Subsequent Event:

Commerce National Bank. On October 1, 2013, Sterling paid $42.9 million in cash to acquire Commerce National Bank ("CNB"). The consolidated financial statements, including segment reporting, as of September 30, 2013, do not include the assets acquired and liabilities assumed as the acquisition occurred on October 1, 2013. The following table summarizes the preliminary net assets acquired amounts recorded at closing:



	October 1, 2013
	(in thousands)
Cash and cash equivalents	$	8,555
Investments and MBS	69,490
Loans receivable, net	161,043
Goodwill	14,408
Core deposit intangible	1,160
Other assets	5,276
Total assets acquired	$	259,932
Deposits	$	189,563
Advances from FHLB	25,000
Other liabilities	2,462
Total liabilities assumed	217,025
Net assets acquired	$	42,907

The recorded goodwill represents the inherent value of the CNB transaction, as a result of the expected enhancement of Sterling’s current operations in Southern California. The amount of goodwill deductible for income tax purposes is approximately equivalent to the recorded book value. The core deposit intangible has an amortization period of approximately ten years and will be amortized on an accelerated basis. The statement of assets acquired and liabilities assumed at fair value are presented above, however, additional adjustments to these amounts may be required, specifically to loans receivable, other assets, which includes OREO and deferred tax assets, and other liabilities, as Sterling finalizes the fair value estimates.

As of October 1, 2013, the unpaid principal balance on purchased loans was $164.2 million. Sterling estimated that $3.7 million of these cash flows would be uncollectable, resulting in a combined credit and interest rate discount of $3.8 million being recorded on these loans. As of the acquisition date, no material loans purchased from CNB exhibited evidence of credit deterioration.