daniel G. Byrne, EVP, Chief Financial Officer, +1-509-458-3711, or Jennifer
Lutz, Public Relations Administrator, +1-509-368-2032, both of Sterling
Financial Corporation