SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------------------------
FORM 11-K
(Mark One)
[ ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended
OR
[X] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from July 1, 1997 to December 31, 1997
Commission file number
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Sterling Savings Association Employee Savings and Investment Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
REQUIRED INFORMATION
The following financial statements shall be furnished for the plan:
1. An audited statement of financial condition as of the end of the
latest two fiscal years of the plan (or such lesser period as the
plan has been in existence).
2. An audited statement of income and changes in plan equity for each
of the latest three fiscal years of the plan (or such lesser period
as the plan has been in existence).
3. The statements required by Items 1 and 2 shall be prepared in
accordance with the applicable provisions of Article 6A of
Regulation S-X (17 CFR 210.6A-01-.6A-05).
4. In lieu of the requirements of Items 1-3 above, plans subject to
ERISA may file plan financial statements and schedules prepared in
accordance with the financial reporting requirements of ERISA. To
the extent required by ERISA, the plan financial statements shall
be examined by an independent accountant, except that the "limited
scope exemption" contained in Section 103(a)(3)(C) of ERISA shall
not be available.
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the employee
benefit plan) have duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
----------------------------------------
(Name of Plan)
---------------------------- ----------------------------------------
Date (Signature)
<PAGE>
STERLING Savings Association
Employee Savings and Investment Plan
INFORMATION TO BE INCLUDED IN THE REPORT:
1. Not applicable, see Item 4.
2. Not applicable, see Item 4.
3. Not applicable, see Item 4.
4. Financial statements and schedules prepared in accordance with the
financial reporting requirements of ERISA.
<PAGE>
Report of Independent Accountants
Financial Statements:
Statements of Net Assets Available for Benefits as of
December 31, 1997 and June 30, 1997
Statements of Changes in Net Assets Available for Benefits
for the Six Months Ended December 31, 1997 and for the
Year Ended June 30, 1997
Notes to Financial Statements
Supplemental Schedules:
Line 27a - Schedule of Assets Held for Investment Purposes
Line 27d - Schedule of Reportable Transactions
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
August 28, 1998
To the Participants and
Administrative Committee
of the Sterling Savings Association
Employee Savings and Investment Plan
In our opinion, the accompanying statements of net assets available
for benefits and the related statements of changes in net assets
available for benefits present fairly, in all material respects, the
net assets available for benefits of the Sterling Savings Association
Employee Savings and Investment Plan ("the Plan") as of December 31,
1997 and June 30, 1997, and the changes in net assets available for
benefits for the six months ended December 31, 1997 and the year ended
June 30, 1997, as listed under Item 4 of Form 11-K, in conformity with
generally accepted accounting principles. These financial statements
are the responsibility of the Plan's management; our responsibility is
to express an opinion on these financial statements based on our
audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by the Plan's
management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
Our audits were made for the purpose of forming an opinion on the
financial statements taken as a whole. The supplemental schedules as
listed on page 1 are presented for the purpose of additional analysis
and are not a required part of the basic financial statements, but are
supplementary information required by the Department of Labor's Rules
and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974, as amended. The supplemental
schedules have been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/PricewaterhouseCoopers LLP
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Statements of Net Assets Available for Benefits
as of December 31, 1997 and June 30, 1997
December 31, June 30,
1997 1997
------------ ----------
Assets:
Investments at fair value:
Mutual funds $3,944,386 $3,590,194
Common stock of Sterling Financial
Corporation 2,972,116 2,436,858
Certificates of deposit 466,710 607,287
Cash and cash equivalents 54,208 13,421
Receivables:
Employer contribution 1,378 38,006
Participants' contributions 29,675
------------ ----------
Net assets available for benefits $7,438,798 $6,715,441
============ ==========
The accompanying notes are an integral part of the financial
statements.
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Statements of Changes in Net Assets Available for Benefits
for the six months ended December 31, 1997 and the year ended
June 30, 1997
Six Months
Ended Year Ended
December 31, June 30,
1997 1997
------------ ----------
Additions to net assets attributed to:
Interest $ 17,336 $ 33,207
Dividends 378,439 205,813
Net appreciation in fair value of
investments 292,924 889,984
Contributions:
Participants 455,077 836,612
Employer 97,714 191,971
---------- ----------
Total additions 1,241,490 2,157,587
Deductions to net assets attributed to:
Distributions and benefits paid to
participants 518,133 454,477
---------- ----------
Increase in net assets available for
benefits 723,357 1,703,110
Net assets available for benefits:
Beginning of year 6,715,441 5,012,331
---------- ----------
End of year $7,438,798 $6,715,441
========== ==========
The accompanying notes are an integral part of the financial
statements.
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Notes to Financial Statements
1. DESCRIPTION OF PLAN:
The following description of the Sterling Savings Association
("Sterling" or "the Employer") Employee Savings and Investment
Plan ("the Plan") provides only general information. Participants
should refer to the plan document for a more complete description
of the Plan's provisions.
GENERAL
The Plan is a defined contribution plan, which became effective
on July 1, 1985. Employees with one year of service may enroll
on the first day of any calendar quarter. The Plan is subject
to the provisions of the Employee Retirement Income Security Act
of 1974 ("ERISA"), as amended.
CONTRIBUTIONS
Participants may contribute from 1% to 15% of their compensation
up to a statutory maximum amount, tax deferred, through payroll
deductions to the Plan. Contributions may be suspended at any
time upon thirty days' written notice by the participant.
However, contributions may only be reinstated, and changes in
the amount contributed are only allowed on the first day of any
calendar quarter.
Participants contributing to the Plan are entitled to an
Employer matching contribution should Sterling elect to make
one. During the six months ended December 31, 1997 and the year
ended June 30, 1997, Sterling's matching contribution was 25% of
the employee's contribution up to 8% of compensation.
Additional amounts may be contributed at the option of Sterling
as a profit sharing contribution. All Employer contributions,
whether matching or profit sharing, are made out of Sterling's
current or accumulated net profits and are invested in the Stock
Fund. Amounts contributed by both Sterling and the participant
shall not exceed 25% of compensation paid to the participants
during the fiscal year or the maximum amount allowable as a tax
deduction by Sterling.
INVESTMENT OPTIONS
Participant contributions are invested in separate funds as
designated by the individual participants. Participants may
elect to reallocate the amounts invested in each fund on the
first day of any calendar quarter during the year. The separate
investment funds are described below.
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Notes to Financial Statements, Continued
1. DESCRIPTION OF PLAN, CONTINUED:
INVESTMENT OPTIONS, CONTINUED
FIXED FUND
The objective of this fund is to maximize short-term income
while minimizing risk. The fund invests in Sterling
certificates of deposit, money market funds and cash. The
certificates of deposit and the cash are federally insured up
to $100,000 per participant. The interest rates on the
certificates of deposit are set each year on July 1.
BALANCED FUND
The object of this fund is to maximize long-term return
through a combination of market appreciation and income. The
fund invests in the American Balanced Fund, a mutual fund
which invests in stocks and bonds.
ALLOCATION FUND
The objective of this fund is to maximize long-term return
through a combination of market appreciation and income. The
fund invests in the Stagecoach Index Allocation Fund (formerly
known as the Overland Express Asset Allocation Fund), a mutual
fund which invests in stocks, bonds and money market
investments.
GROWTH AND INCOME FUND
The objective of this fund is to maximize long-term return
primarily through market appreciation. The fund invests in
The Putnam Fund for Growth and Income, a mutual fund which
invests primarily in common stocks of domestic corporations.
GROWTH FUND
The objective of this fund is to maximize long-term return
through market appreciation. The fund invests in the AIM
Value Fund, a mutual fund which invests in stocks, convertible
securities, bonds and other equity investments.
AGGRESSIVE GROWTH FUND
The objective of this fund is to maximize long-term return
through market appreciation. The fund invests in the John
Hancock Special Equities Fund which invests in emerging-growth
companies.
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Notes to Financial Statements, Continued
1. DESCRIPTION OF PLAN, CONTINUED:
INVESTMENT OPTIONS, CONTINUED
STOCK FUND
The objective of this fund is to achieve total return from
capital appreciation and dividend income through investment in
Sterling Financial Corporation common stock.
PARTICIPANT ACCOUNTS
Separate accounts are maintained for each participant. Each
participant's account is credited with the participant's
contribution and an allocation of Sterling's contribution and
Plan earnings. Allocations of Sterling's contribution and
Plan earnings are based on participant account balances, as
defined in the Plan document. The participant's benefit is
limited to the benefit that has accumulated in the
participant's account.
VESTING
A participant is 100% vested in all contributions, both
participant and Employer, at all times.
PAYMENT OF BENEFITS
Distributions are made upon termination, death, disability or
retirement. Participants or their beneficiaries will receive
payment of benefits as follows: (a) balances of $3,500 or
less will be distributed in a lump sum, or (b) balances
greater than $3,500 in various optional forms of distribution.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the
acrual basis of accounting in accordance with generally
accepted accounting principles.
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Notes to Financial Statements, Continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
INVESTMENTS
The Plan's investments are stated at fair value. Certificates
of deposit are valued at cost which approximates fair value.
Mutual funds are valued at quoted market prices which
represent the value of shares held by the Plan at year end.
Sterling Financial Corporation common stock is valued at its
quoted market price.
The Plan presents in the statement of changes in net assets
available for benefits the net appreciation or depreciation in
the fair value of its investments which consists of the
realized gains or losses and the net unrealized appreciation
or depreciation on those investments.
Purchases and sales of securities are recorded on a trade-date
basis. Interest income is recorded on the accrual basis.
Dividends are recorded on the ex-dividend date.
CASH AND CASH EQUIVALENTS
Cash equivalents are highly liquid instruments, primarily
money market funds, with a remaining maturity of three months
or less at the date of purchase.
ADMINISTRATIVE EXPENSES
Expenses for administration of the Plan are paid by Sterling.
BENEFIT PAYMENTS
Benefits are recorded when paid.
ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make significant estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of changes in net assets
during the reporting period. Actual results could differ from
those estimates.
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Notes to Financial Statements, Continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
RISKS AND UNCERTAINTIES
The Plan provides for various investment options in combinations
of stocks, bonds, fixed income securities, mutual funds and
other investment securities. Investment securities are exposed
to various risks, such as interest rate, market and credit. Due
to the level of risk associated with certain investment
securities and the level of uncertainty related to changes in
the value of investment securities, it is at least reasonably
possible that changes in risks in the near term would materially
affect participants' account balances and the amounts reported
in the statement of net assets available for benefits and the
statement of changes in net assets available for benefits.
3. INVESTMENTS:
The following table presents the fair value of investments,
including those that represent 5% or more of the Plan's net
assets.
Shares Fair
or Units Value
--------- ----------
December 31, 1997:
Certificate of deposit - Sterling
Savings Association, 6.00%, due
July 1, 1998 $ 466,710
Mutual funds:
American Balanced Fund 8,949 140,317
Stagecoach Index Allocation Fund 23,517 364,748
The Putnam Fund for Growth and
Income 106,128 2,073,749
AIM Value Fund 25,231 817,986
John Hancock Special Equities
Fund 21,126 547,586
Common stock of Sterling Financial
Corporation 136,649 2,972,116
Cash and cash equivalents 54,208
----------
$7,437,420
==========
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Notes to Financial Statements, Continued
3. INVESTMENTS, CONTINUED:
Shares Fair
or Units Value
--------- ----------
June 30, 1997:
Certificate of deposit - Sterling
Savings Association, 5.37%, due
July 1, 1997 $ 607,287
Mutual funds:
Overland Express Asset Allocation
Fund 26,058 408,850
The Putnam Fund for Growth and
Income 90,349 1,862,992
AIM Value Fund 21,425 725,247
John Hancock Special Equities
Fund 24,785 593,105
Common stock of Sterling Financial
Corporation 130,838 2,436,858
Cash and cash equivalents 13,421
----------
$6,647,760
==========
During the six months ended December 31, 1997 and the year ended
June 30, 1997, the Plan's investments (including realized and
unrealized gains (losses)) appreciated (depreciated) as follows:
December 31, June 30,
1997 1997
------------ ----------
Mutual funds:
American Balanced Fund $ (7,536)
Stagecoach Index Allocation Fund 1,270 $ 29,427
The Putnam Fund for Growth and
Income (110,665) 274,076
AIM Value Fund (37,300) 115,546
John Hancock Special Equities Fund 49,091 (37,125)
Common stock of Sterling Financial
Corporation 398,064 508,060
---------- ----------
$ 292,924 $ 889,984
========== ==========
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Notes to Financial Statements, Continued
4. NET ASSETS AND CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
BY FUND:
At December 31, 1997, the net assets available for benefits by
fund are as follows:
<TABLE>
<CAPTION>
Fixed Balanced Allocation Growth and Growth
Fund Fund Fund Income Fund Fund
---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Investments, at fair value:
Mutual funds $ 140,317 $ 364,748 $ 2,073,749 $ 817,986
Common stock of Sterling Financial
Corporation
Certificate of deposit $ 466,710
Cash and cash equivalents
---------- ---------- ---------- ----------- ----------
466,710 140,317 364,748 2,073,749 817,986
Receivables:
Employer contribution
Pending transfers 19 1,234 3,719 12,381 6,556
---------- ---------- ---------- ----------- ----------
Net assets available for benefits
at December 31, 1997 $ 466,729 $ 141,551 $ 368,467 $ 2,086,130 $ 824,542
========== ========== ========== =========== ==========
</TABLE>
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Notes to Financial Statements, Continued
4. NET ASSETS AND CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
BY FUND, CONTINUED:
<TABLE>
<CAPTION>
Aggressive Cash and
Growth Cash
Fund Stock Fund Equivalents Total
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Investments, at fair value:
Mutual funds $ 547,586 $ 3,944,386
Common stock of Sterling Financial
Corporation $2,972,116 2,972,116
Certificate of deposit 466,710
Cash and cash equivalents $ 54,208 54,208
---------- ---------- ---------- -----------
547,586 2,972,116 54,208 7,437,420
Receivables:
Employer contribution 1,378 1,378
Pending transfers 5,341 24,958 (54,208) 0
---------- ---------- ---------- -----------
Net assets available for benefits
at December 31, 1997 $ 552,927 $2,998,452 $ 0 $ 7,438,798
========== ========== ========== ===========
</TABLE>
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Notes to Financial Statements, Continued
4. NET ASSETS AND CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
BY FUND, CONTINUED:
At June 30, 1997, the net assets available for benefits by fund
are as follows:
<TABLE>
<CAPTION>
Fixed Balanced Allocation Growth and Growth
Fund Fund Fund Income Fund Fund
---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Investments, at fair value:
Mutual funds $ 408,850 $1,862,992 $ 725,247 $ 593,105
Common stock of Sterling Financial
Corporation
Certificate of deposit $ 607,287
Cash and cash equivalents
---------- ---------- ---------- ----------- ----------
607,287 408,850 1,862,992 725,247 593,105
Receivables:
Employer contribution
Participant contributions 1,838 2,671 8,184 4,619 7,656
Pending transfers 40 165 638 457 406
---------- ---------- ---------- ----------- ----------
Net assets available for
benefits at June 30, 1997 $ 609,165 $ 411,686 $1,871,814 $ 730,323 $ 601,167
========== ========== ========== =========== ==========
</TABLE>
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Notes to Financial Statements, Continued
4. NET ASSETS AND CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
BY FUND, CONTINUED:
<TABLE>
<CAPTION>
Aggressive Cash and
Growth Cash
Fund Stock Fund Equivalents Total
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Investments, at fair value:
Mutual funds $ 593,105 $ 3,590,194
Common stock of Sterling Financial
Corporation $2,436,858 2,436,858
Certificate of deposit 607,287
Cash and cash equivalents $ 13,421 13,421
---------- ---------- ---------- -----------
593,105 2,436,858 13,421 6,647,760
Receivables:
Employer contribution 38,006 38,006
Participant contributions 7,656 4,707 29,675
Pending transfers 406 11,715 (13,421)
---------- ---------- ---------- -----------
Net assets available for benefits
at June 30, 1997 $ 601,167 $2,491,286 $ 0 $ 6,715,441
========== ========== ========== ===========
</TABLE>
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Notes to Financial Statements, Continued
4. NET ASSETS AND CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
BY FUND, CONTINUED:
The changes in net assets available for benefits by fund for the
six months ended December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Fixed Balanced Allocation Growth and Growth
Fund Fund Fund Income Fund Fund
---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Interest $ 16,549 $ 14 $ 47 $ 241 $ 94
Dividends 11,463 39,931 244,477 82,568
Net appreciation (depreciation) in
fair value of investments (7,536) 1,270 (110,665) (37,300)
Contributions:
Participants 19,915 14,734 37,812 138,772 71,108
Employer
---------- ---------- ---------- ----------- ----------
Total additions 36,464 18,675 79,060 272,825 116,470
Transfers (146,638) 122,876 (101,327) 96,387 47,768
Deductions to net assets attributed to:
Distributions and benefits paid to
participants 32,262 20,952 154,896 70,019
---------- ---------- ---------- ----------- ----------
Increase (decrease) in net assets
available for benefits (142,436) 141,551 (43,219) 214,316 94,219
Net assets available for benefits:
Beginning of year 609,165 411,686 1,871,814 730,323
---------- ---------- ---------- ----------- ----------
End of year $ 466,729 $ 141,551 $ 368,467 $ 2,086,130 $ 824,542
========== ========== ========== =========== ==========
</TABLE>
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Notes to Financial Statements, Continued
4. NET ASSETS AND CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
BY FUND, CONTINUED:
<TABLE>
<CAPTION>
Aggressive
Growth
Fund Stock Fund Total
---------- ---------- -----------
<S> <C> <C> <C>
Additions to net assets attributed to:
Interest $ 71 $ 320 $ 17,336
Dividends 378,439
Net appreciation (depreciation) in
fair value of investments 49,091 398,064 292,924
Contributions:
Participants 70,561 102,175 455,077
Employer 97,714 97,714
---------- ---------- ----------
Total additions 119,723 598,273 1,241,490
Transfers (113,684) 94,618 0
Deductions to net assets attributed to:
Distributions and benefits paid to
participants 54,279 185,725 518,133
---------- ---------- ----------
Increase (decrease) in net assets
available for benefits (48,240) 507,166 723,357
Net assets available for benefits:
Beginning of year 601,167 2,491,286 6,715,441
---------- ---------- ----------
End of year $ 552,927 $2,998,452 $7,438,798
========== ========== ==========
</TABLE>
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Notes to Financial Statements, Continued
4. NET ASSETS AND CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
BY FUND, CONTINUED:
The changes in net assets available for benefits by fund for the
year ended June 30, 1997 are as follows:
<TABLE>
<CAPTION>
Fixed Balanced Growth and Growth
Fund Fund Income Fund Fund
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Interest $ 32,375 $ 57 $ 265 $ 99
Dividends 43,652 134,601 27,560
Net appreciation (depreciation) in fair
value of investments 29,427 274,076 115,546
Contributions:
Participants 55,294 72,321 219,355 137,021
Employer
---------- ---------- ---------- -----------
Total additions 87,669 145,457 628,297 280,226
Transfers (152,012) 68,832 12,530 16,691
Deductions to net assets attributed to:
Distributions and benefits paid to
participants 14,660 13,566 116,165 28,841
---------- ---------- ---------- -----------
Increase (decrease) in net assets
available for benefits (79,003) 200,723 524,662 268,076
Net assets available for benefits:
Beginning of year 688,168 210,963 1,347,152 462,247
---------- ---------- ---------- -----------
End of year $ 609,165 $ 411,686 $1,871,814 $ 730,323
========== ========== ========== ===========
</TABLE>
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Notes to Financial Statements, Continued
4. NET ASSETS AND CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
BY FUND, CONTINUED:
<TABLE>
<CAPTION>
Aggressive
Growth
Fund Stock Fund Total
---------- ---------- -----------
<S> <C> <C> <C>
Additions to net assets attributed to:
Interest $ 85 $ 326 $ 33,207
Dividends 205,813
Net appreciation (depreciation) in fair
value of investments (37,125) 508,060 889,984
Contributions:
Participants 223,754 128,867 836,612
Employer 191,971 191,971
---------- ---------- ----------
Total additions 186,714 829,224 2,157,587
Transfers 75,588 (21,629) 0
Deductions to net assets attributed to:
Distributions and benefits paid to
participants 69,254 211,991 454,477
---------- ---------- ----------
Increase (decrease) in net assets
available for benefits 193,048 595,604 1,703,110
Net assets available for benefits:
Beginning of year 408,119 1,895,682 5,012,331
---------- ---------- ----------
End of year $ 601,167 $2,491,286 $6,715,441
========== ========== ==========
</TABLE>
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Notes to Financial Statements, Continued
5. PLAN TERMINATION:
Although it has not expressed an intent to do so, Sterling has the
right to discontinue its contributions to the Plan at any time and
to terminate the Plan subject to the provisions of ERISA.
6. TAX STATUS:
The Internal Revenue Service has determined and informed Sterling
by a letter dated October 20, 1995 that the Plan, as amended, is
designed in accordance with applicable sections of the Internal
Revenue Code ("Code"), as amended. The Plan administrator
believes that the Plan is designed and is being operated in
compliance with the applicable requirements of the Code.
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Line 27a - Schedule of Assets Held for Investment Purposes
at December 31, 1997
<TABLE>
<CAPTION>
Description of Investment, Including
Identity of Issuer, Borrower, Maturity Date, Rate of Interest, Current
Lessor or Similar Party Collateral, Par or Maturity Value Cost Value
------------------------------ ------------------------------------ ---------- ----------
<S> <C> <C> <C>
Sterling Savings Association Certificate of deposit, due July 1,
1998, interest at 6.0% $ 466,710 $ 466,710
Sterling Financial Corporation Common stock, 136,649 shares at $1
par value 1,536,020 2,972,116
AIM Value Fund Mutual fund, 25,231 shares 736,100 817,986
John Hancock Special Equities
Fund Mutual fund, 21,126 shares 510,666 547,586
Stagecoach Index Allocation
Fund Mutual fund, 23,517 shares 347,833 364,748
The Putnam Fund for Growth
and Income Mutual fund, 106,128 shares 1,864,009 2,073,749
American Balanced Fund Mutual fund, 8,949 shares 147,909 140,317
Merrill Lynch Cash Management
Account Short-term money market fund 3,835 3,835
Cash Cash 50,373 50,373
---------- ----------
$5,663,455 $7,437,420
========== ==========
</TABLE>
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Line 27d - Schedule of Reportable Transactions
for the six months ended December 31, 1997
<TABLE>
<CAPTION>
(f)Expenses
(b)Description of Asset Incurred
(a)Identify of (Include interest rate and (c)Purchase (d)Selling (e)Lease with (g)Cost
Party Involved maturity in case of a loan) Price Price Rental Transaction of Asset
-------------------- --------------------------------- ----------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Single transactions:
Merrill Lynch Cash Short-term money market fund $ 407,778 $ 407,778
Management Fund Number of transactions 1
Combined transactions:
Merrill Lynch Cash Short-term money market fund $1,145,960 1,145,960
Management
Fund Number of transactions 30
Merrill Lynch Cash Short-term money market fund 1,155,544 1,155,544
Management Fund Number of transactions 24
The Putnam Fund
for Mutual fund 480,265 480,265
Growth and
Income Number of transactions 18
The Putnam Fund
for Mutual fund 158,844 125,956
Growth and
Income Number of transactions 4
</TABLE>
<PAGE>
STERLING SAVINGS ASSOCIATION
Employee Savings and Investment Plan
Line 27d - Schedule of Reportable Transactions
for the six months ended December 31, 1997
<TABLE>
<CAPTION>
(h)Current
Value of
(b)Description of Asset Asset on (i)Net
(a)Identify of (Include interest rate and Transaction Gain or
Party Involved maturity in case of a loan) Date (Loss)
-------------------- --------------------------------- ----------- ----------
<S> <C> <C> <C>
Single transactions:
Merrill Lynch Cash Short-term money market fund $ 0
Management Fund Number of transactions
Combined transactions:
Merrill Lynch Cash Short-term money market fund $1,145,960 1,145,960
Management
Fund Number of transactions
Merrill Lynch Cash Short-term money market fund 1,155,544 1,155,544
Management Fund Number of transactions
The Putnam Fund
for Mutual fund 480,265 480,265
Growth and
Income Number of transactions
The Putnam Fund
for Mutual fund 158,844 125,956
Growth and
Income Number of transactions
</TABLE>
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