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  		UNITED STATES<BR>
  	SECURITIES AND EXCHANGE COMMISSION
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  	WASHINGTON, D.C. 20549
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  	FORM 8-K
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  	CURRENT REPORT
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  	Pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934
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  	Date of Report (Date of Earliest Event Reported):
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  	&nbsp;
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  	March 30, 2006
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  	Sterling Financial Corporation
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  <BR>__________________________________________<BR>
  	(Exact name of registrant as specified in its charter)
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  	Pennsylvania
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  	0-16276
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  	23-2449551
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  _____________________<BR>
  	(State or other jurisdiction
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  _____________<BR>
  	(Commission
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  ______________<BR>
  	(I.R.S. Employer
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  	of incorporation)
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  	File Number)
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  	Identification No.)
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  	&nbsp;&nbsp;
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  	101 North Pointe Boulevard, Lancaster, Pennsylvania
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  	&nbsp;
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  	17601-4133
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  _________________________________<BR>
  	(Address of principal executive offices)
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  	&nbsp;
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  ___________<BR>
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  	Registrant&#146;s telephone number, including area code:
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  	717-581-6030
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  	Not Applicable
  <BR>______________________________________________<BR>
  	Former name or former address, if changed since last report
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  	&nbsp;
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  <!-- CoverPageRegistrant END --><P><FONT SIZE="2">
  Check the appropriate box below if the Form 8-K filing is intended to
  simultaneously satisfy the filing obligation of the registrant under any
  of the following provisions:</FONT>
  </P>
  <P><FONT SIZE="2">
  [&nbsp;&nbsp;]&nbsp;&nbsp;Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)<br>
  [&nbsp;&nbsp;]&nbsp;&nbsp;Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)<br>
  [&nbsp;&nbsp;]&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))<br>
  [&nbsp;&nbsp;]&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))<br>
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  <B>
  	Item 1.01 Entry into a Material Definitive Agreement.
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  Sterling Financial Corporation ("Sterling") today announced that on March 30, 2006, it entered into a definitive agreement to acquire Bay Net Financial, Inc. and its wholly-owned subsidiary, Bay Net, A Community Bank based in Bel Air, MD.  Pursuant to the agreement, Bay Net Financial, Inc. will merge with and into Sterling and, subsequently, Bay Net, A Comunity Bank, will merge with and into Sterling's wholly-owned subsidiary, First National Bank of North East.  <br><br>The total value of the transaction is $22.8 million but the actual closing value will depend upon several factors, including Sterling's stock price.  Pursuant to the terms of the definitive agreement, each shareholder of Bay Net Financial may elect to receive cash, or to exchange their shares for Sterling shares, or to receive a combination of cash and Sterling stock. The consideration is subject to election and allocation procedures designed to ensure that the cash portion of the transaction is not less than 40% nor more than 45% of the dollar value of the consideration.  The transaction is subject to customary conditions, including approval of the merger by Bay Net Financial's shareholders and applicable regulatory agencies.  Assuming all conditions are satisfied, the merger is expected to be completed in the 4th quarter of 2006.  The specific pricing calculations and other requirements are set forth in the definitive agreement which is attached to this Form 8-K as Exhibit 2.1 and is incorporated herein by reference.     <br><br>
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  	Item 7.01 Regulation FD Disclosure.
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  In connection with the disclosure set forth in Item 1.01 above, Sterling issued a press release announcing its execution, on March 30, 2006, of a definitive merger agreement to acquire Bay Net Financial, Inc. and Bay Net, A Community Bank.  The press release is attached to this Form 8-K as Exhibit 99.1.<br><br>The information furnished under this Item 7.01 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.<br><br>
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  	Item 9.01 Financial Statements and Exhibits.
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  (a)  Not applicable<br><br>(b)  Not applicable<br><br>(c)  Exhibits<br><br>     2.1  Agreement and Plan of Merger, by and among Sterling Financial Corporation, Bay Net Financial, Inc., and Bay Net, A Community Bank, dated March 30, 2006<br><br>     99.1  Sterling Financial Corporation press release, dated March 31, 2006
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  	SIGNATURES
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  	Pursuant to the requirements of the Securities Exchange Act of 1934, the
  	registrant has duly caused this report to be signed on its behalf by the
  	undersigned hereunto duly authorized.
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  	Sterling Financial Corporation
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  	&nbsp;&nbsp;
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  <I>
  	March 31, 2006
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  	By:
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  <I>
  	J. Roger Moyer, Jr.
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  <I>
  	Name: J. Roger Moyer, Jr.
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  <I>
  	Title: President and Chief Executive Officer
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  	Exhibit&nbsp;Index
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  	Exhibit No.
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  	Description
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  	2.1
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  	&nbsp;
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  Agreement and Plan of Merger dated March 30, 2006
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  	99.1
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  	&nbsp;
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  Sterling Financial Corporation press release dated March 31, 2006
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metadata_documents: [{"type": "8-K", "sequence": "1", "filename": "htm_11325.htm", "description": "LIVE FILING", "secsgml_size_bytes": 12737}]
metadata_filer: {"company-data": {"conformed-name": "STERLING FINANCIAL CORP /PA/", "cik": "0000811671", "assigned-sic": "6021", "irs-number": "232449551", "state-of-incorporation": "PA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-16276", "film-number": "06725346"}, "business-address": {"street1": "NORTH POINTE BANKING CORP", "street2": "101 NORTH POINTE BLVD", "city": "LANCASTER", "state": "PA", "zip": "17601-4133", "phone": "7175816030"}}
text: Sterling Financial Corporation (Form: 8-K)
  UNITED STATES
  SECURITIES AND EXCHANGE COMMISSION
  WASHINGTON, D.C. 20549
  FORM 8-K
  CURRENT REPORT
  Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
  Date of Report (Date of Earliest Event Reported):
  March 30, 2006
  Sterling Financial Corporation
  __________________________________________
  (Exact name of registrant as specified in its charter)
  Pennsylvania
  0-16276
  23-2449551
  _____________________
  (State or other jurisdiction
  _____________
  (Commission
  ______________
  (I.R.S. Employer
  of incorporation)
  File Number)
  Identification No.)
  101 North Pointe Boulevard, Lancaster, Pennsylvania
  17601-4133
  _________________________________
  (Address of principal executive offices)
  ___________
  (Zip Code)
  Registrant's telephone number, including area code:
  717-581-6030
  Not Applicable
  ______________________________________________
  Former name or former address, if changed since last report
  Check the appropriate box below if the Form 8-K filing is intended to
  simultaneously satisfy the filing obligation of the registrant under any
  of the following provisions:
  [  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
  [  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
  [  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
  [  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
  Top of the Form
  Item 1.01 Entry into a Material Definitive Agreement.
  Sterling Financial Corporation ("Sterling") today announced that on March 30, 2006, it entered into a definitive agreement to acquire Bay Net Financial, Inc. and its wholly-owned subsidiary, Bay Net, A Community Bank based in Bel Air, MD.  Pursuant to the agreement, Bay Net Financial, Inc. will merge with and into Sterling and, subsequently, Bay Net, A Comunity Bank, will merge with and into Sterling's wholly-owned subsidiary, First National Bank of North East.
  The total value of the transaction is $22.8 million but the actual closing value will depend upon several factors, including Sterling's stock price.  Pursuant to the terms of the definitive agreement, each shareholder of Bay Net Financial may elect to receive cash, or to exchange their shares for Sterling shares, or to receive a combination of cash and Sterling stock. The consideration is subject to election and allocation procedures designed to ensure that the cash portion of the transaction is not less than 40% nor more than 45% of the dollar value of the consideration.  The transaction is subject to customary conditions, including approval of the merger by Bay Net Financial's shareholders and applicable regulatory agencies.  Assuming all conditions are satisfied, the merger is expected to be completed in the 4th quarter of 2006.  The specific pricing calculations and other requirements are set forth in the definitive agreement which is attached to this Form 8-K as Exhibit 2.1 and is incorporated herein by reference.
  Item 7.01 Regulation FD Disclosure.
  In connection with the disclosure set forth in Item 1.01 above, Sterling issued a press release announcing its execution, on March 30, 2006, of a definitive merger agreement to acquire Bay Net Financial, Inc. and Bay Net, A Community Bank.  The press release is attached to this Form 8-K as Exhibit 99.1.
  The information furnished under this Item 7.01 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
  Item 9.01 Financial Statements and Exhibits.
  (a)  Not applicable
  (b)  Not applicable
  (c)  Exhibits
  2.1  Agreement and Plan of Merger, by and among Sterling Financial Corporation, Bay Net Financial, Inc., and Bay Net, A Community Bank, dated March 30, 2006
  99.1  Sterling Financial Corporation press release, dated March 31, 2006
  Top of the Form
  SIGNATURES
  Pursuant to the requirements of the Securities Exchange Act of 1934, the
  	registrant has duly caused this report to be signed on its behalf by the
  	undersigned hereunto duly authorized.
  Sterling Financial Corporation
  March 31, 2006
  By:
  J. Roger Moyer, Jr.
  Name: J. Roger Moyer, Jr.
  Title: President and Chief Executive Officer
  Top of the Form
  Exhibit Index
  Exhibit No.
  Description
  2.1
  Agreement and Plan of Merger dated March 30, 2006
  99.1
  Sterling Financial Corporation press release dated March 31, 2006