CHARLOTTE, N.C., May 1, 2012 (GLOBE NEWSWIRE) -- Park Sterling Corporation (Nasdaq:PSTB), the holding company for Park Sterling Bank, today released unaudited results of operations and other financial information for the first quarter of 2012. Highlights for the quarter include:
- Generated net income of $1.7 million, or $0.05 per share
- Generated net income, excluding merger-related expenses, of $2.4 million, or $0.07 per share
- Improved net interest margin 98 basis points, to 4.65% of average earning assets annualized
- Increased noninterest income $535,000, or 38%, to $2.0 million
- Decreased net charge-offs $68,000, or 9%, to 0.39% of average loans annualized
- Maintained strong ratio of tangible common equity to tangible assets of 16.72%
- Results reflect first full quarter of Community Capital operations following merger
"Park Sterling's first quarter was marked by strong operating profitability and safeguarding of our balance sheet," said Jim Cherry, Chief Executive Officer. "As expected, our merger with Community Capital, which was completed on November 1, 2011, was significantly accretive to earnings and contributed to our reporting net income, excluding merger-related expenses, of $2.4 million, or $0.07 per share, for the quarter. Total revenues grew $4.4 million, or 48%, as higher average earning asset balances, a higher net interest margin, and higher noninterest income each contributed to improved top-line results. Lower provision expense and well-managed noninterest expenses added to our good report for the quarter.
Our capitalization remained very strong, as evidenced by our ratio of tangible common equity to tangible assets of 16.72% at quarter-end. Importantly, our outlook for asset quality remains positive. Pass grade exposures continued to represent a comfortable 93% of total loans, loans 30-89 days past due were a modest 0.21% of total loans, and nonperforming assets remained manageable at 3.41% of total assets at the end of the quarter. Net charge-offs decreased $68,000, or 9%, during the quarter and represented 0.39% of annualized average loans. Assuming we do not experience a "double-dip" recession in our local economies, we expect asset quality, in general, to either remain stable or improve throughout the year.
We remain confident that our merger with Community Capital will prove to be transformational for our customers, employees, shareholders, and communities. We continue to join forces at every level of the new company to create a single organization, aligned to deliver exceptional banking products and services to both existing and prospective customers, utilizing the experience and knowledge of our bankers, and the strength of our balance sheet.
On the mergers and acquisitions front, we expect continued consolidation among community banks across the Carolinas and Virginia, driven in part by increased regulatory burden, uncertain economic conditions, distressed housing markets, and challenging capital markets. We remain active in seeking attractive partners who share our vision of creating a profitable, growing regional franchise, characterized by sound risk management, superior customer service, and exceptional customer relationships."
First Quarter 2012 Financial Results
Net Income (Loss)
Park Sterling reported net income of $2.4 million, or $0.07 per share, for the three months ended March 31, 2012, excluding pre-tax, merger-related expenses of $930,000. This compares to net income of $658,000, or $0.02 per share, for the three months ended December 31, 2011, excluding pre-tax, merger-related expenses of $2.6 million, and to a net loss of $2.8 million, or $(0.10) per share, for the three months ended March 31, 2011, excluding pre-tax, merger-related expenses of $75,000. Including merger-related expenses, the company reported net income of $1.7 million, or $0.05 per share, for the first quarter of 2012, compared to a net loss of $981,000, or $(0.03) per share, for the fourth quarter of 2011, and a net loss of $2.9 million, or $(0.10) per share, for the first quarter of 2011.
Net interest income increased $3.9 million, or 50%, to $11.7 million compared to the fourth quarter of 2011, and increased $7.7 million, or 188%, compared to the first quarter of 2011. This increase reflects, in part, the inclusion of three months of results from Community Capital in the first quarter of 2012, compared to only two months in the fourth quarter of 2011. Net interest income for the first quarter of 2012 also includes $1.5 million of accelerated accretion from credit and interest rate marks associated with acquisition accounting adjustments for performing acquired loans, as accounted for under the contractual cash flow method of accounting. This accelerated accretion, which was not anticipated, resulted from a combination of (i) borrowers repaying loans faster than required by their contractual terms; and (ii) restructuring loan rates and/or terms in such a way as to effectively result in a new loan under the contractual cash flow method of accounting. In both instances, the remaining credit and interest rate marks associated with the loan are fully accreted into interest income.
Net interest margin increased to 4.65% in the first quarter of 2012, representing a 98 basis point improvement from 3.67% in the fourth quarter of 2011 and a 194 basis point improvement from 2.71% in the first quarter of 2011. The increase in net interest margin reflects the inclusion of higher rate loans acquired in the Community Capital merger, the accretion from credit and interest rate marks associated with acquisition accounting adjustments, and reduced funding costs due, primarily, to lower pricing on interest bearing deposits.
Noninterest income for the first quarter of 2012 increased $535,000, or 38%, to $2.0 million, compared to $1.4 million in the fourth quarter of 2011, and compared to $72,000 in the first quarter of 2011. This increase reflects strong results from our mortgage operations, as well as the inclusion of three months of results from Community Capital in the first quarter of 2012, compared to only two months in the fourth quarter of 2011. Income from wealth management operations increased $152,000, or 34%, to $599,000 compared to the fourth quarter of 2011. Assets under management increased 4% to $242.1 million compared to the prior quarter, and assets held as custodian increased 6% to $432.3 million over the period. Income from mortgage operations increased $164,000, or 55%, to $461,000 compared to the fourth quarter of 2011 due primarily to higher loan sales, which increased 58% to $21.4 million over the same period. Service fees on deposit accounts increased $73,000, or 30%, to $314,000 compared to the fourth quarter of 2011, while income from bank-owned life insurance increased $46,000, or 22%, to $259,000. Both of these increases resulted, primarily, from the additional month of acquired Community Capital operations compared to the prior quarter.
Noninterest expenses increased $967,000, or 10%, to $11.0 million for the first quarter of 2011, compared to $10.0 million for the fourth quarter of 2011. This increase reflects primarily the inclusion of three months of results from Community Capital in the first quarter of 2012, compared to only two months in the fourth quarter of 2011. Noninterest expense increased $6.8 million, or 160%, compared to $4.2 million for the first quarter of 2011. This increase reflects the inclusion of results from Community Capital, as well as expenses related to Park Sterling's organic growth initiatives, including expenses for the three de novo offices opened during 2011. Noninterest expenses for the first quarter of 2012 included $930,000 of merger-related expenses due primarily to termination fees associated with cancellation of Community Capital's core processing contract and legal and professional fees. Noninterest expenses for the fourth quarter of 2011 included $2.6 million in merger-related expenses due primarily to contractual employment payments and legal and professional fees. Noninterest expenses for the first quarter of 2011 included $75,000 in merger-related expenses due, primarily, to legal and professional fees.
Balance Sheet and Capital
Linked Quarter Comparisons
Total assets increased $17.5 million in the first quarter of 2012, or 2%, to $1.1 billion at March 31, 2012, compared to the fourth quarter of 2011. Cash and investments increased $47.4 million, or 20%, to $286.1 million due primarily to an increase in total deposits and a reduction in gross loans. Gross loans, which include loans held for sale, decreased $29.4 million, or 4%, to $735.9 million during the quarter. This decline included a $7.0 million, or 2%, reduction in non-acquired loans to $394.9 million, and a $22.4 million, or 6%, reduction in acquired loans to $341.1 million. The decline in acquired loans reflects higher than expected reductions in targeted income-producing commercial real estate (CRE-NOO) and construction and development (C&D) loans, as well as repayments resulting from the improved condition of certain borrowers in multiple loan categories. The decline in non-acquired loans reflects both repayments resulting from the improved condition of certain borrowers and tempered new loan production as a result of the company's unwillingness to match certain interest rate and term structures available from competitors in our markets, primarily for CRE and owner-occupied (CRE-OO) properties. The pipeline of new loan opportunities is strong, particularly associated with commercial and industrial (C&I) borrowers, for which the company believes market conditions are currently more attractive.
Loan mix, which improved materially over the last twelve months, remained fairly constant from the fourth quarter of 2011 to the first quarter of 2012. C&D exposure declined $5.7 million, or 5%, and remained at 15% of total loans (excluding loans held for sale and deferred fees). The combination of C&I and CRE-OO declined $12.3 million, or 5%, and remained at 33% of total loans. CRE-NOO decreased $819,000, and increased slightly from 26% to 27% of total loans. Home equity lines of credit decreased $4.4 million, or 5%, and remained at 12% of total loans. Finally, 1-4 family loans decreased $4.1 million, or 5%, and remained at 10% of total loans.
Total deposits increased $9.8 million, or 1%, to $856.4 million compared to the fourth quarter of 2011. Demand deposits (DDA) increased $6.3 million, or 4%, due primarily to continued emphasis in this area. DDA continued to represent 17% of total deposits at March 31, 2012. Money market, NOW and savings deposits (MMDA & NOW) decreased $4.3 million, or 1%, due primarily to re-pricing certain acquired deposits to enhance profitability. Non-brokered time deposits decreased $22.5 million, or 9%, also due primarily to re-pricing certain acquired deposits to enhance profitability. Finally, brokered deposits increased $30.3 million, or 25%, reflecting the final refunding associated with $80 million in Community Capital FHLB borrowings that were repaid in conjunction with completion of the merger.
Total borrowings increased $6.2 million, or 10%, compared to the prior quarter, as the company increased FHLB borrowings to lock in term funding at attractive rates. Borrowings currently include $5.5 million of Tier 1-eligible subordinated debt and $6.9 million of Tier 2-eligible subordinated debt. Shareholders' equity increased $2.8 million in the first quarter of 2012, or 1%, to $192.8 million at March 31, 2012, compared to $190.1 million at December 31, 2011. Tangible common equity as a percentage of tangible assets remained very strong at 16.72% at March 31, 2012. Tier 1 leverage ratio also remained very strong at 14.77% at March 31, 2012.
Prior Year Comparisons
Total assets increased $502.3 million, or 80%, in the first quarter of 2012, compared to the first quarter of 2011 due to the merger with Community Capital and the company's organic growth initiatives. Cash and investments increased $58.3 million, or 26%, and gross loans increased $347.7 million, or 90%, compared to the prior year period. Loan mix improved over the prior year, with exposure to C&D decreasing from 21% to 15% of total loans, and exposure to combined C&I and CRE-OO increasing from 27% to 33%.
Total deposits increased $434.9 million, or 103%, compared to the first quarter of 2011 due primarily to the merger with Community Capital. Deposit mix improved over the prior year, with DDA increasing from 9% to 17% of total deposits, MMDA & NOW increasing from 25% to 39% of total deposits, and brokered deposits decreasing from 24% to 18% of total deposits.
Total borrowings increased $40.1 million, or 143%, compared to the first quarter of 2011 due to the merger with Community Capital. Shareholders' equity increased $18.0 million, or 10%, due to the issuance of 4,024,269 shares as consideration in the Community Capital merger, which represented approximately $15.5 million of equity capital.
Asset Quality
Asset quality remained strong during the first quarter of 2012. Pass grade loans represented 93% of total loans (excluding loans held for sale and deferred fees) at March 31, 2012, which was unchanged from December 31, 2011 and significantly improved from 79% of total loans at March 31, 2011. Loans 30-89 days past due declined to 0.21% of total loans in the first quarter of 2012, compared to 0.44% in the fourth quarter of 2011, and 0.89% in the first quarter of 2011. Nonperforming loans increased $1.6 million in the first quarter of 2012, or 8%, to $21.9 million, reflecting continued challenges for certain borrowers from the extended economic downturn, and represented 3.00% of total loans at quarter-end. This compares to 2.66% of total loans at December 31, 2011, and represents a significant improvement from 9.07% of total loans at March 31, 2011. Nonperforming assets increased $2.3 million, or 6%, to $38.5 million and represented 3.41% of total assets at March 31, 2012. This compares to 3.25% of total assets at December 31, 2011, and represents a significant improvement from 5.85% of total assets at March 31, 2011.
Net charge-offs decreased $68,000, or 9%, to $721,000 in the first quarter of 2012, representing 0.39% of average loans (annualized). This compares to net charge-offs of $789,000, or 0.51% of average loans (annualized) in the fourth quarter of 2011, and compares to net charge-offs of $5.2 million, or 5.16% of total loans (annualized) in the first quarter of 2011. The allowance for loan losses was $9.6 million, or 1.31% of total loans at March 31, 2012, compared to $10.2 million, or 1.34% of total loans, at December 31, 2011, and $11.8 million, or 3.03% of total loans, at March 31, 2011. The reduction in total allowance dollars during the first quarter of 2012 reflects the previously addressed decline in gross loans, while the decline in allowance percentage reflects management's current expectation for continued improvement in the portfolio. Management considers acquired performing loans for which a "major modification" has occurred, thereby releasing the associated acquisition accounting credit mark, in estimating the qualitative component of the allowance. Excluding acquired loans, the allowance for loan losses represented 2.47% of non-acquired loans in the first quarter of 2012, compared to 2.57% of non-acquired loans in the fourth quarter of 2011.
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., Eastern Time this morning (May 1, 2012). 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 and requesting conference number 10013287.
About Park Sterling Corporation
Park Sterling Corporation is the holding company for Park Sterling Bank, headquartered in Charlotte, North 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 focused on 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, asset quality measures excluding the effects of the merger, 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 asset quality measures excluding acquisitions to evaluate both its asset quality and asset quality trends, 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 Corporation 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 and expected footprint of its banking franchise, organic growth including branch openings and anticipated asset size, expansion or addition of product capabilities, anticipated loan growth, refinement of the loan loss allowance methodology, recruiting of key positions, increases in net interest margin, changes in loan mix, changes in deposit mix, capital and liquidity levels, net interest income, noninterest income, credit trends and conditions, including loan losses, allowance, charge-offs, delinquency trends and nonperforming loan and nonperforming asset levels, residential sales activity, commercial and industrial borrowing 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 Park Sterling'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 continued negative economic conditions or a "double-dip" recession, 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, including accounting for purchase credit impaired loans under ASC 310-30, and the impact on Park Sterling's financial statements; Park Sterling's ability to attract and retain 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 CONSOLIDATED INCOME STATEMENT | |||||
| THREE MONTH RESULTS | |||||
| ($ in thousands, except per share amounts) | March 31, | December 31, | September 30, | June 30, | March 31, |
| 2012 | 2011 | 2011 | 2011 | 2011 | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
| Interest income | |||||
| Loans, including fees | $ 12,110 | $ 8,285 | $ 4,283 | $ 4,450 | $ 4,758 |
| Federal funds sold | 8 | 5 | 22 | 33 | 30 |
| Taxable investment securities | 1,084 | 837 | 681 | 684 | 681 |
| Tax-exempt investment securities | 185 | 184 | 181 | 181 | 171 |
| Interest on deposits at banks | 10 | 29 | 44 | 11 | 14 |
| Total interest income | 13,397 | 9,340 | 5,211 | 5,359 | 5,654 |
| Interest expense | |||||
| Money market, NOW and savings deposits | 326 | 269 | 158 | 176 | 141 |
| Time deposits | 821 | 836 | 868 | 1,080 | 1,226 |
| Short-term borrowings | 3 | 1 | 1 | 1 | -- |
| FHLB advances | 161 | 135 | 140 | 141 | 141 |
| Subordinated debt | 367 | 286 | 190 | 189 | 190 |
| Total interest expense | 1,678 | 1,527 | 1,357 | 1,587 | 1,698 |
| Net interest income | 11,719 | 7,813 | 3,854 | 3,772 | 3,956 |
| Provision for loan losses | 123 | 1,110 | 568 | 3,245 | 4,462 |
| Net interest income (loss) after provision | 11,596 | 6,703 | 3,286 | 527 | (506) |
| Noninterest income | |||||
| Service charges on deposit accounts | 314 | 241 | 23 | 25 | 26 |
| Income from fiduciary activities | 540 | 418 | -- | -- | -- |
| Commissions from sales of mutual funds | 59 | 29 | -- | -- | -- |
| Gain on sale of securities available for sale | -- | -- | -- | 1 | 19 |
| Mortgage banking income | 461 | 297 | -- | -- | -- |
| Income from bank owned life insurance | 259 | 213 | 52 | -- | -- |
| Other noninterest income | 322 | 222 | 36 | 18 | 27 |
| Total noninterest income | 1,955 | 1,420 | 111 | 44 | 72 |
| Noninterest expenses | |||||
| Salaries and employee benefits | 6,124 | 6,245 | 3,051 | 2,975 | 2,507 |
| Occupancy and equipment | 820 | 662 | 369 | 301 | 256 |
| Advertising and promotion | 161 | 132 | 115 | 87 | 38 |
| Legal and professional fees | 312 | 505 | 721 | 1,205 | 307 |
| Deposit charges and FDIC insurance | 291 | 116 | 134 | 196 | 287 |
| Data processing and outside service fees | 1,349 | 402 | 142 | 128 | 123 |
| Communication fees | 232 | 119 | 51 | 36 | 26 |
| Postage and supplies | 196 | 279 | 58 | 47 | 39 |
| Core deposit intangible amortization | 102 | 68 | -- | -- | -- |
| Net cost of operation of other real estate owned | 522 | 400 | 101 | 93 | 235 |
| Loan and collection expense | 244 | 255 | 180 | 109 | 86 |
| Other noninterest expense | 650 | 853 | 294 | 297 | 330 |
| Total noninterest expenses | 11,003 | 10,036 | 5,216 | 5,474 | 4,234 |
| Income (loss) before income taxes | 2,548 | (1,913) | (1,819) | (4,903) | (4,668) |
| Income tax expense (benefit) | 825 | (931) | (443) | (1,789) | (1,781) |
| Net income (loss) | $ 1,723 | $ (982) | $ (1,376) | $ (3,114) | $ (2,887) |
| Earnings (loss) per share, fully diluted | $ 0.05 | $ (0.03) | $ (0.05) | $ (0.11) | $ (0.10) |
| Weighted average diluted shares | 32,075,398 | 30,719,363 | 28,051,098 | 28,051,098 | 28,051,098 |
| PARK STERLING CORPORATION | |||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
| ($ in thousands) | March 31, | December 31, | September 30, | June 30, | March 31, |
| 2012 | 2011* | 2011 | 2011 | 2011 | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||
| ASSETS | |||||
| Cash and due from banks | $ 18,016 | $ 18,426 | $ 14,962 | $ 14,349 | $ 54,192 |
| Interest earning balances at banks | 15,567 | 10,115 | 36,311 | 8,571 | 3,796 |
| Investment securities available-for-sale | 232,464 | 210,146 | 130,667 | 146,734 | 112,273 |
| Nonmarketable equity securities | 8,510 | 8,510 | 1,968 | 1,985 | 2,012 |
| Federal funds sold | 20,085 | -- | 5,295 | 44,060 | 57,525 |
| Loans held for sale | 8,055 | 6,254 | 1,559 | 1,600 | -- |
| Loans | 727,862 | 759,047 | 367,412 | 380,365 | 388,187 |
| Allowance for loan losses | (9,556) | (10,154) | (9,833) | (11,277) | (11,768) |
| Net loans | 718,306 | 748,893 | 357,579 | 369,088 | 376,419 |
| Premises and equipment | 24,371 | 24,515 | 5,335 | 4,862 | 4,526 |
| Other real estate owned | 16,674 | 14,403 | 5,691 | 3,470 | 1,565 |
| Bank owned life insurance | 26,456 | 26,223 | 8,052 | -- | -- |
| Goodwill | 649 | 428 | -- | -- | -- |
| Intangible assets | 3,920 | 4,022 | -- | -- | -- |
| Deferred tax asset | 30,143 | 31,131 | 10,144 | 7,437 | 7,437 |
| Other assets | 7,535 | 10,156 | 4,820 | 8,512 | 8,671 |
| Total assets | $ 1,130,751 | $ 1,113,222 | $ 582,383 | $ 610,668 | $ 628,416 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| Deposits: | |||||
| Demand noninterest-bearing | $ 148,929 | $ 142,652 | $ 42,890 | $ 42,156 | $ 37,098 |
| Money market, NOW and savings | 329,633 | 333,968 | 120,017 | 110,874 | 107,186 |
| Time deposits | 377,875 | 370,017 | 212,085 | 250,876 | 277,228 |
| Total deposits | 856,437 | 846,637 | 374,992 | 403,906 | 421,512 |
| Short-term borrowings | 852 | 9,765 | 1,083 | 1,661 | 1,213 |
| FHLB advances | 55,000 | 40,000 | 20,000 | 20,000 | 20,000 |
| Subordinated debt | 12,396 | 12,296 | 6,895 | 6,895 | 6,895 |
| Accrued expenses and other liabilities | 13,250 | 14,470 | 4,796 | 4,622 | 4,026 |
| Total liabilities | 937,935 | 923,168 | 407,766 | 437,084 | 453,646 |
| Shareholders' equity: | |||||
| Common stock | 32,644 | 32,644 | 28,619 | 28,619 | 28,619 |
| Additional paid-in capital | 172,873 | 172,390 | 160,368 | 159,890 | 159,367 |
| Accumulated deficit | (16,137) | (17,860) | (16,878) | (15,502) | (12,388) |
| Accumulated other comprehensive income (loss) | 3,436 | 2,880 | 2,508 | 577 | (828) |
| Total shareholders' equity | 192,816 | 190,054 | 174,617 | 173,584 | 174,770 |
| Total liabilities and shareholders' equity | $ 1,130,751 | $ 1,113,222 | $ 582,383 | $ 610,668 | $ 628,416 |
| Common shares issued and outstanding | 32,643,627 | 32,643,627 | 28,619,358 | 28,619,358 | 28,619,358 |
| * Derived from audited financial statements. | |||||
| PARK STERLING CORPORATION | ||||||
| SUMMARY OF LOAN PORTFOLIO | ||||||
| ($ in thousands) | March 31, | December 31, | September 30, | June 30, | March 31, | |
| 2012 | 2011* | 2011 | 2011 | 2011 | ||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||
| Commercial: | ||||||
| Commercial and industrial | $ 72,095 | $ 80,746 | $ 44,939 | $ 45,056 | $ 48,107 | |
| Commercial real estate - owner-occupied | 166,064 | 169,663 | 71,549 | 66,157 | 55,019 | |
| Commercial real estate - investor income producing | 193,641 | 194,460 | 108,558 | 111,349 | 113,612 | |
| Acquisition, construction and development | 87,065 | 92,349 | 51,522 | 64,662 | 75,977 | |
| Other commercial | 13,518 | 15,658 | 3,193 | 2,561 | 2,977 | |
| Total commercial loans | 532,383 | 552,876 | 279,761 | 289,785 | 295,692 | |
| Consumer: | ||||||
| Residential mortgage | 75,377 | 79,512 | 19,816 | 21,767 | 25,034 | |
| Home equity lines of credit | 86,028 | 90,408 | 56,787 | 56,481 | 53,725 | |
| Residential construction | 24,670 | 25,126 | 4,787 | 6,048 | 7,018 | |
| Other loans to individuals | 9,635 | 11,496 | 6,530 | 6,494 | 6,811 | |
| Total consumer loans | 195,710 | 206,542 | 87,920 | 90,790 | 92,588 | |
| Total loans | 728,093 | 759,418 | 367,681 | 380,575 | 388,280 | |
| Deferred costs (fees) | (231) | (371) | (269) | (210) | (93) | |
| Total loans, net of deferred costs (fees) | $ 727,862 | $ 759,047 | $ 367,412 | $ 380,365 | $ 388,187 | |
| PCI Loans: | ||||||
| ($ in thousands) | March 31, | December 31, | ||||
| 2012 | 2011* | |||||
| (Unaudited) | ||||||
| Commercial: | ||||||
| Commercial and industrial | $ 2,101 | $ 4,276 | ||||
| Commercial real estate - owner-occupied | 8,964 | 9,953 | ||||
| Commercial real estate - investor income producing | 13,662 | 14,006 | ||||
| Acquisition, construction and development | 20,585 | 24,243 | ||||
| Other commercial | 53 | 57 | ||||
| Total commercial loans | 45,365 | 52,535 | ||||
| Consumer: | ||||||
| Residential mortgage | 9,087 | 9,447 | ||||
| Home equity lines of credit | 341 | 343 | ||||
| Residential construction | 922 | 1,351 | ||||
| Other loans to individuals | 127 | 142 | ||||
| Total consumer loans | 10,477 | 11,283 | ||||
| Total loans | 55,842 | 63,818 | ||||
| Deferred costs (fees) | -- | -- | ||||
| Total loans, net of deferred costs (fees) | $ 55,842 | $ 63,818 | ||||
| * Derived from audited financial statements. | ||||||
| PARK STERLING CORPORATION | |||||
| ALLOWANCE FOR LOAN LOSSES | |||||
| THREE MONTH RESULTS | |||||
| ($ in thousands) | March 31, | December 31, | September 30, | June 30, | March 31, |
| 2012 | 2011 | 2011 | 2011 | 2011 | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
| Beginning of period allowance | $ 10,154 | $ 9,833 | $ 11,277 | $ 11,768 | $ 12,424 |
| Provision for loan losses | 123 | 1,110 | 568 | 3,245 | 4,462 |
| Loans charged-off | 828 | 1,295 | 2,113 | 4,096 | 5,581 |
| Recoveries of loans charged-off | 107 | 506 | 101 | 360 | 463 |
| End of period allowance | 9,556 | 10,154 | 9,833 | 11,277 | 11,768 |
| Net loans charged-off | $ 721 | $ 789 | $ 2,012 | $ 3,736 | $ 5,118 |
| Annualized net charge-offs | 0.39% | 0.51% | 2.19% | 3.87% | 5.16% |
| PARK STERLING CORPORATION | ||||||
| AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS | ||||||
| THREE MONTHS | ||||||
| ($ in thousands) | March 31, 2012 | March 31, 2011 | ||||
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | |
| Balance | Expense | Rate | Balance | Expense | Rate (3) | |
| Assets | ||||||
| Interest-earning assets: | ||||||
| Loans with fees (1)(2) | $ 746,134 | $ 12,110 | 6.53% | $ 397,066 | $ 4,758 | 4.86% |
| Fed funds sold | 13,116 | 8 | 0.25% | 52,726 | 30 | 0.23% |
| Taxable investment securities | 214,471 | 1,084 | 2.02% | 121,424 | 681 | 2.24% |
| Tax-exempt investment securities | 17,820 | 185 | 4.15% | 14,698 | 171 | 4.65% |
| Other interest-earning assets | 22,457 | 10 | 0.18% | 6,475 | 14 | 0.88% |
| Total interest-earning assets | 1,013,998 | 13,397 | 5.31% | 592,389 | 5,654 | 3.87% |
| Allowance for loan losses | (9,833) | (12,343) | ||||
| Cash and due from banks | 17,059 | 8,498 | ||||
| Premises and equipment | 24,509 | 4,474 | ||||
| Goodwill | 461 | -- | ||||
| Intangible assets | 3,954 | -- | ||||
| Other assets | 82,024 | 14,181 | ||||
| Total assets | $ 1,132,172 | $ 607,199 | ||||
| Liabilities and shareholders' equity | ||||||
| Interest-bearing liabilities: | ||||||
| Interest-bearing demand | $ 78,573 | $ 46 | 0.24% | $ 10,448 | $ 3 | 0.12% |
| Savings and money market | 246,724 | 280 | 0.46% | 69,722 | 138 | 0.80% |
| Time deposits - core | 235,657 | 423 | 0.72% | 182,405 | 739 | 1.64% |
| Time deposits - brokered | 145,251 | 398 | 1.10% | 101,696 | 487 | 1.94% |
| Total interest-bearing deposits | 706,205 | 1,147 | 0.65% | 364,271 | 1,367 | 1.52% |
| Federal Home Loan Bank advances | 58,297 | 161 | 1.11% | 20,000 | 141 | 2.86% |
| Subordinated debt | 12,363 | 367 | 11.94% | 6,895 | 189 | 11.12% |
| Other borrowings | 2,501 | 3 | 0.48% | 1,134 | 1 | 0.36% |
| Total borrowed funds | 73,161 | 531 | 2.92% | 28,029 | 331 | 4.79% |
| Total interest-bearing liabilities | 779,366 | 1,678 | 0.87% | 392,300 | 1,698 | 1.76% |
| Net interest rate spread | 11,719 | 4.44% | 3,956 | 2.11% | ||
| Noninterest-bearing demand deposits | 145,724 | 37,048 | ||||
| Other liabilities | 14,446 | 566 | ||||
| Shareholders' equity | 192,636 | 177,285 | ||||
| Total liabilities and shareholders' equity | $ 1,132,172 | $ 607,199 | ||||
| Net interest margin | 4.65% | 2.71% | ||||
| Net interest margin (fully tax-equivalent) (4) | 4.69% | 2.78% | ||||
| (1) Nonaccrual loans are included in the average loan balances. | ||||||
| (2) Interest income and yields for March 31, 2012 include accretion from acquisition accounting adjustments associated with acquired loans. | ||||||
| (3) Yield/ rate calculated on Actual/Actual day count basis, except for yield on investments which is calculated on a 30/360 day count basis. | ||||||
| (4) Fully tax-equivalent basis at 32.39% and 38.55% tax rate at March 31, 2012 and 2011, respectively, for nontaxable securities and loans. | ||||||
| PARK STERLING CORPORATION | |||||
| SELECTED RATIOS | |||||
| ($ in thousands, except per share amounts) | March 31, | December 31, | September 30, | June 30, | March 31. |
| 2012 | 2011* | 2011 | 2011 | 2011 | |
| Unaudited | Unaudited | Unaudited | Unaudited | ||
| ASSET QUALITY | |||||
| Nonaccrual loans | $ 17,703 | $ 16,256 | $ 19,448 | $ 25,565 | $ 34,027 |
| Troubled debt restructuring | 3,451 | 3,972 | 2,001 | 2,002 | 1,198 |
| Past due 90 days plus (and still accruing) | 698 | -- | -- | -- | -- |
| Nonperforming loans | 21,852 | 20,228 | 21,449 | 27,566 | 35,225 |
| OREO | 16,674 | 14,403 | 5,691 | 3,470 | 1,565 |
| Loans held for sale (nonaccruing) | -- | 1,560 | 1,559 | 1,600 | -- |
| Nonperforming assets | 38,526 | 36,191 | 28,699 | 32,637 | 36,790 |
| Past due 30-59 days (and still accruing) | 742 | 2,401 | 655 | -- | 3,469 |
| Past due 60-89 days (and still accruing) | 764 | 924 | 819 | -- | -- |
| Nonperforming loans to total loans | 3.00% | 2.66% | 5.84% | 7.25% | 9.07% |
| Nonperforming assets to total assets | 3.41% | 3.25% | 4.93% | 5.34% | 5.85% |
| Allowance to total loans | 1.31% | 1.34% | 2.68% | 2.96% | 3.03% |
| Allowance to nonperforming loans | 43.73% | 50.20% | 45.84% | 40.91% | 33.41% |
| Allowance to nonperforming assets | 24.80% | 28.06% | 34.26% | 34.55% | 31.99% |
| CAPITAL | |||||
| Book value per share | $ 6.01 | $ 5.93 | $ 6.22 | $ 6.19 | $ 6.23 |
| Tangible book value per share | $ 5.87 | $ 5.79 | $ 6.22 | $ 6.19 | $ 6.23 |
| Common shares outstanding | 32,643,627 | 32,643,627 | 28,619,358 | 28,619,358 | 28,619,358 |
| Dilutive common shares outstanding | 32,075,398 | 32,075,367 | 28,051,098 | 28,051,098 | 28,051,098 |
| Tier 1 capital | $ 161,337 | $ 160,122 | $ 162,207 | $ 166,762 | $ 170,120 |
| Tier 2 capital | 16,451 | 17,049 | 13,124 | 12,143 | 12,123 |
| Total risk based capital | 177,788 | 177,171 | 175,331 | 178,905 | 182,243 |
| Risk weighted assets | 786,703 | 819,762 | 439,708 | 413,846 | 411,689 |
| Average assets for leverage ratio | 1,092,468 | 901,067 | 596,997 | 616,034 | 604,498 |
| Tier 1 ratio | 20.51% | 19.53% | 36.89% | 40.30% | 41.32% |
| Total risk based capital ratio | 22.60% | 21.61% | 39.87% | 43.23% | 44.27% |
| Tier 1 leverage ratio | 14.77% | 17.77% | 27.17% | 27.07% | 28.14% |
| Tangible common equity to tangible assets | 16.72% | 16.74% | 29.98% | 28.43% | 27.81% |
| LIQUIDITY | |||||
| Net loans to total deposits | 83.87% | 88.46% | 95.36% | 91.38% | 89.30% |
| Liquidity ratio | 30.94% | 25.36% | 49.70% | 53.09% | 53.99% |
| INCOME STATEMENT (THREE MONTH RESULTS; ANNUALIZED) | |||||
| Return on Average Assets | 0.61% | -42.00% | -0.91% | -2.00% | -1.93% |
| Return on Average Equity | 3.60% | -2.11% | -3.16% | -7.12% | -6.60% |
| Net interest margin (non-tax equivalent) | 4.65% | 3.67% | 2.69% | 2.60% | 2.71% |
| INCOME STATEMENT (ANNUAL RESULTS) | |||||
| Return on Average Assets | n/a | -1.20% | n/a | n/a | n/a |
| Return on Average Equity | n/a | -4.69% | n/a | n/a | n/a |
| Net interest margin (tax equivalent) | n/a | 3.06% | n/a | n/a | n/a |
| * Balance sheet information derived from audited financial statements. Income statement information unaudited. | |||||
Non-GAAP Measures
Tangible assets, tangible common equity, tangible book value, earnings (loss) excluding merger-related expenses, asset quality measures excluding the effects of the merger, and related ratios and EPS measures, as used throughout this release, are non-GAAP financial measures. A reconciliation of these non-GAAP measures to the most comparable GAAP measures is provided below.
| PARK STERLING CORPORATION | |||||
| RECONCILIATION OF NON-GAAP MEASURES | |||||
| ($ in thousands, except per share amounts) | |||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |
| 2012 | 2011 | 2011 | 2011 | 2011 | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
| Tangible assets | |||||
| Total assets | $ 1,130,751 | $ 1,113,222 | $ 582,383 | $ 610,668 | $ 628,416 |
| Less: intangible assets | 4,569 | 4,450 | -- | -- | -- |
| Tangible assets | $ 1,126,182 | $ 1,108,772 | $ 582,383 | $ 610,668 | $ 628,416 |
| Tangible common equity | |||||
| Total common equity | $ 192,816 | $ 190,054 | $ 174,617 | $ 173,584 | $ 174,770 |
| Less: intangible assets | 4,569 | 4,450 | -- | -- | -- |
| Tangible common equity | $ 188,247 | $ 185,604 | $ 174,617 | $ 173,584 | $ 174,770 |
| Tangible book value per share | |||||
| Issued and outstanding shares | 32,643,627 | 32,643,627 | 28,619,358 | 28,619,358 | 28,619,358 |
| Add: dilutive stock options | 31 | -- | -- | -- | -- |
| Deduct: nondilutive restricted awards | 568,260 | 568,260 | 568,260 | 568,260 | 568,260 |
| Period end dilutive shares | 32,075,398 | 32,075,367 | 28,051,098 | 28,051,098 | 28,051,098 |
| Tangible common equity | $ 188,247 | $ 185,604 | $ 174,617 | $ 173,584 | $ 174,770 |
| Divided by: period end dilutive shares | 32,075,398 | 32,075,367 | 28,051,098 | 28,051,098 | 28,051,098 |
| Tangible common book value per share | $ 5.87 | $ 5.79 | $ 6.22 | $ 6.19 | $ 6.23 |
| Tangible common equity to tangible assets | |||||
| Tangible common equity | 188,247 | 185,604 | 174,617 | 173,584 | 174,770 |
| Divided by: tangible assets | 1,126,182 | 1,108,772 | 582,383 | 610,668 | 628,416 |
| Tangible common equity to tangible assets | 16.72% | 16.74% | 29.98% | 28.43% | 27.81% |
| Profitability measures excluding merger-related expenses | |||||
| Net income (loss) | $ 1,723 | $ (982) | $ (1,376) | $ (3,114) | $ (2,887) |
| Plus: merger-related expenses | 930 | 2,609 | 496 | 632 | 75 |
| Less: related income tax expense | (301) | (970) | (174) | (231) | -- |
| Net income (loss) (excluding merger-related expenses) | $ 2,352 | $ 657 | $ (1,054) | $ (2,713) | $ (2,812) |
| Divided by: weighted average dilutive shares | 32,075,398 | 30,719,363 | 28,051,098 | 28,051,098 | 28,051,098 |
| Earnings per share (excluding merger-related expenses) | $ 0.07 | $ 0.02 | $ (0.04) | $ (0.10) | $ (0.10) |
| Net interest income | $ 11,719 | $ 7,813 | $ 3,854 | $ 3,772 | $ 3,956 |
| Less: accelerated mark accretion | (1,469) | -- | -- | -- | -- |
| Net interest income excluding accelerated mark accretion | 10,250 | 7,813 | 3,854 | 3,772 | 3,956 |
| Divided by: average earning assets | 1,013,998 | 844,498 | 568,743 | 582,154 | 592,389 |
| Multiplied by: annualization factor | 4.02 | 3.97 | 3.97 | 4.01 | 4.06 |
| Net interest margin excluding accelerated mark accretion | 4.07% | 3.67% | 2.69% | 2.60% | 2.71% |
| Noninterest expense | $ 11,003 | $ 10,036 | $ 5,216 | $ 5,474 | $ 4,234 |
| Less: intangible amortization | 102 | 68 | -- | -- | -- |
| Less: merger-related expenses | 930 | 2,609 | 496 | 632 | 75 |
| Adjusted expenses | 9,971 | 7,359 | 4,720 | 4,842 | 4,159 |
| Divided by: total revenues | 13,674 | 9,233 | 3,965 | 3,816 | 4,028 |
| Efficiency ratio (excluding merger-related expenses) | 72.92% | 79.70% | 119.04% | 126.89% | 103.25% |
| Net income (loss) (excluding merger-related expenses) | $ 2,352 | $ 657 | $ (1,054) | $ (2,713) | $ (2,812) |
| Divided by: average assets | 1,132,172 | 938,169 | 607,054 | 622,279 | 607,199 |
| Multiplied by: annualizing factor | 4 | 4 | 4 | 4 | 4 |
| Annualized return on avg. assets (excluding merger-related expenses) | 0.83% | 0.28% | -0.69% | -1.74% | -1.85% |
| Tangible common equity to tangible assets | |||||
| Tangible common equity | 188,247 | 185,604 | 174,617 | 173,584 | 174,770 |
| Divided by: tangible assets | 1,126,182 | 1,108,772 | 582,383 | 610,668 | 628,416 |
| Tangible common equity to tangible assets | 16.72% | 16.74% | 29.98% | 28.43% | 27.81% |
| Asset quality measures and loan information excluding acquisition | |||||
| Total loans | $ 727,862 | $ 759,047 | $ 367,412 | $ 380,365 | $ 388,187 |
| Less: loans acquired with Community Capital | (341,067) | (363,500) | -- | -- | -- |
| Loans excluding acquired loans | $ 386,795 | $ 395,547 | $ 367,412 | $ 380,365 | $ 388,187 |
| Allowance for loan losses | $ 9,556 | $ 10,154 | $ 9,833 | $ 11,277 | $ 11,768 |
| Divided by: loans excluding acquired loans | 386,795 | 395,547 | 367,412 | 380,365 | 388,187 |
| Allowance for loan losses to loans excluding acquisition | 2.47% | 2.57% | 2.68% | 2.96% | 3.03% |
| * Derived from audited financial statements. | |||||