-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OtljMPNDDbA7/jTSvWTzjJcL1rNkbKHNLqx9/FQf1ELlzNf2fMlQYc4OwPxINfrQ R4jchUMltd9whFV2YAoItQ== 0000950129-03-005024.txt : 20031021 0000950129-03-005024.hdr.sgml : 20031021 20031021101548 ACCESSION NUMBER: 0000950129-03-005024 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031021 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20031021 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STERLING BANCSHARES INC CENTRAL INDEX KEY: 0000891098 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 742175590 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20750 FILM NUMBER: 03949007 BUSINESS ADDRESS: STREET 1: 15000 NORTHWEST FRWY STE 308 CITY: HOUSTON STATE: TX ZIP: 77040 BUSINESS PHONE: 7134668300 8-K 1 h09776e8vk.txt STERLING BANCSHARES, INC.- OCTOBER 21, 2003 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ---------- DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): OCTOBER 21, 2003 STERLING BANCSHARES, INC. (Exact name of registrant as specified in its charter) TEXAS 0-20750 74-2175590 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 2550 NORTH LOOP WEST, SUITE 600 HOUSTON, TEXAS 77092 (Address Of Principal Executive Office and Zip Code) (713) 466-8300 (Registrant's telephone number, including area code) ---------- ================================================================================ ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. The following materials are filed as exhibits to this Current Report on Form 8-K: Exhibit Number Description of Exhibit 99.1 Press Release dated October 21, 2003. ITEM 9. REGULATION FD DISCLOSURE. On October 21, 2003, Sterling Bancshares, Inc. issued a press release announcing third quarter results for the period ended September 30, 2003. A copy of the press release is attached as Exhibit 99.1 hereto and is hereby incorporated herein by reference. ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On October 21, 2003, Sterling Bancshares, Inc. issued a press release announcing third quarter results for the period ended September 30, 2003. A copy of the press release is attached as Exhibit 99.1 hereto and is hereby incorporated herein by reference. The press release contains financial information determined by methods other than in accordance with Generally Accepted Accounting Principles ("GAAP"). Management uses these non-GAAP measures in their analysis of the business and its performance. In particular, net interest income, net interest margin and operating efficiency are calculated on a fully tax-equivalent basis ("FTE"). Management believes that these measures calculated on a FTE basis provide a useful picture of net interest income, net interest margin and operating efficiency for comparative purposes. Net interest income and net interest margin on a FTE basis is determined by adjusting net interest income to reflect tax-exempt interest income on an equivalent before-tax basis. The efficiency ratio also uses net interest income on a FTE basis. Non-GAAP information presented by other companies may not be comparable to that presented herein, since each company may define non-GAAP measures differently. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: October 21, 2003. STERLING BANCSHARES, INC. By: /s/ STEPHEN C. RAFFAELE ----------------------------------------- Stephen C. Raffaele Executive Vice President and Chief Financial Officer EXHIBIT INDEX
Exhibit Number Description ------- ------------ 99.1 Press Release dated October 21, 2003.
EX-99.1 3 h09776exv99w1.txt PRESS RELEASE - THIRD QUARTER FINANCIAL RESULTS EXHIBIT 99.1 NEWS RELEASE For More Information Contact: For Release - October 21, 2003 J. Downey Bridgwater, President & Chief Executive Officer 713-507-2670 Stephen Raffaele, Chief Financial Officer 713-507-7408 STERLING BANCSHARES REPORTS THIRD QUARTER RESULTS HOUSTON, TX, October 21, 2003 -- Sterling Bancshares, Inc. (Nasdaq: SBIB) today announced results for the third quarter ended September 30, 2003. Net income for the quarter was $27.3 million or $0.61 per diluted share, up 221.1% from the $0.19 per diluted share earned in the third quarter of 2002. Included within the results for the third quarter is the Company's gain of $21.0 million from the sale of Sterling Capital Mortgage Company on September 30, 2003. For the quarter ending September 30, 2003, annualized return on average assets was 3.16% and annualized return on average common equity was 40.60%. Income from continuing operations for the third quarter of 2003 was $7.4 million or $0.17 per diluted share, down 5.6% from the $0.18 per diluted share earned during the same period of 2002. Income from discontinued operations for the third quarter of 2003 was $19.9 million, or $0.44 per diluted share, and includes the $21.0 million gain from the sale of the mortgage company. THIRD QUARTER 2003 HIGHLIGHTS o September 30, 2003 - CMCR Holding Company, a majority owned indirect subsidiary of the Company, completed the sale of its subsidiary, Sterling Capital Mortgage Company to RBC Mortgage Company, an indirect subsidiary of the Royal Bank of Canada for approximately $100 million. The gross proceeds available to the Company for its indirect interest were $74.2 million. o August 19, 2003 - The Company entered into a definitive agreement to acquire South Texas Capital Group, Inc., of San Antonio, Texas, in a cash and stock merger. The South Texas Capital Group is a privately held bank holding company, which operates three banking offices in San Antonio under the name of Plaza Bank. The transaction is expected to close during the fourth quarter of 2003. "The strategic divestiture of Sterling Capital Mortgage Company enables us to focus all of our resources on building the bank," commented J. Downey Bridgwater, President and Chief Executive Officer. "As such, we can now fully concentrate on providing personal service to owner-operated businesses in Texas. The net proceeds from the sale of the mortgage company and the associated capital is now available to facilitate strategic acquisitions such as Plaza Bank within our markets of Houston, Dallas, and San Antonio as they may become available. In addition, the available capital will support our ongoing internal growth generated through taking market share from the large out-of-state banks and opening new offices." Sterling Bancshares, Inc., News Release October 21, 2003 Page 2 Net interest income was $35.8 million in the third quarter of 2003, a decrease of 6.6% from the same period in 2002. The net interest margin for the third quarter of 2003 was 4.58% compared to 5.60% for the quarter ended September 30, 2002. Tax equivalent net interest income was $36.1 million in the third quarter of 2003, down 6.7% from the same period in 2002. The tax equivalent net interest margin for the third quarter of 2003 was 4.62% as compared to 5.65% for the third quarter of 2002. Effective July 1, 2003, the Company adopted Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity ("SFAS 150"), which negatively impacted net interest income and net interest margin by $1.5 million and 20 basis points, respectively, for the quarter ended September 30, 2003. SFAS 150 requires the reclassification of the Company-obligated mandatorily redeemable trust preferred securities of its subsidiary trusts, or trust preferred securities, from the mezzanine section of the Consolidated Balance Sheet to borrowings and the related interest to interest expense as of July 1, 2003. Prior to this date, the interest related to these securities was treated as minority interest on the Consolidated Statement of Income and not included in the calculation of the net interest margin. All amounts previously recognized as minority interest will not be reclassified to interest expense for all periods prior to July 1, 2003 under the standard. While this reclassification reduced third quarter net interest margin by 20 basis points, it had no impact on net income or results of operation. Noninterest income was $7.4 million in the third quarter of 2003, up 1.6% from the third quarter of last year. Noninterest expense for the third quarter of 2003 was $27.9 million, a decrease of 6.7% from $29.1 million in the third quarter of 2002. The change in classification of the trust preferred securities' expense significantly contributed to the decrease of noninterest expense. Average loans held for investment were $2.0 billion for the third quarter of 2003, up 9.9% from the third quarter of last year. Average total deposits for the third quarter of 2003 were $2.4 billion, up 3.4% from the third quarter of 2002. Net charge-offs in the third quarter of 2003 were $4.4 million or 0.65% of average total loans, compared to $2.2 million or 0.38% of average total loans in the third quarter of last year. The provision for loan losses was $4.2 million for the third quarter of 2003, up $711 thousand from $3.4 million in 2002. The allowance for loan losses at September 30, 2003 was $31.4 million and represented 1.35% of total loans. The allowance for loan losses at September 30, 2002 was $26.1 million and represented 1.00% of total loans. Nonperforming assets were $22.7 million at September 30, 2003 or 0.98% of total loans and foreclosed properties. This represents an increase of $3.1 million from the $19.6 million as of September 30, 2002. At September 30, 2003, Sterling had total assets of $3.1 billion, total loans of $2.3 billion and total deposits of $2.4 billion. Shareholders' equity of $287 million represented 9.2% of total assets. Book value per share was $6.49. Upon the announcements of the sales of its banking offices in Eagle Pass, Carrizo Springs, Crystal City and Pearsall ("South Texas offices") on July 15, 2002 and November 5, 2002, the Company initially determined that the sales of the offices met the requirements in Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, for presentation as discontinued operations. However after further consideration, the Sterling Bancshares, Inc., News Release October 21, 2003 Page 3 Company has determined that the sales of the South Texas offices did not meet such requirements. Net income, basic and diluted earnings per share and shareholders' equity are not affected by such presentation. The Company has determined that it is necessary to amend the March 31, 2003 and June 30, 2003 Forms 10-Q and the 2002 Form 10-K to exclude the sales of the South Texas offices from the discontinued operations presentation. The restated forms will be filed prior to the filing of the Company's Quarterly Report on Form 10-Q for the quarter ending September 30, 2003. The information provided in this earnings release has been restated to present the South Texas offices included in continuing operations which will be in conformity with the restated Forms 10-Q and Form 10-K. In conjunction with Sterling's third quarter earnings release, Downey Bridgwater, President and Chief Executive Officer and Stephen Raffaele, Chief Financial Officer invite you to listen to its conference call that will be broadcast live over the Internet on Tuesday, October 21, 2003 at 11:00AM Eastern Time. To participate, please visit Company's web site at www.banksterling.com Sterling Bancshares, Inc., is a Houston-based bank holding company with assets of $3.1 billion operating 35 banking offices in the greater metro areas of Dallas, Houston, and San Antonio, Texas. 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. This press release contains financial information determined by methods other than in accordance with Generally Accepted Accounting Principles ("GAAP"). Management uses these non-GAAP measures in their analysis of the business and its performance. In particular, net interest income, net interest margin and operating efficiency are calculated on a fully tax-equivalent basis ("FTE"). Management believes that these measures calculated on a FTE basis provide a useful picture of net interest income, net interest margin and operating efficiency for comparative purposes. Net interest income and net interest margin on a FTE basis is determined by adjusting net interest income to reflect tax-exempt interest income on an equivalent before-tax basis. The efficiency ratio also uses net interest income on an FTE basis. Non-GAAP information presented by other companies may not be comparable to that presented herein, since each company may define non-GAAP measures differently. 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 Sterling Bancshares, Inc., News Release October 21, 2003 Page 4 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, 2002. - Tables to follow - STERLING BANCSHARES, INC. FINANCIAL HIGHLIGHTS (UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Page 5
THREE MONTHS ENDED NINE MONTHS ENDED 2002 % 2002 % 2003 RESTATED CHANGE 2003 RESTATED CHANGE ------------ ------------ ----------- ------------ ------------ --------- EARNINGS & DIVIDENDS Period Ended September 30 Income from continuing operations $ 7,425 $ 8,194 (9.4) $ 23,157 $ 23,551 (1.7) Income from discontinued operations $ 19,916 $ 324 6,046.9 $ 20,062 $ 2,648 657.6 Net income $ 27,341 $ 8,518 221.0 $ 43,219 $ 26,199 65.0 Earnings per share from continuing operations Basic $ 0.17 $ 0.18 (5.6) $ 0.53 $ 0.54 (1.9) Diluted $ 0.17 $ 0.18 (5.6) $ 0.52 $ 0.53 (1.9) Earnings per share from discontinued operations Basic $ 0.45 $ 0.01 4,400.0 $ 0.45 $ 0.06 650.0 Diluted $ 0.44 $ 0.01 4,300.0 $ 0.45 $ 0.06 650.0 Earnings per share Basic $ 0.62 $ 0.19 226.3 $ 0.98 $ 0.60 63.3 Diluted $ 0.61 $ 0.19 221.1 $ 0.97 $ 0.59 64.4 Average shares outstanding Basic 44,202 43,917 0.6 44,097 43,849 0.6 Diluted 44,852 44,872 (0.0) 44,765 44,779 (0.0) Dividends paid per common share $ 0.045 $ 0.040 12.5 $ 0.135 $ 0.120 12.5 End of period common shares outstanding 44,232 43,931 0.7 End of period book value per share $ 6.49 $ 5.47 18.6 SELECTED RATIOS Annualized return on average assets 3.16% 1.09% 207 bps 1.69% 1.22% 47 bps Annualized return on average common equity 40.60% 13.95% 2,665 22.06% 15.10% 696 Tier 1 capital ratio 11.91% 8.68% 323 Total capital ratio 14.92% 10.52% 440 Tier 1 leverage ratio 9.23% 8.46% 77 SELECTED RATIOS - CONTINUING OPERATIONS Net interest margin (tax equivalent) (1) 4.62% 5.65% (103) 4.91% 5.70% (79) Net interest margin 4.58% 5.60% (102) 4.86% 5.64% (78) Annualized return on average asset from continuing operations 0.87% 1.07% (20) 0.92% 1.11% (19) Annualized return on average common equity from continuing operations 11.03% 13.41% (238) 11.82% 13.58% (176) Efficiency ratio (tax equivalent) (1) 63.79% 64.71% (92) 62.88% 64.90% (202) Efficiency ratio 64.63% 65.65% (102) 63.73% 65.79% (206)
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THREE MONTHS ENDED NINE MONTHS ENDED 2002 % 2002 % 2003 RESTATED CHANGE 2003 RESTATED CHANGE ------------ ------------ ------------ ------------ ------------ ------------ CONDENSED BALANCE SHEET Period Ended September 30 Average Balances Loans held for sale $ 621,113 $ 439,636 41.3 $ 585,303 $ 327,141 78.9 Loans held for investment 2,034,079 1,850,024 9.9 2,005,257 1,750,926 14.5 ------------ ------------ ------------ ------------ Total loans 2,655,192 2,289,660 16.0 2,590,560 2,078,067 24.7 Securities 302,940 302,758 0.1 305,941 309,442 (1.1) Trading assets 126,349 105,418 19.9 118,323 103,619 14.2 Other earning assets 14,066 18,037 (22.0) 15,573 31,195 (50.1) Allowance for credit losses (32,333) (25,117) 28.7 (29,961) (24,386) 22.9 Goodwill, net 50,354 51,112 (1.5) 52,191 50,396 3.6 Other assets 281,096 308,399 (8.9) 310,446 287,808 7.9 Assets related to discontinued operations 36,683 46,461 (21.0) 47,600 41,855 13.7 ------------ ------------ ------------ ------------ Total assets $ 3,434,347 $ 3,096,728 10.9 $ 3,410,673 $ 2,877,996 18.5 ============ ============ ============ ============ Noninterest bearing deposits $ 913,403 $ 862,041 6.0 $ 925,580 $ 808,196 14.5 Interest bearing deposits 1,535,491 1,505,411 2.0 1,578,865 1,474,731 7.1 ------------ ------------ ------------ ------------ Total deposits 2,448,894 2,367,452 3.4 2,504,445 2,282,927 9.7 Other borrowings 527,771 358,135 47.4 466,660 244,191 91.1 Notes Payable 17,553 20,716 (15.3) 19,343 20,824 (7.1) Subordinated debt 46,356 -- -- 30,620 -- -- Trust preferred securities (2) 80,000 -- -- 26,960 -- -- Other liabilities 10,390 14,666 (29.2) 12,444 14,680 (15.2) Liabilities related to discontinued operations 35,995 26,857 34.0 34,825 22,519 54.6 ------------ ------------ ------------ ------------ Total liabilities 3,166,959 2,787,826 13.6 3,095,297 2,585,141 19.7 Trust preferred securities (2) -- 65,938 (100.0) 53,040 60,343 (12.1) Realized shareholders' equity 264,651 238,496 11.0 258,970 228,321 13.4 Accumulated other comprehensive income 2,737 4,468 (38.7) 3,366 4,191 (19.7) ------------ ------------ ------------ ------------ Total liabilities and shareholders' equity $ 3,434,347 $ 3,096,728 10.9 $ 3,410,673 $ 2,877,996 18.5 ============ ============ ============ ============
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AS OF SEPTEMBER 30, 2002 % 2003 RESTATED CHANGE ------------ ------------ ------------ End of Period Loans held for sale (3) $ 311,729 $ 727,227 (57.1)% Loans held for investment 2,010,253 1,897,164 6.0 ------------ ------------ Total loans 2,321,982 2,624,391 (11.5) Securities 357,978 297,171 20.5 Trading assets 131,597 120,066 9.6 Other earning assets 24,985 26,900 (7.1) Allowance for credit losses (31,350) (26,128) 20.0 Goodwill, net 50,354 55,551 (9.4) Other assets 267,908 310,229 (13.6) Assets related to discontinued operations -- 47,065 (100.0) ------------ ------------ Total assets $ 3,123,454 $ 3,455,245 (9.6) ============ ============ Noninterest bearing deposits $ 961,877 $ 975,950 (1.4) Interest bearing deposits 1,454,385 1,654,885 (12.1) ------------ ------------ Total deposits 2,416,262 2,630,835 (8.2) Other borrowings 231,956 408,098 (43.2) Notes payable 17,028 21,471 (20.7) Subordinated debt 47,453 -- -- Other liabilities 43,625 15,964 173.3 Trust preferred securities (2) 80,000 -- -- Liabilities related to discontinued operations -- 29,097 (100.0) ------------ ------------ Total liabilities 2,836,324 3,105,465 (8.7) Trust preferred securities (2) -- 108,750 (100.0) Realized shareholders' equity 284,509 236,477 20.3 Accumulated other comprehensive income 2,621 4,553 (42.4) ------------ ------------ Total liabilities and shareholders' equity $ 3,123,454 $ 3,455,245 (9.6) ============ ============
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2ND QTR 1ST QTR 4TH QTR 3RD QTR 3RD QTR 2003 2003 2002 2002 2003 RESTATED RESTATED RESTATED RESTATED ------------ ------------ ------------ ------------ ------------ CREDIT DATA - CONTINUING OPERATIONS Allowance for loans - beginning $ 31,574 $ 28,429 $ 27,248 $ 26,128 $ 24,217 Allowance from acquisitions -- -- -- -- 656 Allowance sold with divestiture -- -- (353) -- -- Provision for credit losses 4,150 6,098 4,450 2,550 3,439 Net charge-offs (4,374) (2,953) (2,916) (1,430) (2,184) ------------ ------------ ------------ ------------ ------------ Allowance for credit losses - ending $ 31,350 $ 31,574 $ 28,429 $ 27,248 $ 26,128 ============ ============ ============ ============ ============ Nonaccrual loans - loans held for investment $ 19,788 $ 17,946 $ 17,776 $ 16,819 $ 15,120 Nonaccrual loans - SCMC AFS loans -- 2,143 2,793 2,835 -- Other real estate - loans held for investment 2,669 2,461 3,565 2,604 4,099 Other real estate - SCMC AFS loans -- 2,275 1,612 755 322 Other repossessed assets 237 89 97 66 44 ------------ ------------ ------------ ------------ ------------ Total nonperforming assets $ 22,694 $ 24,914 $ 25,843 $ 23,079 $ 19,585 ============ ============ ============ ============ ============ Accruing loans past due 90 days or more Loans held for investment $ 2,590 $ 110 $ 180 $ 179 $ 384 SCMC AFS loans 2,528 -- 154 805 2,525 RATIOS Nonperforming assets to loans, ORE and ORA 0.98% 0.94% 1.05% 0.87% 0.75% Nonperforming loans to total loans 0.85% 0.76% 0.84% 0.74% 0.58% Allowance to total loans 1.35% 1.19% 1.16% 1.03% 1.00% Allowance to nonperforming assets 138.14% 126.73% 110.01% 118.06% 133.41% Net charge-offs to average loans (annualized) 0.65% 0.45% 0.48% 0.22% 0.38% Provision for credit losses to average loans (annualized) 0.62% 0.93% 0.72% 0.40% 0.60% SELECTED AVERAGE BALANCES Loans available for sale $ 621,113 $ 617,822 $ 515,814 $ 648,592 $ 439,636 Loans held for investment 2,034,079 2,007,484 1,973,546 1,904,800 1,850,024 Total loans 2,655,192 2,625,306 2,489,360 2,553,392 2,289,660 Securities 302,940 295,811 319,250 306,168 302,758 Trading assets 126,349 107,383 121,181 147,788 105,418 Other earning assets 14,066 15,249 17,442 15,688 18,037 Goodwill 50,354 51,082 55,190 55,547 51,112 Earning assets 3,098,547 3,043,749 2,947,233 3,023,036 2,715,873 Assets related to discontinued operations 36,683 53,767 52,524 51,615 46,461 Total assets 3,434,347 3,440,615 3,356,197 3,449,969 3,096,728 Noninterest bearing deposits 913,403 949,373 913,969 950,192 862,041 Interest bearing deposits 1,535,491 1,565,790 1,636,424 1,676,519 1,505,411 Total deposits 2,448,894 2,515,163 2,550,393 2,626,711 2,367,452 Other borrowings 527,771 470,633 400,184 405,957 358,135 Notes payable 17,553 19,792 20,717 21,470 20,716 Subordinated debt 46,356 44,994 -- -- -- Trust preferred securities (2) 80,000 80,000 80,000 99,063 65,938 Liabilities related to discontinued operation 35,995 33,583 34,886 30,672 26,857 Shareholders' equity 267,388 263,748 255,744 248,754 242,964 FUNDINGS AT SCMC Original production 795,734 975,679 690,620 796,158 756,252 Refinanced 1,023,113 1,011,998 777,062 888,824 481,673 ------------ ------------ ------------ ------------ ------------ Total $ 1,818,847 $ 1,987,677 $ 1,467,682 $ 1,684,982 $ 1,237,925 ============ ============ ============ ============ ============
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PERIOD END AS OF ---------------------------- INCREASE/(DECREASE) 9/30/2002 ---------------------------- 9/30/2003 RESTATED AMOUNT % ------------ ------------ ------------ ------------ ASSETS Cash and cash equivalents $ 134,133 $ 140,806 $ (6,673) (4.7)% Interest-bearing deposits in financial institutions 1,338 1,669 (331) (19.8) Securities purchased with an agreement to resell -- 1,890 (1,890) (100.0) Trading assets 131,597 120,066 11,531 9.6 Available-for-sale securities, at fair value 312,005 232,771 79,234 34.0 Held-to-maturity securities, at amortized cost 45,973 64,400 (18,427) (28.6) Loans held for sale 311,729 727,227 (415,498) (57.1) Loans held for investment: Commercial and industrial 627,378 564,197 63,181 11.2 Real estate: Commercial 703,548 615,604 87,944 14.3 Residential mortgage 187,549 197,644 (10,095) (5.1) Construction and development 382,062 363,682 18,380 5.1 Consumer/other 109,716 156,048 (46,332) (29.7) Unearned premium (discount) -- (11) 11 (100.0) ------------ ------------ ------------ Loans held for investment 2,010,253 1,897,164 113,089 6.0 Allowance for credit losses (31,350) (26,128) (5,222) 20.0 ------------ ------------ ------------ Loans held for investment, net 1,978,903 1,871,036 107,867 5.8 Accrued interest receivable 11,549 14,274 (2,725) (19.1) Real estate acquired by foreclosure 2,669 4,421 (1,752) (39.6) Premises and equipment, net 44,845 52,405 (7,560) (14.4) Goodwill, net 50,354 55,551 (5,197) (9.4) Core deposit intangible 1,757 2,225 (468) (21.0) Other assets 96,602 119,439 (22,837) (19.1) Assets related to discontinued operations -- 47,065 (47,065) (100.0) ------------ ------------ ------------ TOTAL ASSETS $ 3,123,454 $ 3,455,245 $ (331,791) (9.6) ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Demand deposits: Noninterest-bearing $ 961,877 $ 975,950 $ (14,073) (1.4) Interest-bearing 862,271 893,172 (30,901) (3.5) Certificates of deposit and other time deposits: Jumbo 378,380 500,780 (122,400) (24.4) Nonjumbo 213,734 260,933 (47,199) (18.1) ------------ ------------ ------------ Total deposits 2,416,262 2,630,835 (214,573) (8.2) Other borrowed funds 231,956 408,098 (176,142) (43.2) Notes payable 17,028 21,471 (4,443) (20.7) Subordinated debt 47,453 -- 47,453 -- Company-obligated mandatorily redeemable Trust preferred securities of subsidiary trusts(2) 80,000 -- 80,000 -- Accrued interest payable and other liabilities 43,625 15,964 27,661 173.3 Liabilities related to discontinued operations -- 29,097 (29,097) (100.0) ------------ ------------ ------------ Total liabilities 2,836,324 3,105,465 (269,141) (8.7) Company-obligated mandatorily redeemable Trust preferred securities of subsidiary trusts(2) -- 108,750 (108,750) (100.0) Shareholders' equity: Convertible preferred stock, $1 par value, 1 million shares authorized 20 59 (39) (66.1) Common stock, $1 par value, 100 million shares authorized 44,232 43,931 301 0.7 Capital surplus 46,329 44,414 1,915 4.3 Retained earnings 193,928 148,073 45,855 31.0 Accumulated other comprehensive income--net unrealized gain on available-for-sale securities, net of tax 2,621 4,553 (1,932) (42.4) ------------ ------------ ------------ Total shareholders' equity 287,130 241,030 46,100 19.1 ------------ ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,123,454 $ 3,455,245 $ (331,791) (9.6) ============ ============ ============
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QUARTER ENDED SEPT. 30, 2002 INCREASE/(DECREASE) 2003 RESTATED AMOUNT % ------------ ------------ ------------ ------------ Interest income: Loans, including fees $ 40,396 $ 40,912 $ (516) (1.3)% Securities: Taxable 2,162 3,303 (1,141) (34.5) Tax-exempt 529 697 (168) (24.1) Federal funds sold and securities purchased under agreements to resell 27 76 (49) (64.5) Trading assets 857 1,282 (425) (33.2) Deposits in financial institutions 17 27 (10) (37.0) ------------ ------------ ------------ Total interest income 43,988 46,297 (2,309) (5.0) Interest expense: Demand and savings deposits 987 2,054 (1,067) (51.9) Certificates and other time deposits 3,461 4,088 (627) (15.3) Other borrowed funds 1,491 1,651 (160) (9.7) Notes payable 137 202 (65) (32.2) Subordinated debt 589 -- 589 -- Company-obligated mandatorily redeemable trust preferred securities of subsidiary trusts (2) 1,542 -- 1,542 -- ------------ ------------ ------------ Total interest expense 8,207 7,995 212 2.7 ------------ ------------ ------------ NET INTEREST INCOME 35,781 38,302 (2,521) (6.6) Provision for credit losses 4,150 3,439 711 20.7 ------------ ------------ ------------ NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 31,631 34,863 (3,232) (9.3) Noninterest income: Customer service fees 4,061 4,126 (65) (1.6) Other 3,369 3,185 184 5.8 ------------ ------------ ------------ Total noninterest income 7,430 7,311 119 1.6 Noninterest expense: Salaries and employee benefits 16,583 16,143 440 2.7 Occupancy expense 3,996 3,800 196 5.2 Net (gain) loss and carrying costs of real estate acquired by foreclosure (225) 229 (454) (198.3) Technology 1,289 1,309 (20) (1.5) Postage and delivery charges 527 583 (56) (9.6) Supplies 304 352 (48) (13.6) Professional fees 1,317 1,243 74 6.0 Minority interest expense: Company-obligated mandatorily redeemable trust preferred securities of subsidiary trusts (2) -- 1,462 (1,462) (100.0) Conversion costs related to acquisitions -- 973 (973) (100.0) Other 4,138 3,852 286 7.4 ------------ ------------ ------------ Total noninterest expense 27,929 29,946 (2,017) (6.7) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 11,132 12,228 (1,096) (9.0) Provision for income taxes 3,707 4,034 (327) (8.1) ------------ ------------ ------------ INCOME FROM CONTINUING OPERATIONS 7,425 8,194 (769) (9.4) INCOME FROM DISCONTINUED OPERATIONS BEFORE INCOME TAXES 44,426 597 43,829 7,341.5 Provision for income taxes 24,510 273 24,237 8,878.0 ------------ ------------ ------------ INCOME FROM DISCONTINUED OPERATIONS 19,916 324 19,592 6,046.9 ------------ ------------ ------------ NET INCOME $ 27,341 $ 8,518 $ 18,823 221.0 ============ ============ ============ EARNINGS PER SHARE: Basic $ 0.62 $ 0.19 $ 0.43 226.3 ============ ============ ============ Diluted $ 0.61 $ 0.19 $ 0.42 221.1 ============ ============ ============ EARNINGS PER SHARE FROM CONTINUING OPERATIONS: Basic $ 0.17 $ 0.18 $ (0.01) (5.6) ============ ============ ============ Diluted $ 0.17 $ 0.18 $ (0.01) (5.6) ============ ============ ============ NINE MONTHS ENDED SEPT. 30, 2002 INCREASE/(DECREASE) 2003 RESTATED AMOUNT % ------------ ------------ ------------ ------------ Interest income: Loans, including fees $ 121,592 $ 112,863 $ 8,729 7.7% Securities: Taxable 7,087 10,953 (3,866) (35.3) Tax-exempt 1,773 2,217 (444) (20.0) Federal funds sold and securities purchased under agreements to resell 113 415 (302) (72.8) Trading assets 2,590 3,249 (659) (20.3) Deposits in financial institutions 53 86 (33) (38.4) ------------ ------------ ------------ Total interest income 133,208 129,783 3,425 2.6 Interest expense: Demand and savings deposits 3,736 6,766 (3,030) (44.8) Certificates and other time deposits 11,514 12,632 (1,118) (8.9) Other borrowed funds 4,417 3,372 1,045 31.0 Notes payable 457 602 (145) (24.1) Subordinated debt 1,305 -- 1,305 -- Company-obligated mandatorily redeemable trust preferred securities of subsidiary trusts (2) 1,542 -- 1,542 -- ------------ ------------ ------------ Total interest expense 22,971 23,372 (401) (1.7) ------------ ------------ ------------ NET INTEREST INCOME 110,237 106,411 3,826 3.6 Provision for credit losses 14,698 9,150 5,548 60.6 ------------ ------------ ------------ NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 95,539 97,261 (1,722) (1.8) Noninterest income: Customer service fees 12,361 12,378 (17) (0.1) Other 13,336 9,244 4,092 44.3 ------------ ------------ ------------ Total noninterest income 25,697 21,622 4,075 18.8 Noninterest expense: Salaries and employee benefits 49,916 46,681 3,235 6.9 Occupancy expense 11,708 11,312 396 3.5 Net (gain) loss and carrying costs of real estate acquired by foreclosure (436) 300 (736) (245.3) Technology 3,718 3,741 (23) (0.6) Postage and delivery charges 1,646 1,702 (56) (3.3) Supplies 990 1,000 (10) (1.0) Professional fees 3,300 3,107 193 6.2 Minority interest expense: Company-obligated mandatorily redeemable trust preferred securities of subsidiary trusts (2) 3,101 4,117 (1,016) (24.7) Conversion costs related to acquisitions -- 973 (973) (100.0) Other 12,682 11,301 1,381 12.2 ------------ ------------ ------------ Total noninterest expense 86,625 84,234 2,391 2.8 INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 34,611 34,649 (38) (0.1) Provision for income taxes 11,454 11,098 356 3.2 ------------ ------------ ------------ INCOME FROM CONTINUING OPERATIONS 23,157 23,551 (394) (1.7) INCOME FROM DISCONTINUED OPERATIONS BEFORE INCOME TAXES 44,719 4,518 40,201 889.8 Provision for income taxes 24,657 1,870 22,787 1,218.6 ------------ ------------ ------------ INCOME FROM DISCONTINUED OPERATIONS 20,062 2,648 17,414 657.6 ------------ ------------ ------------ NET INCOME $ 43,219 $ 26,199 $ 17,020 65.0 ============ ============ ============ EARNINGS PER SHARE: Basic $ 0.98 $ 0.60 $ 0.38 63.3 ============ ============ ============ Diluted $ 0.97 $ 0.59 $ 0.38 64.4 ============ ============ ============ EARNINGS PER SHARE FROM CONTINUING OPERATIONS: Basic $ 0.53 $ 0.54 $ (0.01) (1.9) ============ ============ ============ Diluted $ 0.52 $ 0.53 $ (0.01) (1.9) ============ ============ ============
-more- STERLING BANCSHARES, INC. CONSOLIDATED INCOME STATEMENT (UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Page 11
2ND QTR 1ST QTR 4TH QTR 3RD QTR 3RD QTR 2003 2003 2002 2002 2003 RESTATED RESTATED RESTATED RESTATED ------------ ------------ ------------ ------------ ------------ Interest income: Loans, including fees $ 40,396 $ 41,172 $ 40,024 $ 44,039 $ 40,912 Securities: Taxable 2,162 2,201 2,724 3,004 3,303 Tax-exempt 529 595 649 673 697 Federal funds sold and securities purchased under agreements to resell 27 39 47 48 76 Trading assets 857 871 862 1,291 1,282 Deposits in financial institutions 17 17 19 20 27 ------------ ------------ ------------ ------------ ------------ Total interest income 43,988 44,895 44,325 49,075 46,297 Interest expense: Demand and savings deposits 987 1,288 1,461 1,775 2,054 Certificates and other time deposits 3,461 3,827 4,226 4,847 4,088 Other borrowed funds 1,491 1,578 1,348 1,574 1,651 Note payable 137 155 165 195 202 Subordinated debt 589 716 -- -- -- Company-obligated mandatorily redeemable trust preferred securities of subsidiary trusts (2) 1,542 -- -- -- -- ------------ ------------ ------------ ------------ ------------ Total interest expense 8,207 7,564 7,200 8,391 7,995 ------------ ------------ ------------ ------------ ------------ NET INTEREST INCOME 35,781 37,331 37,125 40,684 38,302 Provision for credit losses 4,150 6,098 4,450 2,550 3,439 ------------ ------------ ------------ ------------ ------------ NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 31,631 31,233 32,675 38,134 34,863 Noninterest income: Customer service fees 4,061 3,986 4,314 4,515 4,126 Other 3,369 3,053 6,914 3,474 3,185 ------------ ------------ ------------ ------------ ------------ Total noninterest income 7,430 7,039 11,228 7,989 7,311 Noninterest expense: Salaries and employee benefits 16,583 16,082 17,251 16,749 16,143 Occupancy expense 3,996 3,960 3,752 3,869 3,800 Net (gain) loss and carrying costs of real estate acquired by foreclosure (225) (205) (6) 181 229 Technology 1,289 1,229 1,200 1,305 1,309 Postage and delivery charges 527 522 597 586 583 Supplies 304 332 354 401 352 Professional fees 1,317 1,289 694 1,098 1,243 Minority interest expense: Company-obligated mandatorily redeemable trust preferred securities of subsidiary trusts (2) -- 1,549 1,552 1,799 1,462 Conversion costs related to acquisitions -- -- -- (151) 973 Other 4,138 4,295 4,249 6,035 3,852 ------------ ------------ ------------ ------------ ------------ Total noninterest expense 27,929 29,053 29,643 31,872 29,946 INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 11,132 9,219 14,260 14,251 12,228 Provision for income taxes 3,707 3,028 4,719 4,619 4,034 ------------ ------------ ------------ ------------ ------------ INCOME FROM CONTINUING OPERATIONS 7,425 6,191 9,541 9,632 8,194 INCOME (LOSS) FROM DISCONTINUED OPERATIONS BEFORE INCOME TAXES 44,426 (2,534) 2,827 1,211 597 Provision (benefit) for income taxes 24,510 (984) 1,131 491 273 ------------ ------------ ------------ ------------ ------------ INCOME (LOSS) FROM DISCONTINUED OPERATIONS 19,916 (1,550) 1,696 720 324 ------------ ------------ ------------ ------------ ------------ NET INCOME $ 27,341 $ 4,641 $ 11,237 $ 10,352 $ 8,518 ============ ============ ============ ============ ============ EARNINGS PER SHARE: Basic $ 0.62 $ 0.11 $ 0.26 $ 0.24 $ 0.19 ============ ============ ============ ============ ============ Diluted $ 0.61 $ 0.10 $ 0.25 $ 0.23 $ 0.19 ============ ============ ============ ============ ============ EARNINGS PER SHARE FROM CONTINUING OPERATIONS: Basic $ 0.17 $ 0.14 $ 0.22 $ 0.22 $ 0.18 ============ ============ ============ ============ ============ Diluted $ 0.17 $ 0.14 $ 0.21 $ 0.22 $ 0.18 ============ ============ ============ ============ ============
-more- STERLING BANCSHARES, INC. YIELD ANALYSIS (UNAUDITED) (DOLLARS IN THOUSANDS) Page 12
QUARTER ENDED ------------------------------------------------------------------------------------ SEPTEMBER 30, 2003 SEPTEMBER 30, 2002 (RESTATED) ---------------------------------------- ---------------------------------------- AVERAGE AVERAGE BALANCE INTEREST YIELD BALANCE INTEREST YIELD ----------- ----------- ----------- ----------- ----------- ----------- INTEREST EARNING ASSETS: Interest bearing deposits in financial institutions $ 1,344 $ 17 5.02% $ 1,722 $ 27 6.22% Federal funds sold and securities purchased under agreements to resell 12,722 27 0.84% 16,315 76 1.85% Trading Assets 126,349 857 2.69% 105,418 1,282 4.82% Investment securities (taxable) 254,234 2,162 3.37% 238,653 3,303 5.49% Investment securities (tax-exempt) 48,706 529 4.31% 64,105 697 4.31% Loans held for sale (taxable) 621,113 8,240 5.26% 439,636 7,871 7.10% Loans held for investment (taxable) 2,029,679 32,086 6.27% 1,845,231 32,967 7.09% Loans held for investment (tax-exempt) 4,400 70 6.31% 4,793 74 6.13% ----------- ----------- ----------- ----------- ----------- ----------- Total Interest Earning Assets 3,098,547 43,988 5.63% 2,715,873 46,297 6.76% NONINTEREST EARNING ASSETS: Cash and due from banks 98,693 92,181 Premises and equipment, net 46,174 51,323 Other assets 186,583 216,007 Allowance for credit losses (32,333) (25,117) Assets related to discontinued operations 36,683 46,461 ----------- ----------- Total Noninterest Earning Assets 335,800 380,855 ----------- ----------- TOTAL ASSETS $ 3,434,347 $ 3,096,728 =========== =========== INTEREST BEARING LIABILITIES: Demand and savings deposits $ 877,274 987 0.45% $ 886,260 2,054 0.92% Certificates and other time deposits 658,217 3,461 2.09% 619,151 4,088 2.62% Other borrowings 527,771 1,491 1.12% 358,135 1,651 1.83% Notes payable 17,553 137 3.10% 20,716 202 3.87% Subordinated debt 46,356 589 5.04% -- -- -- Trust preferred securities (2) 80,000 1,542 7.65% -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- Total Interest Bearing Liabilities 2,207,171 8,207 1.48% 1,884,262 7,995 1.68% NONINTEREST BEARING LIABILITIES: Demand deposits 913,403 862,041 Other liabilities 10,390 14,666 Liabilities related to discontinued operations 35,995 26,857 ----------- ----------- Total Noninterest Bearing Liabilities 959,788 903,564 Trust preferred securities (2) -- 65,938 Shareholders' equity 267,388 242,964 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,434,347 $ 3,096,728 =========== =========== NET INTEREST INCOME & MARGIN $ 35,781 4.58% $ 38,302 5.60% =========== =========== =========== =========== NET INTEREST INCOME & MARGIN (TAX EQUIVALENT) (1) $ 36,080 4.62% $ 38,684 5.65% =========== =========== =========== ===========
Due to the adoption of FASB No. 150 as of July 1, 2003, net interest income and the net interest margin were negatively impacted by $1.5 million and 20 basis points, respectively, for the quarter ended September 30, 2003. See footnote 2 on page 15 of this earnings release for further discussion. -more- STERLING BANCSHARES, INC. YIELD ANALYSIS (UNAUDITED) (DOLLARS IN THOUSANDS) Page 13
NINE MONTHS ENDED ------------------------------------------------------------------------------------ SEPTEMBER 30, 2003 SEPTEMBER 30, 2002 (RESTATED) ---------------------------------------- ---------------------------------------- AVERAGE AVERAGE BALANCE INTEREST YIELD BALANCE INTEREST YIELD ----------- ----------- ----------- ----------- ----------- ----------- INTEREST EARNING ASSETS: Interest bearing deposits in financial institutions $ 1,262 $ 53 5.61% $ 2,082 $ 86 5.52% Federal funds sold and securities purchased under agreements to resell 14,311 113 1.06% 29,113 415 1.91% Trading Assets 118,323 2,590 2.93% 103,619 3,249 4.19% Investment securities (taxable) 252,001 7,087 3.76% 241,286 10,953 6.07% Investment securities (tax-exempt) 53,940 1,773 4.39% 68,156 2,217 4.35% Loans held for sale (taxable) 585,303 23,844 5.45% 327,141 17,669 7.22% Loans held for investment (taxable) 2,000,583 97,525 6.52% 1,745,878 94,963 7.27% Loans held for investment (tax-exempt) 4,674 223 6.38% 5,048 231 6.12% ----------- ----------- ----------- ----------- ----------- ----------- Total Interest Earning Assets 3,030,397 133,208 5.88% 2,522,323 129,783 6.88% NONINTEREST EARNING ASSETS: Cash and due from banks 98,781 95,391 Premises and equipment, net 48,329 51,694 Other assets 215,527 191,119 Allowance for credit losses (29,961) (24,386) Assets related to discontinued operations 47,600 41,855 ----------- ----------- Total Noninterest Earning Assets 380,276 355,673 ----------- ----------- TOTAL ASSETS $ 3,410,673 2,877,996 =========== =========== INTEREST BEARING LIABILITIES: Demand and savings deposits $ 894,814 3,736 0.56% $ 881,276 6,766 1.03% Certificates and other time deposits 684,051 11,514 2.25% 593,455 12,632 2.85% Other borrowings 466,660 4,417 1.27% 244,191 3,372 1.85% Notes payable 19,343 457 3.16% 20,824 602 3.87% Subordinated debt 30,620 1,305 5.70% -- -- -- Trust preferred securities (2) 26,960 1,542 7.65% -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- Total Interest Bearing Liabilities 2,122,448 22,971 1.45% 1,739,746 23,372 1.80% NONINTEREST BEARING LIABILITIES: Demand deposits 925,580 808,196 Other liabilities 12,444 14,680 Liabilities related to discontinued operations 34,825 22,519 ----------- ----------- Total Noninterest Bearing Liabilities 972,849 845,395 Trust preferred securities (2) 53,040 60,343 Shareholders' equity 262,336 232,512 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,410,673 $ 2,877,996 =========== =========== NET INTEREST INCOME & MARGIN $ 110,237 4.86% $ 106,411 5.64% =========== =========== =========== =========== NET INTEREST INCOME & MARGIN (TAX EQUIVALENT) (1) $ 111,239 4.91% $ 107,618 5.70% =========== =========== =========== ===========
Due to the adoption of FASB No. 150 as of July 1, 2003, net interest income and the net interest margin were negatively impacted by $1.5 million and 7 basis points, respectively, for the nine months ended September 30, 2003. See footnote 2 on page 15 of this earnings release for further discussion. -more- STERLING BANCSHARES, INC. DISCONTINUED OPERATIONS INCOME STATEMENT (UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Page 14
QUARTER ENDED SEPT. 30, 2002 INCREASE/(DECREASE) 2003 RESTATED AMOUNT % ------------ ------------ ------------ ------------ Net interest income -- -- -- Provision for credit losses 699 -- 699 -- ------------ ------------ ------------ Net interest income after Provision for credit losses (699) -- (699) -- Noninterest income: Gain on sale of mortgage loans 9,237 9,320 (83) (0.9) Mortgage origination income 6,228 8,802 (2,574) (29.2) Gain on sale of Sterling Capital Mortgage Company 45,983 -- 45,983 -- Other 2,889 2,359 530 22.5 ------------ ------------ ------------ Total noninterest income 64,337 20,481 43,856 214.1 Noninterest expense: Salaries and employee benefits 8,105 8,448 (343) (4.1) Occupancy expense 3,356 2,447 909 37.1 Net loss and carrying costs of real estate acquired by foreclosure 68 -- 68 -- Mortgage servicing rights amortization 1,155 6,141 (4,986) (81.2) Technology 299 277 22 7.9 Postage and delivery charges 398 325 73 22.5 Supplies 426 398 28 7.0 Professional fees 341 159 182 114.5 Minority interest expense: Sterling Capital Mortgage Company 3 81 (78) (96.3) Other 5,061 1,608 3,453 214.7 ------------ ------------ ------------ Total noninterest expense 19,212 19,884 (672) (3.4) INCOME FROM DISCONTINUED OPERATIONS BEFORE INCOME TAXES 44,426 597 43,829 7,341.5 Provision for income taxes 24,510 273 24,237 8,878.0 ------------ ------------ ------------ INCOME FROM DISCONTINUED OPERATIONS $ 19,916 $ 324 $ 19,592 6,046.9 ============ ============ ============ EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS: Basic $ 0.45 $ 0.01 $ 0.44 4,400.0 ============ ============ ============ Diluted $ 0.44 $ 0.01 $ 0.43 4,300.0 ============ ============ ============ NINE MONTHS ENDED SEPT. 30, 2002 INCREASE/(DECREASE) 2003 RESTATED AMOUNT % ------------ ------------ ------------ ------------ Net interest income -- -- -- Provision for credit losses 4,407 -- 4,407 -- ------------ ------------ ------------ Net interest income after Provision for credit losses (4,407) -- (4,407) -- Noninterest income: Gain on sale of mortgage loans 34,621 20,990 13,631 64.9 Mortgage origination income 23,823 17,808 6,015 33.8 Gain on sale of Sterling Capital Mortgage Company 45,983 -- 45,983 -- Other 8,064 6,743 1,321 19.6 ------------ ------------ ------------ Total noninterest income 112,491 45,541 66,950 147.0 Noninterest expense: Salaries and employee benefits 24,246 20,223 4,023 19.9 Occupancy expense 9,420 5,907 3,513 59.5 Net loss and carrying costs of real estate acquired by foreclosure 68 -- 68 -- Mortgage servicing rights amortization 16,615 7,983 8,632 108.1 Technology 878 398 480 120.6 Postage and delivery charges 1,231 732 499 68.2 Supplies 1,351 977 374 38.3 Professional fees 773 341 432 126.7 Minority interest expense: Sterling Capital Mortgage Company 40 662 (622) (94.0) Other 8,743 3,800 4,943 130.1 ------------ ------------ ------------ Total noninterest expense 63,365 41,023 22,342 54.5 INCOME FROM DISCONTINUED OPERATIONS BEFORE INCOME TAXES 44,719 4,518 40,201 889.8 Provision for income taxes 24,657 1,870 22,787 1,218.6 ------------ ------------ ------------ INCOME FROM DISCONTINUED OPERATIONS $ 20,062 $ 2,648 $ 17,414 657.6 ============ ============ ============ EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS: Basic $ 0.45 $ 0.06 $ 0.39 650.0 ============ ============ ============ Diluted $ 0.45 $ 0.06 $ 0.39 650.0 ============ ============ ============
-more- STERLING BANCSHARES, INC. FOOTNOTES TO EARNINGS RELEASE (DOLLARS IN THOUSANDS) Page 15 (1) The net interest income on a tax equivalent basis is used to calculate the net interest margin and the efficiency ratio. In order to present pretax income and resultant yields on tax-exempt investments and loans on a comparable basis to those on taxable investments and loans, a tax-equivalent adjustment is made equally to interest income and income tax expense with no effect on after tax income. The tax equivalent adjustment has been computed using a federal income tax rate of 35%. (2) The Company adopted FASB Statement No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" (SFAS 150") as of July 1, 2003. SFAS 150 requires mandatorily redeemable financial instruments to be classified as liabilities. SFAS 150 does not allow restatement of the prior quarterly periods or prior years' presentation. Beginning on July 1, 2003, the company-obligated mandatorily redeemable trust preferred securities of subsidiary trusts are shown as a liability. At December 31, 2002, the trust preferred securities are reported in the mezzanine section on the balance sheet. Minority interest expense paid on the securities is recorded as interest expense beginning July 1, 2003. The adoption of SFAS 150 had a negative impact on the net interest margin for the three months and nine months ended September 30, 2003 of 20 basis points and 7 basis points, respectively. The decrease of $28.75 million in the period end trust preferred securities at September 30, 2002 to September 30, 2003 is due to the redemption of trust securities in November 2002. (3) Included in loans held for sale are loans of $305.8 million generated by SCMC. These loans were repaid in October 2003. -####- -----END PRIVACY-ENHANCED MESSAGE-----