a5890658ex99-1.htm

Slide: 2 Safe Harbor Statement In the course of our presentation, executives and other key employees of the company may discuss matters that are deemed to be forward-looking statements(1) under the law. While we always try to do our best to give accurate and balanced presentations of the company’s business and prospects, actual results may differ from management's view. Additional information about risks of the company achieving results suggested by any forward-looking statements may be found under the headings “ Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s Annual Report on Form 10-K, as updated periodically in the company’s filings with the Securities and Exchange Commission. (1) The Reform Act defines the term “forward-looking statements” to include: statements of management plans and objectives, statements regarding the future economic performance, and projections of revenues and other financial data, among others. The Reform Act precludes liability for oral or written forward-looking statements if the statement is identified as such and accompanied by “meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those made in the forward-looking statements.” 2

Slide: 3 Investment Overview Leading regional community bank in the West Capital position Asset quality Earnings power Franchise value Management depth/breadth 3 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 2004 2005 2006 2007 2008

Slide: 4 Financial Highlights December 31, 2008 Tangible book value per common share of $11.41 Risk-based capital ratio of 13.0% Record deposits of $8.35 billion, up 9% Total assets of $12.79 billion Loans receivable of $8.81 billion Strong liquidity Total capital of $1.14 billion Cash and investments of $2.96 billion Available additional liquidity in excess of $3.2 billion 4

Slide: 5 U.S. Government Initiatives Other Placeholder: Capital Purchase Program Raised $303 million on 12/5/2008 Senior preferred shares with 5% cumulative dividend Warrant to purchase 6.4 million shares of STSA at $7.06 per share FDIC-insurance limit raised to $250,000 per depositor FDIC Transaction Account Guarantee Program Debt Guarantee Program 5

Slide: 6 STERLING Financial Corporation The Sterling Family Commercial bank and residential mortgage unit 6

Slide: 7 Leader in Regional Community Banking 179 Hometown Helpful® depository branches 216 total service locations in 7 western states 2,481 employees Geographic Footprint Well positioned along major corridors 7

Slide: 8 Golf Savings Bank Management Heidi Stanley SSB’s Chairman and CEO Leadership Next-generation management 8 SSB Executive Team

Slide: 9 Economic Outlook Pacific Northwest economy relatively strong Regions Puget Sound Portland/Vancouver Spokane Santa Rosa/Sonoma Bend Sacramento/Roseville Boise Salt Lake City Southern California Personal Income Employment Housing Inventory Housing Permits Median Home Prices Population Growth New Job Creation Economic Outlook 9

Slide: 10 10 Total Assets Loan growth is both organic and acquisitive Total Assets Loan growth is both organic and acquisitive (S in bilbons) $140 Other $120 Securities Loans $12.8 hlnn $12.1 bilion 0.9 $9.8 bilbon 0.9 1 .1 2.0 $7.6 billion $6.9 bilion 0.5 4— 2.2 1.9 $100 $80 $6.0 $40 $2.0 $08 $4.3 bilbon 1 .1 F fr,4 Growth: 25% 2003 2004 2005 2006 2001 2008 0.5 2.1 4.9 4.3 2.9 8.9 9.0 2.8

Slide: 11 11 Loan Portfolio Mix Diversified and balanced Loan Portfolio Mix Diversified and balanced December 31, 2008 Total: $9.0 Billion Commercial Construction $1,079 million 12% Residential Re Estate, $867 million, 10% YTD Yield 6.14% 11 STERLING Consizner $1,249 million 14% Financial Corporation Commercial Banking $2532 million 28% Residential Construction $1456 million Commercial Real Estate $1843 million 20%

Slide: 12 Loan Originations Construction is declining 12 Loan Originations Construction is declining 12 Mordhs $5A80 2,192 $51480 2,192 ($ in milians) $5SIJO $3,000 $2918 1,o 400 $1,000 819 388 285 2004 12 $4,971 2,335 831 1,154 517 2006 $3,623 602 1$02 n 276 2005 996 L6o2J 199 996 602 D&-O7 542 LJ Dec-06 Commercial real eate Constzna Commercial badirig Reskierdial real estate Cousbuclion STERLING Financial Corporation 4000 2000 3881 899 2007 1492 1465 498

Slide: 13 Capital and Liquidity Well capitalized and solid liquidity 13 Capital and Liquidity Well capitalized and solid liquidity Dec 31, Sept30, 2008 2008 Cash and investments (mils) $ 2,955 $ 2,407 Regulatory capital ratios (SFC) Tier I leverage (to average assets) 9.2% 8.0% Tier I (to risk-weighted assets) 11.7% 9.7% Total (torisk-weightedassets) 13.0% 11.0% Additional borrowing capacity (mils) FHLB, Fed and other $ 3,230 $ 3,100 13 STERLING Financial Corporation

Slide: 14 Capital Funding Sources Primary source – deposits 14 Capital Funding Sources Primary source — deposits B°imwipa $248 milbon Repo& Fed Funds $1,163 milbon 9% Deposits $9350 million 66% ‘,891 million $1,141 milnn 9% 1. Funding Sources Total: $116 Billion of To I pos TnztsxSion Accouits r FHLB $1,727 mUll ;1] ime DeDosit;0] 14 $1,346 irilion 16% STERLING Financial Corporation

Slide: 15 15 Net Interest Income Higher loan volumes Net Interest Income Higher loan volumes STERLING Financial Corporation ($ in millions) $350 $300 $250 $200 $150 $50 l2Monlhs $355.4 $35.6 ‘4 Dec-01 Dec-08 3.42% 3.08% $0 Tax Equivalent Net Interest 3.34% Ham in 15 2004 2005 2006 2001 3.30% 3.33% 3.42% 100

Slide: 16 Fees and Service Charges Diversified streams 16 Fees and Service Charges Diversified streams (Sin millions) $10 l2 Months $59.9 $56.0 $20 $10 $0 J04 2006 2001 Dec-01 Dec-08 60 50 40 30

Slide: 17 9 months Title: Operating Efficiency Systemic process improvements 17 Operating Efficiency Systemic process improvements ($1. billians) 260% Non interest ExpenselAverage Awts Fotith oa 253% 252% 2w — 245% 241% 233% 230% 226% - 22(Y) 2.17% 210% L 200% 2004 2005 2006 2008 [kr-01 D-O8 2.40%

Slide: 18 18 Non-Performing Assets Weighted to residential construction portfolio Non-Performing Assets Weighted to residential construction portfolio [cxxi Stratification of NPAS Dec 31, Sept 30, June 30, Mardi 31, 2008 2008 2008 2008 Residential Consirudion 67.2% 72.5% 79.5% 75J% Co.mnercialCcnshuction 11.6% 4.1% 4.0% 4.2% Multifamily CIFIKtkXI 0.6% 0.9% 0.0% 04136 Commercial 10.1% 10.3% 9.6% 14.1% Residential 7.5% 8.1% 3.3% 1.7% CommercialRealEstate 1.3% 2.0% 1.6% 2.1% Cons.ner 0.9% 1.2% 1.3% 1.3% Multifamily Real Estate 0.8% 0.9% 0.7% 0.9% Total Gross NPAs {$ in mils) $610.6 $436.7 $303.4 $223.1 18 STERLING

Slide: 19 Residential Construction NPAs The 80-20 rule NON-PERFORIBNG ASSET ANALYSIS t$innilkins) %ot IMnt Gross 12/3112008 913012008 613012008 $1114 13_9 618 296 234 221 itS 611 Residential constniction (by ki at Skin) PoItkNd Puqet Soizid & CthIo.n.a LRth Boise Bend Vsicouver Oftr Tthi iesidentul constiuclion Commerd conshucbon (a) Other loan categones TobI gloss NPAs 19% 12% 11% 5% 4% 4% 2% 10% Pint %ot Gross $ 926 381 323 381 410 228 191 322 21% 9% 1% 9% 9% 5% 5% 1% 31 68 216 12% 5% $ 983 4361 23% 100% Amt %ot Gross $ 461 310 401 36.2 349 191 199 110 15% 10% 13% 12% 12% 6% 1% 4% 2409 16 123 4% 502 11% 4104 61% 14S 12% 1251 21% $610S 100% Specihc leseives (1 95) (316) (406) Tohl net NPAs Tgiir flWT -T2r (a) Inchides mtSi-finiy cn’rdnrbon. $ W3A 100%

Slide: 20 Title: Residential Construction Geographic distribution of loan commitments 12/31/08 $1.956 Billion down $419 million from September 30, 2008 “Other” category includes Vancouver, Nevada, Montana, Arizona, other Oregon, other Idaho and other Washington. 20 Residential Construction Geographic distribution of loan commitments 12131108 $1 .956 Billion Othe( category includes Vancouver. Ned& Montana. Arizona. other Oregon. other Idaho and other Washington. Bend Utah N. California $81 million - 4% Boise $92 million 5% S. California —- $159 million 8% $63 million $36 million 2% down $419 million from September 30, 2008 Portland Puget Sound $845 million $384 million 20% 43% Otttr 20 15% STERLING Financial Corporation

Slide: 21 Resolving Non-Performing Assets Time, money and management Body: Restoring to accrual status Short sale of loans Restructuring of loan Sale of notes Foreclosure and sale of property

Slide: 22 Results of Operations (Dollars in thousands) 22 Results of Operations (Dollars in thousands) (S in riIkins) Year-End 2008 Income Statement ($) Provision for ban losses $333,597 Good hiipabment charge $223,765 Net Eiconie, GAAP ($336742) Earnhigs per share, GAAP ($6.51) Netlicanie, are ($113128) EatnEigs per share, ae ($2.19) CapilallEqiiityRalios(°L) Leverage ralio 9.20% Tierlcapitalnlio 1110% Total risk-based capital ratio 13.00% Capital Reserves($) WeI-capitahzed excessl(deftit) -10% RBC $294,600 Alowance ii excess of capital biiit -10% RBG $105,000 Wel-capitaized excessl(delicit) -11% RBC $198,100 Alowance ii excess of capital tiiit- 11% RBC $105,000 Est. Loan-Loss Absorption ($) Absorption amount@36%tax rate- 10% RBC $565,313 Absorptionaniount@36%taxrate-11%RBC $414,531

Slide: 23 Provision Reflects Confluence of Changes One-time adjustment Provision Reflects Confluence of Changes One-time cid,ustment 1 84,178 289,994 56,618 530 .790 S 229699 5 229699 5 183672 5 117332 MODIFIED REPORTED REPORTED REPORTED 474,172 380599 (inthousands, unaudited) NONPERFORMING LOANS: Dec 31, 2008 Dec311 2008 Sept 30, 2008 Dec311 2007 Nonaccrual loans Nonaccrual loans fair value Restructured loans Total nonperlorming loans ALLOWANCE FOR CREDIT LOSSES: Total credit allowance to total loans 2.55% 2.55% 1.99% 1.30% Total allowance to nonperforming loans 95.4% 43.3% 48.1% 94.5% 56,618 123,790 530,790 1,153 381,752 350 124,140 STERLING Financial Corporation

Slide: 24 Title: Earnings Per Share Note: Credit costs per share equals the quarterly provision for loan losses multiplied by STSA’s tax retention rate of 67.5% in 2007, and 72% in 2008, divided by fully diluted shares outstanding in the quarter. Core EPS exclude charge for goodwill impairment and other items. 24 Core EPS excluding credit costs core EPS 2007 2008 2.25 1.92 0.33 2008 2.36 ($2.19) 4.55

Slide: 25 Title: Earnings Power 25 (Dollars in thousands, except per share amounts) * Percentage represents the percent of average earning assets for net interest income, and the percent of average assets for all other categories. Core earnings exclude charge for goodwill impairment and other items. . Earnings Power (Dollars in thousands, except per share amounts) YTh Adual Longer-Term 31 a€-os Sindegic Tagetst Interest eaning assets Loansllnvesiments Deposits Increa se/Mix Capital emain Wel Capitahzed Net jiterest income $ 359,552 3.04% $ 415,000 3.5 0% Provision $ (333,597) -2.63% $ (30,000) -0.24% Total non-literest ncome $ 72,108 0.57% S 115,000 0.90% Total non-ilierest expense $ (285,730) -2.26% $ (305,000) -2.34% Pretax licome $ (187,667) -1.48% $ 195,000 1.49% Income taxes $ 75,898 $ (64000) Netiicome,coire $ (111769) -0.88% 5 131,000 1.00% Preferred dividend $ (1,208) $ (15,150) Netavattoconinon $ (113,128) -0.89% $ 115,850 0.78% Eamiigspershare,awe $ (219) $ 2.15 * Percentage represents the percent of average earning asset3 for net interest income, and the percent of average assets for all other categories. Core earnings exclude charge for goodwill impairment and other items. 25 STERLING Financial Corporation

Slide: 26 Body: $12.8 billion regional community bank Expanding geographic footprint Growth strategy Solid regional economics Strong management Strong credit culture Title: Investment Summary Franchise value 26