SOURCE: Park Sterling Corporation

Park Sterling Corporation

October 26, 2017 07:00 ET

Park Sterling Corporation Announces Results for Third Quarter 2017

CHARLOTTE, NC--(Marketwired - October 26, 2017) - Park Sterling Corporation (NASDAQ: PSTB), the holding company for Park Sterling Bank, today released unaudited results of operations and other financial information for the third quarter of 2017. Financial results for the third quarter of 2017 include:

  • Net income of $8.7 million, or $0.16 per share, compared to $8.5 million, or $0.16 per share, in the quarter ended June 30, 2017, and $6.3 million, or $0.12 per share, in the quarter ended September 30, 2016
  • Adjusted net income (non-GAAP), which excludes merger-related expenses and gain on sale of securities, was $9.2 million, or $0.17 per share, compared to $9.2 million, or $0.17 per share in the prior quarter, and $7.3 million, or $0.14 per share, in the quarter ended September 30, 2016
  • Reported annualized returns on average assets and equity for the third quarter 2017 were 1.05% and 9.21%, respectively, while adjusted annualized returns on average assets and average equity (non-GAAP) were 1.11% and 9.75%, respectively
  • Noninterest income decreased $39 thousand from the prior quarter, with a decrease in mortgage banking income mostly offset by growth in capital markets income
  • Noninterest expenses totaled $20.1 million, a decrease of $1.3 million from the prior quarter; adjusted noninterest expenses (non-GAAP), which excludes merger-related expenses, decreased $1.0 million from the prior quarter
  • Nonperforming loans declined to a very low level of 0.40% of total loans
  • Capital levels remained strong with a Tier 1 leverage ratio of 10.36%
  • The Board of Directors declared a quarterly cash dividend on common shares of $0.04 per share (October 2017)

"We are pleased with our financial results for the third quarter, during which time we focused on several projects in preparation for our pending combination with South State Corporation," said Jim Cherry, Chief Executive Officer. "We look forward to completing the merger, and we are very excited about the opportunity to create a premier regional banking franchise in the southeast."

Financial Results

Income Statement - Three Months Ended September 30, 2017

Park Sterling reported net income of $8.7 million, or $0.16 per share, for the three months ended September 30, 2017 ("2017Q3"). This compares to net income of $8.5 million, or $0.16 per share, for the three months ended June 30, 2017 ("2017Q2") and net income of $6.3 million, or $0.12 per share, for the three months ended September 30, 2016 ("2016Q3"). The increase in net income from 2017Q2 resulted primarily from decreases in operating expenses, merger-related expenses and provision for loan losses, partially offset by a decrease in interest income on earning assets and an increase in income tax expense. The increase in net income from 2016Q3 was primarily a result of an increase in net interest income, a decrease in provision for loan losses and a decrease in merger-related expenses, partially offset by an increase in income taxes.

Net interest income totaled $27.8 million in 2017Q3, which represents a $0.8 million, or 3%, decrease from $28.6 million in 2017Q2 and a $2.0 million, or 8%, increase from $25.8 million in 2016Q3. Average total earning assets decreased $21 million in 2017Q3 to $3.03 billion, compared to $3.05 billion in 2017Q2 and increased $127 million, or 4%, compared to $2.90 billion in 2016Q3. The decrease in average total earning assets in 2017Q3 from 2017Q2 included a decrease in average loans (including loans held for sale) of $16 million, or 2.6% annualized, a decrease in average marketable securities of $21 million, and an increase in average other interest-earning assets of $16 million. The reduction in average total earning assets reflects actions in preparation for the merger to use cash flows from maturing investments and loans that are not closely tied to customer relationships to reduce brokered deposits and borrowed funds. Additionally, the reduction reflects a lower level of new business activity in light of the pending merger and our focus on maintaining our existing customers. The increase in average total earning assets in 2017Q3 from 2016Q3 resulted primarily from a $115 million, or 5%, increase in average loans (including loans held for sale), a $16 million, or 3%, decrease in average marketable securities and a $28 million, or 53%, increase in average other interest-earning assets.

Net interest margin was 3.65% in 2017Q3, representing a 12 basis point decrease from 3.77% in 2017Q2 and an 11 basis point increase from 3.54% in 2016Q3. The decrease in net interest margin from 2017Q2 resulted primarily from a 12 basis point decrease in loan yields resulting from a reduction in the interest income accretion on acquired loans, as well as a 10 basis point increase in the cost of borrowed funds, which reflected the increase in market interest rates. The increase in net interest margin from 2016Q3 was primarily the result of a 17 basis point increase in loan yields and an improved yield on investment securities, partially offset by an increase in the cost of interest-bearing liabilities.

The Company reported a recovery of loan losses of $353 thousand in 2017Q3, compared to no provision recorded in 2017Q2, and $642 thousand of provision for loan losses recorded in 2016Q3. Allowance for loan loss levels remained at 0.51% of total loans at 2017Q3, unchanged from 2017Q2.

Noninterest income totaled $5.4 million in 2017Q3, which was essentially unchanged compared to both 2017Q2 and 2016Q3. The $39 thousand decrease from 2017Q2 is primarily the result of a $305 thousand decrease in mortgage banking income partially offset by a $282 thousand increase in capital markets income. The $68 thousand decrease in noninterest income from 2016Q3 reflects a decrease in mortgage banking and wealth management income of $545 thousand and $121 thousand, respectively, offset by a $247 thousand increase in capital markets income, as well as the absence of $139 thousand in amortization of FDIC indemnification asset recorded in 2016Q3.

Noninterest expense decreased $1.3 million, or 6%, to $20.1 million in 2017Q3 from $21.4 million in 2017Q2, and decreased $1.0 million, or 5%, compared to $21.1 million in 2016Q3. The decrease in noninterest expense from 2017Q2 resulted primarily from a $331 thousand decrease in merger-related expenses incurred in the third quarter as compared to the second quarter, as well as a decrease in salary and employee benefits of $330 thousand, a decrease in the net cost of OREO of $221 thousand, and a decrease in legal and professional fees of $219 thousand. The decrease in noninterest expenses from 2016Q3 was due primarily to a decrease in merger-related expenses of $895 thousand.

The Company's effective tax rate was 35.2% in 2017Q3, compared to 32.2% in 2017Q2 and 33.5% in 2016Q3. The increase in the effective tax rate was primarily a result of non-deductible merger-related expenses.

Balance Sheet

Total assets decreased $93.7 million, or 11% annualized, to $3.25 billion at 2017Q3, compared to total assets of $3.34 billion at 2017Q2. Total securities, including non-marketable securities, decreased $22.8 million, to $488.7 million. Total loans, excluding loans held for sale, decreased $72.5 million, or 12% annualized, to $2.43 billion at 2017Q3.

The mix of commercial and consumer loans remained largely consistent with 2017Q2. Total commercial loans decreased $73.0 million and represent 78% of the loan portfolio. Acquisition, construction and development loans increased $0.3 million and represent 13.9% of the portfolio, up from 13.5% at 2017Q2. Total consumer loans increased $0.3 million and increased as a percentage of total loans to 22% of the portfolio compared to 21% at 2017Q2.

Total deposits decreased $68.3 million, or 11% annualized, to $2.47 billion at 2017Q3. Noninterest bearing demand deposits decreased $4.2 million, or 3% annualized, to $550.2 million from 2017Q2. Money market, NOW and savings deposits were down $30.8 million from 2017Q2 and represent 51% of total deposits. Time deposits decreased $33.3 million to $658.4 million at 2017Q3.

Total borrowings decreased $34.8 million, or 35% annualized, to $373.8 million at 2017Q3 compared to $408.6 million at 2017Q2. At 2017Q3, FHLB borrowings totaled $310 million, the senior unsecured term loan at the holding company totaled $29.8 million, and acquired subordinated debt, net of acquisition accounting fair value marks, totaled $34.0 million.

Total shareholders' equity increased $7.4 million to $376.7 million at 2017Q3 compared to $369.3 million at 2017Q2, driven by a $6.6 million increase in retained earnings and an increase of $0.3 million in accumulated other comprehensive income. The change in accumulated other comprehensive income was caused by the effect of market interest rates on the fair value of available for sale investment securities.

The Company's capital ratios remain strong at September 30, 2017 with the Common Equity Tier 1 ("CET1") ratio at 11.59% and the Tier 1 leverage ratio at 10.36%.

Asset Quality

Asset quality remains strong. Nonperforming assets were $12.2 million at 2017Q3, or 0.38% of total assets, compared to $15.1 million at 2017Q2, or 0.45% of total assets. Nonperforming loans were $9.6 million at 2017Q3, and represented 0.40% of total loans, compared to $12.0 million at 2017Q2, or 0.48% of total loans. The Company reported net recoveries of $74 thousand, or 0.01% of average loans (annualized), in 2017Q3, compared to net charge-offs of $131 thousand, or 0.02% of average loans (annualized), in 2017Q2.

The allowance for loan losses decreased $279 thousand, or 2%, to $12.4 million, or 0.51% of total loans, at 2017Q3, compared to $12.7 million, or 0.51% of total loans, at 2017Q2. The decrease in the allowance from 2017Q2 is primarily attributable to the decrease in the loan balances at the end of the period.

About Park Sterling Corporation
Park Sterling Corporation, the holding company for Park Sterling Bank, is headquartered in Charlotte, North Carolina. Park Sterling, a regional community-focused financial services company with $3.2 billion in assets, is the largest community bank headquartered in the Charlotte area and has 54 banking offices stretching across the Carolinas and into North Georgia, as well as in Richmond, Virginia. The bank serves professionals, individuals, and small and mid-sized businesses by offering a full array of financial services, including deposit, mortgage banking, cash management, consumer and business finance, capital markets and wealth management services with a commitment to "Answers You Can Bank On℠." Park Sterling prides itself on being large enough to help customers achieve their financial aspirations, yet small enough to care that they do. Park Sterling is focused on building a banking franchise that is noted for sound risk management, strong community focus and exceptional customer service. For more information, visit www.parksterlingbank.com. Park Sterling Corporation shares are traded on NASDAQ under the symbol PSTB.

Non-GAAP Financial Measures
Tangible assets, tangible common equity, tangible book value, average tangible common equity, adjusted net income, adjusted operating revenues, adjusted noninterest income, adjusted noninterest expenses, adjusted operating expense, adjusted allowance for loan losses, and related ratios and per share measures, including adjusted return on average assets and adjusted return on average equity, as used throughout this release, are non-GAAP financial measures. For additional information, see "Reconciliation of Non-GAAP Financial Measures" in the accompanying tables.

Cautionary Statement Regarding Forward-Looking Statements
Statements included in this communication which are not historical in nature or do not relate to current facts are intended to be, and are hereby identified as, forward-looking statements for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "may," "will," "anticipate," "could," "should," "would," "believe," "contemplate," "expect," "estimate," "continue," "plan," "project" and "intend," as well as other similar words and expressions of the future, are intended to identify forward-looking statements. South State Corporation ("South State") and Park Sterling Corporation ("Park Sterling" or the "Company") caution readers that forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from anticipated results. Such risks and uncertainties, include, among others, the following possibilities: the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement between South State and Park Sterling; the outcome of any legal proceedings that may be instituted against South State or Park Sterling; the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction) or to satisfy any of the other conditions to the transaction on a timely basis or at all; the possibility that the anticipated benefits of the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where South State and Park Sterling do business; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management's attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction; South State's ability to complete the acquisition and integrate Park Sterling successfully; inability to generate future organic growth in loan balances, retail banking, wealth management, mortgage banking or capital markets results through the hiring of new personnel, development of new products, including new online and mobile banking platforms for treasury services, opening of de novo branches or otherwise in a timely, cost-efficient manner; inability to capitalize on identified revenue enhancements or expense management opportunities, including the inability to achieve or maintain adjusted operating expense to adjusted operating revenue targets; failure of assumptions underlying noninterest expense levels; failure of assumptions underlying the establishment of the allowance for loan losses; deterioration in the value of securities held in the investment securities portfolio; the Company's ability to fully realize the value of its net deferred tax asset, including the impact of lower federal income tax rates on the carrying amount or the risk that the Company may be required to establish a valuation allowance; uncertainties about the financial stability and growth rates of non-U.S. jurisdictions, the risk that those jurisdictions may face difficulties servicing their sovereign debt, and related stresses on the financial, credit and real estate markets generally, which could negatively impact the Company's revenues and the value of its assets and liabilities; changes in general economic or business conditions, customer behavior and other uncertainties that could lead to reduced revenues and deterioration in the credit quality of the loan portfolio or the value of the collateral securing those loans and result in higher credit losses than currently expected; sensitivity to the interest rate environment, including continued low interest rates, a rapid increase in interest rates or a change in the shape of the yield curve, and the impact on net interest margins; cyber-security events; failure to anticipate or inability to adapt to rapid technological developments and changes; fluctuations in the market price of the common stock, regulatory, legal and contractual requirements, other uses of capital, financial performance, market conditions generally, and future actions by the board of directors, in each case impacting repurchases of common stock or declaration of dividends; the impact of implementation of legal and regulatory developments, including changes in the federal risk-based capital rules; increased competition from both banks and nonbanks; changes in accounting standards, rules and interpretations, inaccurate estimates or assumptions in accounting, including acquisition accounting fair market value assumptions and accounting for purchased credit-impaired loans, and the impact on Park Sterling's financial statements; and management's ability to effectively manage credit risk, market risk, operational risk, legal risk, and regulatory and compliance risk; and other factors that may affect future results of South State and Park Sterling. Additional factors that could cause results to differ materially from those described above can be found in South State's Annual Report on Form 10-K for the year ended December 31, 2016, which is on file with the Securities and Exchange Commission (the "SEC") and available in the "Investor Relations" section of South State's website, http://www.southstatebank.com, under the heading "SEC Filings" and in other documents South State files with the SEC, and in Park Sterling's Annual Report on Form 10-K for the year ended December 31, 2016, which is on file with the SEC and available on the "Investor Relations" page linked to Park Sterling's website, http://www.parksterlingbank.com, under the heading "Regulatory Filings" and in other documents Park Sterling files with the SEC.

All forward-looking statements speak only as of the date they are made and are based on information available at that time. Neither South State nor Park Sterling assumes any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

IMPORTANT ADDITIONAL INFORMATION
In connection with the proposed transaction between South State and Park Sterling, South State has filed with the SEC a Registration Statement on Form S-4 that includes a Joint Proxy Statement of South State and Park Sterling and a Prospectus of South State, as well as other relevant documents concerning the proposed transaction. The Registration Statement was declared effective by the SEC on September 6, 2017, and Park Sterling and South State subsequently mailed a definitive Joint Proxy Statement/Prospectus to their respective shareholders. The proposed transaction involving South State and Park Sterling was approved by Park Sterling's shareholders and South State's shareholders at a special meeting of shareholders of Park Sterling and a special meeting of shareholders of South State, each of which was held on October 25, 2017. This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. Shareholders of South State and shareholders of Park Sterling are urged to read the registration statement and the joint proxy statement/prospectus regarding the transaction and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information.

Shareholders can obtain a free copy of the definitive joint proxy statement/prospectus, as well as other filings containing information about South State and Park Sterling, without charge, at the SEC's website (http://www.sec.gov). Copies of the joint proxy statement/prospectus and the filings with the SEC that are incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, by directing a request to South State Corporation, 520 Gervais Street, Columbia, South Carolina 29201, Attention: John C. Pollok, Senior Executive Vice President, CFO and COO, (800) 277-2175 or to Park Sterling Corporation, 1043 E. Morehead Street, Suite 201, Charlotte, North Carolina 28204, Attention: Donald K. Truslow, (704) 323-4292.

                
PARK STERLING CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENT
THREE MONTH RESULTS
($ in thousands, except per share amounts)
                
   September 30,  June 30,  March 31,  December 31,  September 30,
   2017  2017  2017  2016  2016
   (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)
Interest income                       
 Loans, including fees  $28,923   $29,518  $27,462  $27,066  $26,521  
 Taxable investment securities   2,809    2,985   2,935   2,793   2,583  
 Tax-exempt investment securities   132    135   135   135   137  
 Nonmarketable equity securities   225    219   198   163   151  
 Interest on deposits at banks   199    109   89   54   51  
 Federal funds sold   2    2   2   1   1  
  Total interest income   32,290    32,968   30,821   30,212   29,444  
Interest expense                       
 Money market, NOW and savings deposits   1,076    1,031   967   941   953  
 Time deposits   1,468    1,482   1,425   1,469   1,447  
 Short-term borrowings   986    922   501   361   345  
 Long-term debt   371    371   371   371   379  
 Subordinated debt   555    552   499   499   497  
  Total interest expense   4,456    4,358   3,763   3,641   3,621  
  Net interest income   27,834    28,610   27,058   26,571   25,823  
Provision for (recovery of) loan losses   (353 )  -   678   550   642  
  Net interest income after provision (recovery)   28,187    28,610   26,380   26,021   25,181  
Noninterest income                       
 Service charges on deposit accounts   1,737    1,725   1,682   1,761   1,671  
 Mortgage banking income   470    775   961   765   1,015  
 Income from wealth management activities   618    689   649   682   739  
 Income from capital market activities   927    645   609   1,070   680  
 ATM and card income   741    751   714   713   730  
 Income from bank-owned life insurance   576    578   578   663   532  
 Gain (loss) on sale of securities available for sale   -    -   58   6   -  
 Amortization of indemnification asset and true-up liability expense   -    -   -   -   (139 )
 Other noninterest income   310    255   217   185   219  
  Total noninterest income   5,379    5,418   5,468   5,845   5,447  
Noninterest expenses                       
 Salaries and employee benefits   11,058    11,388   11,483   11,480   11,755  
 Occupancy and equipment   3,007    2,924   2,907   3,577   3,111  
 Data processing and outside service fees   2,049    1,907   1,925   2,105   2,331  
 Legal and professional fees   954    1,650   783   869   978  
 Deposit charges and FDIC insurance   378    442   485   391   405  
 Loss on disposal of fixed assets   -    -   24   2,175   144  
 Communication fees   345    460   463   504   532  
 Postage and supplies   106    107   142   125   115  
 Loan and collection expense   175    210   117   57   425  
 Core deposit intangible amortization   454    454   454   458   458  
 Advertising and promotion   179    140   146   254   44  
 Net cost of operation of other real estate owned   19    240   175   11   (92 )
 Other noninterest expense   1,417    1,527   1,538   3,019   906  
  Total noninterest expenses   20,141    21,449   20,642   25,025   21,112  
  Income before income taxes   13,425    12,579   11,206   6,841   9,516  
Income tax expense   4,731    4,052   3,717   1,510   3,192  
  Net income  $8,694   $8,527  $7,489  $5,331  $6,324  
                        
Earnings per common share, fully diluted  $0.16   $0.16  $0.14  $0.10  $0.12  
Weighted average diluted common shares   53,527,283    53,481,846   53,462,857   53,155,493   52,743,928  
                  
 
PARK STERLING CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENT
NINE MONTH RESULTS
($ in thousands, except per share amounts)
       
   September 30,  September 30,
   2017  2016
   (Unaudited)  (Unaudited)
Interest income          
 Loans, including fees  $85,903  $80,374  
 Taxable investment securities   8,729   7,910  
 Tax-exempt investment securities   402   421  
 Nonmarketable equity securities   642   458  
 Interest on deposits at banks   397   127  
 Federal funds sold   6   14  
  Total interest income   96,079   89,304  
Interest expense          
 Money market, NOW and savings deposits   3,074   2,984  
 Time deposits   4,375   4,294  
 Short-term borrowings   2,409   890  
 Long-term debt   1,113   1,229  
 Subordinated debt   1,606   1,437  
  Total interest expense   12,577   10,834  
  Net interest income   83,502   78,470  
Provision for loan losses   325   2,080  
  Net interest income after provision   83,177   76,390  
Noninterest income          
 Service charges on deposit accounts   5,144   4,688  
 Mortgage banking income   2,206   2,663  
 Income from wealth management activities   1,956   2,405  
 Income from capital market activities   2,181   1,515  
 ATM and card income   2,206   2,079  
 Income from bank-owned life insurance   1,732   2,046  
 Gain (loss) on sale of securities available for sale   58   (93 )
 Amortization of indemnification asset and true-up liability expense   -   (311 )
 Other noninterest income   782   557  
  Total noninterest income   16,265   15,549  
Noninterest expenses          
 Salaries and employee benefits   33,929   36,547  
 Occupancy and equipment   8,838   9,277  
 Data processing and outside service fees   5,881   10,078  
 Legal and professional fees   3,387   2,653  
 Deposit charges and FDIC insurance   1,305   1,315  
 Loss on disposal of fixed assets   24   418  
 Communication fees   1,268   1,520  
 Postage and supplies   355   479  
 Loan and collection expense   502   735  
 Core deposit intangible amortization   1,362   1,374  
 Advertising and promotion   465   832  
 Net cost of operation of other real estate owned   434   244  
 Other noninterest expense   4,482   3,739  
  Total noninterest expenses   62,232   69,211  
  Income before income taxes   37,210   22,728  
Income tax expense   12,500   8,111  
  Net income  $24,710  $14,617  
           
Earnings per common share, fully diluted  $0.46  $0.28  
Weighted average diluted common shares   53,481,351   52,674,315  
        
                
PARK STERLING CORPORATION
WEALTH MANAGEMENT ASSETS
($ in thousands)
    
   September 30,  June 30,  March 31,  December 31,  September 30,
   2017  2017  2017  2016  2016
   (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)
Discretionary assets held  $242,779  $256,623  $288,250  $278,872  $294,849
Non-discretionary assets held   27,020   27,274   44,996   36,522   28,476
Total wealth management assets  $269,799  $283,897  $333,246  $315,394  $323,325
                     
                     
PARK STERLING CORPORATION
MORTGAGE ORIGINATION
($ in thousands)
 
   for the three month period ended
   September 30,  June 30,  March 31,  December 31,  September 30,
   2017  2017  2017  2016  2016
   (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)
Mortgage origination - purchase  $13,782  $16,180  $18,446  $14,767  $21,982
Mortgage origination - refinance   5,560   8,609   16,068   21,316   20,552
Mortgage origination - construction   11,056   22,441   16,823   18,535   19,440
Total mortgage origination  $30,398  $47,230  $51,337  $54,618  $61,974
                
                
PARK STERLING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)
                
   September 30,  June 30,  March 31,  December 31,  September 30,
   2017  2017  2017  2016*  2016
   (Unaudited)  (Unaudited)  (Unaudited)     (Unaudited)
ASSETS                          
Cash and due from banks  $44,874   $35,508   $40,081   $34,162   $35,066  
Interest-earning balances at banks   53,102    55,862    32,997    48,882    38,540  
Investment securities available for sale   384,275    403,602    423,345    402,501    405,010  
Investment securities held to maturity   85,704    87,690    89,579    91,752    99,415  
Nonmarketable equity securities   18,692    20,179    19,967    17,501    16,289  
Federal funds sold   240    260    765    570    345  
Loans held for sale   1,814    3,102    6,181    7,996    15,203  
Loans   2,429,585    2,502,120    2,460,595    2,412,186    2,368,950  
Allowance for loan losses   (12,423 )  (12,702 )  (12,833 )  (12,125 )  (11,612 )
 Net loans   2,417,162    2,489,418    2,447,762    2,400,061    2,357,338  
                           
Premises and equipment, net   61,823    62,779    62,392    63,080    64,632  
Other real estate owned   2,603    3,175    3,167    2,438    2,730  
Bank-owned life insurance   72,354    71,831    71,337    70,785    70,167  
Deferred tax asset   18,728    20,790    21,250    25,721    26,947  
Goodwill   63,317    63,317    63,317    63,317    63,030  
Core deposit intangible   10,075    10,530    10,984    11,438    11,896  
Other assets   12,490    12,956    15,632    15,192    20,330  
                           
 Total assets  $3,247,253   $3,340,999   $3,308,756   $3,255,396   $3,226,938  
                           
LIABILITIES AND SHAREHOLDERS' EQUITY                          
Deposits:                          
Demand noninterest-bearing  $550,196   $554,399   $524,380   $521,295   $505,591  
Money market, NOW and savings   1,260,334    1,291,127    1,277,986    1,251,385    1,228,687  
Time deposits   658,393    691,656    706,829    741,072    749,999  
 Total deposits   2,468,923    2,537,182    2,509,195    2,513,752    2,484,277  
                           
Short-term borrowings   310,000    345,000    340,000    285,000    280,000  
Long-term debt   29,769    29,758    29,747    29,736    29,725  
Subordinated debt   33,996    33,832    33,671    33,501    33,339  
Accrued expenses and other liabilities   27,876    25,963    34,423    37,562    40,901  
 Total liabilities   2,870,564    2,971,735    2,947,036    2,899,551    2,868,242  
                           
Shareholders' equity:                          
 Common stock   53,365    53,280    53,113    53,117    53,306  
 Additional paid-in capital   273,893    273,409    273,291    273,400    275,323  
 Retained earnings   50,937    44,375    37,977    32,608    29,409  
 Accumulated other comprehensive income (loss)   (1,506 )  (1,800 )  (2,661 )  (3,280 )  658  
 Total shareholders' equity   376,689    369,264    361,720    355,845    358,696  
                           
Total liabilities and shareholders' equity  $3,247,253   $3,340,999   $3,308,756   $3,255,396   $3,226,938  
                           
 Common shares issued and outstanding   53,364,798    53,279,996    53,112,726    53,116,519    53,305,834  
                           
 * Derived from audited financial statements.  
  
PARK STERLING CORPORATION
SUMMARY OF LOAN PORTFOLIO
($ in thousands)
           
BY LOAN TYPE  
 
 
September 30,
2017
(Unaudited)
 
 
 
June 30,
2017
(Unaudited)
 
 
 
March 31,
2017
(Unaudited)
 
 
 
December 31,
2016*
 
 
 
 
September 30,
2016
(Unaudited)
Commercial:                          
 Commercial and industrial  $411,233   $454,952   $430,247   $387,401   $351,506  
 Commercial real estate (CRE) - owner-occupied   364,345    361,213    360,318    367,553    366,506  
 CRE - investor income producing   769,405    801,698    770,404    743,107    768,513  
 Acquisition, construction and development (AC&D) - 1-4 Family Construction   84,971    95,236    85,025    82,707    108,706  
 AC&D - Lots and land   91,676    92,761    98,339    105,362    88,620  
 AC&D - CRE construction   161,810    150,170    186,325    194,732    148,696  
 Other commercial   15,266    15,712    12,743    12,900    10,653  
  Total commercial loans   1,898,706    1,971,742    1,943,401    1,893,762    1,843,200  
                           
Consumer:                          
 Residential mortgage   287,596    283,911    273,624    260,521    254,298  
 Home equity lines of credit   172,240    173,840    170,709    176,799    181,246  
 Residential construction   50,484    52,222    52,631    59,060    63,847  
 Other loans to individuals   17,061    17,133    16,936    18,905    23,281  
  Total consumer loans   527,381    527,106    513,900    515,285    522,672  
   Total loans   2,426,087    2,498,848    2,457,301    2,409,047    2,365,872  
 Deferred costs (fees)   3,499    3,272    3,294    3,139    3,078  
  Total loans, net of deferred costs (fees)  $2,429,586   $2,502,120   $2,460,595   $2,412,186   $2,368,950  
                           
 * Derived from audited financial statements.  
                           
                
BY ACQUIRED AND NON-ACQUIRED  
 
 
September 30,
2017
(Unaudited)
 
 
 
June 30,
2017
(Unaudited)
 
 
 
March 31,
2017
(Unaudited)
 
 
 
December 31,
2016*
 
 
 
 
September 30,
2016
(Unaudited)
Acquired loans - performing  $376,365   $425,758   $495,216   $538,845   $599,840  
Acquired loans - purchase credit impaired   66,820    75,074    81,869    85,456    90,571  
 Total acquired loans   443,185    500,832    577,085    624,301    690,411  
Non-acquired loans, net of deferred costs (fees)**   1,986,401    2,001,288    1,883,510    1,787,885    1,678,539  
 Total loans  $2,429,586   $2,502,120   $2,460,595   $2,412,186   $2,368,950  
                           
 * Derived from audited financial statements.  
 ** Includes loans transferred from acquired pools following release of acquisition accounting FMV adjustments.  
          
                     
                     
PARK STERLING CORPORATION
ALLOWANCE FOR LOAN LOSSES
THREE MONTH RESULTS
($ in thousands)
                
   September 30,  June 30,  March 31,  December 31,  September 30,
   2017  2017  2017  2016*  2016
   (Unaudited)  (Unaudited)  (Unaudited)     (Unaudited)
Beginning of period allowance  $12,702   $12,833   $12,125   $11,612   $10,873  
Loans charged-off   (237 )  (329 )  (146 )  (223 )  (156 )
Recoveries of loans charged-off   311    198    176    186    253  
 Net (charge-offs) recoveries   74    (131 )  30    (37 )  97  
                           
Provision for (recovery of) loan losses   (353 )  -    678    550    642  
 End of period allowance  $12,423   $12,702   $12,833   $12,125   $11,612  
                           
Net (charge-offs) recoveries  $74   $(131 ) $30   $(37 ) $97  
Net (charge-offs) recoveries to average loans (annualized)   0.01 %  -0.02 %  0.01 %  -0.01 %  0.02 %
                     
 * Derived from audited financial statements.
                     
                     
                     
PARK STERLING CORPORATION
ACQUIRED LOANS
($ in thousands)
                
ACQUIRED LOANS AND FAIR MARKET VALUE (FMV) ADJUSTMENTS  
 
 
September 30,
2017
(Unaudited)
 
 
 
June 30,
2017
(Unaudited)
 
 
 
March 31,
2017
(Unaudited)
 
 
 
December 31,
2016*
 
 
 
 
September 30,
2016
(Unaudited)
                           
Non-acquired loans  $1,986,401   $2,001,288   $1,883,510   $1,787,885   $1,678,539  
                           
 Purchased performing loans   378,857    428,404    498,314    542,269    604,000  
 Less: remaining FMV adjustments   (2,492 )  (2,646 )  (3,098 )  (3,424 )  (4,160 )
 Purchased performing loans, net   376,365    425,758    495,216    538,845    599,840  
                            
 Purchased credit impaired loans   86,784    94,613    104,416    109,805    115,736  
 Less: remaining FMV adjustments   (19,964 )  (19,539 )  (22,547 )  (24,349 )  (25,165 )
 Purchased credit impaired loans, net   66,820    75,074    81,869    85,456    90,571  
                           
Total loans  $2,429,586   $2,502,120   $2,460,595   $2,412,186   $2,368,950  
                           
                           
 
PURCHASED PERFORMING FMV ADJUSTMENTS
 
 
September 30,
2017
(Unaudited)
 
 
 
June 30,
2017
(Unaudited)
 
 
 
March 31,
2017
(Unaudited)
 
 
 
December 31,
2016*
 
 
 
 
September 30,
2016
(Unaudited)
                           
Beginning FMV adjustment  $(2,646 ) $(3,098 ) $(3,424 ) $(4,160 ) $(4,964 )
Accretion to interest income:                          
 First Capital   163    304    236    503    623  
 All other mergers   (9 )  148    90    233    181  
                           
Ending FMV adjustment  $(2,492 ) $(2,646 ) $(3,098 ) $(3,424 ) $(4,160 )
                           
                           
 
 
PCI FMV ADJUSTMENTS
 
 
 
September 30,
2017
(Unaudited)
 
 
 
June 30,
2017
(Unaudited)
 
 
 
March 31,
2017
(Unaudited)
 
 
 
December 31,
2016*
 
 
 
 
September 30,
2016
(Unaudited)
                           
Contractual principal and interest  $99,815   $109,655   $119,970   $125,512   $133,223  
Nonaccretable difference   (4,188 )  (4,312 )  (7,142 )  (10,448 )  (11,529 )
 Expected cash flows as of the end of period   95,627    105,343    112,828    115,064    121,694  
Accretable yield   (28,807 )  (30,269 )  (30,959 )  (29,608 )  (31,123 )
Ending basis in PCI loans- estimated fair value  $66,820   $75,074   $81,869   $85,456   $90,571  
                           
Beginning accretable yield  $(30,269 ) $(30,959 ) $(29,608 ) $(31,123 ) $(30,377 )
Loan system servicing income   1,916    1,318    1,413    1,389    1,532  
Accretion to interest income   961    2,687    2,000    1,285    1,241  
Reclass from non-accretable yield   (1,040 )  (2,699 )  (3,802 )  (929 )  (2,691 )
Other adjustments   (375 )  (616 )  (962 )  (230 )  (828 )
Period end accretable yield**  $(28,807 ) $(30,269 ) $(30,959 ) $(29,608 ) $(31,123 )
                           
                           
 * Derived from audited financial statements.  
 ** Difference between the remaining FMV discount on purchased credit impaired loans and the period end accretable yield is a function of projected estimated expected interest income being included in the period end accretable yield.  
  
 
PARK STERLING CORPORATION
AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS
THREE MONTHS
($ in thousands)
                   
   September 30, 2017        September 30, 2016      
   Average  Income/  Yield/  Average  Income/  Yield/
   Balance  Expense  Rate (2)  Balance  Expense  Rate (2)
Assets                           
Interest-earning assets:                           
 Loans and loans held for sale, net (1)  $2,463,157   $28,923  4.66 % $2,348,297   $26,521  4.49 %
 Fed funds sold   697    2  1.14 %  971    1  0.41 %
 Taxable investment securities   468,621    2,809  2.40 %  483,815    2,583  2.12 %
 Tax-exempt investment securities   13,049    132  4.05 %  14,013    137  3.89 %
 Other interest-earning assets   81,181    424  2.07 %  53,088    202  1.51 %
                             
  Total interest-earning assets   3,026,705    32,290  4.23 %  2,900,184    29,444  4.04 %
                            
Allowance for loan losses   (13,216 )          (11,054 )        
Cash and due from banks   36,802            34,703          
Premises and equipment   62,500            65,332          
Goodwill   63,317            63,076          
Intangible assets   10,281            12,120          
Other assets   106,240            122,438          
                            
  Total assets  $3,292,629           $3,186,799          
                            
Liabilities and shareholders' equity                           
Interest-bearing liabilities:                           
 Interest-bearing demand  $479,170   $90  0.07 % $426,755   $68  0.06 %
 Savings and money market   739,704    625  0.34 %  744,930    777  0.41 %
 Time deposits - core   598,652    1,226  0.81 %  653,937    1,179  0.72 %
 Brokered deposits   136,000    603  1.76 %  156,867    376  0.95 %
  Total interest-bearing deposits   1,953,526    2,544  0.52 %  1,982,489    2,400  0.48 %
 Short-term borrowings   329,293    986  1.19 %  235,870    345  0.58 %
 Long-term debt   29,764    371  4.95 %  29,718    379  5.07 %
 Subordinated debt   33,914    555  6.49 %  33,262    497  5.94 %
  Total borrowed funds   392,971    1,912  1.93 %  298,850    1,221  1.63 %
                             
  Total interest-bearing liabilities   2,346,497    4,456  0.75 %  2,281,339    3,621  0.63 %
                            
Net interest rate spread        27,834  3.48 %       25,823  3.41 %
                            
Noninterest-bearing demand deposits   544,402            502,158          
Other liabilities   27,267            45,725          
Shareholders' equity   374,463            357,577          
                            
Total liabilities and shareholders' equity  $3,292,629           $3,186,799          
                            
Net interest margin           3.65 %          3.54 %
                            
(1) Nonaccrual loans are included in the average loan balances.  
(2) Yield/ rate calculated on Actual/Actual day count basis, except for yield on investments which is calculated on a 30/360 day count basis.  
  
   
 
PARK STERLING CORPORATION
AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS
NINE MONTHS
($ in thousands)
                   
   September 30, 2017        September 30, 2016      
   Average  Income/  Yield/  Average  Income/  Yield/
   Balance  Expense  Rate (2)  Balance  Expense  Rate (2)
Assets                           
Interest-earning assets:                           
 Loans and loans held for sale, net (1)  $2,455,429   $85,903  4.68 % $2,307,380   $80,374  4.65 %
 Fed funds sold   812    6  0.99 %  3,894    14  0.48 %
 Taxable investment securities   481,299    8,729  2.42 %  485,004    7,910  2.18 %
 Tax-exempt investment securities   13,221    402  4.05 %  14,728    421  3.81 %
 Other interest-earning assets   69,102    1,039  2.01 %  48,158    585  1.62 %
                             
  Total interest-earning assets   3,019,863    96,079  4.25 %  2,859,164    89,304  4.17 %
                            
Allowance for loan losses   (12,788 )          (10,296 )        
Cash and due from banks   36,825            35,488          
Premises and equipment   62,759            65,956          
Goodwill   63,317            62,881          
Intangible assets   10,730            12,470          
Other assets   108,713            125,951          
                            
  Total assets  $3,289,419           $3,151,614          
                            
Liabilities and shareholders' equity                           
Interest-bearing liabilities:                           
 Interest-bearing demand  $474,747   $263  0.07 % $426,659   $235  0.07 %
 Savings and money market   737,203    1,795  0.33 %  741,074    2,447  0.44 %
 Time deposits - core   617,908    3,628  0.79 %  683,302    3,670  0.72 %
 Brokered deposits   143,722    1,763  1.64 %  141,009    926  0.88 %
  Total interest-bearing deposits   1,973,580    7,449  0.50 %  1,992,044    7,278  0.49 %
 Short-term borrowings   323,077    2,409  1.00 %  197,043    890  0.60 %
 Long-term debt   29,753    1,113  5.00 %  53,364    1,229  3.08 %
 Subordinated debt   33,753    1,606  6.36 %  33,098    1,437  5.80 %
  Total borrowed funds   386,583    5,128  1.77 %  283,505    3,556  1.68 %
                             
  Total interest-bearing liabilities   2,360,163    12,577  0.71 %  2,275,549    10,834  0.64 %
                            
Net interest rate spread        83,502  3.54 %       78,470  3.54 %
                            
Noninterest-bearing demand deposits   531,162            480,772          
Other liabilities   31,346            42,396          
Shareholders' equity   366,748            352,897          
                            
Total liabilities and shareholders' equity  $3,289,419           $3,151,614          
                            
Net interest margin           3.70 %          3.67 %
                            
(1) Nonaccrual loans are included in the average loan balances.  
(2) Yield/ rate calculated on Actual/Actual day count basis, except for yield on investments which is calculated on a 30/360 day count basis.  
  
 
PARK STERLING CORPORATION
SELECTED RATIOS
($ in thousands, except per share amounts)
                
   September 30,  June 30,  March 31,  December 31,  September 30,
   2017  2017  2017  2016  2016
   (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)
ASSET QUALITY                          
 Nonaccrual loans  $7,072   $9,373   $9,613   $8,819   $8,623  
 Troubled debt restructuring (and still accruing)   2,350    2,457    2,486    2,892    2,549  
 Past due 90 days plus (and still accruing)   206    133    -    1,230    293  
 Nonperforming loans   9,628    11,963    12,099    12,941    11,465  
 OREO   2,603    3,175    3,167    2,438    2,730  
 Nonperforming assets   12,231    15,138    15,266    15,379    14,195  
 Past due 30-59 days (and still accruing)   2,084    677    430    1,175    1,104  
 Past due 60-89 days (and still accruing)   234    332    587    1,836    2,558  
                            
 Nonperforming loans to total loans   0.40 %  0.48 %  0.49 %  0.54 %  0.48 %
 Nonperforming assets to total assets   0.38 %  0.45 %  0.46 %  0.47 %  0.44 %
 Allowance to total loans   0.51 %  0.51 %  0.52 %  0.50 %  0.49 %
 Allowance to nonperforming loans   129.03 %  106.18 %  106.07 %  93.69 %  101.28 %
 Allowance to nonperforming assets   101.57 %  83.91 %  84.06 %  78.84 %  81.80 %
 Past due 30-89 days (accruing) to total loans   0.10 %  0.04 %  0.04 %  0.12 %  0.15 %
 Net charge-offs (recoveries) to average loans (annualized)   0.01 %  -0.02 %  0.01 %  -0.01 %  0.02 %
                            
CAPITAL                          
 Book value per common share  $7.11   $6.98   $6.86   $6.75   $6.84  
 Tangible book value per common share**  $5.72   $5.58   $5.45   $5.33   $5.41  
 Common shares outstanding   53,364,798    53,279,996    53,112,726    53,116,519    53,305,834  
 Weighted average dilutive common shares outstanding   53,527,283    53,481,846    53,462,857    53,155,493    52,743,928  
                            
 Common Equity Tier 1 (CET1) capital  $308,102   $300,698   $293,743   $288,594   $287,518  
 Tier 1 capital   334,006    326,415    319,274    314,043    312,781  
 Tier 2 capital   12,423    12,703    12,888    12,125    11,615  
 Total risk based capital   346,429    339,118    332,162    326,168    324,396  
 Risk weighted assets   2,658,122    2,708,328    2,668,708    2,613,003    2,596,463  
 Average assets for leverage ratio   3,223,539    3,246,949    3,186,307    3,165,665    3,108,707  
                            
 Common Equity Tier 1 (CET1) ratio   11.59 %  11.10 %  11.01 %  11.04 %  11.07 %
 Tier 1 ratio   12.57 %  12.05 %  11.96 %  12.02 %  12.05 %
 Total risk based capital ratio   13.03 %  12.52 %  12.45 %  12.48 %  12.49 %
 Tier 1 leverage ratio   10.36 %  10.05 %  10.02 %  9.92 %  10.06 %
 Tangible common equity to tangible assets**   9.56 %  9.04 %  8.89 %  8.84 %  9.00 %
                            
LIQUIDITY                          
 Net loans to total deposits   97.90 %  98.12 %  97.55 %  95.48 %  94.89 %
 Reliance on wholesale funding   17.71 %  18.61 %  19.01 %  17.39 %  17.65 %
                            
INCOME STATEMENT (THREE MONTH RESULTS; ANNUALIZED)                          
 Return on Average Assets   1.05 %  1.03 %  0.93 %  0.66 %  0.79 %
 Return on Average Common Equity   9.21 %  9.33 %  8.46 %  5.89 %  7.04 %
 Net interest margin (non-tax equivalent)   3.65 %  3.77 %  3.68 %  3.58 %  3.54 %
                           
 ** Non-GAAP financial measure  
   

Non-GAAP Financial Measures
Tangible assets, tangible common equity, tangible book value, adjusted average tangible common equity, adjusted net income, adjusted noninterest income, adjusted operating revenues, adjusted noninterest expense, adjusted operating expenses, adjusted allowance for loan losses, and related ratios and per share measures, including adjusted return on average assets and adjusted return on average equity, as used throughout this release, are non-GAAP financial measures. Management uses (i) tangible assets, tangible common equity, tangible book value and average tangible common equity (which exclude goodwill and other intangibles from equity and assets), and related ratios, to evaluate the adequacy of shareholders' equity and to facilitate comparisons with peers; (ii) adjusted allowance for loan losses (which includes net FMV adjustments related to acquired loans) as supplemental information for comparing the combined allowance and fair market value adjustments to the combined acquired and non-acquired loan portfolios (fair market value adjustments are available only for losses on acquired loans) to facilitate comparisons with peers; and (iii) adjusted net income, adjusted noninterest income and adjusted noninterest expense (which exclude merger-related expenses and/or gain or loss on sale of securities, as applicable), adjusted operating expense (which excludes merger-related expenses and amortization of intangibles) and adjusted operating revenues (which includes net interest income and noninterest income and excludes gain or loss on sale of securities, as applicable) to evaluate core earnings and to facilitate comparisons with peers.

                
PARK STERLING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
($ in thousands, except per share amounts)
    
   As of or for the three month periods ended
   September 30,  June 30,  March 31,  December 31,  September 30,
   2017  2017  2017  2016  2016
   (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)
Adjusted net income                          
 Net income (as reported)  $8,694   $8,527   $7,489   $5,331   $6,324  
 Plus: merger-related expenses   592    923    -    2,984    1,487  
 Less: (gain) loss on sale of securities   -    -    (58 )  (6 )  -  
 Less: tax impact of merger-related expenses and (gain) loss on sale of securities   (84 )  (236 )  20    (1,004 )  (499 )
  Adjusted net income  $9,202   $9,214   $7,451   $7,305   $7,312  
                            
 Divided by: weighted average diluted shares   53,527,283    53,481,846    53,462,857    53,155,493    52,743,928  
  Adjusted net income per share   0.17    0.17    0.14    0.14    0.14  
 Estimated tax rate for adjustment   14.19 %  25.57 %  34.48 %  33.71 %  33.56 %
                            
Adjusted noninterest income                          
 Noninterest income (as reported)  $5,379   $5,418   $5,468   $5,845   $5,447  
 Less: (gain) loss on sale of securities   -    -    (58 )  (6 )  -  
  Adjusted noninterest income  $5,379   $5,418   $5,410   $5,839   $5,447  
                            
Adjusted noninterest expenses                          
 Noninterest expenses (as reported)  $20,141   $21,449   $20,642   $25,025   $21,112  
 Less: merger-related expenses   (592 )  (923 )  -    (2,984 )  (1,487 )
  Adjusted noninterest expenses  $19,549   $20,526   $20,642   $22,041   $19,625  
                            
Adjusted operating expense                          
 Noninterest expenses (as reported)  $20,141   $21,449   $20,642   $25,025   $21,112  
 Less: merger-related expenses   (592 )  (923 )  -    (2,984 )  (1,487 )
 Less: amortization of intangibles   (454 )  (454 )  (454 )  (458 )  (458 )
  Adjusted operating expense  $19,095   $20,072   $20,188   $21,583   $19,167  
                            
Adjusted operating revenues                          
 Net Interest Income (as reported)  $27,834   $28,610   $27,058   $26,571   $25,823  
 Plus: noninterest income (as reported)   5,379    5,418    5,468    5,845    5,447  
 Less: (gain) loss on sale of securities   -    -    (58 )  (6 )  -  
  Adjusted operating revenues  $33,213   $34,028   $32,468   $32,410   $31,270  
                            
Adjusted efficiency ratio                          
 Adjusted operating expense  $19,095   $20,072   $20,188   $21,583   $19,167  
 Divided by: adjusted operating revenues   33,213    34,028    32,468    32,410    31,270  
  Adjusted operating expense to adjusted operating revenues   57.49 %  58.99 %  62.18 %  66.59 %  61.30 %
  Noninterest expenses to net interest income plus noninterest income   60.64 %  63.03 %  63.46 %  77.20 %  67.52 %
                            
Adjusted return on average assets                          
 Adjusted net income  $9,202   $9,214   $7,451   $7,305   $7,312  
 Divided by: average assets   3,292,629    3,316,742    3,258,510    3,229,299    3,186,799  
 Multiplied by: annualization factor   3.97    4.01    4.06    3.98    3.98  
  Adjusted return on average assets   1.11 %  1.11 %  0.93 %  0.90 %  0.91 %
  Return on average assets   1.05 %  1.03 %  0.93 %  0.66 %  0.79 %
                            
Adjusted return on average equity                          
 Adjusted net income  $9,202   $9,214   $7,451   $7,305   $7,312  
 Divided by: average common equity   374,463    366,483    359,130    359,985    357,577  
 Multiplied by: annualization factor   3.97    4.01    4.06    3.98    3.98  
  Adjusted return on average equity   9.75 %  10.08 %  8.41 %  8.07 %  8.14 %
  Return on average equity   9.21 %  9.33 %  8.46 %  5.89 %  7.04 %
                           
                           
PARK STERLING CORPORATION
RECONCILIATION OF NON-GAAP MEASURES
($ in thousands, except per share amounts)
    
   As of or for the three month periods ended
   September 30,  June 30,  March 31,  December 31,  September 30,
   2017  2017  2017  2016  2016
   (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)
Tangible common equity to tangible assets                          
 Total assets  $3,247,253   $3,340,999   $3,308,756   $3,255,396   $3,226,938  
 Less: intangible assets   (73,392 )  (73,847 )  (74,301 )  (74,755 )  (74,926 )
  Tangible assets  $3,173,861   $3,267,152   $3,234,455   $3,180,641   $3,152,012  
                            
 Total common equity  $376,689   $369,264   $361,720   $355,845   $358,696  
 Less: intangible assets   (73,392 )  (73,847 )  (74,301 )  (74,755 )  (74,926 )
  Tangible common equity  $303,297   $295,417   $287,419   $281,090   $283,770  
                            
 Tangible common equity  $303,297   $295,417   $287,419   $281,090   $283,770  
 Divided by: tangible assets   3,173,861    3,267,152    3,234,455    3,180,641    3,152,012  
  Tangible common equity to tangible assets   9.56 %  9.04 %  8.89 %  8.84 %  9.00 %
  Common equity to assets   11.60 %  11.05 %  10.93 %  10.93 %  11.12 %
                            
Tangible book value per share                          
 Issued and outstanding shares   53,364,798    53,279,996    53,112,726    53,116,519    53,305,834  
 Less: unvested restricted stock awards   (364,560 )  (375,056 )  (390,233 )  (405,732 )  (837,561 )
  Period end dilutive shares   53,000,238    52,904,940    52,722,493    52,710,787    52,468,273  
                            
 Tangible common equity  $303,297   $295,417   $287,419   $281,090   $283,770  
 Divided by: period end dilutive shares   53,000,238    52,904,940    52,722,493    52,710,787    52,468,273  
  Tangible common book value per share  $5.72   $5.58   $5.45   $5.33   $5.41  
  Common book value per share  $7.11   $6.98   $6.86   $6.75   $6.84  
                            
Adjusted return on average tangible common equity                          
 Average common equity  $374,463   $366,483   $359,130   $359,985   $357,577  
 Less: average intangible assets   (73,598 )  (74,050 )  (74,504 )  (74,812 )  (75,196 )
  Average tangible common equity  $300,865   $292,433   $284,626   $285,173   $282,381  
                            
 Net income  $8,694   $8,527   $7,489   $5,331   $6,324  
 Divided by: average tangible common equity   300,865    292,433    284,626    285,173    282,381  
 Multiplied by: annualization factor   3.97    4.01    4.06    3.98    3.98  
  Return on average tangible common equity   11.46 %  11.70 %  10.67 %  7.44 %  8.91 %
                            
 Adjusted net income  $9,202   $9,214   $7,451   $7,305   $7,312  
 Divided by: average tangible common equity   300,865    292,433    284,626    285,173    282,381  
 Multiplied by: annualization factor   3.97    4.01    4.06    3.98    3.98  
  Adjusted return on average tangible common equity   12.13 %  12.64 %  10.62 %  10.19 %  10.30 %
                            
Adjusted allowance for loan losses                          
 Allowance for loan losses  $12,423   $12,702   $12,833   $12,125   $11,612  
 Plus: acquisition accounting FMV adjustments to acquired loans   22,456    22,185    25,645    27,773    29,325  
  Adjusted allowance for loan losses  $34,879   $34,887   $38,478   $39,898   $40,937  
 Divided by: total loans (excluding LHFS before FMV adjustments)  $2,452,041   $2,524,305   $2,486,240   $2,439,959   $2,398,275  
  Adjusted allowance for loan losses to total loans   1.42 %  1.38 %  1.55 %  1.64 %  1.71 %
  Allowance for loan losses to total loans   0.51 %  0.51 %  0.52 %  0.50 %  0.49 %
                     

Contact Information

  • For additional information contact:
    Donald K. Truslow
    Chief Financial Officer
    (704) 716-2134