Sterling Financial Corp
Sterling Financial — Northern Empire Bancshares — Merger or Acquisition (September 2006)
24 slides from Sterling Financial's merger presentation, Sep 18, 2006
Slide 1: Combining Complementary Strengths to Create the Third Largest Community Bank in the West
Combining Complementary Strengths to Create the Third Largest(1) Community Bank in the West Presentation to Investors September 18, 2006 See footnote on page #4
Slide 2: Why Northern Empire Bancshares?
Northern Empire (NREB) is a high-performing community bank that has combined strong growth, cost efficiencies and consistently high credit quality to produce positive performance measures Excellent branch network with an attractive Northern California presence Expanded lending footprint, including a
Slide 3: Corporate Overview
(1) Includes Lynnwood Financial Group (LFG) acquisition and Pro forma Sterling Financial Corp. (STSA)/FirstBank NW (FBNW) as of 6/30/06. Source: Company internal documents and 10Q's filed for period ended 6/30/06. (2) Based on six months ended June 30, 2006 10Q data. (3) Based on 0.805 exchange rati
Slide 4: Transaction Rationale - Strategic & Financial
Accelerates entry into and solidifies Sterling's California presence California is largest state economy in the US Northern Empire markets present significant growth opportunity Northern Empire's robust operating performance is expected to help drive continued profitable growth in the combined compa
Slide 5: Pro Forma Branch Map
Sterling/FirstBank Northern Empire Action Golf Intervest Pro Forma Branch Map(1) (1) Map does not show Intervest locations in Scottsdale, AZ or Lakewood, CO. Map does not show Northern Empire loan production office in Phoenix, AZ. SAN FRANCISCO SACRAMENTO MEDFORD BEND EUGENE TACOMA SEATTLE SPOKANE C
Slide 6: Transaction Rationale - Integration
Management and lending team retention Northern Empire CEO, Debbie Meekins, has entered into an employment agreement with Sterling Employment contracts are expected with other key employees Straightforward technology systems allows for smooth Information Technology integration, which is expected in 2
Slide 7: Transaction Summary
Transaction Summary (1) Based upon Sterling's stock price of $33.04 as of September 15, 2006. Based upon 10.94 million NREB common shares outstanding and 778,555 options with an average strike price of $10.84, as of September 15, 2006.
Slide 8: Transaction Summary
Transaction Summary Other: NREB CEO will have an employment agreement with non-competition provisions NREB directors will have non-competition agreements Due Diligence: Completed Anticipated Closing: Second Quarter 2007
Slide 9: Deal Pricing
Deal Pricing Based upon Sterling's closing stock price of $33.04 as of September 15, 2006. Reflects median multiples for 89 nationwide commercial bank transactions announced since January 1, 2006 with a deal value greater than $15 million. Based upon NREB's earnings per share of $1.60 for the 12 mon
Slide 10: Pro Forma Earnings Impact
Pro Forma Earnings Impact Based on First Call mean EPS Estimate for 2007 of $2.33, assuming 41.7 million fully diluted outstanding Sterling shares. Based on STSA/NREB internal projections for calendar 2007 of $2.05, assuming 10.9 million fully diluted outstanding Northern Empire shares. Estimate of
Slide 11: Accretive to Earnings Per Share
Accretive to Earnings Per Share First Call mean EPS estimate for STSA.
Slide 12: Cost Savings
Cost Savings NREB expenses assume cost savings in relation to estimated non-interest expense for the twelve months ended December 31, 2006. Assumes an effective tax rate of 38%. ($ in millions)
Slide 13: Estimated Transaction Costs
Estimated Transaction Costs Assumes employee-related costs, conversion/integration costs and some transaction costs are fully tax-deductible at a tax rate of 38%. Sterling estimates pre-tax merger costs of approximately $8.2 million
Slide 14: STSA-NREB: Solid Capital Ratios
STSA-NREB: Solid Capital Ratios (1) Includes LFG acquisition and Pro forma STSA/FBNW as of 6/30/06. Source: Company internal documents. Data as of 6/30/06.
Slide 15: Loan Portfolio Mix
Loan Portfolio Mix Business/Corporate Banking 21.0% Residential Consumer Construction Income Property 25.4% 13.0% 21.8% 18.8% Pro Forma Mix ($ in thousands) Source: Public filings for STSA as of 6/30/06 (Does not include LFG & FBNW).
Slide 16: STSA-NREB: Strong Loan Origination and Asset Quality
STSA-NREB: Strong Loan Origination and Asset Quality Source: STSA, NREB and FBNW public filings. NREB loan origination data provided by company internal documents.
Slide 17: Appendix
Appendix 7
Slide 18: Sterling's Historical Balance Sheet
Sterling's Historical Balance Sheet Source: STSA public filings.
Slide 19: Sterling's Historical Income Statement
Sterling's Historical Income Statement Source: STSA public filings.
Slide 20: NREB Historical Balance Sheet
NREB Historical Balance Sheet Source: NREB public filings.
Slide 21: NREB Historical Income Statement
NREB Historical Income Statement Source: NREB public filings.
Slide 22: Forward-Looking Statements
Forward-Looking Statements Except for historical information, all other information in this presentation consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements abo
Slide 23: Additional Information and Where To Find It
Additional Information and Where To Find It Sterling intends to file with the Securities and Exchange Commission a registration statement on Form S-4, and Sterling and Northern Empire each expect to mail a proxy statement/prospectus to their respective security holders, containing information about
Slide 24: Creating the Third Largest Community Bank in the West
September 18, 2006 "Creating the Third Largest Community Bank in the West"
Northern Empire Bancshares — Merger or Acquisition (September 2006) on 6ix