Sterling Bancshares Reports Third Quarter 2010 Results

Oct 28, 2010, 07:00 ET from Sterling Bancshares, Inc.

HOUSTON, Oct. 28 /PRNewswire-FirstCall/ -- Sterling Bancshares, Inc. (Nasdaq: SBIB) today reported net income of $4.5 million, or $0.04 per diluted common share, for the third quarter ended September 30, 2010, as compared to a net loss of $24.7 million, or $0.30 for the third quarter of 2009.

Key items and metrics for the quarter include the following:

  • Total nonperforming assets decreased $6 million, or 3.2% over the prior quarter;
  • Period-end allowance for credit losses to period-end loans increased to 2.88% at September 30, 2010, from 2.18% at September 30, 2009;
  • Provision for credit losses was $7.7 million for the third quarter of 2010, a reduction of $1.6 million on a linked-quarter basis;
  • Tangible capital ratio was 9.13% and all regulatory capital ratios were in excess of those considered to be well-capitalized at September 30, 2010.  

“We are pleased to see stabilization in a number of our credit metrics during the third quarter, which contributed to our overall improved profitability,” commented J. Downey Bridgwater, Sterling’s Chairman, President, and Chief Executive Officer.  “Nonperforming loans, foreclosed real estate owned, and past due loans all decreased during the quarter.  We continue to see property values stabilize for the most part which has helped to decrease our credit costs over the last couple of quarters. ”

“The Texas economy continues to recover from the recession at a fairly modest pace,” continued Bridgwater.  “However, historically low interest rates combined with low loan demand has remained a headwind for revenue generation.  As the economic recovery continues and there is additional clarity from a political and regulatory perspective, we anticipate more of our business customers will start to invest in the future growth of their businesses.  Sterling is extremely well-positioned from a capital and liquidity standpoint to take advantage of these future opportunities as they arise.”

Total loans decreased $129 million or 4.3% on a linked-quarter basis to $2.9 billion at September 30, 2010, and decreased $481 million or 14.3% since September 30, 2009.  The decline in loans during the third quarter of 2010 was due in part to a decrease in commercial real estate and construction and development loans of $42.1 million and $42.0 million, respectively, resulting from the Company’s decision to reduce exposure to these loan categories.  The remaining decrease in loans was related to commercial and industrial loans which were impacted by continued low line-of-credit usage.

Average deposits decreased $61.1 million to $4.1 billion for the third quarter of 2010 compared to the second quarter of 2010.  On average, noninterest-bearing deposits increased $27.0 million or 2.3% for the third quarter of 2010 compared to the second quarter of 2010.  Due to continued growth in core deposits during the quarter, the Company was able to reduce higher-cost brokered and jumbo certificates of deposit by $58.8 million on a linked-quarter basis.  Average total deposits increased $52.2 million or 1.2% for the third quarter of 2010 compared to the same quarter in 2009.

At September 30, 2010, nonperforming assets were $178 million or 3.54% of total assets, compared to $184 million or 3.63% at June 30, 2010.  Potential problem loans were $170 million at September 30, 2010, an increase of $27.5 million over the prior quarter. The increase in potential problem loans during the third quarter of 2010 was due to a downgrade of certain non-owner occupied commercial real estate loans.  Accruing loans 30-89 days past due were $16.2 million at September 30, 2010, a decrease of $3.1 million compared to the prior quarter and $18.0 million compared to December 31, 2009.

At September 30, 2010, the total allowance for credit losses was $82.8 million or 2.88% of period-end total loans, up slightly from $82.5 million or 2.75% of period-end total loans at June 30, 2010, and up from $72.9 million or 2.18% of period-end total loans at September 30, 2009.  

Net charge-offs for the third quarter of 2010 were $7.4 million or 1.01% of average total loans, compared to $6.3 million or 0.83% of average total loans for the second quarter of 2010.  

Tax-equivalent net interest income for the third quarter of 2010 was $42.6 million, down $655 thousand on a linked-quarter basis. Tax-equivalent net interest margin was 3.68% for the third quarter of 2010, down six basis points from 3.74% for the second quarter of 2010.  Net interest income and margin during the third quarter of 2010 were negatively impacted by a decrease in average loans and a reduction in interest income from the interest rate hedge that was fully amortized during the third quarter.    

Noninterest income for the third quarter of 2010 was $9.5 million, an increase of $965 thousand on a linked-quarter basis.  This increase in noninterest income was due in part to a decrease in losses on loans classified as held for sale.  During the second quarter of 2010, the Company recorded losses on loans classified as held for sale of $418 thousand.  The Company did not record any losses on loans classified as held for sale during the third quarter of 2010.

Total noninterest expense for the third quarter of 2010 was $37.8 million, a decrease of $3.0 million on a linked-quarter basis.  The decrease in noninterest expense was primarily due to gains from sales of other real estate owned net of carrying costs of $414 thousand recorded during the third quarter of 2010 compared to net losses and carrying costs of $1.4 million in the second quarter of 2010.

As of September 30, 2010, Sterling had total assets of $5.0 billion, total loans of $2.9 billion and total deposits of $4.1 billion.  Shareholders’ equity of $627 million at September 30, 2010, was 12.4% of total assets.  Book value per common share at period-end was $6.15.

Conference Call

Management of Sterling will host a conference call for investors and analysts that will be broadcast live via telephone and over the Internet on Thursday, October 28, 2010 at 11:00 a.m. Eastern Time.  To participate, visit the Investor Relations section of the Company’s web site at http://www.banksterling.com or call (612) 332-0335.  An audio archive of the call will also be available on the web site beginning Friday, October 29, 2010.

A telephone replay of the conference call will be available beginning Thursday, October 28, 2010 at 12:00 p.m. until Thursday, November 4, 2010 at 11:59 p.m. Central Time by dialing (800) 475-6701.  The access code for the replay is 173152.

Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements involve risks and uncertainties and are based on beliefs and assumptions of management at the time that this release was prepared.  The Company does not assume any obligation to update the forward-looking statements.  There are several factors, many beyond the Company’s control, that could cause results to differ significantly from expectations including:  adverse changes in the loan portfolio and the resulting credit risk-related losses and expenses; potential inadequacy of the allowance for credit losses; the ability to maintain or improve origination volumes; competitive influences on product pricing; the ability to integrate acquisitions and realize expected cost savings and revenue enhancements; effects of changes in interest rates on net interest margin; and changes in federal and state regulations and laws.  Additional factors can be found in the Company's 2009 Annual Report on Form 10-K which has been filed with the Securities and Exchange Commission and is available at the Securities and Exchange Commission’s web site (www.sec.gov).

About Sterling Bancshares

Sterling Bancshares, Inc. is a Houston-based bank holding company with total assets of $5.0 billion, which operates 56 banking centers in the greater metropolitan areas of Houston, San Antonio, Dallas and Fort Worth, Texas. The Company’s common stock is traded through the NASDAQ Global Select Market under the symbol “SBIB”.  For more information on Sterling Bancshares, please visit the Company’s web site at http://www.banksterling.com.

For More Information Contact:


Chris Reid, Vice President and Director of Investor Relations, (713) 507-2873




–Tables to follow–

STERLING BANCSHARES, INC.

SELECTED FINANCIAL INFORMATION (Unaudited)

(dollars in thousands, except for per share data)




Quarter Ended


Year-to-date


Sep. 30,


Jun. 30,


Sep. 30,






2010


2010


2009


2010


2009

Profitability










Net income

$ 4,455


$     596


$ (24,724)


$   (1,197)


$ (14,710)

Net income available to common shareholders

$ 4,455


$     596


$ (24,724)


$   (1,197)


$ (24,052)











Earnings per common share (1)










   Basic

$   0.04


$    0.01


$     (0.30)


$     (0.01)


$     (0.31)

   Diluted

$   0.04


$    0.01


$     (0.30)


$     (0.01)


$     (0.31)











Return on average common equity (2)

2.80%


0.38%


(16.98)%


(0.26)%


(5.77)%

Return on average assets (2)

0.35%


0.05%


(1.97)%


(0.03)%


(0.39)%











Net interest margin (3)

3.68%


3.74%


4.20%


3.81%


4.26%











Efficiency Ratio (4):










     Consolidated

72.53%


78.77%


69.56%


75.86%


68.73%

     Sterling Bank

70.74%


76.40%


67.79%


73.58%


66.76%











Liquidity and Capital Ratios










Average loans to average deposits

71.63%


73.39%


85.86%


74.51%


91.82%

Period-end stockholders' equity to total assets

12.44%


12.30%


11.23%


12.44%


11.23%

Average stockholders' equity to average assets

12.53%


12.28%


11.60%


12.15%


12.18%

Period-end tangible capital to total tangible assets

9.13%


9.01%


7.70%


9.13%


7.70%

Tier 1 capital to risk-weighted assets

15.23%


14.45%


11.20%


15.23%


11.20%

Total capital to risk-weighted assets

17.88%


17.04%


13.95%


17.88%


13.95%

Tier 1 leverage ratio (Tier 1 capital to average assets)

10.53%


10.32%


8.88%


10.53%


8.88%











Other Data










Shares used in computing earnings per common share










   Basic shares

101,934


101,898


81,707


97,487


77,659

   Diluted shares

102,212


102,144


81,707


97,487


77,659

End of period common shares outstanding

101,952


101,927


81,755


101,952


81,755











Book value per common share at period-end

$   6.15


$    6.13


$      6.67


$      6.15


$      6.67

Cash dividends paid per common share

$ 0.015


$  0.015


$    0.055


$    0.045


$    0.165

Common stock dividend payout ratio 

34.35%


256.65%


(18.19)%


(358.14)%


(85.45)%

Full-time equivalent employees

986


991


1,013


986


1,013

Number of banking centers

56


57


60


56


60



STERLING BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(dollars in thousands)




Sep. 30,


Jun. 30,


Mar. 31,


Dec. 31,


Sep. 30,


2010


2010


2010


2009


2009

ASSETS










Cash and cash equivalents

$    366,590


$    359,388


$    361,199


$    246,215


$    158,114

Available-for-sale securities, at fair value

1,169,519


1,069,964


920,082


846,216


836,521

Held-to-maturity securities, at amortized cost

280,215


280,658


267,503


222,845


162,990











Loans held for sale

7,123


6,509


18,055


11,778


38,187

Loans held for investment

2,862,952


2,992,370


3,096,261


3,233,273


3,312,520

   Total loans

2,870,075


2,998,879


3,114,316


3,245,051


3,350,707

Allowance for loan losses

(80,754)


(80,983)


(76,646)


(74,732)


(70,059)

   Loans, net

2,789,321


2,917,896


3,037,670


3,170,319


3,280,648











Premises and equipment, net

48,507


47,812


47,396


48,816


49,128

Real estate acquired by foreclosure

14,571


18,151


17,282


16,763


11,674

Goodwill

173,210


173,210


173,210


173,210


173,210

Core deposits and other intangibles, net

10,004


10,540


11,077


11,626


12,179

Accrued interest receivable

14,356


14,951


15,462


16,502


16,142

Other assets

173,328


183,429


192,498


184,536


158,912

TOTAL ASSETS

$ 5,039,621


$ 5,075,999


$ 5,043,379


$ 4,937,048


$ 4,859,518











LIABILITIES AND SHAREHOLDERS' EQUITY










LIABILITIES:










Deposits:










   Noninterest-bearing demand

$ 1,248,321


$ 1,266,781


$ 1,167,602


$ 1,144,133


$ 1,094,346

   Interest-bearing demand

2,014,207


1,962,854


2,031,399


2,004,539


1,874,746

   Certificates and other time deposits

840,683


921,495


925,427


946,279


1,038,362

      Total deposits

4,103,211


4,151,130


4,124,428


4,094,951


4,007,454

Other borrowed funds

106,546


100,770


99,012


97,245


99,486

Subordinated debt

78,624


78,247


77,737


77,338


77,616

Junior subordinated debt

82,734


82,734


82,734


82,734


82,734

Accrued interest payable and other liabilities

41,704


38,722


39,944


44,247


46,716

   Total liabilities

4,412,819


4,451,603


4,423,855


4,396,515


4,314,006











COMMITMENTS AND CONTINGENCIES

-


-


-


-


-











SHAREHOLDERS' EQUITY










Common stock

103,820


103,795


103,745


83,721


83,622

Capital surplus

238,536


238,186


237,439


170,848


171,955

Retained earnings

290,429


287,503


288,436


295,909


295,401

Treasury stock

(21,399)


(21,399)


(21,399)


(21,399)


(21,399)

Accumulated other comprehensive income, net of tax

15,416


16,311


11,303


11,454


15,933

     Total shareholders' equity

626,802


624,396


619,524


540,533


545,512

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$ 5,039,621


$ 5,075,999


$ 5,043,379


$ 4,937,048


$ 4,859,518



STERLING BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(dollars in thousands, except for per share data)




 Quarter Ended


Year-to-date


Sep. 30,


Jun. 30,


Mar. 31,


Dec. 31,


Sep. 30,






2010


2010


2010


2009


2009


2010


2009

Interest income:














   Loans, including fees

$ 40,153


$ 42,087


$ 43,649


$ 46,876


$  49,658


$ 125,889


$ 154,349

   Securities:














      Taxable

     9,841


     9,602


     9,117


     9,758


      9,286


     28,560


     26,659

      Non-taxable

     1,013


        915


        925


        929


         897


       2,853


       2,687

   Deposits in financial institutions

        157


        231


        115


          90


           64


          503


            64

  Other interest-earning assets

            1


            3


            1


          19


           29


              5


            61

      Total interest income

   51,165


   52,838


   53,807


   57,672


    59,934


   157,810


   183,820















Interest expense:














   Demand and savings deposits

     3,583


     4,319


     4,212


     4,243


      4,403


     12,114


     11,781

   Certificates and other time deposits

     2,823


     3,159


     3,352


     4,577


      5,504


       9,334


     19,474

   Other borrowed funds

        784


        768


        448


        314


         346


       2,000


       1,583

   Subordinated debt

        747


        705


        687


        713


         748


       2,139


       2,612

   Junior subordinated debt

     1,071


     1,040


     1,028


     1,045


      1,082


       3,139


       3,441

       Total interest expense

     9,008


     9,991


     9,727


   10,892


    12,083


     28,726


     38,891

Net interest income

   42,157


   42,847


   44,080


   46,780


    47,851


   129,084


   144,929

Provision for credit losses

     7,716


     9,336


   22,936


   11,000


    56,131


     39,988


     76,631

Net interest income after provision for credit losses

   34,441


   33,511


   21,144


   35,780


     (8,280)


     89,096


     68,298















Noninterest income:














   Customer service fees

     3,728


     3,591


     3,488


     3,722


      3,845


     10,807


     11,709

   Net gain (loss) on securities

          43


          17


          20


   (1,823)


             4


            80


            17

   Wealth management fees

     1,733


     2,102


     2,098


     2,049


      1,862


       5,933


       5,904

   Other

     3,986


     2,815


        931


     1,543


      3,402


       7,732


     12,774

      Total noninterest income

     9,490


     8,525


     6,537


     5,491


      9,113


     24,552


     30,404















Noninterest expense:














   Salaries and employee benefits

   20,722


   20,453


   20,503


   19,496


    21,005


     61,678


     67,434

   Occupancy

     5,566


     5,709


     5,790


     5,822


      5,967


     17,065


     18,004

   Technology

     2,267


     2,332


     2,417


     2,375


      2,495


       7,016


       7,475

   Professional fees

     1,452


     1,372


     2,005


     1,283


      1,065


       4,829


       3,419

   Postage, delivery and supplies

        661


        719


        708


        685


         700


       2,088


       2,181

   Marketing

        198


        271


        269


        443


         557


          738


       1,487

   Core deposits & other intangibles amortization

        537


        537


        549


        552


         565


       1,623


       1,695

   Acquisition costs

-


-


-


        980


         154


-


          154

   FDIC insurance assessments

     2,478


     2,438


     2,547


     1,856


      1,741


       7,463


       6,974

   Other

     3,899


     6,975


     4,165


     5,998


      5,826


     15,039


     14,871

      Total noninterest expense

   37,780


   40,806


   38,953


   39,490


    40,075


   117,539


   123,694















Income (loss) before income taxes

     6,151


     1,230


 (11,272)


     1,781


   (39,242)


     (3,891)


   (24,992)

   Income taxes provision (benefit)

     1,696


        634


   (5,024)


          45


   (14,518)


     (2,694)


   (10,282)

Net income (loss)

$   4,455


$      596


$ (6,248)


$   1,736


$ (24,724)


$   (1,197)


$ (14,710)

   Preferred stock dividends

-


-


-


-


-


-


       9,342

Net income (loss) available to common shareholders

$   4,455


$      596


$ (6,248)


$   1,736


$ (24,724)


$   (1,197)


$ (24,052)















Earnings (loss) per common share (1):














     Basic

$     0.04


$     0.01


$   (0.07)


$     0.02


$     (0.30)


$     (0.01)


$     (0.31)

     Diluted

$     0.04


$     0.01


$   (0.07)


$     0.02


$     (0.30)


$     (0.01)


$     (0.31)



STERLING BANCSHARES, INC.

SELECTED FINANCIAL INFORMATION (Unaudited)

(dollars in thousands)




Quarter Ended


Sep. 30,


Jun. 30,


2010


2010


Average Balance


Interest


Yield/Rate


Average Balance


Interest


Yield/Rate

Interest-Earning Assets:












Loans held for sale

$                    5,390


$                28


2.06%


$                  11,454


$                54


1.90%

Loans held for investment:












     Taxable

2,930,124


40,122


5.43%


3,036,770


41,994


5.55%

     Non-taxable (3)

295


4


5.52%


4,260


57


5.34%

Securities:












     Taxable

1,286,050


9,841


3.04%


1,125,517


9,602


3.42%

     Non-taxable (3)

112,188


1,497


5.30%


100,192


1,347


5.39%

Deposits in financial institutions

260,167


157


0.24%


362,429


231


0.26%

Other interest-earning assets

566


1


0.84%


840


3


1.27%

     Total interest-earning assets

4,594,780


51,650


4.46%


4,641,462


53,288


4.60%

Noninterest-earning assets

438,522






444,933





Total Assets

$             5,033,302






$             5,086,395

















Interest-Bearing Liabilities:












Deposits:












     Demand and savings

$             2,003,914


$           3,583


0.71%


$             2,027,133


$           4,319


0.85%

     Certificates and other time

870,041


2,823


1.29%


934,941


3,159


1.36%

Other borrowed funds

103,902


784


2.99%


100,976


768


3.05%

Subordinated debt

78,472


747


3.78%


77,831


705


3.63%

Junior subordinated debt

82,734


1,071


5.14%


82,734


1,040


5.04%

     Total interest-bearing liabilities

3,139,063


9,008


1.14%


3,223,615


9,991


1.24%

Noninterest-bearing sources:












     Noninterest-bearing liabilities

1,263,481






1,238,352





     Shareholders' equity

630,758






624,428





Total Liabilities and Shareholders' Equity

$             5,033,302






$             5,086,395

















Tax Equivalent Net Interest Income & Margin (3)



42,642


3.68%




43,297


3.74%













Non-GAAP to GAAP Reconciliation:












Tax Equivalent adjustment:












     Loans



1






18



    Securities



484






432



       Total tax equivalent adjustment



485






450



Net Interest Income



$         42,157






$         42,847





STERLING BANCSHARES, INC.

SELECTED FINANCIAL INFORMATION (Unaudited)

(dollars in thousands)




Year-to-date






2010


2009


Average Balance


Interest


Yield/Rate


Average Balance


Interest


 Yield/Rate

Interest-Earning Assets:












Loans held for sale

$                10,109


$        129


1.70%


$                  2,064


$          89


5.75%

Loans held for investment:












     Taxable

             3,046,899


   125,677


5.51%


             3,624,478


   154,098


5.68%

     Non-taxable (3)

                    3,113


          122


5.26%


                    5,141


          237


6.16%

Securities:












     Taxable

             1,138,539


     28,560


3.35%


                772,386


     26,659


4.61%

     Non-taxable (3)

                104,647


       4,206


5.37%


                  97,069


       3,902


5.37%

Deposits in financial institutions

                272,475


          503


0.25%


                  60,885


            64


0.14%

Other interest-earning assets

                    1,268


              5


1.01%


                  29,336


            61


0.28%

     Total interest-earning assets

             4,577,050


   159,202


4.65%


             4,591,359


   185,110


5.39%

Noninterest-earning assets

                442,382






                422,017





Total Assets

$           5,019,432






$           5,013,376

















Interest-Bearing Liabilities:












Deposits:












     Demand and savings

$           2,008,236


$   12,114


0.81%


$           1,693,613


$   11,781


0.93%

     Certificates and other time

                909,618


       9,334


1.37%


             1,137,866


     19,474


2.29%

Other borrowed funds

                101,602


       2,000


2.63%


                241,653


       1,583


0.88%

Subordinated debt

                  78,012


       2,139


3.67%


                  77,582


       2,612


4.50%

Junior subordinated debt

                  82,734


       3,139


5.07%


                  82,734


       3,441


5.56%

     Total interest-bearing liabilities

             3,180,202


     28,726


1.21%


             3,233,448


     38,891


1.61%













Noninterest-bearing sources:












     Noninterest-bearing liabilities

             1,229,222






             1,169,110





     Shareholders' equity

                610,008






                610,818





Total Liabilities and Shareholders' Equity

$           5,019,432






$           5,013,376

















Tax Equivalent Net Interest Income & Margin (3)



   130,476


3.81%




   146,219


4.26%













Non-GAAP to GAAP Reconciliation:












Tax equivalent adjustment:












     Loans



            39






            75



     Securities



       1,353






       1,215



       Total tax equivalent adjustment



       1,392






       1,290



Net Interest Income



$ 129,084






$ 144,929





STERLING BANCSHARES, INC.

SELECTED FINANCIAL INFORMATION (Unaudited)

(dollars in thousands)




Quarter Ended


Sep. 30,


Jun. 30,


Mar. 31,


Dec. 31,


Sep. 30,


2010


2010


2010


2009


2009

Condensed Average Balance Sheet










Loans held for sale

$        5,390


$      11,454


$      13,572


$      38,844


$        1,607

Loans held for investment

2,930,419


3,041,030


3,181,345


3,262,525


3,472,635

     Total loans

2,935,809


3,052,484


3,194,917


3,301,369


3,474,242

Available-for-sale securities, at fair value

1,113,780


953,742


860,466


897,733


779,792

Held-to-maturity securities, at amortized cost

284,458


271,967


241,894


168,940


162,717

Deposits in financial institutions

260,167


362,429


194,104


163,195


106,392

Other earning assets

566


840


2,418


26,825


38,419

     Total earning assets

4,594,780


4,641,462


4,493,799


4,558,062


4,561,562

Goodwill

173,210


173,210


173,210


173,210


173,210

Core deposits and other intangibles, net

10,262


10,800


11,340


11,890


12,463

All other non-interest earning assets

255,050


260,923


259,198


236,710


230,667

     Total assets

$ 5,033,302


$ 5,086,395


$ 4,937,547


$ 4,979,872


$ 4,977,902











Noninterest-bearing demand

$ 1,224,402


$ 1,197,400


$ 1,144,754


$ 1,158,023


$ 1,124,076

Interest bearing deposits:










     Interest-bearing demand

2,003,914


2,027,133


1,993,546


1,946,308


1,837,612

     Jumbo certificates of deposits

539,094


582,727


549,723


576,984


614,418

     Regular certificates of deposit

227,490


233,592


241,649


264,388


287,243

     Brokered certificates of deposit

103,457


118,622


133,101


166,319


182,852

          Total deposits

4,098,357


4,159,474


4,062,773


4,112,022


4,046,201

Other borrowed funds

103,902


100,976


99,884


107,211


145,625

Subordinated debt

78,472


77,831


77,724


77,824


77,232

Junior subordinated debt

82,734


82,734


82,734


82,734


82,734

Accrued interest payable and other liabilities

39,079


40,952


40,216


46,348


48,480

     Total liabilities

4,402,544


4,461,967


4,363,331


4,426,139


4,400,272

Total shareholders' equity

630,758


624,428


574,216


553,733


577,630

     Total liabilities and shareholders' equity

$ 5,033,302


$ 5,086,395


$ 4,937,547


$ 4,979,872


$ 4,977,902






















Sep. 30,


Jun. 30,


Mar. 31,


Dec. 31,


Sep. 30,


2010


2010


2010


2009


2009

Period-end Loans:










Loans held for sale

$        7,123


$        6,509


$      18,055


$      11,778


$      38,187

Loans held for investment:










   Commercial and industrial

597,205


658,141


697,998


806,542


823,797

   Real Estate:










      Commercial

1,590,081


1,632,213


1,672,562


1,669,118


1,703,629

      Construction and development

268,691


310,689


330,855


360,444


394,819

      Residential mortgage

362,404


343,894


346,400


344,838


335,007

   Consumer/other

44,571


47,433


48,446


52,331


55,268

Loans held for investment

2,862,952


2,992,370


3,096,261


3,233,273


3,312,520

Total period-end loans

$ 2,870,075


$ 2,998,879


$ 3,114,316


$ 3,245,051


$ 3,350,707











Period-End Deposits:










Noninterest-bearing demand

$ 1,248,321


$ 1,266,781


$ 1,167,602


$ 1,144,133


$ 1,094,346

Interest-bearing demand

2,014,207


1,962,854


2,031,399


2,004,539


1,874,746

Certificates and other time deposits:










        Jumbo

512,178


587,377


560,093


549,588


594,590

        Regular

224,290


231,404


234,010


252,682


273,721

        Brokered

104,215


102,714


131,324


144,009


170,051

Total period-end deposits

$ 4,103,211


$ 4,151,130


$ 4,124,428


$ 4,094,951


$ 4,007,454



STERLING BANCSHARES, INC.

SELECTED FINANCIAL INFORMATION (Unaudited)

(dollars in thousands)




Quarter Ended


Year-to-date


Sep. 30,


Jun. 30,


Mar. 31,


Dec. 31,


Sep. 30,






2010


2010


2010


2009


2009


2010


2009

Allowance For Credit Losses














Allowance for loan losses at beginning of period

$   80,983


$   76,646


$   74,732


$   70,059


$   53,075


$   74,732


$   49,177

Charge-offs:














     Commercial, financial and industrial

       1,034


       1,687


       1,968


       1,536


       5,049


       4,689


     19,378

     Real estate, mortgage and construction

       7,314


       5,786


     20,214


       5,448


     32,464


     33,314


     35,962

     Consumer

          285


          205


          262


          477


          321


          752


       1,109

          Total charge-offs

       8,633


       7,678


     22,444


       7,461


     37,834


     38,755


     56,449

Recoveries:














     Commercial, financial and industrial

          481


          433


          483


          536


          251


       1,397


       1,177

     Real estate, mortgage and construction

          633


          845


          821


          488


            23


       2,299


          301

     Consumer

            72


            51


          118


          110


          163


          241


          420

          Total Recoveries

       1,186


       1,329


       1,422


       1,134


          437


       3,937


       1,898

Net charge-offs

       7,447


       6,349


     21,022


       6,327


     37,397


     34,818


     54,551

Provision for loan losses

       7,218


     10,686


     22,936


     11,000


     54,381


     40,840


     75,433

Allowance for loan losses at end of period

$   80,754


$   80,983


$   76,646


$   74,732


$   70,059


$   80,754


$   70,059















Reserve for unfunded loan commitments at beginning of period

$     1,502


$     2,852


$     2,852


$     2,852


$     1,102


$     2,852


$     1,654

Provision for losses on unfunded loan commitments

          498


     (1,350)


-


-


       1,750


        (852)


       1,198

Reserve for unfunded loan commitments at end of period

       2,000


       1,502


       2,852


       2,852


       2,852


       2,000


       2,852

Total allowance for credit losses

$   82,754


$   82,485


$   79,498


$   77,584


$   72,911


$   82,754


$   72,911















Nonperforming Assets














Nonperforming loans:














   Loans held for sale

$     1,665


$     3,491


$   10,883


$     9,896


$   29,472


$     1,665


$   29,472

   Loans held for investment

   162,096


   162,669


   125,025


     92,668


     65,515


   162,096


     65,515

Real estate acquired by foreclosure

     14,571


     18,151


     17,282


     16,763


     11,674


     14,571


     11,674

Other repossessed assets

            50


            20


            60


            38


            33


            50


            33

Total nonperforming assets

$ 178,382


$ 184,331


$ 153,250


$ 119,365


$ 106,694


$ 178,382


$ 106,694

Restructured loans - accruing

$   17,495


$   15,001


$   10,675


$   69,857


$   45,981


$   17,495


$   45,981

Potential problem loans

$ 169,646


$ 142,123


$ 172,020


$ 187,513


$ 131,950


$ 169,646


$ 131,950

Accruing loans 30 to 89 days past due

$   16,234


$   19,307


$   46,410


$   34,243


$   23,364


$   16,234


$   23,364

Accruing loans past due 90 days or more

$        953


$        441


$        306


$          41


$        681


$        953


$        681















Ratios














Period-end allowance for credit losses to period-end loans

2.88%


2.75%


2.55%


2.39%


2.18%


2.88%


2.18%

Period-end allowance for loan losses to period-end loans

2.81%


2.70%


2.46%


2.30%


2.09%


2.81%


2.09%

Period-end allowance for loan losses to nonperforming loans

49.31%


48.74%


56.40%


72.86%


73.76%


49.31%


73.76%

Nonperforming loans to period-end loans

5.71%


5.54%


4.36%


3.16%


2.83%


5.71%


2.83%

Nonperforming assets to period-end assets

3.54%


3.63%


3.04%


2.42%


2.20%


3.54%


2.20%

Net charge-offs to average loans (2)

1.01%


0.83%


2.67%


0.76%


4.27%


1.52%


2.01%



STERLING BANCSHARES, INC.

FOOTNOTES TO EARNINGS RELEASE



(1)

Earnings per share in each quarter is computed individually using the weighted-average number of shares


outstanding during that quarter while earnings per share for the full period is computed using the


weighted-average number of shares outstanding during the year.  Thus, the sum for all quarters does not


necessarily equal the full period earnings per share.



(2)

Interim periods annualized.



(3)

Taxable-equivalent basis assuming a 35% tax rate.  The Company presents net interest income


on a tax-equivalent basis.  Accordingly, net interest income from tax-exempt securities and


loans is presented in the net interest income results on a basis comparable to taxable securities


and loans.  This non-GAAP financial measure allows management to assess the comparability


of net interest income arising from both taxable and tax-exempt sources.



(4)

The efficiency ratio is calculated by dividing noninterest expense less acquisition costs and a one-time


severance charge by tax equivalent basis net interest income plus noninterest income less net


gain (loss) on investment securities.  



SOURCE Sterling Bancshares, Inc.



RELATED LINKS

http://www.banksterling.com