Sterling Banks, Inc. Reports Fourth Quarter and Fiscal Year 2009 Results of Operations

MOUNT LAUREL, N.J., April 15 /PRNewswire-FirstCall/ -- Sterling Banks, Inc. (Nasdaq: STBK), the bank holding company of Sterling Bank, a locally focused, community oriented, full service commercial bank which operates through ten retail branches that are located in New Jersey's Burlington and Camden Counties, reported a fourth quarter loss before income taxes of $452,000, and after tax income of $364,000, or $0.06 per share, on a basic and diluted basis.

For the quarter ending December 31, 2009, the Company reported net income of $364,000, compared to net loss of $15,823,000 for the fourth quarter of 2008.  On a basic and diluted per share basis, the net income for the fourth quarter of 2009 was $0.06 per share compared to net loss for the fourth quarter of 2008 of $2.71 per share.  For the years ended December 31, 2009 and 2008, the net losses were $10,354,000 and $16,228,000, respectively.  On a basic and diluted per share basis, the net losses for the years ended December 31, 2009 and 2008 were $1.77 and $2.78 per share, respectively.  In addition, the Worker, Homeownership, and Business Assistance Act of 2009 was passed during the fourth quarter of 2009 and allowed the Company to carry back its fiscal 2009 taxable loss up to five years.  This legislation enabled the Company to record a federal income tax receivable at December 31, 2009 and reduce its recorded valuation allowance in the fourth quarter 2009.    

Total assets of the Company were $370 million and $379 million as of December 31, 2009 and 2008, respectively, a decrease of $9 million, or 2%.  Loans outstanding totaled $300 million as of December 31, 2009, a decrease of $6 million, or 2%, from total loans of $306 million as of December 31, 2008.  Deposits totaled $331 million as of December 31, 2009, an increase of $2 million, or 1%, from total deposits of $329 million as of December 31, 2008.  These changes reflect the continued efforts by management to reduce the level of risk on the balance sheet.

For the quarter ended December 31, 2009, the Company's net interest income after the provision for loan losses was $2,964,000, an increase of $5,559,000 over the same period in 2008, primarily as a result of a decrease in provision for loan losses of $5,585,000.  Noninterest income for the quarter ended December 31, 2009 amounted to $175,000, a decrease of $19,000, or 10%, primarily as a result of decreased late charges on loans, decreased prepayment penalties for early loan payoffs and decreased service charges on deposits.  Noninterest expenses decreased $12,313,000, or 77%, for the three months ended December 31, 2009 as compared to the same period in 2008, primarily from the recording of impairment on goodwill and core deposit intangibles in the fourth quarter of 2008.

For the year ended December 31, 2009, the Company's net interest income after the provision for loan losses was $5,598,000, a decrease of $978,000, or 15%, compared to 2008, primarily as a result of a decrease in net interest income before provision for loan losses of $1,678,000 partially offset by a decrease in provision for loan losses of $700,000.  The decrease in net interest income is primarily as a result of a decline in the net interest margin of 55 basis points, or $1,899,000, including approximately $487,000 in lost revenue on nonaccrual loans and partially offset by an increase in interest income on increased interest earning assets outstanding of $221,000.  Noninterest income for the year ended December 31, 2009 amounted to $757,000, a decrease of $232,000, or 23%, compared to 2008, primarily as a result of a decrease in gains on sales of available-for-sale securities of $90,000, a decrease in miscellaneous fee income of $41,000 pertaining to a one time sale of branch rights to one of our former Farnsworth locations ($30,000) in 2008, a decrease in prepayment penalties on early loan payoffs of $31,000, a decrease in late charges of $16,000, and a decrease in mortgage origination income of $14,000.  Noninterest expenses decreased $11,878,000, or 45%, for the year ended December 31, 2009 as compared to 2008, primarily from an impairment charge to goodwill and core deposit intangibles of $12,227,000 in 2008, an increase in deposit insurance of $784,000, including a one time special assessment of $183,000, an increase in loan workout expenses of $503,000, a decrease in personnel expenses of $855,000, a decrease in marketing and business development of $212,000, a decrease in delivery, postage and supplies of $109,000, and a decrease in information systems of $104,000.

Previously, on March 18, 2010, the Company announced that the Board of Directors approved an Agreement and Plan of Merger providing for the Company to merge with and into a subsidiary of Roma Financial in exchange for a cash payment.  Under the terms of the merger agreement, which has been approved by the boards of directors of both companies, Roma Financial will acquire all of the outstanding shares of the Company for a total purchase price of approximately $14.7 million in cash, or $2.52 per share for each share of common stock outstanding.  It is expected that the merger will be consummated in the third quarter of 2010.

Robert H. King, President and CEO of Sterling Banks, Inc., noted the very positive prospects of the pending merger with Roma Financial; "we are quite pleased with the enhanced service offerings and locations which will be available under the Roma umbrella. Sterling's customers will benefit in a host of ways as we combine the two organizations, once the necessary steps to complete the merger are satisfied".

Sterling Banks, Inc. is a bank holding company which commenced operations in March 2007, with assets of $370 million as of December 31, 2009, and is headquartered in Mount Laurel Township, Burlington County.  Sterling Bank is a community bank which commenced operations in December 1990 with the purpose of serving consumers and small to medium-sized businesses in its market area.  Sterling Bank's main office is located in Mount Laurel, New Jersey, and its nine other Community Banking Centers are located in Burlington and Camden Counties in New Jersey.  The Bank's deposits are insured to the applicable regulatory limits per depositor by the Federal Deposit Insurance Corporation.  Sterling Bank is a member of the Federal Reserve System.  The common stock of Sterling Banks, Inc. is traded on the NASDAQ Capital Market under the symbol "STBK".  For additional information about Sterling Bank and Sterling Banks, Inc. visit our website at http://www.sterlingnj.com.

This news release may contain certain forward-looking statements, such as statements of the Company's plans, objectives, expectations, estimates and intentions.  Forward-looking statements may be identified by the use of words such as "expects," "subject," "believe," "will," "intends," "will be" or "would."  These statements are subject to change based on various important factors (some of which are beyond the Company's control).  Readers should not place undue reliance on any forward-looking statements (which reflect management's analysis only as of the date of which they are given).  These factors include general economic conditions, the ability of the Company to close the transaction with Roma Financial, trends in interest rates, the ability of our borrowers to repay their loans, the ability of the Company to manage the risk in its loan and investment portfolios, the ability of the Company to reduce noninterest expenses and increase net interest income, results of possible collateral collections and subsequent sales, and results of regulatory examinations, among other factors.  Sterling Banks, Inc. cautions that the foregoing list of important factors is not exclusive.  Readers should carefully review the risk factors described in other documents the Company files from time to time with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2008, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.

SOURCE Sterling Banks, Inc.