SOURCE: Park Sterling Bank

Park Sterling Bank

January 19, 2011 06:45 ET

Park Sterling Corporation Announces Fourth Quarter and Full Year 2010 Results

CHARLOTTE, NC--(Marketwire - January 19, 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 three months and year ended December 31, 2010. Highlights for the quarter and for the year include:

Fourth Quarter Highlights:

--  Net interest income increased 7% compared to both the third quarter of
    2010 and the fourth quarter of 2009
--  Average earning assets grew 16% compared to the third quarter of 2010,
    and 36% compared to the fourth quarter of 2009
--  Net interest margin (tax equivalent) of 2.52%, a decrease of 22 basis
    points compared to the third quarter of 2010 and 68 basis points
    compared to the fourth quarter of 2009
--  Nonperforming assets increased $28.6 million compared to the third
    quarter of 2010 to $43.4 million, or 7.04% of total assets
--  Provision for loan losses increased $2.1 million to $8.2 million
    compared to the third quarter of 2010 related to the effects of
    extended economic weakness on the loan portfolio
--  Net charge-offs increased $7.0 million compared to the third quarter of
    2010 to $9.0 million
--  Capital levels remain strong as tangible common equity as a percentage
    of tangible assets decreased slightly to 28.75% from 29.06% in the
    third quarter of 2010
--  Net loss of $4.5 million, or $0.16 per diluted share, compared to a net
    loss of $3.7 million, or $0.23 per diluted share, in the third quarter
    of 2010 and net income of $118,000, or $0.02 per diluted share, in the
    fourth quarter of 2009

Full Year Highlights:

--  Successfully completed public offering generating $140.2 million in net
    proceeds, positioning Park Sterling well to take advantage of
    consolidation opportunities in the Carolinas and Virginia
--  Expanded management team and reconstituted board of directors
--  Implemented new operating strategy whereby Park Sterling seeks to reach
    a consolidated asset size between $8 billion and $10 billion over the
    next several years through acquisitions and organic growth
--  Refined loan loss allowance methodology resulting in more comprehensive
    analysis of potential loan losses
--  Net loss of $7.9 million, or $0.58 per diluted share, compared to net
    income of $577,000, or $0.12 per diluted share, for the year ended
    December 31, 2009

"During the fourth quarter of 2010, we continued reviewing our loan portfolio, with a particular emphasis on our higher risk (lower internal grade) exposures in light of the continued economic downturn that persists across North Carolina and shifting borrower behaviors," said Jim Cherry, Chief Executive Officer. "This process intensified in the fourth quarter. As a result of this extensive review, we prudently added $28.8 million to our nonperforming loans, and charged off $9.0 million. This was a purposeful exercise that positions us to better pursue our strategy of acquiring regional and community banks in the Carolinas and Virginia as well as growing organically. Out of the $42.1 million in nonperforming loans, approximately $23.0 million continue to pay according to their agreed upon terms. We believe that our actions were appropriate in the face of the current economic environment. As we saw last quarter, the shift in customer behavior and capacity, whereby borrowers who were once strong with solid liquidity and equity are now becoming increasingly stressed, has expanded as the downturn continues.

"Even with this increase in nonperforming loans and charge-offs in the fourth quarter, we are executing on our growth strategy. We started 2011 by bringing on Emory Ware, a banker with 25 years of experience operating in South Carolina, as our South Carolina Market President to lead our expansion into the Charleston, Greenville/Spartanburg, and Columbia, South Carolina markets. We also continue to have an active pipeline of potential partner banks in all three of our target markets, and are confident in our ability to achieve our objectives."

Fourth Quarter 2010 Financial Highlights

Asset Quality

Nonperforming loans increased to $42.1 million, or 10.53% of total loans, compared to $13.4 million, or 3.36% of total loans, as of September 30, 2010. Nonperforming assets totaled $43.4 million, or 7.04% of total assets, up from $14.8 million, or 2.34% of total assets, as of September 30, 2010.

The provision for loan losses increased $2.1 million, to $8.2 million, compared to the third quarter of 2010. The increase in the provision for loan losses directly resulted from the effects of extended economic weakness on the loan portfolio, which included an increase in both net charge-offs and nonperforming loans. Net charge-offs increased to $9.0 million, or 8.97% of average loans on an annualized basis, compared to $2.0 million, or 1.98% of average loans (annualized) in the prior quarter. The allowance for loan losses was $12.4 million, or 3.11% of total loans, a decrease of $800,000 from $13.2 million, or 3.31% of total loans, at September 30, 2010. The allowance represented 29.50% of nonperforming loans (including restructured loans) at December 31, 2010, down from 98.46% at September 30, 2010. The decrease in the allowance resulted primarily from net charge-offs on previously identified impaired loans with specific reserves.

Net Interest Income and Net Interest Margin

Compared to both the third quarter of 2010 and the fourth quarter of 2009, net interest income increased 7% to $3.9 million from $3.6 million, primarily due to an increased level of average earning assets. On a sequential basis, average earning assets rose 16% which more than offset a 22 basis point decrease in the net interest margin (tax equivalent), to 2.52%. The increase in average earning assets was due to a $73.6 million increase in taxable investment securities through utilization of net proceeds from the common stock offering. The decrease in the net interest margin primarily resulted from interest reversals on nonaccrual loans, which accounted for 21 basis points of net interest margin. Compared to the prior year period, average earning assets increased 36%, as taxable investment securities increased $96.9 million, which more than offset a 68 basis point decrease in the net interest margin (tax equivalent). The decrease in the net interest margin was due to the increase in investment securities which were lower yielding assets. Interest reversals on nonaccrual loans also impacted the net interest margin on a year-over-year basis, which accounted for eight basis points of the net interest margin decrease.

Non-Interest Income

Non-interest income increased $17,000 compared to the third quarter of 2010 and $29,000 compared to the fourth quarter of 2009. The growth in non-interest income compared to both prior periods was primarily related to a $14,000 gain on the disposition of assets.

Non-Interest Expense

Non-interest expense increased 19% compared to the third quarter of 2010, and 71% compared to the fourth quarter of 2009. The increase in expenses compared to both prior periods was primarily related to a $337,000 increase in salaries and employee benefits related to the management expansion and addition of new employees. Also included in non-interest expenses was $165,000 of due diligence-related expenses as well as $328,000 of non-cash stock option expense.

Balance Sheet and Capital

Total assets decreased $16.5 million, or 3%, compared to the third quarter of 2010, primarily due to a decrease in fed funds sold resulting from the release of $11.9 million of brokered CDs as well as a decrease in other time deposits. Compared to the fourth quarter of 2009, total assets grew $142.3 million, or 30%, resulting from increases in the investment portfolio and fed funds sold due to the completion of the Bank's initial public offering during the third quarter of 2010.

Compared to the third quarter of 2010, total loans increased $2.2 million, or 1%, to $399.8 million, primarily due to modest growth in commercial real estate and commercial and industrial loans, partially offset by decreases in construction loans. Total loan balances increased $2.3 million, or 1%, compared to the fourth quarter of 2009, as growth in commercial real estate and commercial and industrial loans more than offset continued runoff in higher risk construction and development loans. Construction and development loans decreased 11% compared to the third quarter of 2010, and 24% compared to the fourth quarter of 2009.

Total deposits decreased $9.3 million, or 2%, compared to the third quarter of 2010. This decrease in deposits was primarily due to the release of $11.9 million of brokered CDs. Compared to the fourth quarter of 2009, total deposits increased $15.2 million, or 4%, resulting from a $12.2 million increase in demand deposits, a $19.6 million increase in money market deposits, and a $14.8 million increase in core CDs, partially offset by the release of $29.2 million in brokered CDs. Core deposits as a percentage of total deposits were 74%, compared to 72% in the third quarter of 2010 and 66% in the fourth quarter of 2009.

Stockholders' equity decreased $6.7 million to $177.1 million compared to $183.8 million at September 30, 2010, primarily resulting from the fourth quarter 2010 net loss of $4.5 million. Stockholders' equity increased $131.0 million compared to the fourth quarter of 2009 as a result of the August 2010 common stock offering. Tangible common equity as a percentage of tangible assets was 28.75%, a slight decrease from 29.06% at September 30, 2010, and an increase compared to 9.73% at December 31, 2009.

Conference Call

A conference call will be held at 8:30 a.m., ET this morning (1/19/11). 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 February 9, 2011, by dialing (877) 344 7529, conference number 447401.

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. The forward-looking statements made represent Park Sterling's current expectations, plans or forecasts of its future results and condition, including expectations regarding its new business strategy of engaging in bank mergers and organic growth and anticipated asset size, 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 asset levels, and other similar matters. These statements are not guarantees of future results or performance and involve certain risks and uncertainties that are based on our beliefs and assumptions and on the information available to us 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 or FDIC; Park Sterling's inability to identify and successfully negotiate and complete 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.


PARK STERLING BANK
SELECTED RATIOS

($ in thousands, except per
 share amounts)

                 December 31, September 30, June 30,  March 31,  December
                      2010        2010       2010       2010        31,
                  (Unaudited) (Unaudited) (Unaudited)(Unaudited)   2009 *
                   ----------  ----------  ---------  ---------  ---------
ASSET QUALITY
 Nonperforming
  loans **         $   42,109  $   13,356  $   8,805  $   4,495  $   3,888
 Nonperforming
  assets
  (including OREO)     43,355      14,798      9,339      7,561      5,438
 Past due 30-59
  days                      -       6,599        343      5,643        594
 Past due 60-89
  days                      -         660      1,778      1,188      3,358
 Past due 90 days
  plus (and still
  accruing)                 -           -          -        553          -

 Nonperforming loans
  to total loans        10.53%       3.36%      2.20%      1.14%      0.98%
 Nonperforming
  assets to total
  assets                 7.04%       2.34%      1.91%      1.59%      1.15%
 Allowance to
  total loans            3.11%       3.31%      2.25%      2.12%      1.86%
 Allowance to
  nonperforming
  loans                 29.50%      98.46%    101.92%    186.43%    190.38%
 Allowance to
  nonperforming
  assets                28.66%      88.86%     96.09%    110.83%    136.12%

CAPITAL
 Book value per
  share            $     6.31  $     6.55  $    9.43  $    9.38  $    9.31
 Tangible book
  value per share  $     6.31  $     6.55  $    9.43  $    9.38  $    9.31
 Common shares
  outstanding      28,051,098  28,051,098  4,951,098  4,951,098  4,951,098

 Tier 1 capital    $  178,039  $  182,234  $  44,262  $  45,137  $  44,877
 Tier 2 capital        12,296      12,280     12,167     12,167     12,184
 Total risk based
  capital             190,339     194,514     56,429     57,304     57,061


 Tier 1 ratio           41.85%      43.09%     10.59%     10.78%     10.66%
 Total risk based
  capital ratio         44.74%      45.99%     13.50%     13.69%     13.55%
 Tier 1 leverage
  ratio                 32.04%      32.80%      9.26%      9.53%      9.40%
 Tangible common
  equity to
  tangible assets       28.75%      29.06%      9.56%      9.77%      9.73%

LIQUIDITY
 Net loans to
  total deposits        94.99%      92.18%     94.81%     98.21%     99.37%
 Liquidity ratio        50.48%      54.99%     19.56%     17.34%     15.81%
 Equity to Total
  Assets                28.75%      29.06%      9.56%      9.77%      9.73%

INCOME STATEMENT
 (THREE MONTH RESULTS)
 Return on Average
  Assets                -2.81%      -2.64%      0.14%      0.13%      0.10%
 Return on Average
  Equity                -9.75%     -12.80%      1.48%      1.36%      1.01%
 Net interest
  margin (tax
  equivalent)            2.52%       2.74%      3.34%      3.41%      3.20%

INCOME STATEMENT
 (ANNUAL RESULTS)
 Return on Average
  Assets                -1.46%        n/a        n/a        n/a       0.13%
 Return on Average
  Equity                -8.00%        n/a        n/a        n/a       1.26%
 Net interest
  margin (tax
  equivalent)            2.95%        n/a        n/a        n/a       2.84%


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




PARK STERLING BANK
CONDENSED BALANCE SHEETS
($ in thousands)

                 December 31, September 30, June 30,  March 31,  December
                      2010        2010       2010       2010        31,
                  (Unaudited) (Unaudited) (Unaudited)(Unaudited)   2009 *
                   ----------  ----------  ---------  ---------  ---------
ASSETS
Cash and due from
 banks             $    2,433  $   11,591  $   7,785  $   9,872  $   6,504
Interest earning
 balances at banks      5,040       5,859      2,290      2,790      2,758
Federal funds sold     57,905      96,560     30,860     14,090     13,975
Investment
 securities
 available-for-sale   140,590     115,357     40,289     43,190     42,567
Loans                 399,829     397,658    399,376    394,499    397,564
Allowance for loan
 losses               (12,424)    (13,150)    (8,974)    (8,380)    (7,402)
                   ----------  ----------  ---------  ---------  ---------
   Net loans          387,405     384,508    390,402    386,119    390,162
                   ----------  ----------  ---------  ---------  ---------

Other real estate
 owned                  1,246       1,441        534      3,066      1,550
Other assets           21,489      17,314     16,201     15,923     16,339
                   ----------  ----------  ---------  ---------  ---------

   Total assets    $  616,108  $  632,630  $ 488,361  $ 475,050  $ 473,855
                   ==========  ==========  =========  =========  =========

LIABILITIES AND
 STOCKHOLDERS' EQUITY

Deposits:
Demand noninterest-
 bearing           $   36,333  $   30,468  $  27,316  $  26,586  $  24,085
Money market, NOW
 and savings           71,666      72,639     62,568     55,811     52,308
Time deposits         299,821     314,042    321,899    310,769    316,240
                   ----------  ----------  ---------  ---------  ---------
   Total deposits     407,820     417,149    411,783    393,166    392,633

Short-term
 borrowings               874       1,100      1,762      7,146      6,989
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      3,418       3,639      1,231      1,423      1,243
                   ----------  ----------  ---------  ---------  ---------
   Total liabilities  439,007     448,783    441,671    428,630    427,760

Stockholders'
 equity:
   Common stock       130,438     130,438     23,023     23,023     23,023
   Additional
    paid-in
    capital            57,102      56,778     23,687     23,600     23,496
   Accumulated
    deficit            (9,501)     (4,981)    (1,313)    (1,485)    (1,642)
   Accumulated other
    comprehensive
    income               (938)      1,612      1,293      1,284      1,218
                   ----------  ----------  ---------  ---------  ---------
   Total
    stockholders'
    equity            177,101     183,847     46,690     46,421     46,095
                   ----------  ----------  ---------  ---------  ---------

Total liabilities
 and stockholders'
 equity            $  616,108  $  632,630  $ 488,361  $ 475,050  $ 473,855
                   ==========  ==========  =========  =========  =========

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


 * Derived from audited financial statements.




PARK STERLING BANK
CONDENSED INCOME STATEMENT
TWELVE MONTH RESULTS
($ in thousands, expect per share amounts)
                                                  December 31, December 31,
                                                      2010        2009 *
                                                  (Unaudited)
                                                  -----------  -----------
 Interest income
   Loans, including fees                          $    20,260  $    19,710
   Federal funds sold                                     107           41
   Taxable investment securities                        1,567        1,365
   Tax-exempt investment securities                       642          533
   Interest on deposits at banks                           66           19
                                                  -----------  -----------
     Total interest income                             22,642       21,668
                                                  -----------  -----------
 Interest expense
   Money market, NOW and savings deposits                 408          353
   Time deposits                                        5,869        7,968
   Short-term borrowings                                    9           25
   Long-term borrowings                                   563          565
   Subordinated debt                                      758          379
                                                  -----------  -----------
     Total interest expense                             7,607        9,290
                                                  -----------  -----------
     Net interest income                               15,035       12,378
 Provision for loan losses                             17,005        3,272
                                                  -----------  -----------
     Net interest income (loss) after provision        (1,970)       9,106
 Total noninterest income                                 130         (293)
 Noninterest expenses
   Salaries and employee benefits                       6,442        4,723
   Occupancy and equipment                                916          820
   Advertising and promotion                              287          236
   Legal and professional fees                            445          212
   Deposit charges and FDIC insurance                     728          965
   Data processing and outside service fees               411          395
   Directors fees                                         392            -
   OREO expense and loss on sales                         411          161
   Other noninterest expense                            1,025          485
                                                  -----------  -----------
     Total noninterest expenses                        11,057        7,997
                                                  -----------  -----------
     Income (loss) before income taxes                (12,897)         816
 Income tax expense (benefit)                          (5,038)         239
                                                  -----------  -----------
     Net income (loss)                            $    (7,859) $       577
                                                  ===========  ===========

 Earnings (loss) per share, fully diluted         $     (0.58) $      0.12
 Weighted average diluted shares                   13,558,221    4,951,098


 * Derived from audited financial statements.




PARK STERLING BANK
CONDENSED INCOME STATEMENT
THREE MONTH RESULTS

($ in thousands, except per
 share amounts)

                   December 31, September 30, June 30,  March 31, December
                         2010        2010       2010      2010       31,
                     (Unaudited) (Unaudited)(Unaudited)(Unaudited)  2009 *
                      ----------  ----------  --------- --------- ---------
Interest income
  Loans, including
   fees               $    4,984  $    4,963  $   5,170 $   5,143 $   5,148
  Federal funds sold          46          42         10         9        15
  Taxable investment
   securities                587         370        286       324       319
  Tax-exempt investment
   securities                160         161        161       160       159
  Interest on deposits
   at banks                   16          23         12        15         9
                      ----------  ----------  --------- --------- ---------
    Total interest
     income                5,793       5,559      5,639     5,651     5,650
                      ----------  ----------  --------- --------- ---------
Interest expense
  Money market, NOW
   and savings
   deposits                  132         104         89        83        89
  Time deposits            1,435       1,490      1,459     1,485     1,594
  Short-term
   borrowings                  1           1          3         4         6
  Long-term
   borrowings                140         144        141       138       143
  Subordinated debt          188         190        190       190       189
                      ----------  ----------  --------- --------- ---------
    Total interest
     expense               1,896       1,929      1,882     1,900     2,021
                      ----------  ----------  --------- --------- ---------
    Net interest income    3,897       3,630      3,757     3,751     3,629
Provision for loan
 losses                    8,237       6,143      1,094     1,531     1,418
                      ----------  ----------  --------- --------- ---------
    Net interest
     income (loss)
     after provision      (4,340)     (2,513)     2,663     2,220     2,211
Total noninterest
 income                       43          26         23        38        14
Noninterest expenses
  Salaries and
   employee benefits       2,114       1,777      1,299     1,252     1,165
  Occupancy and
   equipment                 250         236        224       206       194
  Advertising and
   promotion                  50          84         96        57        62
  Legal and
   professional fees         208          78         80        79        52
  Deposit charges and
   FDIC insurance            185         184        183       176       375
  Data processing and
   outside service fees      109         109        100        93        96
  Directors fees             182         164         46         -         -
  OREO expense and
   loss on sales              16         120        239        36         4
  Other noninterest
   expense                   434         238        210       143       130
                      ----------  ----------  --------- --------- ---------
    Total noninterest
     expenses              3,548       2,990      2,477     2,042     2,078
                      ----------  ----------  --------- --------- ---------
    Income (loss)
     before income taxes  (7,845)     (5,477)       209       216       147
Income tax expense
 (benefit)                (3,324)     (1,809)        36        59        29
                      ----------  ----------  --------- --------- ---------
    Net income (loss) $   (4,521) $   (3,668) $     173 $     157 $     118
                      ==========  ==========  ========= ========= =========

Earnings (loss) per
 share, fully diluted $    (0.16) $    (0.23) $    0.03 $    0.03 $    0.02
Weighted average
 diluted shares       28,051,098  15,998,924  4,951,098 4,951,098 4,951,098


 * Derived from audited financial statements.




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

                 December 31, September 30, June 30,   March 31,  December
                     2010        2010         2010        2010       31,
                  (Unaudited) (Unaudited) (Unaudited) (Unaudited)  2009 *
                  ----------  ----------  ----------  ----------  --------
Secured by real
 estate:
  One to four
   family
   residential    $   44,889  $   43,791  $   45,126  $   44,781  $ 42,782
  Commercial real
   estate            145,548     133,134     132,482     131,108   126,609
  Construction
   and development    96,896     109,138     115,075     117,855   127,811
  Home equity
   line of credit     56,968      58,115      54,982      52,744    52,026
                  ----------  ----------  ----------  ----------  --------
    Total real
     estate loans    344,301     344,178     347,665     346,488   349,228
                  ----------  ----------  ----------  ----------  --------
Commercial and
 industrial           48,401      47,166      45,461      41,693    41,914
Loans to
 individuals           7,246       6,412       6,350       6,410     6,535
                  ----------  ----------  ----------  ----------  --------
    Total other
     loans            55,647      53,578      51,811      48,103    48,449
  Deferred fees,
   net                  (119)        (98)       (100)        (92)     (113)
                  ----------  ----------  ----------  ----------  --------
Total loans       $  399,829  $  397,658  $  399,376  $  394,499  $397,564
                  ==========  ==========  ==========  ==========  ========


 * Derived from audited financial statements.




PARK STERLING BANK
ALLOWANCE FOR LOAN LOSSES
THREE MONTH RESULTS
($ in thousands)
                  December 31, September 30, June 30,   March 31, December
                      2010        2010        2010        2010       31,
                   (Unaudited) (Unaudited) (Unaudited) (Unaudited)  2009 *
                   ----------  ----------  ----------  ----------  -------
Beginning of
 period allowance  $   13,150  $    8,974  $    8,380  $    7,402  $ 7,041
Provision for loan
 losses                 8,237       6,143       1,094       1,531    1,418
Loans charged-off       9,000       1,986         502         554    1,057
Recoveries of
 loans charged-off         37          19           2           1        -
                   ----------  ----------  ----------  ----------  -------
 End of period
  allowance            12,424      13,150       8,974       8,380    7,402
                   ==========  ==========  ==========  ==========  =======

Net loans
 charged-off       $    8,963  $    1,967  $      500  $      553  $ 1,057
Annualized net
 charge-offs             8.97%       1.98%       0.50%       0.56%    1.06%


PARK STERLING BANK
ALLOWANCE FOR LOAN LOSSES
TWELVE MONTH RESULTS
($ in thousands)

                  December 31, December 31,
                      2010        2009 *
                  (Unaudited)
                   ----------  ----------
Beginning of
 period allowance  $    7,402  $    5,568
Provision for loan
 losses                17,005       3,272
Loans charged-off      12,042       1,438
Recoveries of
 loans charged-off         59           -
                   ----------  ----------
 End of period
  allowance            12,424       7,402
                   ==========  ==========

Net loans
 charged-off       $   11,983  $    1,438


 * Derived from audited financial statements.



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


                 December 31, September 30, June 30,   March 31,  December
                     2010        2010        2010        2010        31,
                  (Unaudited) (Unaudited) (Unaudited) (Unaudited)   2009 *
                  ----------- ----------- ----------- ----------- ---------
Tangible assets
 Total assets     $   616,108 $   632,630 $   488,361 $   475,050 $ 473,855
 Less: intangible
  assets                    -           -           -           -         -
                  ----------- ----------- ----------- ----------- ---------
  Tangible assets $   616,108 $   632,630 $   488,361 $   475,050 $ 473,855
                  =========== =========== =========== =========== =========


Tangible common
 equity
 Total common
  equity          $   177,101 $   183,847 $    46,690 $    46,421 $  46,095
 Less: intangible
  assets                    -           -           -           -         -
                  ----------- ----------- ----------- ----------- ---------
  Tangible common
   equity         $   177,101 $   183,847 $    46,690 $    46,421 $  46,095
                  =========== =========== =========== =========== =========


Tangible book
 value per share
 Tangible common
  equity          $   177,101 $   183,847 $    46,690 $    46,421 $  46,095
 Divided by:
  period end
  outstanding
  shares           28,051,098  28,051,098   4,951,098   4,951,098 4,951,098
                  ----------- ----------- ----------- ----------- ---------
  Tangible common
   book value per
   share          $      6.31 $      6.55 $      9.43 $      9.38 $    9.31
                  =========== =========== =========== =========== =========


 * Derived from audited financial statements.

Contact Information

  • For additional information contact:

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

    Investor Relations:
    Megan Malanga
    Nvestcom
    (954) 781-4393
    Email Contact

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