PNC to Acquire Sterling

Expected to result in No. 1 deposit share in central Pennsylvania

The PNC Financial Services Group, Inc. (NYSE: PNC), with $126 billion in assets, announced today that it has signed a definitive agreement to acquire Lancaster, Pa.-based Sterling Financial Corporation (Nasdaq: SLFI), with approximately $3.3 billion in assets, for $565 million in stock and cash, or approximately $19.00 per share.

Sterling provides banking and other financial services, including leasing, trust, investment and brokerage, to individuals and businesses through 67 branches in Pennsylvania, Maryland and Delaware. Sterling has built a leading deposit share in several Pennsylvania counties, and subsequent to this transaction PNC expects to become No. 1 in deposit share in its central Pennsylvania footprint.

“Sterling’s strong deposit share and outstanding retail banking model make it an ideal fit for PNC. This acquisition provides a meaningful entry into several of the fastest growing Pennsylvania counties and joins our Pennsylvania markets of Harrisburg and Philadelphia to our new Greater Baltimore region,” said PNC President Joseph C. Guyaux. “The transaction meets PNC’s disciplined guidelines for the deployment of capital, and we expect it to be accretive to earnings in 2009 with a 15 percent internal rate of return.”

PNC conducted extensive due diligence of Sterling that included its books and records and an assessment of all legal actions pending against the company. Based on this due diligence, PNC believes that previously disclosed accounting issues associated with Sterling’s Equipment Finance, LLC are confined to that unit. PNC expects to take a one-time after-tax charge of $28 million related to the closing of the transaction.

PNC anticipates having the capital flexibility to continue its current common stock repurchase program for 2007.

The acquisition is expected to close in the first quarter of 2008, subject to customary closing conditions, including regulatory approvals and approval by Sterling shareholders, with conversion planned for the third quarter of 2008.

Under the purchase agreement, which has been approved by the boards of directors of both companies, Sterling will merge into PNC. The transaction values each common share of Sterling stock at $19.00 based on PNC’s closing NYSE stock price of $73.87 on July 17, 2007. The aggregate consideration for the Sterling common stock is comprised of approximately 4.540 million shares of PNC common stock and $224 million in cash and is based on 29.425 million shares of Sterling common stock currently outstanding.