CHARLOTTE, N.C., Feb. 2, 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 fourth quarter of 2011. Highlights for the quarter include:
- Generated net income of $658,000, or $0.02 per share, excluding merger-related expenses
- Generated organic loan growth of $28.1 million, or 8% linked-quarter (31% annualized)
- Decreased nonperforming loans $1.5 million, or 7%, to 2.62% of total loans (or 5.04% of total loans excluding acquisition)
- Decreased net charge-offs $1.2 million, or 61%, to 0.51% of average loans annualized (or 0.85% of average loans excluding acquisition annualized)
- Maintained strong ratio of tangible common equity to tangible assets of 16.74%
- Completed merger with Community Capital and consolidated banks into single charter
"Park Sterling's fourth quarter was marked by a return to operating profitability, strong organic loan growth, and continued progress in reducing problem assets," said Jim Cherry, Chief Executive Officer. "As expected, our merger with Community Capital, which was completed on November 1, 2011, was immediately accretive to earnings and contributed to our reporting net income of $658,000, or $0.02 per share, for the quarter, excluding merger-related expenses. Also as expected, we realized the benefits of our organic growth initiatives, as loans increased by $28.1 million, or 31% annualized, excluding acquired loans. Importantly, asset quality also continued to improve. Nonperforming loans have now decreased by 53% and nonperforming assets by 40% since the fourth quarter of 2010, again excluding the merger.
We remain confident that our merger with Community Capital will prove to be transformational for our customers, employees, shareholders, and communities in 2012. We consolidated activities under a single bank charter on December 1, 2011, and now operate our 23 full-service branches and one loan production office under a new, unified Park Sterling brand. We have joined 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 Virginia and the Carolinas, 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."
Fourth Quarter 2011 Financial Results
Net Income (Loss)
Park Sterling reported 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. This compares to a net loss of $1.1 million, or $0.04 per share, for the three months ended September 30, 2011, excluding pre-tax, merger-related expenses of $496,000. Including merger-related expenses, the company reported a net loss of $981,000, or $0.03 per share, for fourth quarter of 2011, which represented a 29% improvement from the $1.4 million net loss, or $0.05 per share, reported for the third quarter of 2011, and an 78% improvement from the $4.5 million net loss, or $0.16 per share, reported for the fourth quarter of 2010.
Net interest income doubled from $3.9 million for both the fourth quarter of 2010 and the third quarter of 2011 to $7.8 million for the fourth quarter of 2011. This increase reflects the inclusion of two months of results from Community Capital in the fourth quarter of 2011, and continuing operating improvements at legacy Park Sterling. Results for the fourth quarter of 2011 also include $160,000 in estimated accretable yield and accretion from acquisition accounting adjustments for acquired loans. Net interest margin increased to 3.67% in the fourth quarter of 2011, representing a 98 basis point improvement from 2.69% in the third quarter of 2011 and a 122 basis point improvement from 2.45% in the fourth quarter of 2010. The increase in net interest margin reflects reduced earnings drag from decreased nonperforming loans at legacy Park Sterling, the inclusion of higher rate loans acquired with Community Capital, and reduced funding costs due, primarily, to improvements in funding mix that resulted from acquired core deposits. Core deposits, which exclude brokered deposits, represented approximately 66% of total funding at December 31, 2011, compared to approximately 50% at both September 30, 2011 and December 31, 2010.
Noninterest income for the fourth quarter increased to $1.4 million, compared to $111,000 in the third quarter of 2011, and compared to $43,000 in the fourth quarter of 2010. Our Wealth Management Group contributed $447,000 in noninterest income during two months of inclusion since the merger. Assets under management ended the period at $232.1 million, and assets held as custodian at $395.2 million. Our mortgage function contributed $297,000 in noninterest income since the merger, and originated $9.4 million in loans over that period. Service fees on deposit accounts contributed $241,000 in noninterest income during the fourth quarter of 2011, compared to $23,000 in the third quarter of 2011, and compared to $19,000 during the fourth quarter of 2010, due to the inclusion of Community Capital results. BOLI income increased to $213,000 for the fourth quarter of 2011, compared to $52,000 for the third quarter of 2011, again primarily due to the inclusion of Community Capital results.
Noninterest expense increased to $10.0 million for the fourth quarter of 2011, compared to $5.2 million for the third quarter of 2011, and $3.5 million for the fourth quarter of 2010. The increase from the prior quarter resulted primarily from the inclusion of two months of results from Community Capital. The increase from the prior year resulted both from the merger with Community Capital and from expenses related to Park Sterling's organic growth initiatives, including expenses for the three de novo offices opened during 2011. Noninterest expenses for the fourth quarter of 2011 included $2.6 million in merger-related expenses, compared to $496,000 in merger-related expenses for the third quarter of 2011. There were no merger-related expenses in the fourth quarter of 2010.
For the full year of 2011, Park Sterling reported a net loss of $8.4 million, or $0.29 per share, compared to a net loss of $7.9 million, or $0.58 per share, for 2010. Net interest income increased to $19.4 million, or 29%, compared to $15.0 million the prior year, reflecting both the inclusion of Community Capital results for two months and higher average earning asset balances from investing net proceeds from the August 2010 initial public offering. Provision expense decreased to $9.4 million, or 45%, compared to $17.0 million the prior year, reflecting improved asset quality. Noninterest income increased to $1.6 million from $130,000, primarily due to the Community Capital merger. Noninterest expense increased to $25.0 million from $11.1 million, including $3.3 million in merger-related expenses. This increase resulted both from the merger with Community Capital and from increased personnel and professional expenses related to Park Sterling's growth initiatives.
Asset Quality
Asset quality continued to improve during the fourth quarter of 2011. Nonperforming loans, which included $3.7 million in performing troubled debt restructurings (TDRs), decreased $1.5 million, or 7%, to $19.9 million, or 2.62% of total loans (5.04% of total loans excluding acquisition) at December 31, 2011. This compares to $21.4 million, or 5.84% of total loans, at September 30, 2011. Compared to prior year results, nonperforming loans at December 31, 2011 decreased $22.2 million, or 53%, from $42.1 million, or 10.53% of total loans, at December 31, 2010.
Nonperforming assets, which included a $1.6 million nonperforming loan held for sale (that moved to OREO in January 2012 and is currently under contract for sale) and $9.6 million of acquired OREO, increased $7.2 million, or 25%, to $35.9 million, or 3.22% of total assets at December 31, 2011. This compares to $28.7 million, or 4.93% of total assets, at September 30, 2011. Compared to prior year results, nonperforming assets at December 31, 2011 decreased $7.5 million, or 17%, from $43.4 million, or 7.04% of total assets, at December 31, 2010.
Net charge-offs decreased $1.2 million, or 61%, to $790,000, representing 0.51% of average loans (annualized), compared to $2.0 million, or 2.19% of average loans (annualized) in the third quarter of 2011. Excluding acquired loans, net charge-offs of $790,000 for the fourth quarter represented 0.85% of average loans (annualized). This compares to net charge-offs in the fourth quarter of 2010 of $9.0 million, or 8.86% of average loans (annualized).
The allowance for loan losses was $10.2 million, or 1.34% of total loans at December 31, 2011, compared to $9.8 million, or 2.68% of total loans, at September 30, 2011. The increase in total allowance supported growth in originated net loans during the quarter. The decrease in allowance percentage resulted from including acquired loans in the ratio, for which no allowance was estimated at quarter-end given management's judgment that net acquisition accounting adjustments adequately address estimated loss in acquired loans. Excluding acquired loans, the allowance at December 31, 2011 represented 2.57% of total loans. The decrease in allowance percentage, excluding acquired loans, reflects improvements in asset quality during the quarter. The allowance at December 31, 2011 compares to an allowance of $12.4 million, or 3.11% at December 31, 2010. This decrease in allowance also reflects improvements in asset quality, over the twelve months.
The company introduced certain enhancements to the quantitative component of its allowance methodology during the fourth quarter of 2011. The methodology currently segregates loans by product type in addition to the previous segregation by internal risk grade. The methodology also now utilizes actual, internal historical loss rates (backward-looking) for its primary quantitative factor in estimating inherent losses in Park Sterling's performing loans, and maintains its traditional risk grade factors (forward-looking) as a secondary quantitative factor. Management believes these enhancements both strengthen the granularity of our allowance methodology and broaden its perspective. The enhanced methodology did not have a material impact on the estimated allowance at December 31, 2011, compared to estimates that would have been produced under the previous methodology.
Balance Sheet and Capital
Total assets increased $530.8 million, or 91%, in the fourth quarter of 2011 compared to the third quarter of 2011, primarily due to the merger with Community Capital. Net loans increased $391.3 million, or 109%, investment securities increased $79.5 million, or 61%, and bank-owned life insurance increased $18.2 million, or 226%, for the period. The merger also resulted in the recognition of a $4.0 million core deposit intangible and $428 thousand of goodwill at December 31, 2011. Excluding acquired loans, Park Sterling generated an increase of $28.1 million, or 8% (31% annualized), in loans in the fourth quarter of 2011 through organic growth initiatives, including $3.2 million in loans originated through legacy-CapitalBank offices.
Total assets increased $497.1 million, or 81%, during 2011 compared to December 31, 2010, again primarily due to the merger with Community Capital. Net loans increased $361.5 million, or 93%, which is lower than loan growth reported on a linked quarter basis due to the resolution of problem credits and a managed decrease in construction and development loans at legacy Park Sterling during the year. Investment securities increased $69.6 million, or 49%. Cash, interest earning balances and Federal funds sold decreased $36.8 million, or 56%. This decrease resulted both from an $8 million investment in bank-owned life insurance during the third quarter of 2011, which is included in other assets, and from management's decision to reduce certain lower yielding interest-earning assets at legacy Park Sterling during the year.
Loan mix, which improved materially over the last twelve months, was also positively impacted by the merger based on current estimates of acquisition accounting adjustments, as allocated by loan type. The combination of commercial and industrial loans and owner-occupied commercial real estate loans represented 31% of total loans at December 31, 2011, compared to 30% at September 30, 2011 and 26% at December 31, 2010. Non-owner-occupied commercial real estate loans represented 26% of total loans at December 31, 2011, compared to 30% the prior quarter and 28% the prior year. Construction and development loans represented 16% of total loans at December 31, 2011, compared to 15% at September 30, 2011 and 24% at December 31, 2010. HELOCs represented 12% of total loans at December 31, 2011, compared to 15% in the prior quarter and 14% the prior year. Finally, 1-4 family loans represented 11% of total loans at December 31, 2011, compared to 5% in both the prior quarter and the prior year.
Total deposits increased $471.6 million, or 126%, compared to the third quarter of 2011, primarily due to the merger with Community Capital, and deposit mix continued to improve. Demand deposits increased $99.8 million, or 233%, and represented 17% of total deposits at December 31, 2011, compared to 11% at September 30, 2011 and 9% at December 31, 2010. Money market, NOW and savings deposits increased $214.0 million, or 178%, and represented 39% of total deposits at December 31, 2011, compared to 32% the prior quarter and 18% the prior year. Time deposits increased $157.9 million, or 74%, and represented 44% of total deposits at December 31, 2011, compared to 57% the prior quarter and 74% the prior year.
Core deposits improved to 85% of total deposits at December 31, 2011, compared to 77% at September 30, 2011 and 74% at December 31, 2010. Brokered deposits increased by $37.8 million, or 44%, during the fourth quarter, as new offerings were utilized to partially fund repayment of fixed rate FHLB borrowings at Community Capital. Total borrowings increased $34.1 million, or 122%, compared to the prior quarter, due primarily to the merger. Borrowings currently include $5.4 million of Tier 1 eligible subordinated debt from Community Capital and $6.9 million of Tier 2 eligible subordinated debt from legacy Park Sterling.
Shareholders' equity increased $15.4 million, or 9%, to $190.1 million at December 31, 2011 compared to $174.6 million at September 30, 2011. The increase resulted primarily from the issuance of 4,024,269 shares as consideration in the Community Capital merger, which represented $15.5 million of equity capital. Tangible common equity as a percentage of tangible assets remained very strong at 16.74%, even though it decreased from 29.98% the prior quarter due to the merger. Tier 1 leverage ratio also remained very strong at 14.93%, even though it decreased from 27.17% the prior quarter.
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 (February 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 10009544.
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 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, asset quality measures excluding the effects of the merger, loan growth 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 loan growth excluding acquired loans to evaluate its organic growth 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 ("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 or addition of product capabilities, anticipated loan growth, refinement of the loan loss allowance methodology, recruiting of key leadership 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 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 continued 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, 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 INCOME STATEMENT | |||||
| THREE MONTH RESULTS | |||||
| ($ in thousands, except per share amounts) | December 31, | September 30, | June 30, | March 31, | December 31, |
| 2011 | 2011 | 2011 | 2011 | 2010 * | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||
| Interest income | |||||
| Loans, including fees | $ 8,285 | $ 4,283 | $ 4,450 | $ 4,758 | $ 4,984 |
| Federal funds sold | 5 | 22 | 33 | 30 | 46 |
| Taxable investment securities | 837 | 681 | 684 | 681 | 587 |
| Tax-exempt investment securities | 184 | 181 | 181 | 171 | 160 |
| Interest on deposits at banks | 29 | 44 | 11 | 14 | 16 |
| Total interest income | 9,340 | 5,211 | 5,359 | 5,654 | 5,793 |
| Interest expense | |||||
| Money market, NOW and savings deposits | 269 | 158 | 176 | 141 | 132 |
| Time deposits | 836 | 868 | 1,080 | 1,226 | 1,435 |
| Short-term borrowings | 1 | 1 | 1 | -- | 1 |
| FHLB advances | 135 | 140 | 141 | 141 | 140 |
| Subordinated debt | 286 | 190 | 189 | 190 | 188 |
| Total interest expense | 1,527 | 1,357 | 1,587 | 1,698 | 1,896 |
| Net interest income | 7,813 | 3,854 | 3,772 | 3,956 | 3,897 |
| Provision for loan losses | 1,111 | 568 | 3,245 | 4,462 | 8,237 |
| Net interest income (loss) after provision | 6,702 | 3,286 | 527 | (506) | (4,340) |
| Noninterest income | |||||
| Service charges on deposit accounts | 241 | 23 | 25 | 26 | 19 |
| Income from fiduciary activities | 418 | -- | -- | -- | -- |
| Commissions from sales of mutual funds | 29 | -- | -- | -- | -- |
| Gain on sale of securities available for sale | -- | -- | 1 | 19 | -- |
| Gain on sale of loans held for sale | 297 | -- | -- | -- | -- |
| Income from bank owned life insurance | 213 | 52 | -- | -- | -- |
| Other noninterest income | 221 | 36 | 18 | 27 | 24 |
| Total noninterest income | 1,419 | 111 | 44 | 72 | 43 |
| Noninterest expenses | |||||
| Salaries and employee benefits | 6,245 | 3,051 | 2,975 | 2,507 | 2,114 |
| Occupancy and equipment | 662 | 369 | 301 | 256 | 250 |
| Advertising and promotion | 132 | 115 | 87 | 38 | 50 |
| Legal and professional fees | 505 | 721 | 1,205 | 307 | 208 |
| Deposit charges and FDIC insurance | 116 | 134 | 196 | 287 | 185 |
| Data processing and outside service fees | 402 | 142 | 128 | 123 | 109 |
| Directors fees | 94 | 45 | 45 | 41 | 182 |
| Intangible amortization | 68 | -- | -- | -- | -- |
| Net cost of operation of other real estate | 400 | 101 | 93 | 235 | 16 |
| Loan and collection expense | 255 | 180 | 109 | 86 | 63 |
| Postage and supplies | 279 | 58 | 47 | 39 | 40 |
| Operational charge-offs | 225 | -- | 9 | 1 | -- |
| Other tax expenses | 85 | 83 | 83 | 50 | 24 |
| Other noninterest expense | 566 | 217 | 196 | 264 | 307 |
| Total noninterest expenses | 10,034 | 5,216 | 5,474 | 4,234 | 3,548 |
| Income (loss) before income taxes | (1,913) | (1,819) | (4,903) | (4,668) | (7,845) |
| Income tax expense (benefit) | (932) | (443) | (1,789) | (1,781) | (3,324) |
| Net income (loss) | $ (981) | $ (1,376) | $ (3,114) | $ (2,887) | $ (4,521) |
| Earnings (loss) per share, fully diluted | $ (0.03) | $ (0.05) | $ (0.11) | $ (0.10) | $ (0.16) |
| Weighted average diluted shares | 30,719,363 | 28,051,098 | 28,051,098 | 28,051,098 | 28,051,098 |
| * Derived from audited financial statements. | |||||
| PARK STERLING CORPORATION | ||
| CONDENSED INCOME STATEMENT | ||
| TWELVE MONTH RESULTS | ||
| ($ in thousands, expect per share amounts) | December 31, | December 31, |
| 2011 | 2010 * | |
| (Unaudited) | ||
| Interest income | ||
| Loans, including fees | $ 21,776 | $ 20,260 |
| Federal funds sold | 90 | 107 |
| Taxable investment securities | 2,883 | 1,567 |
| Tax-exempt investment securities | 716 | 642 |
| Interest on deposits at banks | 99 | 66 |
| Total interest income | 25,564 | 22,642 |
| Interest expense | ||
| Money market, NOW and savings deposits | 743 | 408 |
| Time deposits | 4,011 | 5,869 |
| Short-term borrowings | 3 | 9 |
| FHLB advances | 557 | 563 |
| Subordinated debt | 855 | 758 |
| Total interest expense | 6,169 | 7,607 |
| Net interest income | 19,395 | 15,035 |
| Provision for loan losses | 9,385 | 17,005 |
| Net interest income (loss) after provision | 10,010 | (1,970) |
| Service charges on deposit accounts | 315 | 66 |
| Income from fiduciary activities | 418 | -- |
| Commissions from sales of mutual funds | 29 | -- |
| Gain on sale of securities available for sale | 20 | 19 |
| Gain on sale of loans held for sale | 297 | -- |
| Income from bank owned life insurance | 265 | -- |
| Other noninterest income | 303 | 45 |
| Total noninterest income | 1,647 | 130 |
| Noninterest expenses | ||
| Salaries and employee benefits | 14,778 | 6,442 |
| Occupancy and equipment | 1,588 | 916 |
| Advertising and promotion | 372 | 287 |
| Legal and professional fees | 2,738 | 445 |
| Deposit charges and FDIC insurance | 733 | 728 |
| Data processing and outside service fees | 794 | 411 |
| Directors fees | 225 | 392 |
| Intangible amortization | 68 | -- |
| Net cost of operation of other real estate | 829 | 411 |
| Loan and collection expense | 630 | 224 |
| Postage and supplies | 423 | 145 |
| Operational charge-offs | 236 | -- |
| Other tax expenses | 303 | 95 |
| Other noninterest expense | 1,242 | 561 |
| Total noninterest expenses | 24,959 | 11,057 |
| Income (loss) before income taxes | (13,302) | (12,897) |
| Income tax expense (benefit) | (4,944) | (5,038) |
| Net income (loss) | $ (8,358) | $ (7,859) |
| Earnings (loss) per share, fully diluted | $ (0.29) | $ (0.58) |
| Weighted average diluted shares | 28,723,647 | 13,558,221 |
| * Derived from audited financial statements. | ||
| PARK STERLING CORPORATION | |||||
| CONDENSED BALANCE SHEETS | |||||
| ($ in thousands) | December 31, | September 30, | June 30, | March 31, | December 31, |
| 2011 | 2011 | 2011 | 2011 | 2010 * | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||
| ASSETS | |||||
| Cash and due from banks | $ 18,427 | $ 14,962 | $ 14,349 | $ 54,192 | $ 2,433 |
| Interest earning balances at banks | 10,115 | 36,311 | 8,571 | 3,796 | 5,040 |
| Investment securities available-for-sale | 210,146 | 130,667 | 146,734 | 112,273 | 140,590 |
| Nonmarketable equity securities | 8,511 | 1,968 | 1,985 | 2,012 | 1,859 |
| Federal funds sold | -- | 5,295 | 44,060 | 57,525 | 57,905 |
| Loans held for sale | 6,254 | 1,559 | 1,600 | -- | -- |
| Loans | 759,047 | 367,412 | 380,365 | 388,187 | 399,829 |
| Allowance for loan losses | (10,154) | (9,833) | (11,277) | (11,768) | (12,424) |
| Net loans | 748,893 | 357,579 | 369,088 | 376,419 | 387,405 |
| Premises and equipment | 24,515 | 5,335 | 4,862 | 4,526 | 4,477 |
| Other real estate owned | 14,403 | 5,691 | 3,470 | 1,565 | 1,246 |
| Bank owned life insurance | 26,223 | 8,052 | -- | -- | -- |
| Goodwill | 428 | ||||
| Intangible assets | 4,022 | -- | -- | -- | -- |
| Deferred tax asset | 29,164 | 10,144 | 7,437 | 7,437 | 7,437 |
| Other assets | 12,122 | 4,820 | 8,512 | 8,671 | 7,716 |
| Total assets | $ 1,113,223 | $ 582,383 | $ 610,668 | $ 628,416 | $ 616,108 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| Deposits: | |||||
| Demand noninterest-bearing | $ 142,652 | $ 42,890 | $ 42,156 | $ 37,098 | $ 36,333 |
| Money market, NOW and savings | 333,968 | 120,017 | 110,874 | 107,186 | 71,666 |
| Time deposits | 370,017 | 212,085 | 250,876 | 277,228 | 299,821 |
| Total deposits | 846,637 | 374,992 | 403,906 | 421,512 | 407,820 |
| Short-term borrowings | 9,765 | 1,083 | 1,661 | 1,213 | 874 |
| FHLB advances | 40,000 | 20,000 | 20,000 | 20,000 | 20,000 |
| Subordinated debt | 12,296 | 6,895 | 6,895 | 6,895 | 6,895 |
| Accrued expenses and other liabilities | 14,470 | 4,796 | 4,622 | 4,026 | 3,418 |
| Total liabilities | 923,168 | 407,766 | 437,084 | 453,646 | 439,007 |
| Shareholders' equity: | |||||
| Common stock | 32,644 | 28,619 | 28,619 | 28,619 | 130,438 |
| Additional paid-in capital | 172,390 | 160,368 | 159,890 | 159,367 | 57,102 |
| Accumulated deficit | (17,859) | (16,878) | (15,502) | (12,388) | (9,501) |
| Accumulated other comprehensive income (loss) | 2,880 | 2,508 | 577 | (828) | (938) |
| Total shareholders' equity | 190,055 | 174,617 | 173,584 | 174,770 | 177,101 |
| Total liabilities and shareholders' equity | $ 1,113,223 | $ 582,383 | $ 610,668 | $ 628,416 | $ 616,108 |
| Common shares issued and outstanding | 32,643,627 | 28,619,358 | 28,619,358 | 28,619,358 | 28,051,098 |
| * Derived from audited financial statements. | |||||
| PARK STERLING CORPORATION | |||||
| SUMMARY OF LOAN PORTFOLIO | |||||
| ($ in thousands) | December 31, | September 30, | June 30, | March 31, | December 31, |
| 2011 | 2011 | 2011 | 2011 | 2010 * | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||
| Commercial: | |||||
| Commercial and industrial | $ 80,381 | $ 44,939 | $ 45,056 | $ 48,107 | $ 48,401 |
| Commercial real estate - owner-occupied | 158,476 | 71,549 | 66,157 | 55,019 | 56,016 |
| Commercial real estate - investor income producing | 195,691 | 108,558 | 111,349 | 113,612 | 110,407 |
| Acquisition, construction and development | 92,591 | 51,522 | 64,662 | 75,977 | 87,846 |
| Other commercial | 15,743 | 3,193 | 2,561 | 2,977 | 2,298 |
| Total commercial loans | 542,882 | 279,761 | 289,785 | 295,692 | 304,968 |
| Consumer: | |||||
| Residential mortgage | 84,122 | 19,816 | 21,767 | 25,034 | 21,716 |
| Home equity lines of credit | 93,168 | 56,787 | 56,481 | 53,725 | 56,968 |
| Residential construction | 27,263 | 4,787 | 6,048 | 7,018 | 9,051 |
| Other loans to individuals | 11,279 | 6,530 | 6,494 | 6,811 | 7,245 |
| Total consumer loans | 215,833 | 87,920 | 90,790 | 92,588 | 94,980 |
| Total loans | 758,714 | 367,681 | 380,575 | 388,280 | 399,948 |
| Deferred costs (fees) | 333 | (269) | (210) | (93) | (119) |
| Total loans, net of deferred costs (fees) | $ 759,047 | $ 367,412 | $ 380,365 | $ 388,187 | $ 399,829 |
| * Derived from audited financial statements. | |||||
| PARK STERLING CORPORATION | |||||
| ALLOWANCE FOR LOAN LOSSES | |||||
| THREE MONTH RESULTS | |||||
| ($ in thousands) | December 31, | September 30, | June 30, | March 31, | December 31, |
| 2011 | 2011 | 2011 | 2011 | 2010 * | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||
| Beginning of period allowance | $ 9,833 | $ 11,277 | $ 11,768 | $ 12,424 | $ 13,150 |
| Provision for loan losses | 1,111 | 568 | 3,245 | 4,462 | 8,237 |
| Loans charged-off | 1,297 | 2,113 | 4,096 | 5,581 | 9,000 |
| Recoveries of loans charged-off | 507 | 101 | 360 | 463 | 37 |
| End of period allowance | 10,154 | 9,833 | 11,277 | 11,768 | 12,424 |
| Net loans charged-off | $ 790 | $ 2,012 | $ 3,736 | $ 5,118 | $ 8,963 |
| Annualized net charge-offs | 0.51% | 2.19% | 3.87% | 5.16% | 8.86% |
| * Derived from audited financial statements. | |||||
| PARK STERLING CORPORATION | ||||||
| AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS | ||||||
| THREE MONTHS | ||||||
| ($ in thousands) | December 31, 2011 | December 31, 2010 | ||||
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | |
| Balance | Expense | Rate | Balance | Expense | Rate | |
| Assets | ||||||
| Interest-earning assets: | ||||||
| Loans with fees (1) | $ 622,823 | $ 8,285 | 5.28% | $ 404,664 | $ 4,984 | 4.89% |
| Fed funds sold | 9,326 | 5 | 0.21% | 79,732 | 46 | 0.23% |
| Taxable investment securities | 158,968 | 794 | 2.00% | 123,791 | 587 | 1.90% |
| Tax-exempt investment securities | 16,979 | 184 | 4.33% | 14,598 | 160 | 4.38% |
| Other interest-earning assets | 36,402 | 72 | 0.78% | 7,435 | 16 | 0.85% |
| Total interest-earning assets | 844,498 | 9,340 | 4.39% | 630,220 | 5,793 | 3.65% |
| Allowance for loan losses | (9,228) | (12,961) | ||||
| Cash and due from banks | 16,863 | 5,633 | ||||
| Premises and equipment | 18,246 | 4,550 | ||||
| Goodwill | 836 | -- | ||||
| Intangible assets | 2,335 | -- | ||||
| Other assets | 64,619 | 13,139 | ||||
| Total assets | $ 938,169 | $ 640,581 | ||||
| Liabilities and shareholders' equity | ||||||
| Interest-bearing liabilities: | ||||||
| Interest-bearing demand | $ 58,098 | $ 25 | 0.17% | $ 11,012 | $ 3 | 0.11% |
| Savings and money market | 204,792 | 244 | 0.47% | 65,538 | 129 | 0.78% |
| Time deposits - core | 211,152 | 481 | 0.90% | 200,432 | 898 | 1.78% |
| Time deposits - brokered | 96,523 | 355 | 1.46% | 110,311 | 537 | 1.93% |
| Total interest-bearing deposits | 570,565 | 1,105 | 0.77% | 387,293 | 1,567 | 1.61% |
| Federal Home Loan Bank advances | 44,313 | 135 | 1.21% | 20,000 | 140 | 2.78% |
| Subordinated debt | 10,781 | 286 | 10.52% | 6,895 | 188 | 10.82% |
| Other borrowings | 1,526 | 1 | 0.26% | 1,885 | 1 | 0.21% |
| Total borrowed funds | 56,620 | 422 | 2.96% | 28,780 | 329 | 4.54% |
| Total interest-bearing liabilities | 627,185 | 1,527 | 0.97% | 416,073 | 1,896 | 1.81% |
| Net interest rate spread | 7,813 | 3.42% | 3,897 | 1.84% | ||
| Noninterest-bearing demand deposits | 113,082 | 36,052 | ||||
| Other liabilities | 12,165 | 4,593 | ||||
| Shareholders' equity | 185,737 | 183,863 | ||||
| Total liabilities and shareholders' equity | $ 938,169 | $ 640,581 | ||||
| Net interest margin | 3.67% | 2.45% | ||||
| (1) Average loan balances include nonaccrual loans. | ||||||
| PARK STERLING CORPORATION | |||||
| SELECTED RATIOS | |||||
| ($ in thousands, except per share amounts) | December 31, | September 30, | June 30, | March 31. | December 31, |
| 2011 | 2011 | 2011 | 2011 | 2010 * | |
| Unaudited | Unaudited | Unaudited | Unaudited | ||
| ASSET QUALITY | |||||
| Nonaccrual loans | $ 16,256 | $ 19,448 | $ 25,565 | $ 34,027 | $ 40,911 |
| Troubled debt restructuring | 3,666 | 2,001 | 2,002 | 1,198 | 1,198 |
| Nonperforming loans | 19,922 | 21,449 | 27,566 | 35,225 | 42,109 |
| OREO | 14,403 | 5,691 | 3,470 | 1,565 | 1,246 |
| Loans held for sale | 1,560 | 1,559 | 1,600 | -- | -- |
| Nonperforming assets | 35,885 | 28,699 | 32,637 | 36,790 | 43,356 |
| Past due 30-59 days (and still accruing) | 2,401 | 655 | -- | 3,469 | -- |
| Past due 60-89 days (and still accruing) | 924 | 819 | -- | -- | -- |
| Past due 90 days plus (and still accruing) | -- | -- | -- | -- | -- |
| Nonperforming loans to total loans | 2.62% | 5.84% | 7.25% | 9.07% | 10.53% |
| Nonperforming assets to total assets | 3.22% | 4.93% | 5.34% | 5.85% | 7.04% |
| Allowance to total loans | 1.34% | 2.68% | 2.96% | 3.03% | 3.11% |
| Allowance to nonperforming loans | 50.97% | 45.84% | 40.91% | 33.41% | 29.50% |
| Allowance to nonperforming assets | 28.30% | 34.26% | 34.55% | 31.99% | 28.66% |
| CAPITAL | |||||
| Book value per share | $ 5.93 | $ 6.22 | $ 6.19 | $ 6.23 | $ 6.31 |
| Tangible book value per share | $ 5.79 | $ 6.22 | $ 6.19 | $ 6.23 | $ 6.31 |
| Common shares outstanding | 32,643,627 | 28,619,358 | 28,619,358 | 28,619,358 | 28,051,098 |
| Dilutive common shares outstanding | 32,075,367 | 28,051,098 | 28,051,098 | 28,051,098 | 28,051,098 |
| Tier 1 capital | $ 158,027 | $ 162,207 | $ 166,762 | $ 170,120 | $ 173,395 |
| Tier 2 capital | 17,049 | 13,124 | 12,143 | 12,123 | 12,373 |
| Total risk based capital | 175,076 | 175,331 | 178,905 | 182,243 | 185,768 |
| Risk weighted assets | 817,653 | 439,708 | 413,846 | 411,689 | 431,324 |
| Average assets for leverage ratio | 1,058,122 | 596,997 | 616,034 | 604,498 | 637,650 |
| Tier 1 ratio | 19.33% | 36.89% | 40.30% | 41.32% | 40.20% |
| Total risk based capital ratio | 21.41% | 39.87% | 43.23% | 44.27% | 43.07% |
| Tier 1 leverage ratio | 14.93% | 27.17% | 27.07% | 28.14% | 27.19% |
| Tangible common equity to tangible assets | 16.74% | 29.98% | 28.43% | 27.81% | 28.75% |
| LIQUIDITY | |||||
| Net loans to total deposits | 88.46% | 95.36% | 91.38% | 89.30% | 94.99% |
| Liquidity ratio | 25.36% | 49.70% | 53.09% | 53.99% | 50.48% |
| INCOME STATEMENT (THREE MONTH RESULTS; ANNUALIZED) | |||||
| Return on Average Assets | -0.42% | -0.91% | -2.00% | -1.93% | -2.81% |
| Return on Average Equity | -2.11% | -3.16% | -7.12% | -6.60% | -9.75% |
| Net interest margin (tax equivalent) | 3.67% | 2.69% | 2.60% | 2.76% | 2.52% |
| INCOME STATEMENT (ANNUAL RESULTS) | |||||
| Return on Average Assets | -1.20% | n/a | n/a | n/a | -1.46% |
| Return on Average Equity | -4.69% | n/a | n/a | n/a | -8.00% |
| Net interest margin (tax equivalent) | 2.99% | n/a | n/a | n/a | 2.95% |
| * Derived from audited financial statements. | |||||
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, loan growth excluding acquired loans, 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) | |||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |
| 2011 | 2011 | 2011 | 2011 | 2010 * | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||
| Tangible assets | |||||
| Total assets | $ 1,113,223 | $ 582,383 | $ 610,668 | $ 628,416 | $ 616,108 |
| Less: intangible assets | 4,450 | -- | -- | -- | -- |
| Tangible assets | $ 1,108,773 | $ 582,383 | $ 610,668 | $ 628,416 | $ 616,108 |
| Tangible common equity | |||||
| Total common equity | $ 190,055 | $ 174,617 | $ 173,584 | $ 174,770 | $ 177,101 |
| Less: intangible assets | 4,450 | -- | -- | -- | -- |
| Tangible common equity | $ 185,605 | $ 174,617 | $ 173,584 | $ 174,770 | $ 177,101 |
| Tangible book value per share | |||||
| Issued and outstanding shares | 32,643,627 | 28,619,358 | 28,619,358 | 28,619,358 | 28,051,098 |
| Add: dilutive stock options | -- | -- | -- | -- | -- |
| Deduct: nondilutive restricted awards | 568,260 | 568,260 | 568,260 | 568,260 | -- |
| Period end dilutive shares | 32,075,367 | 28,051,098 | 28,051,098 | 28,051,098 | 28,051,098 |
| Tangible common equity | $ 185,605 | $ 174,617 | $ 173,584 | $ 174,770 | $ 177,101 |
| Divided by: period end dilutive shares | 32,075,367 | 28,051,098 | 28,051,098 | 28,051,098 | 28,051,098 |
| Tangible common book value per share | $ 5.79 | $ 6.22 | $ 6.19 | $ 6.23 | $ 6.31 |
| Earnings per share (excluding merger-related expenses) | |||||
| Net income (loss) | $ (981) | $ (1,376) | $ (3,114) | $ (2,887) | $ (4,521) |
| Plus: merger-related expenses | 2,609 | 496 | 632 | 75 | -- |
| Less: related income tax expense | (970) | (174) | (231) | -- | -- |
| Net income (loss) (excluding merger-related expenses) | $ 658 | $ (1,054) | $ (2,713) | $ (2,812) | $ (4,521) |
| Divided by: weighted average dilutive shares | 30,719,363 | 28,051,098 | 28,051,098 | 28,051,098 | 28,051,098 |
| Earnings per share (excluding merger-related expenses) | $ 0.02 | $ (0.04) | $ (0.10) | $ (0.10) | $ (0.16) |
| Asset quality measures and loan information excluding acquisition | |||||
| Total loans | $ 759,047 | $ 367,412 | $ 380,365 | $ 388,187 | $ 399,829 |
| Less: loans acquired with Community Capital | (363,539) | -- | -- | -- | -- |
| Loans excluding acquired loans (originated loans) | $ 395,508 | $ 367,412 | $ 380,365 | $ 388,187 | $ 399,829 |
| Total nonperforming assets | $ 35,885 | $ 28,699 | $ 32,637 | $ 36,790 | $ 43,356 |
| Less: nonpeforming assets acquired with Community Capital | (9,762) | -- | -- | -- | -- |
| Nonperforming assets excluding acquisition | $ 26,123 | $ 28,699 | $ 32,637 | $ 36,790 | $ 43,356 |
| Nonperforming loans | $ 19,922 | $ 21,449 | $ 27,566 | $ 35,225 | $ 42,109 |
| Divided by: loans excluding acquisition | 395,508 | 367,412 | 380,365 | 388,187 | 399,829 |
| Nonperforming loans to loans excluding acquisition | 5.04% | 5.84% | 7.25% | 9.07% | 10.53% |
| Allowance for loan losses | $ 10,154 | $ 9,833 | $ 11,277 | $ 11,768 | $ 12,424 |
| Divided by: loans excluding acquisition | 395,508 | 367,412 | 380,365 | 388,187 | 399,829 |
| Allowance for loan losses to loans excluding acquisition | 2.57% | 2.68% | 2.96% | 3.03% | 3.11% |
| Average loans | $ 622,823 | $ 367,096 | $ 385,893 | $ 397,066 | $ 404,644 |
| Less: average loans related to Community Capital | (251,233) | -- | -- | -- | -- |
| Average loans excluding acquisition | $ 371,590 | $ 367,096 | $ 385,893 | $ 397,066 | $ 404,644 |
| Net charge-offs | $ 790 | $ 2,012 | $ 3,736 | $ 5,118 | $ 8,963 |
| Divided by: average loans excluding acquisition | 372,661 | 367,096 | 385,893 | 397,066 | 404,644 |
| Annualized net charge-offs to average loans excluding acquisition | 0.85% | 2.19% | 3.87% | 5.16% | 8.86% |
| * Derived from audited financial statements. | |||||