exv99w2

EXHIBIT 99.2

Sterling Financial Corporation
CONSOLIDATED BALANCE SHEETS


(in thousands, except per share amounts, unaudited)	Sept 30,			June 30,			Sept 30,
	2006			2006			2005
ASSETS:
Cash and cash equivalents	$	144,975		$	116,795		$	126,812
Loans receivable, net		6,240,512			5,510,188			4,287,684
Loans held for sale		119,406			12,181			26,091
Investment and mortgage-backed securities (“MBS”) available for sale		1,864,923			1,892,983			1,915,287
Investments and MBS held to maturity		83,681			81,473			49,716
Office properties and equipment, net		79,150			83,185			81,007
Real estate owned, net		4,369			5,101			2,454
Goodwill, net		144,861			112,702			112,391
Other intangible assets, net		16,634			16,514			18,180
Bank owned life insurance (“BOLI”)		112,383			110,150			107,122
Prepaid expenses and other assets, net		101,823			103,066			69,304

Total assets	$	8,912,717		$	8,044,338		$	6,796,048


LIABILITIES:
Deposits	$	5,953,767		$	5,337,791		$	4,390,757
Advances from Federal Home Loan Bank of Seattle		1,373,513			1,337,138			1,266,874
Repurchase agreements and fed funds		623,612			583,041			461,594
Other borrowings		237,222			185,874			110,683
Accrued expenses and other liabilities		115,882			86,352			66,457

Total liabilities		8,303,996			7,530,196			6,296,365


SHAREHOLDERS’ EQUITY:
Common stock		37,024			35,093			34,725
Additional paid-in capital		441,547			390,324			384,409
Accumulated comprehensive loss:
Unrealized loss on investments and MBS ⁽¹⁾		(35,249	)		(59,929	)		(26,635	)
Retained earnings		165,399			148,654			107,184

Total shareholders’ equity		608,721			514,142			499,683

Total liabilities and shareholders’ equity	$	8,912,717		$	8,044,338		$	6,796,048


Book value per share	$	16.44		$	14.65		$	14.39
Tangible book value per share ⁽²⁾	$	12.08		$	10.97		$	10.63
Shares outstanding at end of period		37,024,265			35,092,842			34,725,400
Shareholders’ equity to total assets		6.83	%		6.39	%		7.35	%
Tangible shareholders’ equity to tangible assets ⁽³⁾		5.11	%		4.86	%		5.54	%


(1)		Net of deferred income taxes.

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

(3)		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									Nine Months Ended
	Sept 30,			June 30,			Sept 30,			Sept 30,			Sept 30,
	2006			2006			2005			2006			2005
INTEREST INCOME:
Loans	$	125,554		$	103,356		$	73,375		$	321,021		$	214,037
Mortgage-backed securities		21,626			22,473			20,757			67,444			65,697
Investments and cash		1,028			891			642			2,642			2,162

Total interest income		148,208			126,720			94,774			391,107			281,896


INTEREST EXPENSE:
Deposits		51,653			40,909			23,827			127,372			63,255
Borrowings		26,522			24,762			17,859			73,697			58,921

Total interest expense		78,175			65,671			41,686			201,069			122,176


Net interest income		70,033			61,049			53,088			190,038			159,720
Provision for losses on loans		(4,698	)		(4,650	)		(3,400	)		(13,998	)		(10,550	)

Net interest income after provision		65,335			56,399			49,688			176,040			149,170


NONINTEREST INCOME:
Fees and service charges		11,526			10,615			9,260			31,220			24,868
Mortgage banking operations		5,572			2,725			2,969			10,568			14,447
Loan servicing fees		473			482			90			1,224			330
Net loss on sales of securities		0			0			0			0			(57	)
Real estate owned operations		(138	)		78			(23	)		247			188
BOLI		1,225			1,203			1,164			3,611			3,331
Charge related to early repayment of debt		(204	)		0			0			(204	)		645
Other non-interest income (expense)		(3	)		27			(154	)		(168	)		(402	)

Total noninterest income		18,451			15,130			13,306			46,498			43,350


NONINTEREST EXPENSES:
Employee compensation and benefits		31,479			25,710			23,274			82,278			67,625
Occupancy and equipment		8,755			7,375			6,578			23,046			19,241
Amortization of core deposit intangibles		586			555			556			1,697			1,667
Merger and acquisition costs		191			0			0			191			0
Other		14,291			13,349			12,191			39,319			35,315

Total noninterest expenses		55,302			46,989			42,599			146,531			123,848


Income before income taxes		28,484			24,540			20,395			76,007			68,672
Income tax provision		(9,145	)		(7,609	)		(6,505	)		(24,321	)		(22,883	)

Net Income	$	19,339		$	16,931		$	13,890		$	51,686		$	45,789


Earnings per share — basic	$	0.52		$	0.48		$	0.40		$	1.45		$	1.32
Earnings per share — diluted	$	0.52		$	0.48		$	0.40		$	1.44		$	1.31

Core earnings ⁽¹⁾	$	19,587		$	16,931		$	13,890		$	51,934		$	45,419
Core earnings per share — basic ⁽¹⁾	$	0.53		$	0.48		$	0.40		$	1.46		$	1.31
Core earnings per share — diluted ⁽¹⁾	$	0.53		$	0.48		$	0.40		$	1.44		$	1.30

Weighted average shares outstanding — basic		36,891,986			35,077,647			34,660,107			35,645,887			34,581,606
Weighted average shares outstanding — diluted		37,273,560			35,404,364			35,097,474			35,992,764			35,033,011


(1)		See Exhibit A.

Sterling Financial Corporation
OTHER SELECTED FINANCIAL DATA


(in thousands, unaudited)	Three Months Ended									Nine Months Ended
	Sept 30,			June 30,			Sept 30,			Sept 30,			Sept 30,
	2006			2006			2005			2006			2005
LOAN ORIGINATIONS:
Residential real estate	$	328,436		$	78,124		$	115,870		$	477,657		$	378,842
Multifamily real estate		2,750			1,465			0			4,215			13,267
Commercial real estate		35,738			36,528			51,065			106,241			120,820
Construction		588,466			462,523			443,521			1,614,581			1,212,960
Consumer — direct		79,063			103,659			86,216			261,571			270,760
Consumer — indirect		56,660			41,152			30,825			127,347			67,613
Commercial business banking		205,208			184,527			155,831			566,184			380,107
Commercial corporate banking		107,032			131,623			72,176			358,166			241,864

Total loan origination volume	$	1,403,353		$	1,039,601		$	955,504		$	3,515,962		$	2,686,233


PERFORMANCE RATIOS:
Return on average assets		0.89	%		0.85	%		0.81	%		0.85	%		0.88	%
Return on average assets, core ⁽¹⁾		0.90	%		0.85	%		0.81	%		0.85	%		0.87	%
Return on average shareholders’ equity		13.4	%		13.1	%		10.8	%		12.9	%		12.5	%
Return on average shareholders’ equity, core ⁽¹⁾		13.5	%		13.1	%		10.8	%		13.0	%		12.4	%
Return on average tangible equity ⁽²⁾		18.1	%		17.5	%		14.6	%		17.3	%		17.1	%
Operating efficiency		62.5	%		61.7	%		64.2	%		61.9	%		61.0	%
Operating efficiency, core ⁽¹⁾		62.1	%		61.7	%		64.2	%		61.7	%		61.3	%
Non interest expense to average assets (annualized)		2.54	%		2.36	%		2.49	%		2.41	%		2.38	%
Average assets	$	8,642,452		$	7,981,266		$	6,785,740		$	8,130,378		$	6,948,356
Average shareholders’ equity	$	573,785		$	517,791		$	509,256		$	535,922		$	488,564
Average tangible equity ⁽²⁾	$	423,939		$	388,240		$	378,326		$	399,412		$	357,074

REGULATORY CAPITAL RATIOS:
Sterling Financial Corporation:
Tier 1 leverage (to average assets)		8.5	%		7.9	%		7.7	%		8.5	%		7.7	%
Tier 1 (to risk-weighted assets)		9.9	%		9.8	%		10.6	%		9.9	%		10.6	%
Total (to risk-weighted assets)		10.9	%		10.9	%		11.7	%		10.9	%		11.7	%
Sterling Savings Bank:
Tier 1 leverage (to average assets)		8.1	%		7.5	%		6.7	%		8.1	%		6.7	%
Tier 1 (to risk-weighted assets)		9.7	%		9.5	%		10.7	%		9.7	%		10.7	%
Total (to risk-weighted assets)		10.7	%		10.5	%		11.9	%		10.7	%		11.9	%

OTHER:
Sales of financial products	$	38,213		$	50,975		$	23,332		$	119,420		$	78,430
FTE employees at end of period (whole numbers)		2,100			1,814			1,770			2,100			1,770


(1)		See Exhibit A

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

Sterling Financial Corporation
OTHER SELECTED FINANCIAL DATA


(in thousands, unaudited)	Sept 30,			June 30,			Sept 30,
	2006			2006			2005
LOANS BY COLLATERAL TYPE:
Residential real estate	$	488,130		$	494,698		$	493,752
Multifamily real estate		284,989			264,241			219,224
Commercial real estate		832,839			801,995			580,567
Construction		1,985,414			1,433,305			905,381
Consumer — direct		696,775			673,483			598,956
Consumer — indirect		229,740			196,110			141,475
Commercial business banking		1,236,489			1,183,657			1,001,691
Commercial corporate banking		571,180			536,536			409,251
Deferred loan fees, net		(13,581	)		(11,032	)		(8,942	)
Allowance for losses on loans		(71,463	)		(62,805	)		(53,671	)

Net loans receivable	$	6,240,512		$	5,510,188		$	4,287,684


ALLOWANCE FOR LOSSES ON LOANS:
Balance at beginning of quarter	$	62,805		$	58,699		$	54,593
Acquired allowance		4,552			0			0
Provision for losses on loans		4,698			4,650			3,400
Amounts written off net of recoveries and other		(592	)		(544	)		(4,322	)

Balance at end of quarter	$	71,463		$	62,805		$	53,671


Net charge-offs to average net loans (annualized)		0.04	%		0.04	%		0.40	%
Net charge-offs to average net loans (ytd)		0.05	%		0.04	%		0.14	%
Loan loss allowance to total loans		1.13	%		1.13	%		1.24	%
Loan loss allowance to nonperforming loans (excluding loans classified as loss)		507.9	%		1447.2	%		953.1	%
Nonperforming loans to net loans		0.24	%		0.10	%		0.21	%

NONPERFORMING ASSETS:
Past 90 days due	$	10,945		$	0		$	0
Nonaccrual loans		3,044			4,390			7,888
Restructured loans		793			904			1,226

Total nonperforming loans		14,782			5,294			9,114
REO		4,369			5,101			2,454

Total nonperforming assets (NPA)	$	19,151		$	10,395		$	11,568

NPA to total assets		0.21	%		0.13	%		0.17	%
Loan delinquency ratio (60 days and over)		0.25	%		0.11	%		0.28	%
Classified assets	$	45,979		$	57,075		$	63,537
Classified assets/total assets		0.52	%		0.71	%		0.93	%

DEPOSITS DETAIL:
Interest-bearing transaction accounts	$	407,383		$	409,296		$	439,838
Noninterest-bearing transaction accounts		724,454			689,423			717,026
Savings accounts		1,612,207			1,476,357			1,198,489
Time deposits		3,209,723			2,762,715			2,035,404

Total deposits	$	5,953,767		$	5,337,791		$	4,390,757


Number of transaction accounts (whole numbers):
Interest-bearing transaction accounts		41,812			41,903			47,157
Noninterest-bearing transaction accounts		118,309			115,852			105,208

Total transaction accounts		160,121			157,755			152,365

Sterling Financial Corporation
AVERAGE BALANCE, YIELDS AND RATES PAID


(in thousands, unaudited)	Three Months Ended
	September 30, 2006							June 30, 2006							September 30, 2005
	Average				Average			Average				Average			Average				Average
	Balance		Amount		Rate			Balance		Amount		Rate			Balance		Amount		Rate
ASSETS:
Loans:
Mortgage	$	3,555,542	$	73,659		8.22	%	$	2,949,789	$	55,561		7.55	%	$	2,164,792	$	36,367		6.66	%
Commercial and consumer		2,665,550		51,895		7.72	%		2,525,246		47,795		7.59	%		2,135,668		37,008		6.87	%

Total loans		6,221,092		125,554		8.01	%		5,475,035		103,356		7.57	%		4,300,460		73,375		6.77	%
MBS		1,825,084		21,626		4.70	%		1,896,134		22,473		4.75	%		1,858,353		20,757		4.43	%
Investments and cash		340,954		1,028		1.20	%		192,661		891		1.85	%		169,716		642		1.50	%

Total interest-earning assets		8,387,130		148,208		7.01	%		7,563,830		126,720		6.72	%		6,328,529		94,774		5.94	%

Noninterest-earning assets		255,322							417,436							457,211

Total average assets	$	8,642,452						$	7,981,266						$	6,785,740


LIABILITIES and EQUITY:
Deposits:
Transaction	$	1,108,313		438		0.16	%	$	1,069,682		409		0.15	%	$	1,104,013		339		0.12	%
Savings		1,557,175		13,085		3.33	%		1,453,641		11,029		3.04	%		1,160,121		5,983		2.05	%
Time deposits		3,215,319		38,130		4.70	%		2,694,370		29,471		4.39	%		2,039,046		17,505		3.41	%

Total deposits		5,880,807		51,653		3.48	%		5,217,693		40,909		3.14	%		4,303,180		23,827		2.20	%
Borrowings		2,111,071		26,522		4.98	%		2,157,017		24,762		4.60	%		1,885,913		17,859		3.76	%

Total interest-bearing liabilities		7,991,878		78,175		3.88	%		7,374,710		65,671		3.57	%		6,189,093		41,686		2.67	%

Noninterest-bearing liabilities		76,789							88,765							87,391

Total average liabilities		8,068,667							7,463,475							6,276,484
Total average shareholders’ equity		573,785							517,791							509,256

Total average liabilities and equity	$	8,642,452						$	7,981,266						$	6,785,740

Net interest income and spread			$	70,033		3.13	%			$	61,049		3.15	%			$	53,088		3.27	%

Net interest margin						3.31	%						3.24	%						3.33	%

Sterling Financial Corporation
EXHIBIT A— RECONCILIATION SCHEDULE


(in thousands, unaudited)	Three Months Ended									Nine Months Ended
	Sept 30,			June 30,			Sept 30,			Sept 30,			Sept 30,
	2006			2006			2005			2006			2005
CORE EARNINGS: ⁽¹⁾
Net income as reported	$	19,339		$	16,931		$	13,890		$	51,686		$	45,789
Subtract: net (gain) loss on securities, net of tax		0			0			0			0			36
Add back: merger and acquisition costs, net of tax		120			0			0			120			0
Add back: charge on early debt repayment, net of tax		128			0			0			128			(406	)

Core earnings	$	19,587		$	16,931		$	13,890		$	51,934		$	45,419


CORE EARNINGS PER SHARE — BASIC: ⁽¹⁾
Earnings per share — basic, as reported	$	0.52		$	0.48		$	0.40		$	1.45		$	1.32
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		0.01			0.00			0.00			0.01			(0.01	)

Core earnings per share — basic	$	0.53		$	0.48		$	0.40		$	1.46		$	1.31


CORE EARNINGS PER SHARE — DILUTED: ⁽¹⁾
Earnings per share — basic, as reported	$	0.52		$	0.48		$	0.40		$	1.44		$	1.31
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		0.01			0.00			0.00			0.00			(0.01	)

Core earnings per share — diluted	$	0.53		$	0.48		$	0.40		$	1.44		$	1.30


RETURN ON AVERAGE ASSETS, CORE: ⁽¹⁾
Return on average assets, as reported		0.89	%		0.85	%		0.81	%		0.85	%		0.88	%
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		0.01	%		0.00	%		0.00	%		0.00	%		(0.01	%)

Return on average shareholders’ equity, core		0.90	%		0.85	%		0.81	%		0.85	%		0.87	%


RETURN ON AVERAGE SHAREHOLDERS’ EQUITY, CORE: ⁽¹⁾
Return on average shareholders’ equity, as reported		13.4	%		13.1	%		10.8	%		12.9	%		12.5	%
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		0.1	%		0.0	%		0.0	%		0.1	%		(0.1	%)

Return on average shareholders’ equity, core		13.5	%		13.1	%		10.8	%		13.0	%		12.4	%


OPERATING EFFICIENCY RATIO, CORE: ⁽¹⁾
Operating efficiency ratio, as reported		62.5	%		61.7	%		64.2	%		61.9	%		61.0	%
Add back: net (gain) loss on securities		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Subtract: merger and acquisition costs		(0.2	%)		0.0	%		0.0	%		(0.1	%)		0.0	%
Subtract: charge on early debt repayment		(0.2	%)		0.0	%		0.0	%		(0.1	%)		0.3	%

Operating efficiency ratio, core		62.1	%		61.7	%		64.2	%		61.7	%		61.3	%


(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. Core earnings is a non-GAAP financial measure. 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