CHARLOTTE, NC--(Marketwire - Nov 2, 2011) - Park Sterling Corporation (
Third Quarter Highlights:
- Nonperforming loans decreased $6.1 million, or 22%, compared to the second quarter of 2011 to $21.4 million, or 5.84% of total loans
- Nonperforming assets decreased $3.9 million, or 12%, compared to the second quarter of 2011 to $28.7 million, or 4.93% of total assets
- Provision for loan losses decreased $2.7 million, or 82%, to $568,000 compared to the second quarter of 2011
- Net charge-offs decreased $1.7 million, or 46%, to $2.0 million, or 2.19% of average loans (annualized), compared to $3.7 million, or 3.87% of average loans (annualized), in the second quarter of 2011
- Net interest income increased slightly to $3.9 million compared to $3.8 million in the second quarter of 2011
- Net loss of $1.4 million, or $0.05 per diluted share, compared to a net loss of $3.1 million, or $0.11 per diluted share, in the second quarter of 2011 and a net loss of $3.7 million, or $0.23 per diluted share, in the third quarter of 2010
- Excluding pre-tax, merger-related expenses of $496,000 in the third quarter of 2011 and $632,000 in the second quarter of 2011, the net loss narrowed to $1.1 million, or approximately $0.04 per diluted share, compared to $2.7 million, or approximately $0.10 per diluted share in the second quarter of 2011
- Capital levels remain strong as tangible common equity as a percentage of tangible assets increased to 29.98% from 28.43% in the second quarter of 2011
Business Highlights:
- Consummated merger with Community Capital Corporation ("Community Capital") on November 1, 2011
- Received regulatory approval for de novo branches in Raleigh, North Carolina and Greenville, South Carolina, with conversion from loan production office to branch offices expected during the fourth quarter of 2011
"Park Sterling's third quarter was marked by significant progress in reducing problem assets and their attendant drag on earnings," said Jim Cherry, Chief Executive Officer. "As expected, during the quarter, we began to realize the benefits of our organic growth initiatives with attractive new loan production reported in each of our markets. Combined with our ongoing progress in reducing construction and development exposures, this new loan production contributed to achieving a more balanced loan mix. In addition, Park Sterling's credit quality continued to improve as nonperforming assets, provision expense, and net charge-offs each decreased, as anticipated.
During the quarter, significant time was devoted to ensuring the successful consummation of our merger with Community Capital. With that merger now complete, we are laser focused on ensuring that we provide customers and communities across our combined footprint with superior products and services. We expect, subject to regulatory approval, to merge our two operating banks, CapitalBank and Park Sterling Bank, into a single charter by year-end, which will allow us to more efficiently and effectively deliver an exceptional customer experience across the new Park Sterling franchise.
On the mergers and acquisitions front, we believe there are a growing number of prospects across Virginia and the Carolinas that will be attracted to a partnership with Park Sterling. They are driven in part by the continuing uncertain regulatory and economic environment, and we remain active in seeking attractive partnership opportunities for Park Sterling."
Third Quarter 2011 Financial Highlights
Asset Quality
Asset quality continued to improve during the third quarter of 2011. Nonperforming loans, which included $2.0 million in performing troubled debt restructurings (TDRs), decreased $6.1 million, or 22%, to $21.4 million, or 5.84% of total loans, compared to $27.6 million, or 7.25% of total loans, as of June 30, 2011. Nonperforming assets, which included $1.6 million in nonperforming loans held for sale, decreased $3.9 million, or 12%, to $28.7 million, or 4.93% of total assets, down from $32.6 million, or 5.34% of total assets, as of June 30, 2011.
The provision for loan losses decreased $2.7 million, or 82%, to $568,000, compared to the second quarter of 2011. Net charge-offs decreased $1.7 million, or 46%, to $2.0 million, representing 2.19% of average loans on an annualized basis, compared to $3.7 million, or 3.87% of average loans (annualized) in the prior quarter. The allowance for loan losses was $9.8 million, or 2.68% of total loans at September 30, 2011, a decrease of $1.4 million from $11.3 million, or 2.96% of total loans, at June 30, 2011. This decrease in the allowance resulted both from positive trends in credit quality in the loan portfolio and from the recognition of losses on previously identified impaired loans and a related reduction in specific reserves. The allowance represented 45.84% of nonperforming loans (including TDRs) at September 30, 2011 up from 40.91% at June 30, 2011.
Compared to the third quarter of 2010, nonperforming loans increased 61% from $13.4 million, or 3.36% of total loans. Nonperforming assets increased 94% from $14.8 million, or 2.34% of total assets. The provision for loan losses decreased 91% from $6.1 million. Net charge-offs increased 2% from $2.0 million, or 1.97% of average loans (annualized).
Net Interest Income and Net Interest Margin
Net interest income increased slightly to $3.9 million compared to $3.8 million in the second quarter of 2011, and the net interest margin increased 9 basis points during the same time period to 2.69%. The increase in the net interest margin related primarily to a $230,000 decrease in interest expense during the third quarter of 2011, due in large part to improved deposit mix and pricing. Average earning assets decreased $13.4 million, or 2%, compared to the second quarter of 2011, due to an $18.8 million, or 5%, decrease in average loan balances, resulting in part from the resolution of problem credits and a managed decrease in construction and development (C&D) exposure to improve the loan mix.
Compared to the third quarter of 2010, net interest income increased 6% to $3.9 million from $3.6 million, and the net interest margin increased 2 basis points during the same time period. Average interest-earning assets increased $29.0 million, or 5%, resulting from the utilization of net proceeds of $140.2 million from the common stock offering completed during the third quarter of 2010.
Noninterest Income
Noninterest income increased $67,000 compared to the second quarter of 2011 and increased $85,000 compared to the third quarter of 2010. The increase in noninterest income in both periods included $52,000 in incremental other income associated with a new $8 million investment in bank-owned life insurance purchased during the third quarter of 2011. The increase in noninterest income from the third quarter of 2010 was also due in part to higher NSF fees and deposit service charges.
Noninterest Expense
Noninterest expense decreased $258,000 to $5.2 million compared to $5.5 million in the second quarter of 2011. This decrease in noninterest expense primarily reflected $484,000 in lower legal and professional fees, partially offset by an $81,000 increase in other expenses, $76,000 increase in salaries and employee benefits, and $71,000 increase loan and collection expenses. Noninterest expense included $496,000 of merger-related expense during the third quarter of 2011 compared to $632,000 during the second quarter of 2011, primarily in legal and professional fees.
Compared to the third quarter of 2010, noninterest expense increased $2.2 million, primarily due to increased salaries and employee benefits related to the management expansion that occurred during the second half of 2010 and the addition of new employees during 2011. Also impacting the increase in noninterest expense were higher costs related to being a newly public company, merger related expenses resulting from the Community Capital acquisition, and an increase in OREO-related and loan and collection expenses due to the addition of nonperforming assets resulting from a deterioration in the loan portfolio during the second half of 2010.
Balance Sheet and Capital
Total assets decreased $28.3 million, or 5%, compared to the second quarter of 2011. Loans decreased $13.0 million, or 3%, in the third quarter of 2011 resulting in part from the resolution of problem credits and a managed decrease in C&D exposure to improve the loan mix. Cash, interest earning balances, Federal funds sold and investment securities together decreased $26.5 million, or 12%, compared to the second quarter of 2011. The decrease resulted in part from an $8 million investment in bank-owned life insurance that is included in other assets. The decrease also reflected management's decision to reduce certain lower yielding interest-earning assets by allowing higher priced time deposits to mature without renewal.
Loan mix continued to improve during the third quarter of 2011. Construction and development related exposures decreased 20% compared to the second quarter of 2011. C&D loans represented 15.3% of total loans at September 30, 2011, compared to 18.6% at June 30, 2011 and 27.4% at September 30, 2010. Commercial and industrial loans and owner-occupied commercial real estate loans together increased 5% compared to the second quarter of 2011. C&I and owner-occupied loans represented 30.4% of total loans at September 30, 2011, compared to 28.1% at June 30, 2011 and 24.9% at September 30, 2011. Non-owner-occupied commercial real estate loans and 1-4 family loans remained fairly steady compared to the second quarter of 2011 at 29.5% and 5.4% of total loans, respectively. Home equity lines of credit increased slightly from 14.8% to 15.4% of total loans on a linked-quarter basis.
Total deposits decreased $28.9 million, or 7%, compared to the second quarter of 2011. This decrease in deposits was primarily due to a managed 15% decrease in time deposits, as management both allowed higher-priced special rates to mature without renewal and reduced brokered deposits. The decrease was offset by an 8% increase in money market, NOW and savings deposits, and a 2% increase in demand deposits. Compared to the third quarter of 2010, total deposits decreased $42.4 million, or 10%, resulting from a 32% decrease in time deposits, offset by a 65% increase in money market, NOW and savings deposits, and a 41% increase in demand deposits. Core deposits, which excludes brokered deposits, as a percentage of total deposits were 77%, compared to 76% in the first quarter of 2011 and 72% in the third quarter of 2010.
Shareholders' equity increased $1.0 million to $174.6 million compared to $173.6 million at June 30, 2011, as an increase in accumulated other comprehensive income offset the third quarter 2011 net loss of $1.4 million. Shareholders' equity decreased $9.2 million compared to the third quarter of 2010 as a result of $11.9 million in accumulated net losses. Tangible common equity as a percentage of tangible assets was 29.98%, an increase from 28.43% at June 30, 2011 and from 29.06% at September 30, 2010. Tier 1 leverage ratio was 27.13%, compared to 27.07% at June 30, 2011 and 32.80% at September 30, 2010.
During the first quarter of 2011, and as contemplated in the 2010 equity offering, 568,260 shares of restricted stock were issued but will not vest until the Company's share price achieves certain performance thresholds above the equity offering price (these restricted stock awards vest one-third each at $8.125, $9.10 and $10.40 per share, respectively). Accordingly, these additional shares have been excluded from earnings and tangible book value per share calculations.
Conference Call
A conference call will be held at 8:30 a.m., ET this morning (November 2, 2011). The conference call can be accessed by dialing (877) 317-6789 and requesting the Park Sterling Corporation 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 by dialing (877) 344-7529, conference number 10005537.
About Park Sterling Corporation
Park Sterling Corporation is the holding company for Park Sterling Bank, headquartered in Charlotte, North Carolina, and for CapitalBank, headquartered in Greenwood, South Carolina. Park Sterling's primary focus is to provide financial 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 offers a full array of banking services, including a diverse wealth management group. Park Sterling is committed to building a banking franchise across the Carolinas and Virginia that is noted for sound risk management, superior customer 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, earnings (loss) excluding merger-related expenses and related ratios and EPS measures, as used throughout this release, are non-GAAP financial measures. Management uses tangible assets, tangible common equity and tangible book value and related ratios to evaluate the adequacy of shareholders' equity and to facilitate comparisons with peers. Management uses earnings (loss) excluding merger-related expenses and related EPS measures to evaluate core earnings (loss). For additional information, see "Reconciliation of Non-GAAP Measures" in the accompanying tables.
Cautionary Statement Regarding Forward Looking Statements
This news release contains, and Park Sterling and its management may make, certain statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts and often use words such as "may," "plan," "contemplate," "anticipate," "believe," "intend," "continue," "expect," "project," "predict," "estimate," "could," "should," "would," "will," "goal," "target" and similar expressions. These forward-looking statements express management's current expectations, plans or forecasts of future events, results and condition, including financial and other estimates and expectations regarding the merger with Community Capital Corporation, the general business strategy of engaging in bank mergers, organic growth including branch openings and anticipated asset size, expansion of product capabilities, anticipated loan growth, refinement of the loan loss allowance methodology, recruiting of key leadership positions, decreases in construction and development loans and other changes in loan mix, changes in deposit mix, capital and liquidity levels, emerging regulatory expectations and measures, net interest income, credit trends and conditions, including loan losses, allowance, charge-offs, delinquency trends and nonperforming loan and asset levels, residential sales activity and other similar matters. These statements are not guarantees of future results or performance and by their nature involve certain risks and uncertainties that are based on management's beliefs and assumptions and on the information available to management at the time that these disclosures were prepared. Actual outcomes and results may differ materially from those expressed in, or implied by, any of these forward-looking statements.
You should not place undue reliance on any forward-looking statement and should consider all of the following uncertainties and risks, as well as those more fully discussed in any of Park Sterling's filings with the SEC: failure to realize synergies and other financial benefits from the merger with Community Capital within the expected time frame; increases in expected costs or difficulties related to integration of the Community Capital merger; inability to identify and successfully negotiate and complete additional combinations with potential merger partners or to successfully integrate such businesses into Park Sterling, including the company's ability to realize the benefits and cost savings from and limit any unexpected liabilities acquired as a result of any such business combination; the effects of negative economic conditions, including stress in the commercial real estate markets or delay or failure of recovery in the residential real estate markets; changes in consumer and investor confidence and the related impact on financial markets and institutions; changes in interest rates; failure of assumptions underlying the establishment of our allowance; deterioration in the credit quality of our loan portfolios or in the value of the collateral securing those loans or in the value of guarantor support for those loans, where applicable; deterioration in the value of securities held in our investment securities portfolio; failure of assumptions underlying the utilization of our deferred tax assets; 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 CORPORATION | |||||||||||||||||||||
| CONDENSED INCOME STATEMENT | |||||||||||||||||||||
| THREE MONTH RESULTS | |||||||||||||||||||||
| ($ in thousands, except per share amounts) | September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| 2011 | 2011 | 2011 | 2010 * | 2010 | |||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||
| Interest income | |||||||||||||||||||||
| Loans, including fees | $ | 4,283 | $ | 4,450 | $ | 4,758 | $ | 4,984 | $ | 4,963 | |||||||||||
| Federal funds sold | 22 | 33 | 30 | 46 | 42 | ||||||||||||||||
| Taxable investment securities | 681 | 684 | 681 | 587 | 370 | ||||||||||||||||
| Tax-exempt investment securities | 181 | 181 | 171 | 160 | 161 | ||||||||||||||||
| Interest on deposits at banks | 44 | 11 | 14 | 16 | 23 | ||||||||||||||||
| Total interest income | 5,211 | 5,359 | 5,654 | 5,793 | 5,559 | ||||||||||||||||
| Interest expense | |||||||||||||||||||||
| Money market, NOW and savings deposits | 158 | 176 | 141 | 132 | 104 | ||||||||||||||||
| Time deposits | 868 | 1,080 | 1,226 | 1,435 | 1,490 | ||||||||||||||||
| Short-term borrowings | 1 | 1 | - | 1 | 1 | ||||||||||||||||
| Long-term borrowings | 140 | 141 | 141 | 140 | 144 | ||||||||||||||||
| Subordinated debt | 190 | 189 | 190 | 188 | 190 | ||||||||||||||||
| Total interest expense | 1,357 | 1,587 | 1,698 | 1,896 | 1,929 | ||||||||||||||||
| Net interest income | 3,854 | 3,772 | 3,956 | 3,897 | 3,630 | ||||||||||||||||
| Provision for loan losses | 568 | 3,245 | 4,462 | 8,237 | 6,143 | ||||||||||||||||
| Net interest income (loss) after provision | 3,286 | 527 | (506 | ) | (4,340 | ) | (2,513 | ) | |||||||||||||
| Total noninterest income | 111 | 44 | 72 | 43 | 26 | ||||||||||||||||
| Noninterest expenses | |||||||||||||||||||||
| Salaries and employee benefits | 3,051 | 2,975 | 2,507 | 2,114 | 1,777 | ||||||||||||||||
| Occupancy and equipment | 369 | 301 | 256 | 250 | 236 | ||||||||||||||||
| Advertising and promotion | 115 | 87 | 38 | 50 | 84 | ||||||||||||||||
| Legal and professional fees | 721 | 1,205 | 307 | 208 | 78 | ||||||||||||||||
| Deposit charges and FDIC insurance | 134 | 196 | 287 | 185 | 184 | ||||||||||||||||
| Data processing and outside service fees | 142 | 128 | 123 | 109 | 109 | ||||||||||||||||
| Directors fees | 45 | 45 | 41 | 182 | 164 | ||||||||||||||||
| Net cost of operation of other real estate | 101 | 93 | 235 | 16 | 120 | ||||||||||||||||
| Loan and collection expense | 180 | 109 | 86 | 63 | 82 | ||||||||||||||||
| Shareholder reporting expense | 36 | 94 | 64 | 15 | 8 | ||||||||||||||||
| Other noninterest expense | 322 | 241 | 290 | 356 | 148 | ||||||||||||||||
| Total noninterest expenses | 5,216 | 5,474 | 4,234 | 3,548 | 2,990 | ||||||||||||||||
| Income (loss) before income taxes | (1,819 | ) | (4,903 | ) | (4,668 | ) | (7,845 | ) | (5,477 | ) | |||||||||||
| Income tax expense (benefit) | (443 | ) | (1,789 | ) | (1,781 | ) | (3,324 | ) | (1,809 | ) | |||||||||||
| Net income (loss) | $ | (1,376 | ) | $ | (3,114 | ) | $ | (2,887 | ) | $ | (4,521 | ) | $ | (3,668 | ) | ||||||
| Earnings (loss) per share, fully diluted | $ | (0.05 | ) | $ | (0.11 | ) | $ | (0.10 | ) | $ | (0.16 | ) | $ | (0.23 | ) | ||||||
| Weighted average diluted shares | 28,051,098 | 28,051,098 | 28,051,098 | 28,051,098 | 15,998,924 | ||||||||||||||||
| * Derived from audited financial statements. | |||||||||||||||||||||
| PARK STERLING CORPORATION | ||||||||||
| CONDENSED INCOME STATEMENT | ||||||||||
| NINE MONTH RESULTS | ||||||||||
| ($ in thousands, expect per share amounts) | September 30, | September 30, | ||||||||
| 2011 | 2010 | |||||||||
| (Unaudited) | (Unaudited) | |||||||||
| Interest income | ||||||||||
| Loans, including fees | $ | 13,491 | $ | 15,275 | ||||||
| Federal funds sold | 85 | 60 | ||||||||
| Taxable investment securities | 2,046 | 981 | ||||||||
| Tax-exempt investment securities | 533 | 481 | ||||||||
| Interest on deposits at banks | 69 | 51 | ||||||||
| Total interest income | 16,224 | 16,848 | ||||||||
| Interest expense | ||||||||||
| Money market, NOW and savings deposits | 475 | 276 | ||||||||
| Time deposits | 3,174 | 4,434 | ||||||||
| Short-term borrowings | 2 | 9 | ||||||||
| FHLB advances | 422 | 423 | ||||||||
| Subordinated debt | 569 | 569 | ||||||||
| Total interest expense | 4,642 | 5,711 | ||||||||
| Net interest income | 11,582 | 11,137 | ||||||||
| Provision for loan losses | 8,275 | 8,768 | ||||||||
| Net interest income (loss) after provision | 3,307 | 2,369 | ||||||||
| Total noninterest income | 227 | 88 | ||||||||
| Noninterest expenses | ||||||||||
| Salaries and employee benefits | 8,533 | 4,328 | ||||||||
| Occupancy and equipment | 926 | 666 | ||||||||
| Advertising and promotion | 240 | 237 | ||||||||
| Legal and professional fees | 2,233 | 237 | ||||||||
| Deposit charges and FDIC insurance | 617 | 543 | ||||||||
| Data processing and outside service fees | 393 | 302 | ||||||||
| Directors fees | 131 | 211 | ||||||||
| Net cost of operation of other real estate | 429 | 395 | ||||||||
| Loan and collection expense | 375 | 161 | ||||||||
| Shareholder reporting expense | 194 | 24 | ||||||||
| Other noninterest expense | 853 | 406 | ||||||||
| Total noninterest expenses | 14,924 | 7,510 | ||||||||
| Income (loss) before income taxes | (11,390 | ) | (5,053 | ) | ||||||
| Income tax expense (benefit) | (4,013 | ) | (1,714 | ) | ||||||
| Net income (loss) | $ | (7,377 | ) | $ | (3,339 | ) | ||||
| Earnings (loss) per share, fully diluted | $ | (0.26 | ) | $ | (0.38 | ) | ||||
| Weighted average diluted shares | 28,051,098 | 8,674,175 | ||||||||
| * Derived from audited financial statements. | ||||||||||
| PARK STERLING CORPORATION | ||||||||||||||||||||
| CONDENSED BALANCE SHEETS | ||||||||||||||||||||
| ($ in thousands) | ||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| 2011 | 2011 | 2011 | 2010 * | 2010 | ||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and due from banks | $ | 14,962 | $ | 14,349 | $ | 54,192 | $ | 2,433 | $ | 11,591 | ||||||||||
| Interest earning balances at banks | 36,311 | 8,571 | 3,796 | 5,040 | 5,859 | |||||||||||||||
| Investment securities available-for-sale | 130,667 | 146,734 | 112,273 | 140,590 | 115,357 | |||||||||||||||
| Federal funds sold | 5,295 | 44,060 | 57,525 | 57,905 | 96,560 | |||||||||||||||
| Loans held for sale | 1,559 | 1,600 | - | - | - | |||||||||||||||
| Loans | 367,412 | 380,365 | 388,187 | 399,829 | 397,658 | |||||||||||||||
| Allowance for loan losses | (9,833 | ) | (11,277 | ) | (11,768 | ) | (12,424 | ) | (13,150 | ) | ||||||||||
| Net loans | 357,579 | 369,088 | 376,419 | 387,405 | 384,508 | |||||||||||||||
| Other real estate owned | 5,691 | 3,470 | 1,565 | 1,246 | 1,441 | |||||||||||||||
| Bank owned life insurance | 8,052 | - | - | - | - | |||||||||||||||
| Other assets | 22,267 | 22,796 | 22,646 | 21,489 | 17,314 | |||||||||||||||
| Total assets | $ | 582,383 | $ | 610,668 | $ | 628,416 | $ | 616,108 | $ | 632,630 | ||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Demand noninterest-bearing | $ | 42,890 | $ | 42,156 | $ | 37,098 | $ | 36,333 | $ | 30,468 | ||||||||||
| Money market, NOW and savings | 120,017 | 110,874 | 107,186 | 71,666 | 72,639 | |||||||||||||||
| Time deposits | 212,085 | 250,876 | 277,228 | 299,821 | 314,042 | |||||||||||||||
| Total deposits | 374,992 | 403,906 | 421,512 | 407,820 | 417,149 | |||||||||||||||
| Short-term borrowings | 1,083 | 1,661 | 1,213 | 874 | 1,100 | |||||||||||||||
| FHLB advances | 20,000 | 20,000 | 20,000 | 20,000 | 20,000 | |||||||||||||||
| Subordinated debt | 6,895 | 6,895 | 6,895 | 6,895 | 6,895 | |||||||||||||||
| Accrued expenses and other liabilities | 4,796 | 4,622 | 4,026 | 3,418 | 3,639 | |||||||||||||||
| Total liabilities | 407,766 | 437,084 | 453,646 | 439,007 | 448,783 | |||||||||||||||
| Shareholders' equity: | ||||||||||||||||||||
| Common stock | 28,619 | 28,619 | 28,619 | 130,438 | 130,438 | |||||||||||||||
| Additional paid-in capital | 160,368 | 159,890 | 159,367 | 57,102 | 56,778 | |||||||||||||||
| Accumulated deficit | (16,878 | ) | (15,502 | ) | (12,388 | ) | (9,501 | ) | (4,981 | ) | ||||||||||
| Accumulated other comprehensive income (loss) | 2,508 | 577 | (828 | ) | (938 | ) | 1,612 | |||||||||||||
| Total shareholders' equity | 174,617 | 173,584 | 174,770 | 177,101 | 183,847 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 582,383 | $ | 610,668 | $ | 628,416 | $ | 616,108 | $ | 632,630 | ||||||||||
| Common shares issued and outstanding | 28,619,358 | 28,619,358 | 28,619,358 | 28,051,098 | 28,051,098 | |||||||||||||||
| * Derived from audited financial statements. | ||||||||||||||||||||
| PARK STERLING CORPORATION | |||||||||||||||||||||||
| SUMMARY OF LOAN PORTFOLIO | |||||||||||||||||||||||
| ($ in thousands) | |||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||||
| 2011 | 2011 | 2011 | 2010 * | 2010 | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||
| Commercial: | |||||||||||||||||||||||
| Commercial and industrial | $ | 44,939 | $ | 45,056 | $ | 48,107 | $ | 48,401 | $ | 47,166 | |||||||||||||
| Commercial real estate - owner-occupied | 66,979 | 61,878 | 52,764 | 55,089 | 51,779 | ||||||||||||||||||
| Commercial real estate - investor income producing | 108,558 | 111,349 | 113,612 | 110,407 | 101,359 | ||||||||||||||||||
| Acquisition, construction and development | 51,522 | 64,662 | 75,977 | 87,846 | 100,522 | ||||||||||||||||||
| Other commercial | 7,763 | 6,840 | 5,232 | 3,225 | 2,866 | ||||||||||||||||||
| Total commercial loans | 279,761 | 289,785 | 295,692 | 304,968 | 303,692 | ||||||||||||||||||
| Consumer: | |||||||||||||||||||||||
| Residential mortgage | 19,816 | 21,767 | 25,034 | 21,716 | 20,920 | ||||||||||||||||||
| Home equity lines of credit | 56,787 | 56,481 | 53,725 | 56,968 | 58,115 | ||||||||||||||||||
| Residential construction | 4,787 | 6,048 | 7,018 | 9,051 | 8,616 | ||||||||||||||||||
| Other loans to individuals | 6,530 | 6,494 | 6,811 | 7,245 | 6,413 | ||||||||||||||||||
| Total consumer loans | 87,920 | 90,790 | 92,588 | 94,980 | 94,064 | ||||||||||||||||||
| Total loans | 367,681 | 380,575 | 388,280 | 399,948 | 397,756 | ||||||||||||||||||
| Deferred fees | (269 | ) | (210 | ) | (93 | ) | (119 | ) | (98 | ) | |||||||||||||
| Total loans, net of deferred fees | $ | 367,412 | $ | 380,365 | $ | 388,187 | $ | 399,829 | $ | 397,658 | |||||||||||||
| * Derived from audited financial statements. | |||||||||||||||||||||||
| PARK STERLING CORPORATION | |||||||||||||||||||||
| ALLOWANCE FOR LOAN LOSSES | |||||||||||||||||||||
| THREE MONTH RESULTS | |||||||||||||||||||||
| ($ in thousands) | |||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||
| 2011 | 2011 | 2011 | 2010 * | 2010 | |||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||
| Beginning of period allowance | $ | 11,277 | $ | 11,768 | $ | 12,424 | $ | 13,150 | $ | 8,974 | |||||||||||
| Provision for loan losses | 568 | 3,245 | 4,462 | 8,237 | 6,143 | ||||||||||||||||
| Loans charged-off | 2,113 | 4,096 | 5,581 | 9,000 | 1,986 | ||||||||||||||||
| Recoveries of loans charged-off | 101 | 360 | 463 | 37 | 19 | ||||||||||||||||
| End of period allowance | 9,833 | 11,277 | 11,768 | 12,424 | 13,150 | ||||||||||||||||
| Net loans charged-off | $ | 2,012 | $ | 3,736 | $ | 5,118 | $ | 8,963 | $ | 1,967 | |||||||||||
| Annualized net charge-offs | 2.19 | % | 3.87 | % | 5.16 | % | 8.86 | % | 1.97 | % | |||||||||||
| PARK STERLING CORPORATION | ||||||||||||||||||||||
| AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS | ||||||||||||||||||||||
| THREE MONTHS | ||||||||||||||||||||||
| September 30, 2011 | September 30, 2010 | |||||||||||||||||||||
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | |||||||||||||||||
| Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||||||||
| Assets | ||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||
| Loans with fees (1) | $ | 367,096 | $ | 4,283 | 4.63 | % | $ | 399,580 | $ | 4,963 | 4.93 | % | ||||||||||
| Fed funds sold | 36,505 | 22 | 0.24 | % | 70,388 | 42 | 0.24 | % | ||||||||||||||
| Taxable investment securities | 118,445 | 681 | 2.30 | % | 50,216 | 370 | 2.95 | % | ||||||||||||||
| Tax-exempt investment securities | 16,201 | 181 | 4.47 | % | 14,570 | 161 | 4.42 | % | ||||||||||||||
| Other interest-earning assets | 30,496 | 44 | 0.57 | % | 4,971 | 23 | 1.84 | % | ||||||||||||||
| Total interest-earning assets | 568,743 | 5,211 | 3.64 | % | 539,725 | 5,559 | 4.09 | % | ||||||||||||||
| Allowance for loan losses | (10,698 | ) | (9,061 | ) | ||||||||||||||||||
| Cash and due from banks | 14,315 | 8,061 | ||||||||||||||||||||
| Premises and equipment | 5,087 | 4,596 | ||||||||||||||||||||
| Other assets | 29,607 | 12,339 | ||||||||||||||||||||
| Total assets | $ | 607,054 | $ | 555,660 | ||||||||||||||||||
| Liabilities and shareholders' equity | ||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||
| Interest-bearing demand | $ | 12,770 | $ | 3 | 0.09 | % | $ | 9,695 | $ | 3 | 0.12 | % | ||||||||||
| Savings and money market | 107,069 | 155 | 0.57 | % | 52,138 | 101 | 0.77 | % | ||||||||||||||
| Time deposits - core | 141,154 | 487 | 1.37 | % | 192,666 | 909 | 1.87 | % | ||||||||||||||
| Time deposits - brokered | 93,906 | 381 | 1.61 | % | 125,007 | 581 | 1.84 | % | ||||||||||||||
| Total interest-bearing deposits | 354,899 | 1,026 | 1.15 | % | 379,506 | 1,594 | 1.67 | % | ||||||||||||||
| Federal Home Loan Bank advances | 20,000 | 140 | 2.78 | % | 20,000 | 144 | 2.86 | % | ||||||||||||||
| Other borrowings | 8,418 | 191 | 9.00 | % | 8,490 | 191 | 8.93 | % | ||||||||||||||
| Total borrowed funds | 28,418 | 331 | 4.62 | % | 28,490 | 335 | 4.67 | % | ||||||||||||||
| Total interest-bearing liabilities | 383,317 | 1,357 | 1.40 | % | 407,996 | 1,929 | 1.88 | % | ||||||||||||||
| Net interest rate spread | 3,854 | 2.23 | % | 3,630 | 2.21 | % | ||||||||||||||||
| Noninterest-bearing demand deposits | 44,130 | 30,833 | ||||||||||||||||||||
| Other liabilities | 5,210 | 2,168 | ||||||||||||||||||||
| Shareholders' equity | 174,397 | 114,663 | ||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 607,054 | $ | 555,660 | ||||||||||||||||||
| Net interest margin | 2.69 | % | 2.67 | % | ||||||||||||||||||
| (1) Average loan balances include nonaccrual loans. | ||||||||||||||||||||||
| PARK STERLING CORPORATION | ||||||||||||||||||||
| SELECTED RATIOS | ||||||||||||||||||||
| ($ in thousands, except per share amounts) | ||||||||||||||||||||
| September 30, | June 30, | March 31. | December 31, | September 30, | ||||||||||||||||
| 2011 | 2011 | 2011 | 2010 * | 2010 | ||||||||||||||||
| Unaudited | Unaudited | Unaudited | (Unaudited) | |||||||||||||||||
| ASSET QUALITY | ||||||||||||||||||||
| Nonaccrual loans | $ | 19,448 | $ | 25,565 | $ | 34,027 | $ | 40,911 | $ | 10,043 | ||||||||||
| Troubled debt restructuring | 2,001 | 2,002 | 1,198 | 1,198 | 3,314 | |||||||||||||||
| Nonperforming loans | 21,449 | 27,566 | 35,225 | 42,109 | 13,357 | |||||||||||||||
| OREO | 5,691 | 3,470 | 1,565 | 1,246 | 1,441 | |||||||||||||||
| Loans held for sale | 1,559 | 1,600 | - | - | - | |||||||||||||||
| Nonperforming assets | 28,699 | 32,637 | 36,790 | 43,356 | 14,797 | |||||||||||||||
| Past due 30-59 days (and still accruing) | 655 | - | 3,469 | - | 6,599 | |||||||||||||||
| Past due 60-89 days (and still accruing) | 819 | - | - | - | 660 | |||||||||||||||
| Past due 90 days plus (and still accruing) | - | - | - | - | - | |||||||||||||||
| Nonperforming loans to total loans | 5.84 | % | 7.25 | % | 9.07 | % | 10.53 | % | 3.36 | % | ||||||||||
| Nonperforming assets to total assets | 4.93 | % | 5.34 | % | 5.85 | % | 7.04 | % | 2.34 | % | ||||||||||
| Allowance to total loans | 2.68 | % | 2.96 | % | 3.03 | % | 3.11 | % | 3.31 | % | ||||||||||
| Allowance to nonperforming loans | 45.84 | % | 40.91 | % | 33.41 | % | 29.50 | % | 98.45 | % | ||||||||||
| Allowance to nonperforming assets | 34.26 | % | 34.55 | % | 31.99 | % | 28.66 | % | 88.87 | % | ||||||||||
| CAPITAL | ||||||||||||||||||||
| Book value per share | $ | 6.22 | $ | 6.19 | $ | 6.23 | $ | 6.31 | $ | 6.55 | ||||||||||
| Tangible book value per share | $ | 6.22 | $ | 6.19 | $ | 6.23 | $ | 6.31 | $ | 6.55 | ||||||||||
| Common shares outstanding | 28,619,358 | 28,619,358 | 28,619,358 | 28,051,098 | 28,051,098 | |||||||||||||||
| Dilutive common shares outstanding | 28,051,098 | 28,051,098 | 28,051,098 | 28,051,098 | 28,051,098 | |||||||||||||||
| Tier 1 capital | $ | 162,207 | $ | 166,762 | $ | 170,956 | $ | 173,395 | $ | 182,234 | ||||||||||
| Tier 2 capital | 13,124 | 12,143 | 12,035 | 12,373 | 12,280 | |||||||||||||||
| Total risk based capital | 175,331 | 178,905 | 182,991 | 185,768 | 194,514 | |||||||||||||||
| Risk weighted assets | 439,708 | 413,846 | 411,869 | 431,324 | 422,956 | |||||||||||||||
| Average assets | 596,997 | 616,034 | 604,498 | 637,650 | 555,655 | |||||||||||||||
| Tier 1 ratio | 36.89 | % | 40.30 | % | 42.25 | % | 40.20 | % | 43.09 | % | ||||||||||
| Total risk based capital ratio | 39.87 | % | 43.23 | % | 45.23 | % | 43.07 | % | 45.99 | % | ||||||||||
| Tier 1 leverage ratio | 27.17 | % | 27.07 | % | 28.36 | % | 27.39 | % | 32.80 | % | ||||||||||
| Tangible common equity to tangible assets | 29.98 | % | 28.43 | % | 27.81 | % | 28.75 | % | 29.06 | % | ||||||||||
| LIQUIDITY | ||||||||||||||||||||
| Net loans to total deposits | 95.36 | % | 91.38 | % | 89.30 | % | 94.99 | % | 92.18 | % | ||||||||||
| Liquidity ratio | 49.70 | % | 53.09 | % | 53.99 | % | 50.48 | % | 54.99 | % | ||||||||||
| Equity to Total Assets | 29.98 | % | 28.43 | % | 27.81 | % | 28.75 | % | 29.06 | % | ||||||||||
| INCOME STATEMENT (THREE MONTH RESULTS; ANNUALIZED) | ||||||||||||||||||||
| Return on Average Assets | -0.91 | % | -2.00 | % | -1.93 | % | -2.81 | % | -2.64 | % | ||||||||||
| Return on Average Equity | -3.16 | % | -7.12 | % | -6.60 | % | -9.75 | % | -12.80 | % | ||||||||||
| Net interest margin (tax equivalent) | 2.69 | % | 2.60 | % | 2.76 | % | 2.52 | % | 2.74 | % | ||||||||||
| INCOME STATEMENT (ANNUAL RESULTS) | ||||||||||||||||||||
| Return on Average Assets | n/a | n/a | n/a | -1.46 | % | n/a | ||||||||||||||
| Return on Average Equity | n/a | n/a | n/a | -8.00 | % | n/a | ||||||||||||||
| Net interest margin (tax equivalent) | n/a | n/a | n/a | 2.95 | % | n/a | ||||||||||||||
| * Derived from audited financial statements. | ||||||||||||||||||||
| PARK STERLING CORPORATION | |||||||||||||||||||||
| RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||||||||
| ($ in thousands) | |||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||
| 2011 | 2011 | 2011 | 2010 * | 2010 | |||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||
| Tangible assets | |||||||||||||||||||||
| Total assets | $ | 582,383 | $ | 610,668 | $ | 628,416 | $ | 616,108 | $ | 632,630 | |||||||||||
| Less: intangible assets | - | - | - | - | - | ||||||||||||||||
| Tangible assets | $ | 582,383 | $ | 610,668 | $ | 628,416 | $ | 616,108 | $ | 632,630 | |||||||||||
| Tangible common equity | |||||||||||||||||||||
| Total common equity | $ | 174,617 | $ | 173,584 | $ | 174,770 | $ | 177,101 | $ | 183,847 | |||||||||||
| Less: intangible assets | - | - | - | - | - | ||||||||||||||||
| Tangible common equity | $ | 174,617 | $ | 173,584 | $ | 174,770 | $ | 177,101 | $ | 183,847 | |||||||||||
| Tangible book value per share | |||||||||||||||||||||
| Issued and outstanding shares | 28,619,358 | 28,619,358 | 28,619,358 | 28,051,098 | 28,051,098 | ||||||||||||||||
| Add: dilutive stock options | - | - | - | - | - | ||||||||||||||||
| Deduct: nondilutive restricted awards | 568,260 | 568,260 | 568,260 | - | - | ||||||||||||||||
| Period end dilutive shares | 28,051,098 | 28,051,098 | 28,051,098 | 28,051,098 | 28,051,098 | ||||||||||||||||
| Tangible common equity | $ | 174,617 | $ | 173,584 | $ | 174,770 | $ | 177,101 | $ | 183,847 | |||||||||||
| Divided by: period end dilutive shares | 28,051,098 | 28,051,098 | 28,051,098 | 28,051,098 | 28,051,098 | ||||||||||||||||
| Tangible common book value per share | $ | 6.22 | $ | 6.19 | $ | 6.23 | $ | 6.31 | $ | 6.55 | |||||||||||
| Earnings per share (excluding merger-related expenses) | |||||||||||||||||||||
| Net income (loss) | $ | (1,376 | ) | $ | (3,114 | ) | $ | (2,887 | ) | $ | (4,521 | ) | $ | (3,668 | ) | ||||||
| Plus: merger-related expenses | 496 | 632 | - | - | - | ||||||||||||||||
| Less: related income tax expense | (174 | ) | (231 | ) | - | - | - | ||||||||||||||
| Net income (loss) (excluding merger-related expenses) | $ | (1,054 | ) | $ | (2,713 | ) | $ | (2,887 | ) | $ | (4,521 | ) | $ | (3,668 | ) | ||||||
| Divided by: weighted average dilutive shares | 28,051,098 | 28,051,098 | 28,051,098 | 28,051,098 | 15,998,924 | ||||||||||||||||
| Earnings per share (excluding merger-related expenses) | $ | (0.04 | ) | $ | (0.10 | ) | $ | (0.10 | ) | $ | (0.16 | ) | $ | (0.23 | ) | ||||||
| * Derived from audited financial statements. | |||||||||||||||||||||
Non-GAAP Measures
Tangible assets, tangible common equity, tangible book value, earnings (loss) excluding merger-related expenses and related ratios and EPS measures, as used throughout this release, are non-GAAP financial measures. Management uses tangible assets, tangible common equity and tangible book value and related ratios to evaluate the adequacy of shareholders' equity and to facilitate comparisons with peers. Management uses earnings (loss) excluding merger-related expenses and related EPS measures to evaluate core earnings (loss). For additional information, see "Reconciliation of Non-GAAP Measures" in the accompanying tables.