425 1 h91425e425.txt STERLING BANCSHARES, INC. Filed by Sterling Bancshares, Inc. Pursuant to Rule 425 under the Securities Act of 1933 Subject Company: Community Bancshares, Inc. Commission File No. 000-20750 Date: October 18, 2001 Sterling Bancshares, Inc. has previously filed with the Securities and Exchange Commission a registration statement on Form S-4 to register shares of Sterling Bancshares' common stock to be issued in one or more transactions involving the acquisitions of other businesses, properties or securities. In connection with the proposed transaction among Sterling Bancshares, Sterling Bancorporation, Inc. and Community Bancshares, Inc., the shares of common stock to be issued by Sterling Bancshares to the shareholders of Community Bancshares have been registered under the registration statement on Form S-4 previously filed with the Securities and Exchange Commission. Investors and security holders are advised to read the registration statement and prospectus included within the registration statement, together with the prospectus supplement filed by Sterling Bancshares because they contain important information about Sterling Bancshares. Investors and security holders may obtain free copies of these documents through the website maintained by the SEC at http://www.sec.gov. Free copies of the prospectus and prospectus supplement may also be obtained by directing a request through the investor relations portion of Sterling Bancshares' website at http://banksterling.com or by mail to Sterling Bancshares, Inc., 2550 North Loop West, Suite 600, Houston, Texas 77092, Attn: Investor Relations. Sterling's telephone number is (713) 466-8300. Certain of the statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, including, but not limited to, the following: general business and economic conditions in the markets Sterling Bancshares serves may be less favorable than anticipated which could decrease the demand for loan, deposit and other financial services and increase loan delinquencies and defaults; changes in market rates and prices may adversely impact the value of securities, loans, deposits and other financial instruments; Sterling Bancshares' liquidity requirements could be adversely affected by changes in its assets and liabilities; legislative or regulatory developments including changes in laws concerning taxes, banking, securities, insurance and other aspects of the financial securities industry; competitive factors may increase, including product and pricing pressures among financial services organizations; and changes in fiscal and governmental policies of the United States federal government could have an adverse effect on Sterling Bancshares' business. Please also read the additional risks and factors described from time to time in Sterling Bancshares' reports filed with the Securities and Exchange Commission, including Sterling Bancshares' Annual Report on Form 10-K for the fiscal year ended December 31, 2000. The following is a press release issued on October 18, 2001, by Sterling Bancshares concerning its financial results for the third quarter ending September 30, 2001. NEWS RELEASE For More Information Contact: For Immediate Release - October 18, 2001 Eugene Putnam, Chief Financial Officer 713-507-7292 STERLING BANCSHARES REPORTS 18% INCREASE IN OPERATING EARNINGS PER SHARE HOUSTON, TEXAS -- Sterling Bancshares, Inc. (Nasdaq: SBIB) today reported operating income for the third quarter of 2001 of $8.7 million or $.20 per diluted share, up 18% from the $.17 per diluted share earned in the third quarter of 2000. Including $1.2 million in before-tax charges relating to the previously announced acquisition of Lone Star Bancorporation, Inc., reported net income for the quarter ended September 30, 2001 totaled $7.9 million or $.18 per diluted share. For the third quarter of 2001, reported return on average assets was 1.23% and return on average common equity was 16.48%. On August 23, 2001 Sterling Bancshares completed its merger with Lone Star Bancorporation, Inc. The merger was accounted for as a pooling-of-interests business combination. Accordingly, all consolidated financial information reflects the results of operations of both Sterling and Lone Star, on a combined basis, for all periods presented. On July 24, 2001, Sterling Bancshares declared a three-for-two stock split, effected in the form of a stock dividend, to all shareholders of record on September 4, 2001. All financial information presented reflects the three-for-two split. For the first nine months of 2001, operating income was $23.9 million or $.56 per diluted share, up 17% from the $.48 per diluted share earned in the first nine months of 2000. Including $1.0 million in before-tax charges in the first quarter of 2001 related to the acquisition of CaminoReal Bancshares and $1.2 million in before-tax charges related to the acquisition of Lone Star Bancorporation, Inc., reported net income for the first nine months of 2001 was $22.4 million. For the first nine months of 2001, reported return on average assets was 1.26% and return on average common equity was 16.81%. "The Texas economy continued to grow during the third quarter, which combined with our relationship approach to serving owner-operated businesses led to a record level of earnings," commented J. Downey Bridgwater, President. "Our third quarter results clearly indicate the success of our franchise, and we look forward to continued growth of our loan and deposit portfolios in Houston as well as San Antonio and Dallas." "Over the past eighteen months, we have taken additional steps to strengthen our credit review function. With the national economy slowing, we are pleased to report that our loan -more- Sterling Bancshares, Inc., News Release October 18, 2001 Page 2 portfolio has continued to grow while our credit quality has remained relatively stable. Additionally, our mortgage company continues to post record results, in part due to the low interest-rate environments." Tax equivalent net interest income was $32.7 million in the third quarter of 2001, up 22% from the third quarter of 2000. For the first nine months of 2001, tax equivalent net interest income was $92.2 million, up 17% from the first nine months of 2000. The net interest margin for the third quarter of 2001 was 5.78%. Average loans held for investment for the third quarter of 2001 were $1.6 billion, up 25% from the third quarter of last year. Average deposits for the quarter ended September 30, 2001 were $2.1 billion, a 28% increase from the same period a year ago. Noninterest income was $14.2 million in the third quarter, up 35% from the third quarter of last year. For the first nine months of 2001, noninterest income was $46.4 million, up 66% from the first nine months of 2000. Noninterest income represented 30% of total revenue in the third quarter of 2001. Noninterest expense was $29.9 million for the third quarter of 2001, up from the $24.1 million in the third quarter of 2000. For the first nine months of 2001, noninterest expenses, excluding one-time merger charges related to the acquisitions of CaminoReal Bancshares and Lone Star Bancorporation Inc. were $92.3 million, up from the $69.2 million reported in the first nine months of 2000. Net charge-offs in the third quarter of 2001 were $2.0 million or .45% of average loans, compared to $1.8 million or .52% of average loans in the third quarter of last year. For the first nine months of 2001, net charge-offs were $5.9 million or .48% of average loans, compared to $4.9 million or .50% of average loans in 2000. The provision for loan losses was $3.1 million for the third quarter and $8.6 million for the first nine months of 2001, up from $2.4 million and $6.8 million respectively in 2000. The allowance for loan losses at September 30, 2001 was $21.4 million and represented 1.37% of loans held for investment, up from 1.24% a year ago. Nonperforming assets were $15.5 million at September 30, 2001 or .89% of loans and foreclosed properties. Nonperforming assets at September 30, 2001 comprised .61% of total assets, compared to .55% at June 30, 2001 and .42% a year ago. At September 30, 2001, Sterling had total assets of $2.5 billion and total deposits of $2.1 billion. Equity capital of $191.5 million represented 7.54% of total assets. Book value per share was $4.53. In conjunction with Sterling's third quarter earnings release, George Martinez, Chairman; Downey Bridgwater, President; and Eugene Putnam, Chief Financial Officer invite you to listen to its conference call that will be broadcast live over the Internet on Friday, October 19, 2001 at 10:00AM EST. To participate, please visit Sterling's web site at www.banksterling.com. Sterling Bancshares, Inc. is a Houston-based bank holding company that operates 36 community-banking offices in the greater metro areas of Dallas, Houston, San Antonio, -more- Sterling Bancshares, Inc., News Release October 18, 2001 Page 3 and South Texas. Sterling also provides mortgage-banking services through its 80 percent-owned subsidiary, Sterling Capital Mortgage Company. Sterling's common stock is traded through the Nasdaq National Market System under the symbol SBIB. For more information on Sterling Bancshares, please visit the company's web site at www.banksterling.com. Except for historical information contained herein, this press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, including, but not limited to, the following: general business and economic conditions in the markets the Company serves may be less favorable than anticipated which could decrease the demand for loan, deposit and other financial services and increase loan delinquencies and defaults; changes in market rates and prices may adversely impact the value of securities, loans, deposits and other financial instruments; the Company's liquidity requirements could be adversely affected by changes in its assets and liabilities; legislative or regulatory developments including changes in laws concerning taxes, banking, securities, insurance and other aspects of the financial securities industry; competitive factors may increase, including product and pricing pressures among financial services organizations; and changes in fiscal and governmental policies of the United States federal government could have an adverse effect on the Company's business. Please also read the additional risks and factors described from time to time in the Company's reports filed with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000. -more- Sterling Bancshares, Inc., News Release October 18, 2001 Page 4 -more- Sterling Bancshares, Inc., News Release October 18, 2001 Page 4 STERLING BANCSHARES, INC. UNAUDITED (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
QUARTER ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ----------------------- % ----------------------- % EARNINGS SUMMARY 2001 2000 CHANGE 2001 2000 CHANGE --------- --------- --------- --------- --------- --------- Interest income $ 44,895 $ 43,469 3.28% $ 131,700 $ 124,218 6.02% Interest expense 12,556 17,021 (26.23)% 40,735 46,603 (12.59%) --------- --------- --------- --------- --------- --------- Net interest income 32,339 26,448 22.27% 90,965 77,615 17.20% Provision for loan losses 3,120 2,405 29.73% 8,592 6,774 26.84% Noninterest income 14,171 10,477 35.26% 46,384 28,009 65.60% Noninterest expense 29,907 24,089 24.15% 92,290 69,247 33.28% Conversion costs related to acquisitions 1,194 -- -- 2,224 -- -- --------- --------- --------- --------- --------- --------- Earnings before income taxes 12,289 10,431 17.81% 34,243 29,603 15.67% Provision for income taxes 4,416 3,232 36.63% 11,841 9,205 28.64% --------- --------- --------- --------- --------- --------- Net earnings 7,873 7,199 9.36% $ 22,402 $ 20,398 9.82% ========= ========= ========= ========= ========= ========= Basic earnings per share $ 0.19 $ 0.17 7.76% $ 0.53 $ 0.49 8.55% ========= ========= ========= ========= ========= ========= Basic weighted average shares outstanding 42,263 41,645 1.48% 42,052 41,565 1.17% ========= ========= ========= ========= ========= ========= Diluted earnings per share $ 0.18 $ 0.17 7.08% $ 0.52 $ 0.48 7.69% ========= ========= ========= ========= ========= ========= Diluted weighted average shares outstanding 43,224 42,323 2.13% 42,942 42,109 1.98% ========= ========= ========= ========= ========= ========= Cash diluted earnings per share $ 0.19 $ 0.17 8.86% $ 0.54 $ 0.49 10.10% ========= ========= ========= ========= ========= =========
Sterling Bancshares, Inc., News Release October 18, 2001 Page 5 STERLING BANCSHARES, INC. UNAUDITED (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
AVERAGE FOR QUARTER ENDED -------------------------------------------------------------------------------- SEPTEMBER 30, JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30, BALANCE SHEET SUMMARY 2001 2001 2001 2000 2000 ------------ ------------ ------------ ------------ ------------ Loans available for sale $ 177,610 $ 180,566 $ 145,195 $ 102,708 $ 102,959 Loans held for investment 1,558,697 1,540,352 1,373,500 1,305,381 1,245,870 Total loans 1,736,307 1,720,918 1,518,695 1,408,089 1,348,829 Total investment securities 361,273 370,216 307,431 435,720 504,010 Earning assets 2,248,111 2,210,358 1,887,530 1,902,396 1,937,760 Total assets 2,538,475 2,490,034 2,111,703 2,100,959 2,142,843 Noninterest bearing deposits 706,271 667,495 566,869 556,258 550,847 Interest bearing deposits 1,374,870 1,365,119 1,179,649 1,107,248 1,070,968 Total deposits 2,081,141 2,032,614 1,746,518 1,663,506 1,621,815 Other borrowings 183,164 193,569 143,033 230,215 322,245 Note payable 1,600 1,600 1,600 1,600 52 Trust issued preferred securities 57,500 57,500 35,938 28,750 28,750 Preferred equity 385 397 484 731 1,116 Common equity 189,567 181,236 168,314 163,784 156,541
AVERAGE FOR NINE MONTHS ENDED SEPTEMBER 30, --------------------------- % BALANCE SHEET SUMMARY 2001 2000 CHANGE ------------ ------------ ------------ Loans available for sale $ 167,909 $ 80,176 109.43% Loans held for investment 1,491,510 1,225,456 21.71% Total loans 1,659,419 1,305,632 27.10% Total investment securities 349,504 517,712 (32.49)% Earning assets 2,117,122 1,886,022 12.25% Total assets 2,382,121 2,082,875 14.37% Noninterest bearing deposits 647,388 530,133 22.12% Interest bearing deposits 1,307,626 1,045,247 25.10% Total deposits 1,955,014 1,575,380 24.10% Other borrowings 173,857 314,853 (44.78)% Note payable 1,600 18 8788.89% Trust issued preferred securities 51,287 28,750 78.39% Preferred equity 428 1,090 (60.73)% Common equity 178,209 149,595 19.13%
ENDING BALANCE --------------------------------------------------------------------------------- SEPTEMBER 30, JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30, BALANCE SHEET SUMMARY 2001 2001 2001 2000 2000 ------------- ------------- ------------- ------------- ------------- Loans available for sale $ 177,868 $ 206,323 $ 215,821 $ 139,148 $ 126,084 Loans held for investment 1,564,291 1,555,117 1,525,918 1,345,842 1,280,066 ------------- ------------- ------------- ------------- ------------- Total loans 1,742,159 1,761,440 1,741,739 1,484,990 1,406,150 Securities purchased with an agreement to resell 82,577 45,189 48,881 37,863 33,099 Trading Assets 61,547 62,971 -- -- -- Investment securities 351,212 368,853 378,790 308,202 489,134 Allowance for credit losses (21,431) (20,293) (19,631) (16,862) (15,909) Premises and equipment 54,904 55,388 54,246 47,099 46,578 Goodwill, net 26,475 26,637 25,820 5,952 6,067 Total assets 2,540,553 2,532,944 2,476,953 2,077,214 2,185,254 Noninterest bearing deposits 757,883 738,994 686,635 598,251 576,023 Interest bearing deposits 1,391,057 1,368,883 1,377,014 1,120,571 1,086,476 Total deposits 2,148,940 2,107,877 2,063,649 1,718,822 1,662,499 Other borrowings 112,568 164,160 155,390 140,364 320,523 Note payable 1,600 1,600 1,600 1,600 1,600 Total liabilities 2,287,702 2,290,356 2,242,207 1,879,587 1,995,663 Minority interest in Sterling Capital Mortgage 3,434 2,816 2,290 2,052 1,729 Trust issued preferred securities 57,500 57,500 57,500 28,750 28,750 Preferred equity 385 385 401 566 787 Common equity 191,532 181,887 174,555 166,259 158,325
Sterling Bancshares, Inc., News Release October 18, 2001 Page 6 STERLING BANCSHARES, INC. UNAUDITED (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
SEPTEMBER 30, JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30, NONPERFORMING ASSETS 2001 2001 2001 2000 2000 ------------ ---------- ----------- ------------ ------------ Nonaccrual loans $ 11,585 $ 11,127 $ 10,432 $ 8,297 $ 7,431 Restructured loans -- -- 1,356 1,298 -- Other real estate 1,887 1,738 1,895 1,702 1,445 Other repossessed assets 205 200 153 192 107 Accruing loans past due 90 days or more 1,867 841 299 626 213 ------------ ---------- ----------- ------------ ------------ Total nonperforming assets $ 15,544 $ 13,906 $ 14,135 $ 12,115 $ 9,196 ============ ========== =========== ============ ============ Total nonperforming assets as a percentage of loans, ORE and ORA 0.89% 0.79% 0.81% 0.81% 0.65% ============ ========== =========== ============ ============
QUARTER ENDED ----------------------------------------------------------------------------- SEPTEMBER 30, JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30, ALLOWANCE FOR LOAN LOSSES 2001 2001 2001 2000 2000 ------------ ---------- ----------- ------------ ------------ Balance at beginning of period $ 20,293 $ 19,631 $ 16,862 $ 15,909 $ 15,274 Loans charged off (2,130) (2,719) (1,990) (2,199) (1,937) Loan recoveries 148 269 504 258 167 ------------ ---------- ----------- ------------ ------------ Net charge-offs (1,982) (2,450) (1,486) (1,941) (1,770) Provision for loan losses 3,120 3,112 2,360 2,894 2,405 Acquisition of CaminoReal Bank -- -- 1,895 -- -- ------------ ---------- ----------- ------------ ------------ Balance at end of period $ 21,431 $ 20,293 $ 19,631 $ 16,862 $ 15,909 ============ ========== =========== ============ ============ Allowance for loan losses as a percentage of total loans 1.23% 1.15% 1.13% 1.14% 1.13% ============ ========== =========== ============ ============ Allowance for loan losses as a percentage of total loans held for investment 1.37% 1.30% 1.29% 1.25% 1.24% ============ ========== =========== ============ ============ Allowance for loan losses as a percentage of nonperforming assets 137.87% 145.93% 138.88% 139.18% 173.00% ============ ========== =========== ============ ============ Net charge-offs as a percentage of average loans (annualized) 0.45% 0.57% 0.40% 0.55% 0.52% ============ ========== =========== ============ ============ Provision for loan losses as a percentage of average loans (annualized) 0.71% 0.73% 0.63% 0.82% 0.71% ============ ========== =========== ============ ============
QUARTER ENDED --------------------------------------------------------------------- SEPTEMBER 30, JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30, 2001 2001 2001 2000 2000 ------------ ---------- ----------- ------------ ------------ SELECTED RATIOS Annualized return on average assets 1.23% 1.27% 1.28% 1.35% 1.34% ============ ========== =========== ============ ============ Annualized return on average shareholders' equity 16.48% 17.46% 16.00% 17.35% 18.30% ============ ========== =========== ============ ============ Net interest margin (tax equivalent) 5.78% 5.77% 5.93% 5.72% 5.50% ============ ========== =========== ============ ============ End of period book value per common share $ 4.53 $ 4.32 $ 4.16 $ 3.98 $ 3.80 ============ ========== =========== ============ ============ End of period common shares outstanding 42,318 42,145 41,988 41,728 41,678 ============ ========== =========== ============ ============ Tangible book value per common share $ 3.90 $ 3.68 $ 3.54 $ 3.84 $ 3.65 ============ ========== =========== ============ ============
Sterling Bancshares, Inc., News Release October 18, 2001 Page 7 STERLING BANCSHARES, INC. Unaudited (Dollars in thousands)
QUARTER ENDED ---------------------------------------------------------------------------- SEPTEMBER 30, 2001 SEPTEMBER 30, 2000 -------------------------------------- ----------------------------------- YIELD ANALYSIS AVERAGE AVERAGE BALANCE INTEREST YIELD BALANCE INTEREST YIELD ----------- ----------- ---------- ---------- ---------- ---------- INTEREST EARNING ASSETS: Interest bearing deposits in financial institutions $ 1,297 $ 22 6.73% 1,116 $ 18 6.42% Federal funds sold 26,297 298 4.50% 25,443 425 6.65% Securites purchased under agreements to resell 60,591 866 5.67% 58,362 1,196 8.15% Trading Assets 62,346 1,120 7.13% -- -- -- Investment securities (taxable) 285,914 4,400 6.11% 426,424 7,148 6.67% Investment securities (tax-exempt) 75,359 814 4.29% 77,586 867 4.45% Loans (taxable) 1,731,870 37,299 8.54% 1,348,460 33,807 9.97% Loans (tax-exempt) 4,437 76 6.80% 369 8 8.62% ----------- ----------- ---------- ---------- ---------- ---------- Total Interest Earning Assets 2,248,111 44,895 7.92% 1,937,760 43,469 8.92% NONINTEREST EARNING ASSETS: Cash and due from banks 94,319 71,392 Premises and equipment, net 55,631 46,250 Other assets 161,391 103,185 Allowance for credit losses (20,977) (15,744) ----------- ---------- Total Noninterest Earning Assets 290,364 205,083 ----------- ---------- TOTAL ASSETS $ 2,538,475 2,142,843 ----------- ---------- INTEREST BEARING LIABILITIES: Demand and savings deposits $ 820,334 $ 4,473 2.16% 619,828 5,204 3.34% Certificates and other time deposits 554,536 6,269 4.49% 451,140 6,432 5.67% Other borrowings 183,164 1,794 3.89% 322,245 5,384 6.65% Note payable 1,600 20 4.96% 52 1 7.65% ----------- ----------- ---------- ---------- ---------- ---------- Total Interest Bearing Liabilities 1,559,634 12,556 3.19% 1,393,265 17,021 4.86% NONINTEREST BEARING LIABILITIES: Demand deposits 706,271 550,847 Other liabilities 25,118 12,324 Trust preferred securities 57,500 28,750 Shareholders' equity 189,952 157,657 ----------- ---------- 978,841 749,578 ----------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,538,475 2,142,843 =========== ========== NET INTEREST INCOME & MARGIN $ 32,339 5.71% $ 26,448 5.43% ========== ========== ========== ========== NET INTEREST INCOME & MARGIN (TAX EQUIVALENT) $ 32,744 5.78% $ 26,796 5.50% ========== ========== ========== ==========
Sterling Bancshares, Inc., News Release October 18, 2001 Page 8 STERLING BANCSHARES, INC. Unaudited (Dollars in thousands)
NINE MONTHS ENDED SEPTEMBER 30, 2001 2000 ---------------------------------------- -------------------------------------- AVERAGE AVERAGE BALANCE INTEREST YIELD BALANCE INTEREST YIELD ----------- ----------- ----------- ----------- ----------- ----------- INTEREST EARNING ASSETS: Interest bearing deposits in financial institutions $ 1,176 $ 57 6.48% $ 1,339 $ 59 5.89% Federal funds sold 25,841 854 4.42% 17,252 817 6.33% Securites purchased under agreements to resell 47,084 2,080 5.91% 44,087 2,586 7.84% Trading Assets 34,098 1,917 7.52% -- -- -- Securities (taxable) 272,585 13,202 6.48% 438,202 22,264 6.79% Securities (tax-exempt) 76,919 2,504 4.35% 79,510 2,640 4.44% Loans (taxable) 1,655,403 110,873 8.95% 1,305,204 95,825 9.81% Loans (tax-exempt) 4,016 213 7.09% 428 27 8.43% ----------- ----------- ----------- ----------- ----------- ----------- Total Interest Earning Assets 2,117,122 131,700 8.32% 1,886,022 124,218 8.80% NONINTEREST EARNING ASSETS: Cash and due from banks 86,814 70,321 Premises and equipment, net 53,070 45,490 Other assets 144,692 96,249 Allowance for credit losses (19,577) (15,207) ----------- ----------- Total Noninterest Earning Assets 264,999 196,853 ----------- ----------- TOTAL ASSETS $ 2,382,121 $ 2,082,875 =========== =========== INTEREST BEARING LIABILITIES: Demand and savings deposits $ 761,749 $ 14,068 2.47% $ 614,585 $ 14,408 3.13% Certificates and other time deposits 545,877 20,751 5.08% 430,662 17,378 5.39% Other borrowings 173,857 5,830 4.48% 314,853 14,816 6.29% Note payable 1,600 86 7.19% 18 1 7.42% ----------- ----------- ----------- ----------- ----------- ----------- Total Interest Bearing Liabilities 1,483,083 40,735 3.67% 1,360,118 46,603 4.58% NONINTEREST BEARING LIABILITIES: Demand deposits 647,388 530,133 Other liabilities 21,726 13,188 Trust preferred securities 51,287 28,750 Shareholders' equity 178,637 150,685 ----------- ----------- 899,038 722,756 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,382,121 $ 2,082,875 =========== =========== NET INTEREST INCOME & MARGIN $ 90,965 5.74% $ 77,615 5.50% =========== =========== =========== =========== NET INTEREST INCOME & MARGIN (TAX EQUIVALENT) $ 92,165 5.82% $ 78,695 5.57% =========== =========== =========== ===========
Sterling Bancshares, Inc., News Release October 18, 2001 Page 9 STERLING BANCSHARES, INC. UNAUDITED (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
SEGMENT REPORTING QUARTER ENDED SEPTEMBER 30, 2001 QUARTER ENDED SEPTEMBER 30, 2000 ------------------------------------------ ------------------------------------------ COMMERCIAL MORTGAGE COMMERCIAL MORTGAGE BANKING BANKING COMBINED BANKING BANKING COMBINED ------------ ------------ ------------ ------------ ------------ ------------ EARNINGS SUMMARY Interest income $ 44,895 $ -- $ 44,895 $ 43,469 $ -- $ 43,469 Interest expense 12,556 -- 12,556 17,021 -- 17,021 ------------ ------------ ------------ ------------ ------------ ------------ Net interest income 32,339 -- 32,339 26,448 -- 26,448 Provision for loan losses 3,120 -- 3,120 2,405 -- 2,405 Noninterest income 6,276 7,895 14,171 4,740 5,737 10,477 Noninterest expense 26,197 3,710 29,907 19,774 4,315 24,089 Conversion costs related to acquisitions 1,194 -- 1,194 -- -- -- ------------ ------------ ------------ ------------ ------------ ------------ Earnings before income taxes 8,104 4,185 12,289 9,009 1,422 10,431 Provision for income taxes 2,702 1,714 4,416 2,645 587 3,232 ------------ ------------ ------------ ------------ ------------ ------------ Net earnings $ 5,402 $ 2,471 $ 7,873 $ 6,364 $ 835 $ 7,199 ============ ============ ============ ============ ============ ============ EFFICIENCY RATIO 66.66% 46.99% 63.37% 62.18% 75.21% 64.17% ============ ============ ============ ============ ============ ============
QUARTER ENDED SEPTEMBER 30, 2001 QUARTER ENDED SEPTEMBER 30, 2000 ---------------------------------------- ---------------------------------------- COMMERCIAL MORTGAGE COMMERCIAL MORTGAGE BANKING BANKING COMBINED BANKING BANKING COMBINED ------------ ------------ ------------ ------------ ------------ ------------ NONINTEREST INCOME Customer service fees $ 4,027 $ -- $ 4,027 $ 2,785 $ -- $ 2,785 Bank-owned life insurance income 518 -- 518 491 -- 491 Gain on sale of mortgage loans -- 6,489 6,489 -- 3,050 3,050 Debit card fees 248 -- 248 76 -- 76 Other 1,483 1,406 2,889 1,388 2,687 4,075 ------------ ------------ ------------ ------------ ------------ ------------ Total $ 6,276 $ 7,895 $ 14,171 $ 4,740 $ 5,737 $ 10,477 ============ ============ ============ ============ ============ ============ NONINTEREST EXPENSE Salaries and employee benefits $ 14,500 $ 687 $ 15,187 $ 11,389 $ 2,325 $ 13,714 Occupancy expense 3,426 1,123 4,549 2,631 949 3,580 Technology 1,214 82 1,296 1,000 28 1,028 Supplies 467 115 582 289 92 381 Goodwill amortization 309 71 380 46 68 114 Professional fees 651 86 737 559 35 594 Minority interest expense 1,329 617 1,946 667 209 876 Other 4,301 929 5,230 3,193 609 3,802 ------------ ------------ ------------ ------------ ------------ ------------ Total $ 26,197 $ 3,710 $ 29,907 $ 19,774 $ 4,315 $ 24,089 ============ ============ ============ ============ ============ ============
Sterling Bancshares, Inc., News Release October 18, 2001 Page 10 STERLING BANCSHARES, INC. UNAUDITED (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
SEGMENT REPORTING NINE MONTHS ENDED SEPTEMBER 30, 2001 NINE MONTHS ENDED SEPTEMBER 30, 2000 ------------------------------------------ ------------------------------------------ COMMERCIAL MORTGAGE COMMERCIAL MORTGAGE BANKING BANKING COMBINED BANKING BANKING COMBINED ------------ ------------ ------------ ------------ ---------- ------------ EARNINGS SUMMARY Interest income $ 131,700 $ -- $ 131,700 $ 124,218 $ -- $ 124,218 Interest expense 40,735 -- 40,735 46,603 -- 46,603 ------------ ------------ ------------ ------------ ---------- ------------ Net interest income 90,965 -- 90,965 77,615 -- 77,615 Provision for loan losses 8,592 -- 8,592 6,774 -- 6,774 Noninterest income 17,212 29,172 46,384 14,068 13,941 28,009 Noninterest expense 73,114 19,176 92,290 58,224 11,023 69,247 Conversion costs related to acquisitions 2,224 -- 2,224 -- -- -- ------------ ------------ ------------ ------------ ---------- ------------ Earnings before income taxes 24,247 9,996 34,243 26,685 2,918 29,603 Provision for income taxes 7,746 4,095 11,841 7,999 1,206 9,205 ------------ ------------ ------------ ------------ ---------- ------------ Net earnings $ 16,501 $ 5,901 $ 22,402 $ 18,686 $ 1,712 $ 20,398 ============ ============ ============ ============ ============ ============ EFFICIENCY RATIO 66.35% 65.73% 66.22% 62.26% 79.07% 64.44% ============ ============ ============ ============ ============ ============
NINE MONTHS ENDED SEPTEMBER 30, 2001 NINE MONTHS ENDED SEPTEMBER 30, 2000 ---------------------------------------- ---------------------------------------- COMMERCIAL MORTGAGE COMMERCIAL MORTGAGE BANKING BANKING COMBINED BANKING BANKING COMBINED ------------ ------------ ------------ ------------ ------------ ------------ NONINTEREST INCOME Customer service fees $ 10,713 $ -- $ 10,713 $ 8,182 $ -- $ 8,182 Bank-owned life insurance income 1,520 -- 1,520 1,388 -- 1,388 Gain on the sale of credit card loan portfolio -- -- -- 237 -- 237 Gain on sale of mortgage loans -- 17,964 17,964 -- 7,811 7,811 Debit card fees 599 -- 599 78 -- 78 Other 4,380 11,208 15,588 4,183 6,130 10,313 ------------ ------------ ------------ ------------ ------------ ------------ Total $ 17,212 $ 29,172 $ 46,384 $ 14,068 $ 13,941 $ 28,009 ============ ============ ============ ============ ============ ============ NONINTEREST EXPENSE Salaries and employee benefits $ 40,761 $ 10,872 $ 51,633 $ 33,760 $ 5,702 $ 39,462 Occupancy expense 9,887 3,104 12,991 7,613 2,497 10,110 Technology 3,698 270 3,968 2,822 92 2,914 Supplies 1,161 323 1,484 892 300 1,192 Goodwill amortization 665 208 873 138 200 338 Professional fees 1,894 168 2,062 1,483 102 1,585 Minority interest expense 3,390 1,475 4,865 2,001 428 2,429 Other 11,658 2,756 14,414 9,515 1,702 11,217 ------------ ------------ ------------ ------------ ------------ ------------ Total $ 73,114 $ 19,176 $ 92,290 $ 58,224 $ 11,023 $ 69,247 ============ ============ ============ ============ ============ ============
Sterling Bancshares, Inc., News Release October 18, 2001 Page 11 STERLING BANCSHARES, INC. UNAUDITED (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
SEPTEMBER 30, DECEMBER 31, 2001 % 2000 % ------------- ------------- ------------- ------------- LOAN PORTFOLIO Commercial and industrial $ 492,157 28.25% $ 477,199 32.13% Real estate: Commercial 492,646 28.28% 447,113 30.11% One-to-four family available for sale 177,868 10.21% 139,148 9.37% One-to-four family 137,128 7.87% 125,081 8.42% Multi-family 36,297 2.08% 32,611 2.20% Construction & development 261,874 15.03% 134,482 9.06% Consumer 135,520 7.78% 126,925 8.55% Other 8,756 0.50% 2,149 0.14% ------------- ------------- ------------- ------------- Total loans (gross) 1,742,246 100.00% 1,484,708 99.98% Unearned (discounts)/premiums (87) 0.00% 282 0.02% ------------- ------------- ------------- ------------- Total loans (net) $ 1,742,159 100.00% $ 1,484,990 100.00% ============= ============= ============= =============
SEPTEMBER 30, DECEMBER 31, 2001 2000 ------------- ------------- INTANGIBLES Goodwill $ 26,475 $ 5,952 Mortgage service intangibles 13,459 907 ------------- ------------- $ 39,934 $ 6,859 ============= =============
SEPTEMBER 30, DECEMBER 31, REGULATORY CAPITAL DATA 2001 2000 ------------- ------------- Tier 1 Capital $ 221,413 $ 190,547 Tier 1 Ratio 10.24% 10.51% Total Capital (Tier 1 + Tier 2) $ 242,845 $ 204,200 Total Capital Ratio 11.24% 11.26% Total Risk -Adjusted Assets $ 2,161,375 $ 1,813,599 Tier 1 Leverage Ratio 8.73% 9.10%
FUNDINGS AT MORTGAGE COMPANY
ORIGINAL PRODUCTION REFINANCED TOTAL ------------- ------------- ------------- Quarter ended 3/31/00 $ 242,001 $ 13,466 $ 255,467 Quarter ended 6/30/00 $ 335,992 $ 26,094 $ 362,086 Quarter ended 9/30/00 $ 346,075 $ 24,794 $ 370,869 Quarter ended 12/31/00 $ 339,534 $ 41,802 $ 381,336 Quarter ended 3/31/01 $ 369,974 $ 125,188 $ 495,162 Quarter ended 6/30/01 $ 511,384 $ 159,409 $ 670,792 Quarter ended 9/30/01 $ 492,523 $ 122,649 $ 615,172
Sterling Bancshares, Inc., News Release October 18, 2001 Page 12 STERLING BANCSHARES, INC. UNAUDITED (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
SEPTEMBER 30, DECEMBER 31, 2001 2000 ------------- ------------- SUPPLEMENTAL DATA Held to maturity securities - fair value $ 82,852 $ 91,061 Held to maturity securities - book value $ 80,504 $ 90,927 Available for sale securities - fair value $ 270,708 $ 217,275 Available for sale securities - amortized cost $ 263,772 $ 215,680 Pledged securities - book value $ 186,046 $ 241,642 Common dividends per share $ 0.037 $ 0.033 EOP employees - Sterling Bank (FTEs) 897 743 EOP employees - Lone Star Bank (FTEs) 66 67 EOP employees - mortgage company (FTEs) 578 351 Total number of banking offices 36 28
52 WEEK HIGH 52 WEEK LOW ------------- ------------- Stock price (close) $ 15.65 $ 9.67