425

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8 - K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) December 1, 2007

STERLING FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Washington
(State or other jurisdiction of
incorporation) 0-20800
(Commission File Number) 91-1572822
(IRS Employer
Identification No.)

111 North Wall Street, Spokane, Washington 99201

(Address of principal executive offices) (Zip Code)

(509) 458-3711

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.

x Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

INFORMATION TO BE INCLUDED IN THE REPORT

Item 8.01. Other Events.

     On April 11, 2007, Sterling Financial Corporation (“Sterling”) and North Valley Bancorp (“North Valley”), the parent company of North Valley Bank, announced that they had entered into an Agreement and Plan of Merger dated April 10, 2007 (the “Merger Agreement”), pursuant to which North Valley would merge with and into Sterling, with Sterling being the surviving corporation. The boards of directors of both Sterling and North Valley approved the Merger Agreement on April 10, 2007 and the shareholders of North Valley approved the principal terms of the Merger Agreement at a special meeting of shareholders held on July 31, 2007.

     Pursuant to the terms of the Merger Agreement, either party was entitled to terminate the Merger Agreement if the proposed merger was not consummated by November 30, 2007. Effective December 1, 2007 Sterling received notice from North Valley that the North Valley board of directors had decided to exercise its right to terminate the Merger Agreement. This decision was reached after it became apparent that requisite regulatory approval of the transaction by the Federal Deposit Insurance Corporation, which is a condition precedent to the merger, had not been received as of November 30, 2007, and there was no assurance when or if such approval would be received.

     Pursuant to the terms of the Merger Agreement, the parties remain bound by the terms of a Confidentiality Agreement dated February 6, 2007, and all costs and expenses incurred in connection with the Merger Agreement and the transactions contemplated thereby shall be paid by the party incurring the expense. Sterling’s costs and expenses in connection with the transaction are expected to be less than $1 million. There were no termination fees incurred by the parties in connection with the termination of the Merger Agreement.

Item 9.01 Financial Statements and Exhibits.

     (d) Exhibit

     99.1 Text of Sterling Press Release dated December 3, 2007.

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S I G N A T U R E

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	STERLING FINANCIAL CORPORATION
	(Registrant)
December 3, 2007	By:	/s/ Daniel G. Byrne
Date		Daniel G. Byrne
		Executive Vice President, Assistant Secretary and Principal Financial Officer

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EX-99.1

For Release December 3, 2007 — 6:00 a.m. PT

STERLING FINANCIAL CORPORATION OF SPOKANE, WA,
AND NORTH VALLEY BANCORP OF REDDING, CA
TERMINATE MERGER PLANS

Spokane, WA — December 3, 2007 —
Sterling Financial Corporation (“Sterling”) (NASDAQ:STSA) announced today that it has received notice from North Valley Bancorp (“North Valley”) (NASDAQ:NOVB) that, effective December 1, 2007, North Valley has elected to terminate the definitive agreement for the merger of North Valley with and into Sterling. Pursuant to the terms of the Agreement and Plan of Merger dated April 10, 2007 (the “Merger Agreement”), either party had the right to terminate the Merger Agreement if the proposed merger was not consummated by November 30, 2007.

The terms of the Merger Agreement had been unanimously approved by the board of directors of each company, and had also been approved by the shareholders of North Valley. The pending merger remained subject to regulatory approval and satisfaction of other customary closing conditions. In October, Sterling announced that it had revised its expectations regarding the expected closing date of the proposed merger because the Federal Deposit Insurance Corporation (the “FDIC”) had informed Sterling that the FDIC could not advise when or if the pending application to merge Sterling Savings Bank with North Valley Bank would be approved.

Chairman and chief executive officer of Sterling, Harold B. Gilkey, stated “We had hoped to complete this transaction, but we recognize that the delay in receiving requisite regulatory approval created challenges for North Valley’s ability to plan for the future and we understand their need to be able to give their stakeholders guidance with regard to expectations for day-to-day operations. It is disappointing that specific assurances regarding the timing of regulatory approval are not currently available. This was a great opportunity to combine the resources of two companies that shared a commitment to community, a strong customer service culture and an appetite for continuous improvement that would have benefited the customers, shareholders and employees of both companies.”

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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 United States. 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.

Sterling Contacts:	Sterling Financial Corporation
	Harold B. Gilkey
	Chairman and Chief Executive Officer
	509-354-8186
	Daniel G. Byrne
	EVP, Chief Financial Officer
	509-458-3711
Sterling Media Contact:	Jennifer Lutz
	Public Relations Administrator
	509-368-2032

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