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                                                                    Exhibit 10.1

                                CREDIT AGREEMENT

     THIS CREDIT AGREEMENT (this "Agreement") is entered into as of August 4,
2006, by and between STERLING FINANCIAL CORPORATION, a Washington corporation
("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").

                                    RECITALS

     Borrower has requested that Bank extend or continue credit to Borrower as
described below, and Bank has agreed to provide such credit to Borrower on the
terms and conditions contained herein.

     NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Bank and Borrower hereby agree as follows:

                                   ARTICLE I
                                  CREDIT TERMS

     SECTION 1.1. LINE OF CREDIT.

     (a) Line of Credit - 364 Days. Subject to the terms and conditions of this
Agreement, Bank hereby agrees to make advances to Borrower from time to time up
to and including August 3, 2007, not to exceed at any time the aggregate
principal amount of Forty Million Dollars ($40,000,000.00) ("Line of Credit"),
the proceeds of which shall be used for Borrower's working capital purposes and
general corporate purposes. Borrower's obligation to repay advances under the
Line of Credit shall be evidenced by a promissory note dated as of August 4,
2006 ("Line of Credit Note"), all terms of which are incorporated herein by this
reference.

     (b) Borrowing and Repayment. Borrower may from time to time during the term
of the Line of Credit borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions contained herein or in the Line of Credit Note; provided however,
that the total outstanding borrowings under the Line of Credit shall not at any
time exceed the maximum principal amount available thereunder, as set forth
above.

     SECTION 1.2. INTEREST/FEES

     (a) Interest. The outstanding principal balance of the Line of Credit shall
bear interest at the rate of interest set forth in the Line of Credit Note.

     (b) Computation and Payment. Interest shall be computed on the basis of a
360-day year, actual days elapsed. Interest shall be payable at the times and
place set forth in each promissory note or other instrument or document required
hereby.

     (c) Commitment Fee. Borrower shall pay to Bank a non-refundable commitment
fee for the Line of Credit equal to Twenty Thousand Dollars ($20,000.00), which
fee shall be due and payable in full on the date of this Agreement.

     (d) Unused Commitment Fee. Borrower shall pay to Bank a fee equal to
one-fifth percent (0.20%) per annum (computed on the basis of a 360-day year,
actual days elapsed) on


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the average daily unused amount of the Line of Credit, which fee shall be
calculated on a calendar quarter basis by Bank and shall be due and payable by
Borrower in arrears on the last day of each March, June, September and December.

                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

     Borrower makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this Agreement and
shall continue in full force and effect until the full and final payment, and
satisfaction and discharge, of all obligations of Borrower to Bank subject to
this Agreement.

     SECTION 2.1 LEGAL STATUS. Borrower is a corporation, duly organized and
existing and in good standing under the laws of Washington and is qualified or
licensed to do business (and is in good standing as a foreign corporation, if
applicable) in all jurisdictions in which such qualification or licensing is
required or in which the failure to so qualify or to be so licensed could have a
material adverse effect on Borrower.

     SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement and each promissory
note, contract, instrument and other document required hereby or at any time
hereafter delivered to Bank in connection herewith (collectively, the "Loan
Documents") have been duly authorized, and upon their execution and delivery in
accordance with the provisions hereof will constitute legal, valid and binding
agreements and obligations of Borrower or the party which executes the same,
enforceable in accordance with their respective terms.

     SECTION 2.3. NO VIOLATION. The execution, delivery and performance by
Borrower of each of the Loan Documents do not violate any provision of any law
or regulation, or contravene and provision of the Articles of Incorporation or
By-Laws of Borrower, or result in any breach of or default under any contract,
obligations, indenture or other instrument to which Borrower is a party or by
which Borrower may be bound.

     SECTION 2.4. LITIGATION. There are no pending, or to the best of Borrower's
knowledge, threatened actions, claims, investigations, suites or proceedings by
or before any governmental authority, arbitrator, court or administrative agency
which could have a material adverse effect on the financial condition or
operation of Borrower other than those disclosed by Borrower to Bank in writing
prior to the date hereof.

     SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENT. The annual financial
statement of Borrower dated December 31, 2005, and all interim financial
statements delivered to Bank since said date, true copies of which have been
delivered by Borrower to Bank prior to the date hereof, (a) are complete and
correct and present fairly the financial condition of Borrower, (b) disclose all
liabilities of Borrower that are required to be reflected or reserved against
under generally accepted accounting principles, whether liquidated or
unliquidated, fixed or contingent, and (c) have been prepared in accordance with
generally accepted accounting principles consistently applied. Since the dates
of such financial statements there has been no material adverse change in the
financial condition of Borrower, nor has Borrower mortgaged, pledged, granted a
security interest in or otherwise encumbered any of its assets or properties
except in favor of Bank or as otherwise permitted by Bank in writing.


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     SECTION 2.6 INCOME TAX RETURNS. Borrower has no knowledge of any pending
assessments or adjustments of its income tax payable with respect to any year.

     SECTION 2.7. NO SUBORDINATION. There is no agreement, indenture, contract
or instrument to which Borrower is a party or by which Borrower may be bound
that requires the subordination in right of payment of any of Borrower's
obligations subject to this Agreement to any other obligation of Borrower.

     SECTION 2.8. PERMITS, FRANCHISES. Borrower possesses, and will hereafter
possess, all permits, consents, approvals, franchises and licenses required and
rights to all trademarks, trade names, patents, and fictitious names, if any,
necessary to enable it to conduct the business in which it is now engaged in
compliance with applicable law.

     SECTION 2.9. ERISA. Borrower is in compliance in all material respects with
all applicable provisions of the Employee Retirement Income Security Act of
1974, as amended or recodified from time to time ("ERISA"); Borrower has not
violated any provision of any defined employee pension benefit plan (as defined
in ERISA) maintained or contributed to by Borrower (each, a "Plan"); no
Reportable Event as defined in ERISA as occurred and is continuing with respect
to any Plan initiated by Borrower; Borrower has met its minimum funding
requirements under ERISA with respect to each Plan; and each Plan will be able
to fulfill its benefit obligations as they come due in accordance with the Plan
documents and under generally accepted accounting principles.

     SECTION 2.10. OTHER OBLIGATIONS. Borrower is not in default on any
obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation.

     SECTION 2.11. BANK SUBSIDIARIES. As of the date of this Agreement Borrower
owns 100% of the issued and outstanding common voting stock in Sterling Savings
Bank. Each bank, if any, named in this Section, and each bank at any time
hereafter established or acquired by Borrower, is referred to as a "Bank
Subsidiary."

                                   ARTICLE III
                                   CONDITIONS

     SECTION 3.1 CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of
Bank to extend any credit contemplated by this Agreement is subject to the
fulfillment to Bank's satisfaction of all of the following conditions:

     (a) Approval of Bank Counsel. All legal matters incidental to the extension
of credit by Bank shall be reasonably satisfactory to Bank's counsel.

     (b) Documentation. Bank shall have received, in form and substance
satisfactory to Bank, each of the following, duly executed:

     (i)  This Agreement and each promissory note or other instrument or
          document required hereby.

     (ii) Certificate of Incumbency.

     (iii) Corporate Borrowing Resolution.

     (iv) Such other documents as Bank may require under any other Section of
          this Agreement.


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     (c) Financial Condition. There shall have been no material adverse change,
as determined by Bank, in the financial condition or business of Borrower, nor
any material decline, as determined by Bank, in the market value of any
collateral required hereunder or a substantial or material portion of the assets
of Borrower.

     SECTION 3.2 CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank
to make each extension of credit requested by Borrower hereunder shall be
subject to the fulfillment to Bank's satisfaction of each of the following
conditions:

     (a) Compliance. The representations and warranties contained herein and in
each of the other Loan Documents shall be true on and as of the date of the
signing of this Agreement and on the date of each extension of credit by Bank
pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date, and on each such date, no
Event of Default as defined herein, and no condition, event or act which with
the giving of notice or the passage of time or both would constitute such an
Event of Default, shall have occurred and be continuing or shall exist.

     (b) Documentation. Bank shall have received all additional documents which
may be required in connection with such extension of credit.

                                   ARTICLE IV
                              AFFIRMATIVE COVENANTS

     Borrower covenants that so long as Bank remains committed to extend credit
to Borrower pursuant thereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower shall, unless Bank otherwise consents in writing:

     SECTION 4.1. PUNCTUAL PAYMENTS. Punctually pay all principal, interest,
fees or other liabilities due under any of the Loan Documents at the times and
place and in the manner specified therein.

     SECTION 4.2. ACCOUNTING RECORDS. Maintain adequate books and records in
accordance with generally accepted accounting principals consistently applied,
and permit any representative of Bank, at any reasonable time, to inspect, audit
and examine such books and records, to make copies of the same, and to inspect
the properties of Borrower; provided, however, Bank understands that Borrower is
a publicly owned company whose shares are traded on a national exchange and
that, as a consequence, Bank agrees that it, its employees attorneys, and
agents, shall keep all non-public financial information of Borrower strictly
confidential and that neither it, or any of its employees, attorneys or agents,
shall trade, sell or otherwise exchange any shares of Borrower's stock while
they are in possession of any of Borrower's nonpublic financial information.

     SECTION 4.3. FINANCIAL STATEMENTS. Provide to Bank all of the following, in
form and detail satisfactory to Bank:

     (a) not later than 90 days after and as of the end of each fiscal year, an
unqualified audit of the financial statement of Borrower prepared by the
independent accounting firm of BDO Seidman, or such other independent certified
public accountant reasonably acceptable to


                                       -4-

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Bank, to include balance sheet, income statement, statement of Borrower's cash
flow, which Bank confirms is acceptable to it, management report, auditor's
report, all supporting schedules, footnotes and a copy of 10K report filed with
the Securities Exchange Commission;

     (b) not later than 45 days after and as of the end of each fiscal quarter,
company prepared financial statement of Borrower, to include a balance sheet,
income statement, statement of cash flow, and a copy of 10Q report filed with
the Securities Exchange Commission;

     (c) contemporaneously with each annual and quarterly financial statement of
Borrower required hereby, a compliance certificate of the president or chief
financial officer of Borrower that said financial statements are accurate, that
there exists no Event of Default nor any condition, act or event which with the
giving of notice or the passage of time or both would constitute an Event of
Default, and demonstrating compliance with the financial covenants contained in
this Agreement;

     (d) as soon as available, and in any event no later than 15 days after
filing with the Federal Reserve Bank, each quarterly, semi-annual, and annual
financial statement of the Borrower (including but not limited to any FRY-9SP,
FRY-9LP, FRY-6 and FRY-9C, as applicable) required to be filed by Borrower with
the Federal Reserve Bank in the applicable Federal Reserve District;

     (e) as soon as available (but without duplication of any other requirements
set forth in this Section 4.3.) a copy of all reports which are required by law
to be furnished to any regulatory authority having jurisdiction over Borrower or
any Bank Subsidiary (including without limitation Call Reports, but excluding
any report which applicable law or regulation prohibits Borrower or a Bank
Subsidiary from furnishing to Bank);

     (f) from time to time such other information as Bank may reasonably
request.

     SECTION 4.4. COMPLIANCE. Preserve and maintain all license, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; and comply with the provisions of all documents
pursuant to which Borrower is organized and/or which govern Borrower's continued
existence and with the requirements of all laws, rules, regulations and orders
of any governmental authority applicable to Borrower and/or its business.

     SECTION 4.5. INSURANCE. Maintain and keep in force, for each business in
which Borrower is engaged, insurance as described in Schedule 4.5 attached
hereto, with all such insurance carried with companies and in amounts
satisfactory to Bank, and deliver to Bank from time to time at Bank's request
schedules setting forth all insurance then in effect.

     SECTION 4.6. FACILITIES. Keep all properties useful or necessary to
Borrower's business in good repair and condition, and from time to time make
necessary repairs, renewals and replacements there to so that such properties
shall be fully and efficiently preserved and maintained.

     SECTION 4.7. TAXES AND OTHER LIABILITIES. Pay and discharge when due any
and all indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except such (a) as Borrower may in good faith
contest or as to which a bona fide


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dispute may arise, and (b) for which Borrower has made provision, to Bank's
satisfaction, for eventual payment thereof in the event Borrower is obligated to
make such payment.

     SECTION 4.8. LITIGATION. Promptly give notice in writing to Bank of any
litigation pending or threatened against Borrower with a claim in excess of
$10,000,000.00.

     SECTION 4.9. BORROWER'S FINANCIAL CONDITION. Maintain Borrower's
consolidated financial condition as follows using generally accepted account
principles consistently applied and used consistently with prior practices
(except to the extent modified by the definitions herein), with compliance
determined commencing with Borrower's financial statements for period ending
September 30, 2006:

     (a) ROA not less than 0.65% on a rolling four quarter basis, determined as
of each fiscal quarter end, with "ROA" defined as the percentage arrived at by
dividing net income by Total Assets, as reported in the most recent Call Report.

     (b) Allowance for loan and lease losses not less than 100% of the total
amount of Non-Performing Assets, determined as of each fiscal quarter end, with
"Non-Performing Assets" defined as the sum of: (i) all loans classified as past
due 90 days or more and still accruing interest; (ii) all loans classified as
'non-accrual' and no longer accruing interest; (iii) all loans classified as
'restructured loans and leases'; and (iv) all other 'non-performing assets',
including those classified as 'other real estate owned' and 'repossessed
property', as reported in the then most recent Call Report.

     (c) Non-Performing Assets not greater than 10% of Primary Equity Capital,
determined as of each fiscal quarter end, with "Non-Performing Assets" as
defined above, and with "Primary Equity Capital" defined as the aggregate of
allowance for loan and lease losses, as reported in the then most recent Call
Report, plus Equity Capital (defined as the aggregate of perpetual preferred
stock (and related surplus), common stock, surplus (excluding all surplus
related to perpetual preferred stock), undivided profits and capital reserves,
plus the net unrealized holding gains (or less the net realized holding losses)
on available-for-sale securities, less goodwill and other disallowed intangible
assets).

     SECTION 4.10. BORROWER'S AND BANK SUBSIDIARY FINANCIAL CONDITION. Cause
Borrower and each Bank Subsidiary to maintain its categorization as Well
Capitalized as defined by regulatory agencies having jurisdiction, which,
pursuant to Section 38 of the Federal Deposit Insurance Act (created by Section
131 of the Federal Deposit Insurance Corporation Improvement Act (FDICIA) of
1991) (entitled "Prompt Corrective Action") (herein, "Section 38"), which
considers an institution "Well Capitalized" if, among other things, its Total
Risk-Based Capital Ratio equals or exceeds 10%, its Tier 1 Risk-Based Capital
equals or exceeds 6% and its Leverage equals or exceeds 5%. As used herein,
"Total Risk-Based Capital Ratio," "Tier 1 Risk-Based Capital" and "Leverage"
shall be defined and calculated in conformity with Section 38.

     SECTION 4.11. NOTICE TO BANK. Promptly (but in no event more than five (5)
business days after Borrower knows or in the exercise of reasonable care and
diligence should have known of the occurrence of each such event or matter) give
written notice to Bank in reasonable detail of: (a) the occurrence of any Event
of Default, or any condition, event or act which with the giving or the passage
of time or both would constitute an Event of Default; (b) any change in the name
or legal structure of borrower; (c) the occurrence and nature of any Reportable
Event or Prohibited Transaction, each as defined in ERISA, or any funding


                                       -6-
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deficiency with respect to any Plan; (d) any termination or cancellation of any
insurance policy which Borrower is required to maintain, or any uninsured or
partially uninsured loss through liability or property damage, or through fire,
theft or any other cause affecting Borrower's property in excess of an aggregate
of $10,000,000.00; (e) any change in Executive Management of Borrower or any
Bank Subsidiary; with "Executive Management" defined as the Chief Financial
Office or Chief Executive Officer; or (f) any negotiations to sell any capital
stock of Borrower and/or any Bank Subsidiary, together with copies of any
proposed buy/sell agreements; provided however, that this clause shall not be
deemed approval by Bank of any such negotiation and shall not apply to
information which under applicable law or regulation is prohibited from
disclosure to Bank.

                                    ARTICLE V
                               NEGATIVE COVENANTS

     Borrower further covenants that so long as Bank remains committed to extend
credit to Borrower pursuant thereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower will not without Bank's prior written
consent, which consent shall not be unreasonably withheld, conditioned or
delayed:

     SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any credit extended
hereunder except for the purposes stated in Article 1 hereof.

     SECTION 5.2. CAPITAL EXPENDITURES. Make any additional investment in fixed
assets in any fiscal year in excess of an aggregate of $50,000,000.00.

     SECTION 5.3. LEASE EXPENDITURES. Incur operating lease expense in any
fiscal year in excess of an aggregate of $10,000,000.00.

     SECTION 5.4. OTHER INDEBTEDNESS. Create, incur, assume or permit to exist
any indebtedness or liabilities resulting from borrowings loans or advances,
whether secured or unsecured, matured or unmatured, liquidated or unliquidated,
joint or several, except (a) the liabilities of Borrower to Bank, (b) trade debt
and other similar obligations incurred in the ordinary course of business in
favor of Borrower's suppliers, vendors and other Third Parties; and (c) any
other liabilities of Borrower existing as of, and disclosed to Bank prior to,
the date hereof; provided that Borrower's existing $20,000,000.00 secured line
of credit shall be repaid in full and terminated no later than 30 days from the
date of this Agreement.

     SECTION 5.5 MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or
consolidate with any other entity; make any substantial change in the nature of
Borrower's business as conducted as of the date hereof; acquire all or
substantially all of the assets of any other entity; nor sell, lease, transfer
or otherwise dispose of all or a substantial or material portion of Borrower's
assets or consolidations except (a) acquisitions in the same line of business as
Borrower and its subsidiaries currently engage, so long as the cost of any such
acquisition does not exceed 10% of Borrower's total consolidated assets
(determined prior to such acquisition), and (b) acquisitions in a different line
of business than Borrower and its subsidiaries currently engage in, so long as
the cost of any such acquisition does not exceed 5% of Borrower's total
consolidated assets (determined prior to such acquisition).


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     SECTION 5.6. DIVIDENDS, DISTRIBUTIONS. Declare or pay any dividend or
distribution either in cash, stock or any other property on Borrower's stock now
or hereafter outstanding, nor redeem, retire, repurchase or otherwise acquire
any shares of any class of Borrower's stock now or thereafter outstanding;
provided however, that so long as no Event of Default has occurred and is
continuing, Borrower may pay cash dividends or distributions to its shareholders
in any fiscal year not to exceed 10% of Borrower's net income for the prior
fiscal year.

     SECTION 5.7. PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to exist a
security interest in, or lien upon, all or any portion of Borrower's assets now
owned or hereafter acquired, except (i) any of the foregoing in favor of Bank or
which is existing as of, and disclosed to Bank in writing prior to, the date
hereof; and (ii) Permitted Liens. As used herein "Permitted Liens" shall mean
(a) Liens securing purchase money indebtedness and capital lease obligations
(and refinancings thereof; (b) Liens for ad valorem, income or property taxes or
assessments and similar charges that either are not delinquent or are being
properly contested; (c) statutory Liens of carriers, warehousemen, mechanics
suppliers, materialmen, repairmen and other Liens imposed by law incurred in the
ordinary course of business for sums not yet delinquent or being properly
contested; (d) Liens incurred or pledges or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance and
other social security legislation, leases, appeal bonds and other obligations of
like nature incurred by Borrower or any of its Subsidiaries in the ordinary
course of business, and deposits made in the ordinary course of business
securing liability to insurance carriers under insurance or self-insurance
arrangements; (e) Liens, deposits or pledges to secure the performance of bids,
tenders, contracts, leases, or other similar obligations arising in the ordinary
course of business; (f) judgment and attachment Liens not giving rise to an
Event of Default and notices of lis pendens and associated rights related to
litigation being properly contested; (g) Liens, deposits or pledges in the
ordinary course of business to secure public or statutory obligations, surety,
stay, appeal, indemnity, performance or other similar bonds or obligations and
liens, deposits or pledges in the ordinary course of business in lieu of such
bonds or obligations, or to secure such bonds or obligations, or to secure
letters of credit in lieu of or supporting the payment of such bonds or
obligations; (h) Liens in favor of collecting or payor banks having a right of
setoff, revocation, refund or chargeback with respect to money or instruments of
Borrower or any Subsidiary on deposit with or in possession of such bank; (i)
any interest or title of a lessor, licensor or sublicensor in the property
subject to any lease, license or sublicense; (j) Liens arising from
precautionary UCC financing statements regarding operating leases or
consignments; and (k) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any lien referred
to in the foregoing clauses, provided that such extension, renewal or
replacement Lien shall be limited to all or a part of the property which secured
the Lien so extended, renewed or replaced.

                                   ARTICLE VI
                                EVENTS OF DEFAULT

     SECTION 6.1. The occurrence of any of the following shall constitute an
"Event of Default" under this Agreement:

     (a) Borrower shall fail to pay within five (5) business days of when due
any principal, interest, fees or other amounts payable under any of the Loan
Documents.


                                       -8-

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     (b) Any financial statement or certificate furnished to Bank in connection
with, or any representation or warranty made by Borrower under this Agreement or
any other Loan Document fails to fairly present the financial condition of
Borrower.

     (c) Any default in the performance of or compliance with the covenants
contained in Sections 4.9, 4.10, 5.4, 5.5, 5.6 or 5.7 hereof, or any substantial
default in the performance of or compliance with any other material obligation,
agreement or other provision contained herein or in any other Loan Document
(other than those referred to in subsections (a) and (b) above), and with
respect to any such default which by its nature can be cured, such default is
not cured within thirty (30) days from its occurrence, or such longer period of
time as may be reasonably necessary so long as cure of such default is being
diligently pursued by Borrower during such extended cure period.

     (d) Any default under any other agreement between Borrower or any Bank
Subsidiary and Bank, or any defined event of default, under the terms of any
contract or instrument (other than any of the Loan Documents) pursuant to which
Borrower, any Bank Subsidiary, has incurred any debt or other liability to any
person or entity in excess of $100,000.00, but only if such other person or
entity has declared an event of default thereunder and such action is not being
contested in good faith by Borrower or Bank Subsidiary, as applicable.

     (e) The filing of a notice of judgment lien against Borrower or any Bank
Subsidiary in any amount in excess of $100,000.00, and enforcement of any such
judgment has not been superseded or otherwise stayed; or the recording of any
abstract of judgment against Borrower or any Bank Subsidiary in an amount in
excess of $100,000.00 in any county which Borrower or such Bank Subsidiary has
an interest in real property, and enforcement of any such judgment has not been
superseded or otherwise stayed; or the service of a notice of levy and/or of a
writ of attachment or execution; or other like process, against the assets of
Borrower or any Bank Subsidiary, in an amount in excess of $100,000.00, and
enforcement of any such levy or writ has not been superseded or otherwise
stayed.

     (f) Borrower or any Bank Subsidiary shall become insolvent, or shall suffer
or consent to or apply for the appointment of a receiver, trustee, custodian or
liquidator of itself or any of its property, or shall generally fail to pay its
debts as they become due, or shall make a general assignment for the benefit of
creditors; Borrower or any Bank Subsidiary shall file a voluntary petition in
bankruptcy, or seeking reorganization, in order to effect a plan or other
arrangement with creditors or any other relief under the Bankruptcy Reform Act,
Title 11 of the United State Code, as amended ore recodified from time to time
("Bankruptcy Code"), or under any state or federal law granting relief to
debtors, whether now or hereafter in effect; or any involuntary petition or
proceeding pursuant to the Bankruptcy Code or any other applicable state or
federal law relating to bankruptcy, reorganization or other relief for debtors
is filed or commenced against Borrower or any Bank Subsidiary or Third Party
Obligor, or Borrower or nay Bank Subsidiary or Third Party Obligor shall file an
answer admitting the jurisdiction of the court and the material allegations of
any involuntary petition; or Borrower or any Bank Subsidiary or Third Party
Obligor shall be adjudicated a bankruptcy, or an order for relief shall be
entered against Borrower or any Bank Subsidiary by any court of competent
jurisdiction under the Bankruptcy Code or any other applicable state or federal
law relating to bankruptcy, reorganization or other relief for debtors.

     (g) The dissolution or liquidation of Borrower or any Bank Subsidiary; or
Borrower or any Bank Subsidiary shall take action to seeking to effect such
dissolution or liquidation.


                                       -9-

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     (h) The issuance or proposed issuance against Borrower, or any affiliate of
Borrower (including without limitation, any Bank Subsidiary) of any or formal
administrative action, temporary or permanent, by any federal or state
regulatory agency having jurisdiction or control over Borrower or such
affiliate, such action taking the form of, but not limited to: (i) any or formal
directive citing conditions or activities deemed to be unsafe or unsound or
breaches of fiduciary duty or law or regulation which directive would impair the
prospect of payment or performance by Borrower of its obligations under the Loan
Documents; (ii) a memorandum of understanding; (iii) a cease and desist order;
(iv) the termination of insurance coverage of customer deposits by the Federal
Deposit Insurance Corporation; (v) the suspension or removal of key executives,
or the prohibition of participation in the business affairs of Borrower or such
affiliate; (vi) any capital maintenance agreement; or (vii) any other regulatory
action, agreement or understanding with respect to Borrower or such affiliate.

     SECTION 6.2. REMEDIES. Upon the occurrence and continuation of any Event of
Default: (a) all indebtedness of Borrower under each of the Loan Documents, any
term thereof to the contrary notwithstanding, shall at Bank's option and without
notice become immediately due and payable without presentment, demand, protest
or notice of dishonor, all of which are hereby expressly waived by Borrower; (b)
the obligation, if any, of Bank to extend any further credit under any of the
Loan Documents shall immediately cease and terminate; and (c) Bank shall have
all rights, powers and remedies available under each of the Loan Documents, or
accorded by law, including without limitation the right to resort to any or all
security for any credit subject hereto and to exercise any or all of the rights
of a beneficiary or secured party pursuant to applicable law. All rights, powers
and remedies of Bank may be exercised at any time by Bank and from time to time
after the occurrence of an Event of Default, are cumulative and not exclusive,
and shall be in addition to any other rights, powers or remedies provided by law
or equity.

                                   ARTICLE VII
                                  MISCELLANEOUS

     SECTION 7.1. NO WAIVER. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect an other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, permit, consent or approval of any
kind by Bank of any breach of or default under any of the Loan Documents must be
in writing and shall be effective only to the extent set forth in such writing.

     SECTION 7.2. NOTICES. All notices, request and demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to each party at the following address:

     BORROWER: STERLING FINANCIAL CORPORATION
               111 North Wall Street
               Spokane, WA 99201
               Attn: Chief Financial Officer


                                      -10-

<PAGE>

     BANK:     WELLS FARGO BANK, NATIONAL ASSOCIATION
               Correspondent Banking Northwest
               999 3rd Avenue, 14th Floor
               Seattle, WA 98104

Or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.

     SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to
Bank immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all reasonably and responsibly allocated costs of Bank's
in-house counsel), expended or incurred by Bank in connection with (a) the
negotiation and preparation of this Agreement and the other Loan Documents, and
the preparation of any amendments and waivers hereto and thereto, (b) the
enforcement of Bank's rights and/or the collection of any amounts which become
due to Bank under any of the Loan Documents, and (c) the prosecution of defense
of any action in any way related to any of the Loan Documents, including without
limitation, any action for declatory relief, whether incurred at the trial or
appellate level, in an arbitration proceeding or otherwise, and including any of
the foregoing incurred in connection with any bankruptcy proceeding (including
without limitation, any adversary proceeding, contested matter or motion brought
by Bank or any other person) relating to Borrower or any other person or entity.

     SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the heirs, executors, administrators, legal
representative, successors and assigns of the parties; provided however, that
Borrower may not assign or transfer its interests or rights hereunder without
Bank's prior written consent. Bank reserves the right to sell, assign, transfer,
negotiate or grant participations in all or any part of, or any interest in,
Bank's rights and benefits under each of the Loan Documents, subject to
Borrower's consent, which consent shall not be unreasonably conditioned,
withheld or delayed; provided, however, no such assignment, transfer, sale or
participation shall (i) be made to any person or entity other than a Well
Capitalized financial institution, as defined in Section 38; and (ii) release
Bank of its obligations to the Note and remaining Loan Documents. In connection
therewith, Bank may disclose all documents and information which Bank now has or
may hereafter acquire relating to any credit subject hereto, Borrower, any Bank
Subsidiary or any collateral required hereunder.

     SECTION 7.5. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other Loan
Documents constitute the entire agreement between Borrower and Bank with respect
to each credit subject hereto and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof. This Agreement may be amended or modified only in writing signed by each
party hereto.

     SECTION 7.6. NO THIRD PARTY BENEFICIARIES. This Agreement is made and
entered into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity shall
be a third party beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any other of the Loan Documents
to which it is not a party.


                                      -11-
<PAGE>

     SECTION 7.7. TIME. Time is of the essence of each and every provision of
this Agreement and each other of the Loan Documents.

     SECTION 7.8 SEVERABILITY OF PROVISIONS. If any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.

     SECTION 7.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original, and all of which when taken together shall constitute one and the same
Agreement.

     SECTION 7.10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Washington.

     SECTION 7.11. ARBITRATION.

     (a) Arbitration. The parties hereto agree, upon demand by any party, to
submit to binding arbitration all claims, disputes and controversies between or
among them (and their respective employees, officers, directors, attorneys, and
other agents), whether in tort, contract or otherwise in any way arising out of
or relating to (i) any credit subject hereto, or any of the Loan Documents, and
their negotiation, execution, collateralization, administration, repayment,
modification, extension, substitution, formation, inducement, enforcement,
default or termination; or (ii) requests for additional credit.

     (b) Governing Rules. Any arbitration proceeding will (i) proceed in a
location in Washington selected by the American Arbitration Association ("AAA");
(ii) be governed by the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in any of the
documents between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA's commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA's optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to herein, as applicable, the "Rules"). If
there is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. Section 91 or
any similar applicable state law.

     (c) Arbitrator Qualifications and Powers. Any arbitration proceeding in
which the amount in controversy is $5,000,000.00 or less will be decided by a
single mutually acceptable arbitrator and who shall not render an award of
greater than $5,000,000.00. Any dispute in which the amount in controversy
exceeds $5,000,000.00 shall be decided by majority vote of a panel of three
arbitrators selected in accordance with the Rules; provided however, that all
three arbitrators must actively participate in all hearings and deliberations.
The arbitrator will be a neutral attorney licensed in the State of Washington or
a neutral retired judge of the stet or federal judiciary of Washington, in
either case with a minimum of ten years experience in the substantive law
applicable to the subject matter of the dispute to be arbitrated. The arbitrator


                                      -12-

<PAGE>

will determine whether or not an issue is arbitratable ad will give effect to
the states of limitation in determining any claim. In any arbitration proceeding
the arbitrator will decide (by documents only or with a hearing at the
arbitrator's discretion) any pre-hearing motions which are similar to motions to
dismiss for failure to state a claim or motions for summary adjudication. The
arbitrator shall resolve all disputes in accordance with the substantive law of
Washington and may grant any remedy or relief as is necessary to make effective
any award. The arbitrator shall also have the power to award reasonable fees, to
impose sanctions and to take such other action as the arbitrator seems necessary
to the same extent a judge could pursuant to the Federal Rules of Civil
Procedures, the Washington Rules of Civil Procedure or other applicable law.
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction. The institution and maintenance of any action for judicial
relief or pursuit of a provisional or ancillary remedy shall not constitute a
waiver of the right of any party, including the plaintiff, to submit the
controversy or claim to arbitration if any other party contests such action for
judicial relief.

     (d) Class Proceedings and Consolidations. No party hereto shall be entitled
to join or consolidate disputes by or against others in any arbitration, except
parties who have executed any Loan Document, or to include in any arbitration
any dispute as a representative or member of a class, or to act in any
arbitration in the interest of the general public or in a private attorney
general capacity.

     (e) Payment of Arbitration Costs and Fees. The arbitrator shall award all
costs and expenses of the arbitration proceeding to the prevailing party.

     (f) Miscellaneous. To the maximum extend practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly
related to the Loan Documents or the subject matter of the dispute shall
control. This arbitration provision shall survive termination, amendment or
expiration of any of the Loan Documents or any relationship between the parties.

ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.

STERLING FINANCIAL CORPORATION          WELLS FARGO BANK,
                                        NATIONAL ASSOCIATION


By: /s/ Daniel G. Byrne                 By: /s/ David S. Hernandez
    ---------------------------------       ------------------------------------
Title: EVP - Finance                        David S. Hernandez
                                            SVP & Division Manager


                                      -13-
<PAGE>

                       FIRST AMENDMENT TO CREDIT AGREEMENT

     THIS AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered into as of
August 29, 2006, by and between STERLING FINANCIAL CORPORATION, a Washington
corporation ("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").

                                    RECITALS

     WHEREAS, Borrower is currently indebted to Bank pursuant to the terms and
conditions of that certain Credit Agreement between Borrower and Bank dated as
of August 4, 2006, as amended from time to time ("Credit Agreement").

     WHEREAS, Bank and Borrower have agreed to certain changes in the terms and
conditions set forth in the Credit Agreement and have agreed to amend the Credit
Agreement to reflect said changes.

     NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree that the Credit
Agreement shall be amended as follows:

     1. Section 1.1 (a) is hereby amended by deleting "Forty Million Dollars
($40,000,000.00)" as the maximum principal amount available under the Line of
Credit, and by substituting for said amount "Thirty Million Dollars
($30,000,000.00)," with such change to be effective upon the execution and
delivery to Bank of a promissory note dated as of August 29, 2006 (which
promissory note shall replace and be deemed the Line of Credit Note defined in
and made pursuant to the Credit Agreement) and all other contracts, instruments
and documents required by Bank to evidence such change.

     2. In consideration of the changes set forth herein, promptly upon receipt
by Bank of an executed copy of this Amendment and the Line of Credit Note
reducing the maximum principal amount of the Line of Credit to $30,000,000.00,
Bank shall refund to Borrower $5,000.00 of the $20,000.00 that the Borrower has
paid to Bank as a commitment fee.

     3. Except as specifically provided herein, all terms and conditions of the
Credit Agreement remain in full force and effect, without waiver or
modification. All terms defined in the Credit Agreement shall have the same
meaning when used in this Amendment. This Amendment and the Credit Agreement
shall be read together, as one document.

     4. Borrower hereby remakes all representations and warranties contained in
the Credit Agreement and reaffirms all covenants set forth therein. Borrower
further certifies that as of the date of this Amendment there exists no Event of
Default as defined in the Credit Agreement, nor any condition, act or event
which with the giving of notice or the passage of time or both would constitute
any such Event of Default.

ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.


                                       -1-

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first written above.

STERLING FINANCIAL CORPORATION          WELLS FARGO BANK,
                                        NATIONAL ASSOCIATION


By: /s/ Daniel G. Byrne                 By: /s/ Brandon Kowsky
    ---------------------------------       ------------------------------------
Title: Executive Vice President,            Brandon Kowsky
       Assistant Secretary,                 Vice President
       and Chief Financial Officer


                                       -2-