Exhibit 10.8

STERLING FINANCIAL CORPORATION

AMENDED AND RESTATED

DEFERRED COMPENSATION PLAN

Sterling Financial Corporation, a Washington corporation (“Sterling”), hereby
adopts, amends and restates the Deferred Compensation Plan which was initially
adopted by Sterling Savings Bank effective July 1, 1984. This Amended and
Restated Plan is effective as of the 1st day of July, 1999.

I. PURPOSE

Sterling continues this unfunded deferred compensation plan to provide
retirement benefits to a select group of management personnel in order to
attract, retain, and encourage the efforts of the executives who have rendered
valuable services to Sterling. All rights hereunder shall be construed and
governed by the laws of the State of Washington. This Plan is intended to be a
“top hat” plan for purposes of ERISA and it limits participation to certain key
executives designated by Sterling, or any related entity adopting the Plan.

II. DEFINITIONS

2.01 ACCOUNT means the account maintained for each Participant under
Section 4.01.

2.02 BENEFICIARY means a person designated under Section 4.04 by a Participant
to receive plan benefits in the event of the Participant’s death.

2.03 BOARD means the Board of Directors of Sterling.

2.04 CHANGE IN CONTROL. A change in control shall be deemed to have occurred at
such times as:

(a) any “person” (as that term is used in Section 13(d) and 14(d) of the
Exchange Act) (other than Sterling or an affiliate of Sterling) becomes,
directly or indirectly, the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act) of securities representing 25% or more of the then outstanding
securities of Sterling;

(b) during any period of two (2) consecutive years or less, individuals who at
the beginning of such period constituted the Board of Sterling cease, for any
reason, to constitute at least a majority of the Board, unless the election or
nomination for election of each new member of the Board was approved by a vote
of at least two-thirds of the members of the Board then still in office who were
members of the Board at the beginning of the period;

(c) the Shareholders of Sterling approve (i) a plan of complete liquidation of
Sterling; or (ii) an agreement for the sale or disposition of all or
substantially all of Sterling’s assets; or (iii) a merger or consolidation of
Sterling with any other corporation, other than

 

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a merger or consolidation which would result in the voting securities of
Sterling outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity), at least 50% of the combined voting power of the voting
securities of Sterling (or such surviving entity) outstanding immediately after
such merger or consolidation.

2.05 COMMITTEE means the Personnel Committee appointed by the Board, which shall
consist solely of outside directors who are not employees of Sterling.

2.06 DEFERRED COMPENSATION POOL. The total annual dollar amount, if any, to be
credited to Participants’ Accounts by Sterling as determined by the Board, after
recommendation by the Committee.

2.07 DISABILITY means disability as determined under Sterling’s long-term or
permanent disability insurance policy then in effect.

2.08 FISCAL YEAR means Sterling’s fiscal year which currently ends December 31.

2.09 KEY EMPLOYEE means an employee of Sterling who is a member of a select
group of management or a highly compensated employee.

2.10 NORMAL RETIREMENT AGE means the last day of the calendar month in which the
Participant attains sixty years of age.

2.11 PARTICIPANT means an employee of Sterling who participates in the benefits
of the Plan, or a person who so participated at the time of his retirement,
death, disability or resignation and who retains or whose Beneficiary obtains
benefits under the Plan in accordance with its terms.

2.12 PLAN means this Deferred Compensation Plan of Sterling.

2.13 PLAN YEAR means the twelve-month period corresponding to the Fiscal Year.

2.14 SUBSIDIARY means any corporation (whether now or hereafter existing) which
constitutes a “subsidiary” of Sterling within the meaning of Section 424(f) of
the Internal Revenue Code of 1986, as amended.

2.15 STERLING means Sterling Financial Corporation, a Washington corporation,
including its Subsidiaries which participate in the Plan (each a “Participating
Corporation”), and each of their successors.

2.16 YEAR OF SERVICE means each fiscal year in which the Participant works at
least one thousand hours for Sterling.

 

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III. PARTICIPATION AND METHOD OF ALLOCATION OF FUNDS

3.01 ELIGIBILITY. Pursuant to Section 7.02, the Committee shall specify which
Key Employees shall be entitled to participate in the Deferred Compensation Pool
for any given Plan Year. The Committee’s selection shall be based on objective
criteria uniformly applied which may change from time to time in the discretion
of the Committee. The Committee’s determination of eligibility for any given
Plan Year does not guarantee eligibility in subsequent Plan Years. In the event
any Key Employee is no longer designated as an active Participant eligible for
further allocations under the Plan, such Key Employee shall become an inactive
Participant and retain all other rights described under this Plan, until the Key
Employee again becomes an active Participant.

3.02 ALLOCATION. The method by which the Deferred Compensation Pool shall be
allocated or credited for the benefit of each Participant for the following Plan
Year shall be determined annually by the Committee, in its absolute discretion.

IV. BENEFITS

4.01 PARTICIPANT ACCOUNTS. The Committee shall cause an Account to be kept in
the name of each Participant and each Beneficiary of a deceased Participant,
which shall reflect the value of the deferred benefit and the vested amount
thereof allocated to each Participant or Beneficiary under the Plan. Effective
as of the date the Board approves the Deferred Compensation Pool for such Plan
Year, or on such other date as the Committee may determine, each Participant’s
Account shall be credited with that portion, if any, of the Deferred
Compensation Pool as has been allocated by the Committee pursuant to
Section 7.02. The balance of each Account shall be equal to the sum of all
contributions to the Account plus the net sum of all investment gains and losses
attributable to the Account (the “Balance”). Benefits payable from an Account
shall be determined by subtracting the sum of unvested contributions to the
Account from the Account Balance as of the date of determination. For example,
if on a date of determination contributions to a Participant’s account equal
$10,000, the contributions are 10% vested and the net amount of investment gains
and losses is $1,200, an eligible Participant will be entitled to a benefit of
$2,200. Conversely, if the same Account has incurred net investment losses of
$2,000, no benefit will be payable as of the date of determination. In such an
event, however, no Participant shall be required to reimburse Sterling for net
investment losses.

4.02 NATURE OF PARTICIPANT’S INTEREST. Until and except to the extent that funds
from a Participant’s Account are actually distributed to such Participant (or
Beneficiary), the interest therein of each Participant (or Beneficiary) is
contingent and subject to forfeiture. Title to and beneficial ownership of all
assets in the Plan, whether cash, certificates of deposit, or other deposits
(including certificates of or deposits in Sterling Savings Bank), and whether in
stocks (including Sterling stock), bonds, mutual funds, life insurance, or other
investments, shall, at all times, remain general assets of Sterling subject to
the claims of its general creditors. Neither Sterling nor this Plan gives any
ownership interest in any assets of Sterling to a Participant or Beneficiary.
The rights of each Participant, any Beneficiary, or any person claiming through
a Participant shall be solely those of an unsecured general creditor of
Sterling.

 

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4.03 NO TRUST. Sterling’s obligation under this Plan shall be an unfunded and
unsecured promise to pay. Sterling shall not be obligated under any
circumstances to fund its financial obligations under this Plan prior to the
date any benefits become payable pursuant to the terms of the Plan, and neither
Sterling, members of the Board or Committee, nor any other person shall be
deemed to be a trustee of any amounts to be paid under the Plan. Benefits
payable under the Plan shall be reflected on the account records of Sterling but
shall not be construed to create or require the creation of a trust, custodial,
or escrow account. No Participant or Beneficiary shall have any right, title, or
interest whatever in or to any investment reserves, accounts, or funds that
Sterling may purchase, establish, or accumulate to aid in providing benefits
under the Plan. Nothing contained in the Plan, and no action taken pursuant to
its provisions, shall create a trust or fiduciary relationship of any kind
between the Employer and a Participant, Beneficiary, or any other person.

4.04 DESIGNATION OF BENEFICIARY. Each Participant shall have the right to
designate Beneficiaries who are to succeed to his contingent right to receive
future payments hereunder in the event of his death. In case of a failure to
designate, or in the case of the death of a designated Beneficiary without a
designated successor, distributions shall be made to a Participant’s surviving
spouse or, if none, to his estate. No designation of Beneficiary or change
thereof shall be valid unless in writing, signed by the Participant, dated and
filed with the Committee.

V. DISTRIBUTIONS

5.01 FORM OF BENEFITS. The Committee, in its absolute discretion, will determine
the method of distribution, which may be a lump sum or otherwise, and the manner
of distribution of the Participant’s Account, but in no event shall installment
distributions be made over a period of more than ten years. Installment
distributions shall be made in substantially equal monthly, quarterly or annual
installments and the Account shall receive its proportionate share of net
earnings until it has been fully paid. Such installments may be accelerated at
any time by the Committee. Upon the Request of a Participant or Beneficiary,
which Request the Committee may in its absolute discretion grant or deny,
payments to a Participant or Beneficiary may be made in whole or in part through
distributions in kind of Plan assets, if any, such as stock.

5.02 COMMENCEMENT OF PAYMENTS. Commencement of distribution in each case may be
deferred by the Committee, but not beyond one year after the termination,
retirement, disability or death of a Participant. In case of a Participant’s
death before distributions are completed, the balance may be distributed in a
lump sum or on an installment basis, as the Committee may determine. The
Committee shall have the right, in its absolute discretion, to accelerate any
payments being made hereunder.

VI. AMENDMENT AND TERMINATION

6.01 AMENDMENT. Sterling reserves the right to amend the Plan at any time by
resolution of its Board of Directors. The Board of Directors will determine the
effective date of the amendment. The amendment may not deprive any Participant
or Beneficiary of any benefit or right he or she would have been entitled to
prior to the effective date of the amendment.

 

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6.02 TERMINATION. Sterling also may terminate the Plan at any time by resolution
of the Board of Directors. In the event of Plan termination, each Participant’s
Account balance shall become 100% vested and nonforfeitable. A Participant’s
Account will be distributed in accordance with the provisions of Article V.

VII. COMMITTEE

7.01 DISCRETION. The Committee shall, with respect to the general management of
the Plan, have the final and absolute right to reconcile any inconsistency in
the Plan, to interpret and construe the provisions of the Plan in all
particulars in such manner and to such extent as it deems proper and to take all
action and make all decisions and determinations necessary under the Plan or in
connection with its administration, interpretation and application. Any
interpretation or construction placed upon any term or provision of the Plan by
the Committee, any decision of the Committee with regard to the rights of a
Participant, former Participant or Beneficiary or any other person, any
reconciliation of an inconsistency in the Plan made by the Committee and any
other action, determination or decision whatsoever taken by the Committee, shall
be final, conclusive and binding upon all persons or parties interested or
concerned in the Plan.

7.02 MEETINGS. The Committee shall meet no later than forty-five (45) days
following the end of each Plan Year. At such meeting the Committee, in addition
to addressing any other matters which may come to its attention, shall:

(a) Identify the Key Employees who will be eligible to participate in the Plan
during the current Plan Year;

(b) Arrive at a recommendation as to the amount of the Deferred Compensation
Pool for the current Plan Year, which recommendation shall be communicated to
the Board; and

(c) Determine the method by which the Deferred Compensation Pool shall be
allocated to the Participants for that Plan Year.

VIII. INVESTMENTS

8.01 ELECTION. Sterling participates in a retirement plan qualified under
Section 401 of the Internal Revenue Code of 1986, as amended (the “401(k)
Plan”). Participants under the 401(k) Plan have the conditional right to direct
the investment and re-investment of assets comprising such participants’
individual accounts. Subject to the conditions set forth herein and in the
401(k) Plan, Participants hereunder shall have the right to direct the
investment and re-investment of amounts in their individual Accounts at the
times and in the manner specified in the 401(k) Plan.

8.02 STATEMENT OF ACCOUNT. Within one hundred twenty (120) days after the close
of each Plan Year, a statement shall be given by the Committee to each
Participant setting forth, with regard to such Plan Year, the balance standing
to the credit of his or her Account, the net earnings and losses, and the vested
amount of the Account.

 

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8.03 NO LIABILITY. Neither Sterling, the Committee, the Board nor any affiliate
of any of them shall be liable for any investment or other losses or damages
arising out of or relating to a Participant’s Account including a Participant’s
election under Section 8.01.

IX. VESTING

9.01 VESTING SCHEDULE. Notwithstanding any contrary provision in this Plan, all
amounts in an Account shall become 100% vested: (a) upon a Change of Control;
(b) when the related Participant attains Normal Retirement Age; (c) when the
employment of the related Participant terminates due to death or disability; or
(d) upon termination of the Plan. Prior to such an event, each contribution to
an Account shall vest in accordance with the schedule below:

YEARS OF SERVICE WITH STERLING INCLUDING THE PLAN

YEAR IN WHICH SUCH CONTRIBUTION IS CREDITED TO PERCENT OF EACH CONTRIBUTION

 

PARTICIPANT’S ACCOUNT

   VESTED  

1 Year of Service but less than 2

   10 % 

2 Years of Service but less than 3

   20 % 

3 Years of Service but less than 4

   30 % 

4 Years of Service but less than 5

   40 % 

5 Years of Service but less than 6

   50 % 

6 Years of Service but less than 7

   60 % 

7 Years of Service but less than 8

   70 % 

8 Years of Service but less than 9

   80 % 

9 Years of Service but less than 10

   90 % 

10 Years of Service

   100 % 

9.02 ACCELERATION. As provided in Section 9.01(d) and notwithstanding the
foregoing schedule, after a Participant has reached the age of 51, the vesting
of all new contributions to the Participant’s Account shall be accelerated, pro
rata, so that such vesting will reach 100% in the year the Participant attains
the age of 60. For example, if $1,000 is contributed to a Participant’s Account
when the Participant is 55 years of age, such contribution will vest at 20% per
year so that it will be 100% vested in the year the Participant attains the age
of 60. After a Participant has attained the age of 60, all new contributions to
the Participant’s Account shall immediately vest at 100%.

X. MISCELLANEOUS

10.01 EMPLOYMENT NOT GUARANTEED. Nothing contained in the Plan nor any action
taken hereunder shall be construed as a contract of employment or as giving any
Participant any right to be retained in the employ of Sterling, or any related
entity.

10.02 NO LIABILITY. Neither Sterling, the Committee, the Board nor any affiliate
of any of them shall be liable for any action or determination made in good
faith with respect to this Plan.

 

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10.03 NO GUARANTEE OF TAX CONSEQUENCES. Neither Sterling nor the Committee makes
any commitment or guarantee that any federal or state tax treatment will apply
or be available to any Participant in the Plan.

10.04 SEVERABILITY. In the event any provision of this Plan shall be held
illegal, invalid or unenforceable for any reason, such provision shall be fully
severable, but shall not affect the remaining provisions of the Plan, and the
Plan shall be construed and enforced as if the illegal, invalid or unenforceable
provision had never been included herein.

10.05 BENEFITS NOT ASSIGNABLE. Neither the Participant nor Beneficiary may
assign, transfer, anticipate or pledge the benefits under this Agreement, nor
may they be subject to attachment or garnishment of creditors. Any attempt to
assign, transfer or pledge a Participant’s benefits under this Agreement is
void.

10.06 BENEFIT. This Agreement is binding upon and inures to Sterling, its
successors and assigns and the Participant, his heirs and legal representatives.

10.07 GENDER USAGE. The use of the masculine includes the feminine gender for
all purposes of this Agreement.

10.08 NOTICE. Any notices required or permitted to be given under this Plan
shall be sufficient if in writing and hand delivered or sent by certified or
registered mail, return receipt requested, to the following addresses:

 

To Sterling:

   Sterling Financial Corporation    111 North Wall Street    Spokane, WA 99201

To Participant: AT THE PARTICIPANT’S ADDRESS ON FILE WITH STERLING or at such
other addresses as Sterling or a Participant may designate, from time to time,
in writing.

STERLING FINANCIAL CORPORATION

 

By                                                       

Title                                                    

 

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STERLING FINANCIAL CORPORATION

AMENDED AND RESTATED

DEFERRED COMPENSATION PLAN

PARTICIPATION AGREEMENT

FOR PARTICIPATION BY SUBSIDIARIES

(PLAN SECTION 2.15)

The undersigned Corporation, by executing this Participation Agreement, elects
to become or to continue as a Participating Corporation in the Plan as if the
Participating Corporation were a signatory to the Plan. The Participating
Corporation accepts, and agrees to be bound by, all of the provisions of the
Plan.

DATED this          day of                                 , 1999.

 

  NAME OF PARTICIPATING CORPORATION   Signed:      

Participating Employer’s EIN:    

 

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