SOURCE: Park Sterling Bank

Park Sterling Bank

April 28, 2011 07:00 ET

Park Sterling Corporation Announces First Quarter 2011 Results

CHARLOTTE, NC--(Marketwire - Apr 28, 2011) - Park Sterling Corporation (NASDAQ: PSTB), the holding company for Park Sterling Bank, today released unaudited results of operations and other financial information for the first quarter of 2011. Highlights for the quarter include:

First Quarter Highlights:

--  Nonperforming assets decreased $6.6 million compared to the fourth
    quarter of 2010 to $36.8 million, or 5.85% of total assets
--  Provision for loan losses decreased $3.8 million to $4.5 million
    compared to the fourth quarter of 2010
--  Net charge-offs decreased $3.9 million to $5.1 million, or 5.27% of
    average loans (annualized), compared to $9.0 million, or 8.97% of
    average loans (annualized), in the fourth quarter of 2010
--  Net interest income increased 2% compared to the fourth quarter of 2010
    and 5% compared to the first quarter of 2010
--  Net interest margin (tax equivalent) of 2.76%, an increase of 24 basis
    points compared to the fourth quarter of 2010 and a decrease of 65
    basis points compared to the first quarter of 2010
--  Capital levels remain strong as tangible common equity as a percentage
    of tangible assets decreased slightly to 27.81% from 28.75% in the
    fourth quarter of 2010
--  Net loss of $2.9 million, or $0.10 per diluted share, compared to a net
    loss of $4.5 million, or $0.16 per diluted share, in the fourth quarter
    of 2010 and net income of $157,000, or $0.03 per diluted share, in the
    first quarter of 2010

Business Highlights:

--  Signed a definitive merger agreement to acquire Community Capital
    Corporation for a total value of approximately $32.4 million, expanding
    Park Sterling's footprint into the attractive Upstate South Carolina
    market
--  Added veteran banker as South Carolina Market President to lead the
    expansion into the South Carolina market and received regulatory
    approval for a de novo office in Charleston
--  Hired two highly experienced North Carolina bankers to lead the
    expansion into the Research Triangle market of North Carolina
--  Continued to expand management and board of directors

"During the first quarter of 2011, we made significant progress in working through our problem loans," said Jim Cherry, Chief Executive Officer. "The level of nonperforming assets decreased in the first quarter to 5.85% of total assets from 7.04% in the fourth quarter of last year. While we do expect some unevenness in the level of nonperforming loans for the remainder of the year, we believe that nonperforming loans peaked in the fourth quarter of 2010, given the prudent approach we took in reclassifying our loan portfolio. We are optimistic that we will continue to make progress in working through these nonperforming assets, barring any unforeseen adverse changes in the economic environment. Our net charge offs also decreased to 5.27% of average loans (annualized) compared to 8.97% in the prior quarter and we expect this downward trend to continue through the remainder of 2011.

"Our organic growth strategy was evidenced by the addition of new teams of highly skilled bankers with strong networks in the Charleston and Research Triangle markets during the first quarter. We believe the expansion into these key markets has well-positioned Park Sterling to take advantage of unique opportunities in the Carolinas and expect to see accelerated loan growth during the second half of 2011 as a result.

"We are excited about our plans to partner with Community Capital Corporation during the third quarter of this year. In addition to highly talented people and management, this partnership provides Park Sterling with a strong source of core deposits to support growth initiatives, significantly expands our product capabilities, and diversifies our revenue mix and geographic footprint. We will continue to seek out other potential partners who can similarly fuel our growth in the Carolinas and Virginia."

First Quarter 2011 Financial Highlights

Asset Quality

Nonperforming loans decreased to $35.2 million, or 9.07% of total loans, compared to $42.1 million, or 10.53% of total loans, as of December 31, 2010. Nonperforming assets totaled $36.8 million, or 5.85% of total assets, down from $43.4 million, or 7.04% of total assets, as of December 31, 2010.

The provision for loan losses decreased $3.8 million, to $4.5 million, compared to the fourth quarter of 2010. Net charge-offs decreased to $5.1 million, or 5.27% of average loans on an annualized basis, compared to $9.0 million, or 8.97% of average loans (annualized) in the prior quarter. The allowance for loan losses was $11.8 million, or 3.03% of total loans, a decrease of $656,000 from $12.4 million, or 3.11% of total loans, at December 31, 2010. The decrease in the provision for loan losses and the allowance resulted from a lower level of impaired loans requiring specific reserves. The allowance represented 33.41% of nonperforming loans (including restructured loans) at March 31, 2011, up slightly from 29.50% at December 31, 2010.

Net Interest Income and Net Interest Margin

Net interest income increased 2% compared to the fourth quarter of 2010 and the net interest margin (tax equivalent) increased 24 basis points to 2.76%. The increase in the net interest margin was primarily related to a reduction in nonperforming loans that occurred early in the first quarter, a managed 9% decrease in average time deposits, and to a lesser extent, improved yields on investment securities. The decrease in nonaccrual loans accounted for 3 basis points of the net interest margin expansion. These factors more than offset a 6% decrease in average earning assets.

Compared to the first quarter of 2010, net interest income increased 5%, primarily due to a $93.5 million increase in investment securities as proceeds from the initial public offering were invested, which more than offset a 63 basis point decrease in the net interest margin (tax equivalent.) The decrease in the net interest margin was due to an increase in investment securities which were lower yielding assets.

Non-Interest Income

Non-interest income increased $29,000 compared to the fourth quarter of 2010 and $34,000 compared to the first quarter of 2010. The growth in non-interest income compared to both prior periods was primarily related to gains on the sale of other property totaling $17,000 and a $19,000 gain on the sale of securities.

Non-Interest Expense

Non-interest expense increased $686,000, or 19%, compared to the fourth quarter of 2010. The increase in expenses compared to the fourth quarter 2010 was primarily related to a $393,000 increase in salaries and employee benefits related to the management expansion and addition of new employees. Also impacting expenses was a $259,000 increase in OREO-related expenses primarily resulting from writedowns on five properties, a $102,000 increase in FDIC insurance premiums due to higher deposit balances, and a $99,000 increase in legal and professional fees related to being a new public company. Included in other non-interest expense was $41,000 in director fees and $75,000 in due diligence expenses.

Compared to the first quarter of 2010, expenses increased $2.2 million, primarily due to increased salaries and employee benefits related to the management expansion and addition of new employees, higher expenses related to being a new public company, an increase in FDIC insurance premiums resulting from a larger deposit base, and an increase in OREO-related expenses due to writedowns on OREO properties as new appraisals were obtained as well as a general increase in OREO properties that occurred during the last twelve months.

Balance Sheet and Capital

Total assets increased $12.8 million, or 2%, compared to the fourth quarter of 2010, primarily due to excess liquidity invested in cash and short term investments. Compared to the first quarter of 2010, total assets grew $153.3 million, or 32%, resulting from an increase in the securities portfolio as proceeds from the initial public offering were invested during the third and fourth quarters of 2010.

Compared to the fourth quarter of 2010, total loans decreased $11.6 million, or 3%, to $388.2 million, primarily due to a 14% decrease in construction loans which partially offset modest growth in commercial real estate and residential loans. Compared to the first quarter of 2010, total loans decreased $6.3 million, or 2%, resulting from a 30% decrease in construction and development loans, which more than offset a 13% increase in commercial real estate loans and a 15% increase in commercial and industrial loans. Exposure to construction and development loans also decreased to 21% of total loans, down from 24% in the fourth quarter of 2010 and 30% in the first quarter of 2010.

Total deposits increased $13.7 million, or 3%, compared to the fourth quarter of 2010. This increase in deposits was primarily due to a 50% increase in money market, NOW and savings deposits, offset by an 8% decrease in time deposits. The growth in money market, NOW and savings deposits primarily resulted from the addition of net new deposits. Compared to the first quarter of 2010, total deposits increased $28.3 million, or 7%, resulting from a 40% increase in demand deposits, a 92% increase in money market, NOW and savings deposits, which more than offset an 11% reduction in time deposits. Core deposits as a percentage of total deposits were 51%, compared to 46% in the fourth quarter of 2010 and 40% in the first quarter of 2010.

Stockholders' equity decreased $2.3 million to $174.8 million compared to $177.1 million at December 31, 2010, primarily resulting from the first quarter 2011 net loss of $2.9 million. Stockholders' equity increased $128.3 million compared to the first quarter of 2010 as a result of the August 2010 common stock offering. Tangible common equity as a percentage of tangible assets was 27.81%, a slight decrease from 28.75% at December 31, 2010, and an increase compared to 9.77% at March 31, 2010. Tier 1 leverage ratio was 28.36%, a slight increase from 27.39% at December 31, 2010.

During the first quarter, and as contemplated in the equity offering, 568,260 shares of restricted stock were issued, but will not vest until the Company's share price achieves certain performance thresholds above the equity offering price (these restricted stock awards vest one-third each at $8.125, $9.10 and $10.40 per share, respectively). Accordingly, these additional shares have been excluded from earnings and tangible book value per share calculations.

Conference Call

A conference call will be held at 8:30 a.m., ET this morning (April 28, 2011). The conference call can be accessed by dialing (877) 317 6789 and requesting the Park Sterling Bank earnings call. Listeners should dial in 10 minutes prior to the start of the call. The live webcast and presentation slides will be available on www.parksterlingbank.com under Investor Relations, "Investor Presentations."

A replay of the webcast will be available on www.parksterlingbank.com under Investor Relations, "Investor Presentations" shortly following the call. A replay of the conference call can be accessed one hour after the call through May 13, 2011, by dialing (877) 344 7529, conference number 450459.

About Park Sterling Corporation

Park Sterling Corporation is the holding company for Park Sterling Bank, headquartered in Charlotte, North Carolina. The Bank's primary focus is to provide banking services to small and mid-sized businesses, owner-occupied and income producing real estate owners, professionals and consumers doing business or residing within its target markets. Park Sterling Bank is committed to building a banking franchise across the Carolinas and Virginia that is noted for sound risk management, superior client service and exceptional client relationships. For more information, visit www.parksterlingbank.com. Park Sterling's shares are traded on NASDAQ under the symbol PSTB.

Non-GAAP Measures

Tangible assets, tangible common equity, tangible book value and related ratios, as used throughout this release, are non-GAAP financial measures. For additional information, see "Reconciliation of Non-GAAP Measures" in the accompanying tables.

Cautionary Statement Regarding Forward Looking Statements

This news release contains, and Park Sterling and its management may make, certain statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts and often use words such as "may," "plan," "contemplate," "anticipate," "believe," "intend," "continue," "expect," "project," "predict," "estimate," "could," "should," "would," "will," "goal," "target" and similar expressions. These forward-looking statements express management's current expectations, plans or forecasts of future events, results and condition, including expectations regarding the proposed merger with Community Capital Corporation ("Community Capital"), the general business strategy of engaging in bank mergers, organic growth and anticipated asset size, anticipated loan growth, refinement of the loan loss allowance methodology, recruiting of key leadership positions, decreases in construction and development loans and other changes in loan mix, changes in deposit mix, capital and liquidity levels, emerging regulatory expectations and measures, net interest income, credit trends and conditions, including loan losses, allowance, charge-offs, delinquency trends and nonperforming loan and asset levels, residential sales activity and other similar matters. These statements are not guarantees of future results or performance and by their nature involve certain risks and uncertainties that are based on management's beliefs and assumptions and on the information available to management at the time that these disclosures were prepared. Actual outcomes and results may differ materially from those expressed in, or implied by, any of these forward-looking statements.

You should not place undue reliance on any forward-looking statement and should consider all of the following uncertainties and risks, as well as those more fully discussed in any of Park Sterling's filings with the SEC: inability to obtain regulatory approvals of the Community Capital merger on the proposed terms and schedule; failure of Community Capital's shareholders to approve the merger; failure to realize synergies and other financial benefits from the proposed merger within the expected time frame; increases in expected costs or difficulties related to integration of the Community Capital merger; inability to identify and successfully negotiate and complete additional combinations with potential merger partners or to successfully integrate such businesses into Park Sterling, including the company's ability to realize the benefits and cost savings from and limit any unexpected liabilities acquired as a result of any such business combination; the effects of negative economic conditions, including stress in the commercial real estate markets or delay or failure of recovery in the residential real estate markets; changes in consumer and investor confidence and the related impact on financial markets and institutions; changes in interest rates; failure of assumptions underlying the establishment of our allowance; deterioration in the credit quality of our loan portfolios or in the value of the collateral securing those loans; deterioration in the value of securities held in our investment securities portfolio; legal and regulatory developments; increased competition from both banks and nonbanks; changes in accounting standards, rules and interpretations, inaccurate estimates or assumptions in accounting and the impact on Park Sterling's financial statements; Park Sterling's ability to attract new employees; and management's ability to effectively manage credit risk, market risk, operational risk, legal risk, and regulatory and compliance risk.

Forward-looking statements speak only as of the date they are made, and Park Sterling undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances or events that arise after the date the forward-looking statement was made.

Additional Information About The Merger And Where To Find It

In connection with the proposed merger between Park Sterling and Community Capital Corp. ("Community Capital"), Park Sterling will file with the Securities and Exchange Commission (the "SEC") a Registration Statement on Form S-4 that will include a Proxy Statement of Community Capital that also will constitute a Prospectus of Park Sterling, as well as other relevant documents concerning the proposed transaction. Shareholders are strongly urged to read the Registration Statement and the Proxy Statement/Prospectus regarding the proposed merger when they become available and other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information regarding the proposed merger.

A free copy of the Proxy Statement/Prospectus, as well as other filings containing information about Park Sterling and Community Capital, may be obtained after their filing at the SEC's Internet site (http://www.sec.gov). In addition, free copies of documents filed with the SEC may be obtained on the respective websites of Park Sterling and Community Capital at www.parksterlingbank.com and www.capitalbanksc.com.

This report does not constitute an offer to buy, or a solicitation to sell, shares of any security or the solicitation of any proxies from the shareholders of Park Sterling or Community Capital.

Participants in Solicitation

Park Sterling and Community Capital and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Community Capital's shareholders in connection with the proposed merger. Information about the directors and executive officers of Park Sterling and Community Capital and information about other persons who may be deemed participants in this solicitation will be included in the Proxy Statement/Prospectus. Information about Park Sterling's executive officers and directors can be found in Park Sterling's definitive proxy statement in connection with its 2011 Annual Meeting of Shareholders filed with the SEC on April 12, 2011. Information about Community Capital's executive officers and directors can be found in Community Capital's definitive proxy statement in connection with its 2010 Annual Meeting of Shareholders filed with the SEC on April 21, 2010.



PARK STERLING CORPORATION
CONDENSED INCOME STATEMENT
THREE MONTH RESULTS
($ in thousands, except per share amounts)

                 March 31,   Dec. 31,   Sept. 30,    June 30,   March 31,
                   2011        2010*       2010        2010       2010
                (Unaudited)            (Unaudited) (Unaudited) (Unaudited)
                ----------  ----------  ----------  ----------  ----------
Interest income
  Loans,
  including
   fees         $    4,758  $    4,984  $    4,963  $    5,170  $    5,143
  Federal funds
   sold                 30          46          42          10           9
  Taxable
   investment
   securities          681         587         370         286         324
  Tax-exempt
   investment
   securities          171         160         161         161         160
  Interest on
   deposits at
   banks                14          16          23          12          15
                ----------  ----------  ----------  ----------  ----------
    Total
     interest
     income          5,654       5,793       5,559       5,639       5,651
                ----------  ----------  ----------  ----------  ----------
Interest expense
  Money market,
   NOW and
   savings
   deposits            141         132         104          89          83
  Time deposits      1,226       1,435       1,490       1,459       1,485
  Short-term
   borrowings            -           1           1           3           4
  Long-term
   borrowings          141         140         144         141         138
  Subordinated
   debt                190         188         190         190         190
                ----------  ----------  ----------  ----------  ----------
    Total
     interest
     expense         1,698       1,896       1,929       1,882       1,900
                ----------  ----------  ----------  ----------  ----------
    Net interest
     income          3,956       3,897       3,630       3,757       3,751
Provision for
 loan losses         4,462       8,237       6,143       1,094       1,531
                ----------  ----------  ----------  ----------  ----------
    Net interest
     income
     (loss) after
     provision        (506)     (4,340)     (2,513)      2,663       2,220
Total noninterest
 income                 72          43          26          23          38
Noninterest
 expenses
  Salaries and
   employee
   benefits          2,507       2,114       1,777       1,299       1,252
  Occupancy and
   equipment           256         250         236         224         206
  Advertising
   and promotion        38          50          84          96          57
  Legal and
   professional
   fees                307         208          78          80          79
  Deposit charges
   and FDIC
   insurance           287         185         184         183         176
  Data
   processing
   and outside
   service fees        123         109         109         100          93
  Directors fees        41         182         164          46           -
  OREO expense
   and loss on
   sales               235          16         120         239          36
  Other
   noninterest
   expense             440         434         238         210         143
                ----------  ----------  ----------  ----------  ----------
    Total
     noninterest
     expenses        4,234       3,548       2,990       2,477       2,042
                ----------  ----------  ----------  ----------  ----------
    Income (loss)
     before income
     taxes          (4,668)     (7,845)     (5,477)        209         216
Income tax
 expense
 (benefit)          (1,781)     (3,324)     (1,809)         36          59
                ----------  ----------  ----------  ----------  ----------
    Net income
     (loss)     $   (2,887) $   (4,521) $   (3,668) $      173  $      157
                ==========  ==========  ==========  ==========  ==========

Earnings (loss)
 per share,
 fully diluted  $    (0.10) $    (0.16) $    (0.23) $     0.03 $      0.03
Weighted
 average
 diluted
 shares         28,051,098  28,051,098  15,998,924   4,951,098   4,951,098


* Derived from audited financial statements.





PARK STERLING CORPORATION
CONDENSED BALANCE SHEETS
($ in thousands)

                 March 31,   Dec. 31,   Sept. 30,    June 30,   March 31,
                   2011        2010*       2010        2010       2010
                (Unaudited)            (Unaudited) (Unaudited) (Unaudited)
                ----------  ----------  ----------  ----------  ----------
ASSETS
Cash and due
 from banks     $   54,192  $    2,433  $   11,591  $    7,785  $    9,872
Interest
 earning
 balances at
 banks               3,796       5,040       5,859       2,290       2,790
Federal funds
 sold               57,525      57,905      96,560      30,860      14,090
Investment
 securities
 available-for-
 sale              112,273     140,590     115,357      40,289      43,190
Loans              388,187     399,829     397,658     399,376     394,499
Allowance for
 loan losses       (11,768)    (12,424)    (13,150)     (8,974)     (8,380)
                ----------  ----------  ----------  ----------  ----------
  Net loans        376,419     387,405     384,508     390,402     386,119
                ----------  ----------  ----------  ----------  ----------

Other real
 estate owned        1,565       1,246       1,441         534       3,066
Other assets        22,646      21,489      17,314      16,201      15,923
                ----------  ----------  ----------  ----------  ----------

  Total assets  $  628,416  $  616,108  $  632,630  $  488,361  $  475,050
                ==========  ==========  ==========  ==========  ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
Demand
 noninterest-
 bearing        $   37,098  $   36,333  $   30,468  $   27,316  $   26,586
Money market,
 NOW and
 savings           107,186      71,666      72,639      62,568      55,811
Time deposits      277,228     299,821     314,042     321,899     310,769
                ----------  ----------  ----------  ----------  ----------
  Total
   deposits        421,512     407,820     417,149     411,783     393,166

Short-term
 borrowings          1,213         874       1,100       1,762       7,146
Long-term
 borrowings         20,000      20,000      20,000      20,000      20,000
Subordinated
 debt                6,895       6,895       6,895       6,895       6,895
Accrued expenses
 and other
 liabilities         4,026       3,418       3,639       1,231       1,423
                ----------  ----------  ----------  ----------  ----------
  Total
   liabilities     453,646     439,007     448,783     441,671     428,630

Stockholders'
 equity:
  Common stock      28,619     130,438     130,438      23,023      23,023
  Additional
   paid-in
   capital         159,367      57,102      56,778      23,687      23,600
  Accumulated
   deficit         (12,388)     (9,501)     (4,981)     (1,313)     (1,485)
  Accumulated
   other
   comprehensive
   income             (828)       (938)      1,612       1,293       1,284
                ----------  ----------  ----------  ----------  ----------
  Total
   stockholders'
   equity          174,770     177,101     183,847      46,690      46,421
                ----------  ----------  ----------  ----------  ----------

Total liabilities
 and stockholders'
 equity         $  628,416  $  616,108  $  632,630  $  488,361  $  475,050
                ==========  ==========  ==========  ==========  ==========

  Common shares
   issued and
   outstanding  28,619,358  28,051,098  28,051,098   4,951,098   4,951,098


 * Derived from audited financial statements.





PARK STERLING CORPORATION
SUMMARY OF LOAN PORTFOLIO
($ in thousands)

                 March 31,   Dec. 31,   Sept. 30,    June 30,   March 31,
                   2011        2010*       2010        2010       2010
                (Unaudited)            (Unaudited) (Unaudited) (Unaudited)
                ----------  ----------  ----------  ----------  ----------
Secured by
 real estate:
  One to four
   family
   residential  $   46,143  $   44,889  $   43,791  $   45,126  $   44,781
  Commercial
   real estate     148,129     145,548     133,134     132,482     131,108
  Construction
   and
   development      82,995      96,896     109,138     115,075     117,855
  Home equity
   line of
   credit           56,095      56,968      58,115      54,982      52,744
                ----------  ----------  ----------  ----------  ----------
    Total real
     estate
     loans         333,362     344,301     344,178     347,665     346,488
                ----------  ----------  ----------  ----------  ----------
Commercial and
 industrial         48,107      48,401      47,166      45,461      41,693
Loans to
 individuals         6,811       7,246       6,412       6,350       6,410
                ----------  ----------  ----------  ----------  ----------
    Total other
     loans          54,918      55,647      53,578      51,811      48,103
  Deferred
   fees, net           (93)       (119)        (98)       (100)        (92)
                ----------  ----------  ----------  ----------  ----------
Total loans     $  388,187  $  399,829  $  397,658  $  399,376  $  394,499
                ==========  ==========  ==========  ==========  ==========

* Derived from audited financial statements.





PARK STERLING CORPORATION
ALLOWANCE FOR LOAN LOSSES
THREE MONTH RESULTS
($ in thousands)

                 March 31,   Dec. 31,   Sept. 30,    June 30,   March 31,
                   2011        2010*       2010        2010       2010
                (Unaudited)            (Unaudited) (Unaudited) (Unaudited)
                ----------  ----------  ----------  ----------  ----------
Beginning of
 period
 allowance      $   12,424  $   13,150  $    8,974  $    8,380  $    7,402
Provision for
 loan losses         4,462       8,237       6,143       1,094       1,531
Loans
 charged-off         5,581       9,000       1,986         502         554
Recoveries of
 loans
 charged-off           463          37          19           2           1
                ----------  ----------  ----------  ----------  ----------
  End of period
   allowance        11,768      12,424      13,150       8,974       8,380
                ==========  ==========  ==========  ==========  ==========

Net loans
 charged-off    $    5,118  $    8,963  $    1,967  $      500  $      553
Annualized net
 charge-offs          5.27%       8.97%       1.98%       0.50%       0.56%





PARK STERLING CORPORATION
SELECTED RATIOS
($ in thousands, except per share amounts)

                 March 31,   Dec. 31,   Sept. 30,    June 30,   March 31,
                   2011        2010*       2010        2010       2010
                (Unaudited)            (Unaudited) (Unaudited) (Unaudited)
                ----------  ----------  ----------  ----------  ----------
ASSET QUALITY
  Nonperforming
   loans**      $   35,225  $   42,109  $   13,356  $    8,805  $    4,495
  Nonperforming
   assets
   (including
   OREO)            36,790      43,355      14,798       9,339       7,561
  Past due 30-59
   days (and still
   accruing)         3,469           -       6,599         343       5,643
  Past due 60-89
   days (and still
   accruing)             -           -         660       1,778       1,188
  Past due 90
   days plus
   (and still
   accruing)             -           -           -           -         553

  Nonperforming
   loans to
   total loans        9.07%      10.53%       3.36%       2.20%       1.14%
  Nonperforming
   assets to
   total assets       5.85%       7.04%       2.34%       1.91%       1.59%
  Allowance to
   total loans        3.03%       3.11%       3.31%       2.25%       2.12%
  Allowance to
   nonperforming
   loans             33.41%      29.50%      98.46%     101.92%     186.43%
  Allowance to
   nonperforming
   assets            31.99%      28.66%      88.86%      96.09%     110.83%

CAPITAL
  Book value
   per share    $     6.23  $     6.31  $     6.55  $     9.43  $     9.38
  Tangible book
   value
   per share    $     6.23  $     6.31  $     6.55  $     9.43  $     9.38
  Common shares
   outstanding  28,619,358  28,051,098  28,051,098   4,951,098   4,951,098
  Dilutive
   common shares
   outstanding  28,051,098  28,051,098  28,051,098   4,951,098   4,951,098

  Tier 1
   capital      $  170,956  $  173,395  $  182,234  $   44,262  $   45,137
  Tier 2
   capital          12,035      12,373      12,280      12,167      12,167
  Total risk
   based capital   182,991     185,768     194,514      56,429      57,304


  Tier 1 ratio       42.25%      40.20%      43.09%      10.59%      10.78%
  Total risk
   based capital
   ratio             45.23%      43.07%      45.99%      13.50%      13.69%
  Tier 1
   leverage
   ratio             28.36%      27.39%      32.80%       9.26%       9.53%
  Tangible
   common equity
   to tangible
   assets            27.81%      28.75%      29.06%       9.56%       9.77%

LIQUIDITY
  Net loans to
   total
   deposits          89.30%      94.99%      92.18%      94.81%      98.21%
  Liquidity
   ratio             53.99%      50.48%      54.99%      19.56%      17.34%
  Equity to
   Total Assets      27.81%      28.75%      29.06%       9.56%       9.77%

INCOME STATEMENT (THREE MONTH RESULTS; ANNUALIZED)
  Return on Average
   Assets            -1.93%      -2.81%      -2.64%       0.14%       0.13%
  Return on Average
   Equity            -6.60%      -9.75%     -12.80%       1.48%       1.36%
  Net interest
   margin (tax
   equivalent)        2.76%       2.52%       2.74%       3.34%       3.41%

INCOME STATEMENT (ANNUAL RESULTS)
  Return on Average
   Assets              n/a       -1.46%        n/a         n/a         n/a
  Return on Average
   Equity              n/a       -8.00%        n/a         n/a         n/a
  Net interest
   margin (tax
   equivalent)         n/a        2.95%        n/a         n/a         n/a


*  Derived from audited financial statements.
** Nonperforming Includes accruing restructured loans.


Reconciliation of Non-GAAP Measures

Tangible assets, tangible common equity, tangible book value and related ratios, as used throughout this release, are non-GAAP financial measures. "Tangible assets" equals period end total assets less intangible assets. "Tangible common equity" equals period end common shareholders' equity less intangible assets. "Tangible book value per share" equals period end tangible common equity divided by period end dilutive common shares issued and outstanding. See the table below for the non-GAAP measures and corresponding reconciliations to GAAP financial measures.



PARK STERLING CORPORATION
RECONCILIATION OF NON-GAAP MEASURES
($ in thousands)

                 March 31,   Dec. 31,   Sept. 30,    June 30,   March 31,
                   2011        2010*       2010        2010       2010
                (Unaudited)            (Unaudited) (Unaudited) (Unaudited)
                ----------  ----------  ----------  ----------  ----------
Tangible assets
  Total assets  $  628,416  $  616,108  $  632,630  $  488,361  $  475,050
  Less:
   intangible
   assets                -           -           -           -           -
                ----------  ----------  ----------  ----------  ----------
    Tangible
     assets     $  628,416  $  616,108  $  632,630  $  488,361  $  475,050
                ==========  ==========  ==========  ==========  ==========

Tangible common
 equity
  Total common
   equity       $  174,770  $  177,101  $  183,847  $   46,690  $   46,421
  Less:
   intangible
   assets                -           -           -           -           -
                ----------  ----------  ----------  ----------  ----------
    Tangible
     common
     equity     $  174,770  $  177,101  $  183,847  $   46,690  $   46,421
                ==========  ==========  ==========  ==========  ==========

Tangible book
 value per share
  Issued and
   outstanding
   shares       28,619,358  28,051,098  28,051,098   4,951,098   4,951,098
  Add: dilutive
   stock options         -           -           -           -           -
  Deduct:
   nondilutive
   restricted
   awards          568,260           -           -           -           -
                ----------  ----------  ----------  ----------  ---------- 
    Period end
     dilutive
     shares     28,051,098  28,051,098  28,051,098   4,951,098   4,951,098
                ==========  ==========  ==========  ==========  ==========

  Tangible
   common
   equity       $  174,770  $  177,101  $  183,847  $   46,690  $   46,421
  Divided by:
   period end
   outstanding
   shares       28,051,098  28,051,098  28,051,098   4,951,098   4,951,098
                ----------  ----------  ----------  ----------  ----------
    Tangible
     common
     book value
     per share  $     6.23  $     6.31  $     6.55  $     9.43  $     9.38
                ==========  ==========  ==========  ==========  ==========

* Derived from audited financial statements.

Contact Information

  • For additional information contact:

    David Gaines
    Chief Financial Officer
    (704) 716-2134
    Email Contact

    Charlotte Laurent-Ottomane
    Nvestcom
    (561) 395-4581
    Email Contact