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Commitments and Contingencies
9 Months Ended
Sep. 30, 2013
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure
Commitments and Contingencies:

Merger Agreement. On September 11, 2013, Sterling entered into a definitive agreement to merge (the "Merger") with and into Umpqua Holdings Corporation ("Umpqua"), with headquarters in Portland, Oregon. Immediately after the Merger, Sterling Savings Bank will merge (the "Bank Merger") with and into Umpqua Bank, an Oregon state chartered bank and wholly owned subsidiary of Umpqua. Upon completion of the merger, the combined company will operate under the Umpqua Bank name and brand. The transaction is expected to be completed in the first half of 2014, subject to shareholder and regulatory approval and other customary closing conditions. Under the terms of the agreement, Sterling shareholders will receive 1.671 shares of Umpqua common stock and $2.18 cash for each share of Sterling common stock.

Merger Litigation. On September 18, 2013, Plaintiff Matthew Barnett filed a purported class action on behalf of Sterling's shareholders in connection with the proposed merger of Sterling and Umpqua in the Superior Court for Spokane County, Washington, docketed as Barnett v. Sterling Financial Corporation et al., No. 13-2-03848-4. On September 23, 2013, Plaintiff Vladimir Gusinsky Revocable Trust filed another purported class action in the Superior Court for Spokane County, docketed as Vladimir Gusinsky Revocable Trust v. Seibly et al., No. 13-2-03904-9. On September 26, 2013, Plaintiff Shoshana Minzer filed a third purported class action in the Superior Court for Spokane County, docketed as Minzer v. Sterling Financial Corporation et al., No. 13-2-03986-3. Each complaint names as defendants the members of Sterling's Board of Directors. The Barnett and Minzer complaints also name Sterling as a defendant. The Barnett and Gusinsky complaints also name Umpqua as a defendant.
The lawsuits allege, among other things, that the Board of Directors breached its fiduciary duties to shareholders by failing to take steps to maximize shareholder value or to engage in a fair sale process before approving the Merger. The lawsuits allege that the consideration to be paid by Umpqua is inadequate in light of Sterling's recent performance and growth potential, that Board members labored under conflicts of interest, that Sterling failed to negotiate a protective collar on the exchange ratio, and that the use of certain deal protection mechanisms precluded Sterling from investigating or pursuing alternatives or proposals superior to the Merger. Two of the lawsuits allege that Umpqua aided and abetted the Board of Director’s breaches of fiduciary duty.
On October 11, 2013, the Superior Court for Spokane County consolidated the three actions as In re Sterling Financial Corporation Merger Litigation, Lead No. 13-2-03848-4, and lead counsel was appointed.

The plaintiffs in these actions seek relief that includes, among other things, an injunction prohibiting the consummation of the Merger, rescission to the extent the Merger terms have already been implemented, damages for the breaches of fiduciary duty, and the payment of plaintiffs' attorneys' fees and costs. Sterling believes the lawsuits are without merit and intends to defend against them vigorously. There can be no assurance, however, with regard to the outcome of these lawsuits. Currently, a loss resulting from these claims is not considered probable or reasonably estimable in amount.

Securities Class Action Litigation. On December 11, 2009, a putative securities class action was filed in the United States District Court for the Eastern District of Washington against Sterling and certain of our current and former officers. The court appointed a lead plaintiff on March 9, 2010. On June 18, 2010, the lead plaintiff filed a consolidated complaint. The complaint purports to be brought on behalf of a class of persons who purchased or otherwise acquired Sterling's stock during the period from July 23, 2008 to October 15, 2009. The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by failing to disclose the extent of Sterling's delinquent commercial real estate, construction and land development loans, properly record losses for impaired loans, and properly reserve for loan losses, thereby causing Sterling's stock price to be artificially inflated during the purported class period. Plaintiffs seek unspecified damages and attorneys' fees and costs. On August 30, 2010, Sterling moved to dismiss the complaint. On March 2, 2011, after complete briefing, the court held a hearing on the motion to dismiss. On August 5, 2013, the court entered an order granting defendants' motion and dismissing the complaint in its entirety.  On October 11, 2013, the lead plaintiff filed an amended consolidated complaint.  The amended consolidated complaint names the same defendants, specifies the same class period, alleges the same violations of Sections 10(b) and 20(a) of the Securities & Exchange Act of 1934, and seeks the same relief.  The amended consolidated complaint contains similar allegations of improper disclosure regarding Sterling's lending practices, status of loans and reserving and accounting for loans. Sterling believes the lawsuit is without merit and intends to defend against it vigorously. Failure by Sterling to obtain a favorable resolution of the claims set forth in the complaint could have a material adverse effect on our business, results of operations and financial condition. Currently, a loss resulting from these claims is not considered probable or reasonably estimable in amount.

Additionally, Sterling is involved in ongoing litigation, primarily related to its normal business operations. When establishing a liability for contingent litigation losses, Sterling determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there is no estimable range of possible losses. Sterling believes that the eventual outcome from these cases will not, individually or in the aggregate, have a material adverse effect on its consolidated financial position.