exv99w2

Exhibit 99.2

Sterling Financial Corporation
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts, unaudited)


	June 30,			March 31,			June 30,
	2006			2006			2005
ASSETS:

Cash and cash equivalents	$	116,795		$	117,722		$	126,345
Loans receivable, net		5,510,188			5,249,515			4,181,265
Loans held for sale		12,181			9,315			15,559
Investment and mortgage-backed securities (“MBS”) available for sale		1,892,983			1,983,252			1,996,804
Investments and MBS held to maturity		81,473			63,491			49,908
Office properties and equipment, net		83,185			83,748			80,582
Real estate owned, net		5,101			5,160			2,463
Goodwill, net		112,702			112,702			112,391
Other intangible assets, net		16,514			17,070			18,736
Bank owned life insurance (“BOLI”)		110,150			108,816			95,957
Prepaid expenses and other assets, net		103,066			89,494			63,802

Total assets	$	8,044,338		$	7,840,285		$	6,743,812


LIABILITIES:

Deposits	$	5,337,791		$	5,085,302		$	4,200,196
Advances from Federal Home Loan Bank of Seattle		1,337,138			1,371,152			1,317,141
Repurchase agreements and fed funds		583,041			660,420			536,152
Other borrowings		185,874			129,166			111,152
Accrued expenses and other liabilities		86,352			85,525			75,684

Total liabilities		7,530,196			7,331,565			6,240,325


SHAREHOLDERS’ EQUITY:

Common stock		35,093			35,067			23,084
Additional paid-in capital		390,324			388,800			395,865
Accumulated comprehensive loss:
Unrealized loss on investments and MBS ⁽¹⁾		(59,929	)		(49,152	)		(10,494	)
Retained earnings		148,654			134,005			95,032

Total shareholders’ equity		514,142			508,720			503,487

Total liabilities and shareholders’ equity	$	8,044,338		$	7,840,285		$	6,743,812


Book value per share ⁽²⁾	$	14.65		$	14.51		$	14.54
Tangible book value per share ⁽²⁾⁽³⁾	$	10.97		$	10.81		$	10.75
Shares outstanding at end of period		35,092,842			35,066,735			23,084,300
Shareholders’ equity to total assets		6.39	%		6.49	%		7.47	%
Tangible shareholders’ equity to tangible assets ⁽⁴⁾		4.86	%		4.91	%		5.63	%


(1)		Net of deferred income taxes.

(2)		Amounts as of June 30, 2005 have been restated to reflect the 3 for 2 stock split that was effected on August 31, 2005.

(3)		Amount represents shareholders’ equity less net goodwill and other intangible assets divided by total shares outstanding.

(4)		Amount represents shareholders’ equity less net goodwill and other intangible assets divided by assets less net goodwill and other intangible assets.

Sterling Financial Corporation
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts, unaudited)


	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2006			2006			2005			2006			2005
INTEREST INCOME:

Loans	$	103,356		$	92,111		$	72,619		$	195,467		$	140,662
Mortgage-backed securities		22,473			23,345			21,858			45,818			44,940
Investments and cash		891			723			579			1,614			1,520

Total interest income		126,720			116,179			95,056			242,899			187,122


INTEREST EXPENSE:

Deposits		40,909			34,810			21,105			75,719			39,428
Borrowings		24,762			22,413			20,137			47,175			41,062

Total interest expense		65,671			57,223			41,242			122,894			80,490


Net interest income		61,049			58,956			53,814			120,005			106,632
Provision for losses on loans		(4,650	)		(4,650	)		(3,400	)		(9,300	)		(7,150	)

Net interest income after provision		56,399			54,306			50,414			110,705			99,482


NONINTEREST INCOME:

Fees and service charges		10,615			9,079			8,205			19,694			15,608
Mortgage banking operations		2,725			2,271			6,106			4,996			11,478
Loan servicing fees		482			269			103			751			240
Net gain (loss) on sales of securities		0			0			0			0			(57	)
Real estate owned operations		78			307			99			385			211
BOLI		1,203			1,183			1,107			2,386			2,167
Charge related to early repayment of debt		0			0			0			0			645
Other non-interest income (expense)		27			(192	)		(215	)		(165	)		(248	)

Total noninterest income		15,130			12,917			15,405			28,047			30,044


NONINTEREST EXPENSES:

Employee compensation and benefits		25,710			25,089			22,334			50,799			44,351
Occupancy and equipment		7,375			6,916			6,617			14,291			12,663
Amortization of core deposit intangibles		555			556			555			1,111			1,111
Other		13,349			11,679			12,096			25,028			23,124

Total noninterest expenses		46,989			44,240			41,602			91,229			81,249


Income before income taxes		24,540			22,983			24,217			47,523			48,277
Income tax provision		(7,609	)		(7,567	)		(8,209	)		(15,176	)		(16,378	)

Net Income	$	16,931		$	15,416		$	16,008		$	32,347		$	31,899


Earnings per share — basic ⁽¹⁾	$	0.48		$	0.44		$	0.46		$	0.92		$	0.92
Earnings per share — diluted ⁽¹⁾	$	0.48		$	0.44		$	0.46		$	0.92		$	0.91

Core earnings ⁽²⁾	$	16,931		$	15,416		$	16,008		$	32,347		$	31,529
Core earnings per share — basic ⁽²⁾	$	0.48		$	0.44		$	0.46		$	0.92		$	0.91
Core earnings per share — diluted ⁽²⁾	$	0.48		$	0.44		$	0.46		$	0.92		$	0.90

Weighted average shares outstanding — basic ⁽¹⁾		35,077,647			34,946,649			34,597,964			35,012,510			34,541,705
Weighted average shares outstanding — diluted ⁽¹⁾		35,404,364			35,255,602			35,022,597			35,326,837			35,000,243


(1)		Weighted average shares and per share amounts for the applicable prior periods have been restated to reflect the 3 for 2 stock split that was effected on August 31, 2005.

(2)		See Exhibit A.

Sterling Financial Corporation
OTHER SELECTED FINANCIAL DATA
(in thousands, unaudited)


	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2006			2006			2005			2006			2005
LOAN ORIGINATIONS:

Residential real estate	$	78,124		$	71,097		$	106,489		$	149,221		$	262,972
Multifamily real estate		1,465			0			0			1,465			13,267
Commercial real estate		36,528			33,975			14,700			70,503			69,755
Construction		462,523			563,592			424,519			1,026,115			769,439
Consumer — direct		103,659			78,849			120,593			182,508			184,544
Consumer — indirect		41,152			29,535			21,746			70,687			36,788
Business banking		184,527			176,449			130,128			360,976			224,276
Corporate banking		131,623			119,511			89,955			251,134			169,688

Total loan origination volume	$	1,039,601		$	1,073,008		$	908,130		$	2,112,609		$	1,730,729


PERFORMANCE RATIOS:

Return on average assets		0.85	%		0.81	%		0.92	%		0.83	%		0.92	%
Return on average assets, core ⁽¹⁾		0.85	%		0.81	%		0.92	%		0.83	%		0.91	%
Return on average shareholders’ equity		13.1	%		12.1	%		13.4	%		12.6	%		13.5	%
Return on average shareholders’ equity, core ⁽¹⁾		13.1	%		12.1	%		13.4	%		12.6	%		13.3	%
Return on average tangible equity ⁽²⁾		17.5	%		16.2	%		18.5	%		16.9	%		18.6	%
Operating efficiency		61.7	%		61.6	%		60.1	%		61.6	%		59.4	%
Operating efficiency, core ⁽¹⁾		61.7	%		61.6	%		60.1	%		61.6	%		59.9	%
Non interest expense to average assets (annualized)		2.36	%		2.34	%		2.39	%		2.35	%		2.33	%
Average assets	$	7,981,266		$	7,673,383		$	6,972,385		$	7,825,473		$	7,019,640
Average shareholders’ equity	$	517,791		$	515,551		$	478,378		$	516,677		$	478,047
Average tangible equity ⁽²⁾	$	388,240		$	385,418		$	346,889		$	386,835		$	346,276

OTHER:

Regulatory capital ratios (Sterling Financial Corporation):
Core capital ratio ⁽³⁾		7.9	%		7.2	%		N/A			7.9	%		N/A
Tier 1 risk-based capital ratio ⁽³⁾		9.8	%		9.2	%		N/A			9.8	%		N/A
Total risk-based capital ratio ⁽³⁾		10.9	%		10.1	%		N/A			10.9	%		N/A
Regulatory capital ratios (Sterling Savings Bank):
Core capital ratio		7.5	%		7.2	%		7.3	%		7.5	%		7.3	%
Tier 1 risk-based capital ratio		9.5	%		9.1	%		10.1	%		9.5	%		10.1	%
Total risk-based capital ratio		10.5	%		10.1	%		11.1	%		10.5	%		11.1	%

Sales of financial products	$	50,975		$	30,232		$	26,183		$	81,207		$	55,098
FTE employees at end of period (whole numbers)		1,814			1,832			1,707			1,814			1,707


(1)		See Exhibit A

(2)		Average tangible equity is average shareholders’ equity less average net goodwill and other intangible assets.

(3)		Sterling Financial Corporation did not have regulatory capital ratio requirements prior to its conversion to a bank holding company in July of 2005.

Sterling Financial Corporation
OTHER SELECTED FINANCIAL DATA
(in thousands, unaudited)


	June 30,			March 31,			June 30,
	2006			2006			2005
LOANS BY COLLATERAL TYPE:

Residential	$	494,698		$	497,386		$	495,682
Multifamily		264,241			330,427			225,476
Commercial		801,995			786,215			568,945
Construction		1,433,305			1,261,061			801,746
Consumer — direct		673,483			640,941			591,409
Consumer — indirect		196,110			177,013			128,510
Business banking		1,183,657			1,128,397			994,054
Corporate banking		536,536			496,851			438,038
Deferred loan fees, net		(11,032	)		(10,077	)		(8,002	)
Allowance for losses on loans		(62,805	)		(58,699	)		(54,593	)

Net loans receivable	$	5,510,188		$	5,249,515		$	4,181,265


ALLOWANCE FOR LOSSES ON LOANS:

Balance at beginning of quarter	$	58,699		$	55,483		$	52,712
Provision for losses on loans		4,650			4,650			3,400
Amounts written off net of recoveries and other		(544	)		(1,434	)		(1,519	)

Balance at end of quarter	$	62,805		$	58,699		$	54,593

Net charge-offs to average net loans (annualized)		0.04	%		0.11	%		0.13	%
Net charge-offs to average net loans (ytd)		0.04	%		0.03	%		0.03	%
Loan loss allowance to total loans		1.13	%		1.11	%		1.29	%
Loan loss allowance to nonperforming loans (excluding loans classified as loss)		1447.2	%		1553.6	%		460.1	%
Nonperforming loans to net loans		0.10	%		0.09	%		0.37	%

NONPERFORMING ASSETS:

Nonaccrual loans	$	4,390		$	3,788		$	14,020
Restructured loans		904			1,039			1,267

Total nonperforming loans		5,294			4,827			15,287
REO		5,101			5,160			2,463

Total nonperforming assets (NPA)	$	10,395		$	9,987		$	17,750

NPA to total assets		0.13	%		0.13	%		0.26	%
Loan delinquency ratio (60 days and over)		0.11	%		0.08	%		0.45	%
Classified assets	$	57,075		$	54,733		$	73,753
Classified assets/total assets		0.71	%		0.70	%		1.09	%

DEPOSITS DETAIL:

Interest-bearing transaction accounts	$	409,296		$	410,780		$	420,460
Noninterest-bearing transaction accounts		689,423			676,857			634,997
Savings accounts		1,476,357			1,403,730			1,116,071
Time deposits		2,762,715			2,593,935			2,028,668

Total deposits	$	5,337,791		$	5,085,302		$	4,200,196


Number of transaction accounts (whole numbers):
Interest-bearing transaction accounts		41,903			45,912			47,745
Noninterest-bearing transaction accounts		115,852			110,050			102,477

Total transaction accounts		157,755			155,962			150,222

Sterling Financial Corporation
AVERAGE BALANCE, YIELDS AND RATES PAID
(in thousands, unaudited)


	Three Months Ended
	June 30, 2006							March 31, 2006							June 30, 2005
	Average Balance		Amount		Average Rate			Average Balance		Amount		Average Rate			Average Balance		Amount		Average Rate
ASSETS:

Loans:
Mortgage	$	2,949,789	$	55,561		7.55	%	$	2,754,279	$	49,504		7.29	%	$	2,437,582	$	38,001		6.25	%
Commercial and consumer		2,525,246		47,795		7.59	%		2,346,225		42,607		7.36	%		2,088,756		34,618		6.65	%

Total loans		5,475,035		103,356		7.57	%		5,100,504		92,111		7.32	%		4,526,338		72,619		6.44	%
MBS		1,896,134		22,473		4.75	%		1,966,595		23,345		4.81	%		1,933,964		21,858		4.53	%
Investments and cash		192,661		891		1.85	%		177,151		723		1.66	%		161,791		579		1.44	%

Total interest-earning assets		7,563,830		126,720		6.72	%		7,244,250		116,179		6.50	%		6,622,093		95,056		5.76	%

Noninterest-earning assets		417,436							429,133							350,292

Total average assets	$	7,981,266						$	7,673,383						$	6,972,385


LIABILITIES and EQUITY:

Deposits:
Transaction	$	1,069,682		409		0.15	%	$	1,055,363		349		0.13	%	$	1,036,304		322		0.12	%
Savings		1,453,641		11,029		3.04	%		1,345,667		8,813		2.66	%		1,109,551		4,843		1.75	%
Time deposits		2,694,370		29,471		4.39	%		2,527,672		25,648		4.12	%		2,012,237		15,940		3.18	%

Total deposits		5,217,693		40,909		3.14	%		4,928,702		34,810		2.86	%		4,158,092		21,105		2.04	%
Borrowings		2,157,017		24,762		4.60	%		2,075,072		22,413		4.38	%		2,323,964		20,137		3.48	%

Total interest-bearing liabilities		7,374,710		65,671		3.57	%		7,003,774		57,223		3.31	%		6,482,056		41,242		2.55	%

Noninterest-bearing liabilities		88,765							154,058							11,951

Total average liabilities		7,463,475							7,157,832							6,494,007
Total average shareholders’ equity		517,791							515,551							478,378

Total average liabilities and equity	$	7,981,266						$	7,673,383						$	6,972,385


Net interest income and spread			$	61,049		3.15	%			$	58,956		3.19	%			$	53,814		3.21	%


Net interest margin						3.24	%						3.30	%						3.26	%

Sterling Financial Corporation
EXHIBIT A — RECONCILIATION SCHEDULE
(in thousands, unaudited)


	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2006			2006			2005			2006			2005
CORE EARNINGS: ⁽¹⁾

Net income as reported	$	16,931		$	15,416		$	16,008		$	32,347		$	31,899
Subtract: net (gain) loss on securities, net of tax		0			0			0			0			36
Add back: merger and acquisition costs, net of tax		0			0			0			0			0
Add back: charge on early debt repayment, net of tax		0			0			0			0			(406	)

Core earnings	$	16,931		$	15,416		$	16,008		$	32,347		$	31,529


CORE EARNINGS PER SHARE — BASIC: ^{(1) (2)}

Earnings per share — basic, as reported	$	0.48		$	0.44		$	0.46		$	0.92		$	0.92
Subtract: net (gain) loss on securities, net of tax		0.00			0.00			0.00			0.00			0.00
Add back: merger and acquisition costs, net of tax		0.00			0.00			0.00			0.00			0.00
Add back: charge on early debt repayment, net of tax		0.00			0.00			0.00			0.00			(0.01	)

Core earnings per share — basic	$	0.48		$	0.44		$	0.46		$	0.92		$	0.91


CORE EARNINGS PER SHARE — DILUTED: ^{(1) (2)}

Earnings per share — basic, as reported	$	0.48		$	0.44		$	0.46		$	0.92		$	0.91
Subtract: net (gain) loss on securities, net of tax		0.00			0.00			0.00			0.00			0.00
Add back: merger and acquisition costs, net of tax		0.00			0.00			0.00			0.00			0.00
Add back: charge on early debt repayment, net of tax		0.00			0.00			0.00			0.00			(0.01	)

Core earnings per share — diluted	$	0.48		$	0.44		$	0.46		$	0.92		$	0.90


RETURN ON AVERAGE ASSETS, CORE: ⁽¹⁾

Return on average assets, as reported		0.85	%		0.81	%		0.92	%		0.83	%		0.92	%
Subtract: net (gain) loss on securities, net of tax		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
Add back: merger and acquisition costs, net of tax		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
Add back: charge on early debt repayment, net of tax		0.00	%		0.00	%		0.00	%		0.00	%		(0.01	%)

Return on average shareholders’ equity, core		0.85	%		0.81	%		0.92	%		0.83	%		0.91	%


RETURN ON AVERAGE SHAREHOLDERS’ EQUITY, CORE: ⁽¹⁾

Return on average shareholders’ equity, as reported		13.1	%		12.1	%		13.4	%		12.6	%		13.5	%
Subtract: net (gain) loss on securities, net of tax		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Add back: merger and acquisition costs, net of tax		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Add back: charge on early debt repayment, net of tax		0.0	%		0.0	%		0.0	%		0.0	%		(0.2	%)

Return on average shareholders’ equity, core		13.1	%		12.1	%		13.4	%		12.6	%		13.3	%


OPERATING EFFICIENCY RATIO, CORE: ⁽¹⁾

Operating efficiency ratio, as reported		61.7	%		61.6	%		60.1	%		61.6	%		59.4	%
Add back: net (gain) loss on securities		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Subtract: merger and acquisition costs		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Subtract: charge on early debt repayment		0.0	%		0.0	%		0.0	%		0.0	%		0.5	%

Operating efficiency ratio, core		61.7	%		61.6	%		60.1	%		61.6	%		59.9	%


(1)		Core earnings per share excludes net securities gains (losses), merger and acquisition costs and a charge for costs related to early repayment of debt, net of related income taxes. Management believes that this presentation of non-GAAP information regarding core earnings provides useful information to investors regarding the registrant’s financial condition and results of operations as core earnings are widely used for comparison purposes in the financial services industry.

(2)		Weighted average shares and per share amounts for the applicable prior periods have been restated to reflect the 3 for 2 stock split that was effected on August 31, 2005.