EX-99.1 2 h27115exv99w1.htm PRESS RELEASE DATED JULY 21, 2005 exv99w1
 

EXHIBIT 99.1

NEWS RELEASE

     
For More Information Contact:
  For Release — July 21, 2005
J. Downey Bridgwater, President & Chief
    
Executive Officer, (713) 507-2670
    
Stephen C. Raffaele, Executive Vice President
    
& Chief Financial Officer, (713) 507-7408
    

STERLING BANCSHARES REPORTS SECOND QUARTER 2005 EARNINGS
Net Income of $8.5 Million up 20% Over the Year Ago Quarter,
Diluted EPS of $0.19, Quarterly Loan Growth of 5.6%

HOUSTON, TX, July 21, 2005 – Sterling Bancshares, Inc. (NASDAQ: SBIB) today reported net income of $8.5 million for the second quarter ended June 30, 2005, a 20% increase compared to $7.1 million reported for the second quarter of 2004. Earnings were $0.19 per diluted share in 2005’s second quarter, up from $0.16 per diluted share for the second quarter of 2004.

Net income for the six months ended June 30, 2005 was $16.3 million, or $0.36 per diluted share, compared with $12.3 million, or $0.27 per diluted share earned for the same period in 2004.

“We reported another quarter of earnings improvement, demonstrating continued strong business momentum and success in executing our strategy,” commented J. Downey Bridgwater, President and Chief Executive Officer. “Total loans grew by more than $136 million or 5.6% over the prior quarter and are up 19.2% in the past twelve months.”

Bridgwater continued, “Our recently announced agreement to acquire Dallas-based Prestonwood Bancshares, Inc. and its subsidiary, The Oaks Bank & Trust Company, will enable us to expand our Dallas presence providing greater scale and enhanced service to customers.” Subject to satisfaction of customary closing conditions, including receipt of necessary regulatory approvals, the Company expects to close this transaction in mid-fourth quarter of 2005.

As previously reported, net income for the second quarter of 2004 included an after-tax gain of $3.2 million, or $0.07 per diluted share, related to the securitization and sale of certain interest-only securities, after-tax losses of $554 thousand, or $0.01 per diluted share, from the sale of U.S. Treasury securities, and impairment charges on certain bank properties of $721 thousand, or $0.02 per diluted share, net of taxes.

Second Quarter Highlights

Period-end total loans increased $136.6 million during the second quarter to $2.6 billion at June 30, 2005, up 5.6% on a linked-quarter basis and up $416.2 million or 19.2% since June 30, 2004. Average loans held for investment were $2.5 billion for the second quarter of 2005, up 5.1% on a linked-quarter basis and up 15.9% from the second quarter of 2004.

Net charge-offs for 2005’s second quarter were 0.30% annualized of average total loans compared with 0.38% annualized for the same period of 2004. The decline in net charge-offs from a year ago was primarily the result of continuing improvements in credit policy and underwriting as well as strengthening economic conditions. At June 30, 2005, nonperforming

 

 

Sterling Bancshares, Inc., News Release
July 21, 2005
Page 2

assets were $20.2 million or 0.78% of total loans and foreclosed properties compared to $19.0 million or 0.78% at March 31, 2005.

The allowance for loan losses at June 30, 2005 was $32.2 million and represented 1.25% of total period-end loans, down from 1.26% at March 31, 2005. The Company provided $3.2 million for credit losses in the second quarter of 2005 compared with $2.8 million for the same quarter in 2004. In the second quarter of 2005, the reserve for losses on unfunded loan commitments was reclassified from the allowance for loan losses to other liabilities. Previously reported amounts and related ratios were changed for this reclassification.

Period-end total deposits increased $111.3 million to $2.6 billion at June 30, 2005, up 4.5% on a linked-quarter basis. Average total deposits increased $84.0 million or 3.4% in the second quarter of 2005 compared with the second quarter of 2004. The growth in earning assets during the second quarter of 2005 was partially funded with an increase in average short-term borrowings of $55.9 million. The Company provides for a portion of its earning asset growth and liquidity needs using a mix of brokered deposits and short-term borrowings.

Net interest income for the second quarter of 2005 was $38.2 million, up 18.4% compared to the second quarter of 2004, driven primarily by strong loan growth and a higher net interest margin. The Company’s net interest margin for the second quarter of 2005 was 4.75%, up 20 basis points from the 4.55% margin for the second quarter of 2004. On a linked-quarter basis, the margin declined 8.4 basis points compared with the first quarter of 2005. The margin was negatively impacted, in part, by a flatter interest rate yield curve and higher rates paid on borrowings and deposits.

Noninterest income was $6.5 million in the second quarter of 2005, down $4.3 million as compared with the second quarter of last year. Noninterest income for the second quarter of 2004 included a pre-tax gain on the securitization and sale of certain interest-only securities of $4.9 million, offset by realized losses on the sale of U.S. Treasury securities of $853 thousand before taxes.

Noninterest expense for the second quarter of 2005 was $29.1 million, down $893 thousand as compared with the second quarter of 2004. Noninterest expense for the second quarter of 2004 included a pre-tax impairment charge of $1.1 million on properties owned by the Company. Salaries and employee benefits decreased $237 thousand in the second quarter of 2005 as compared with the same period in 2004. Over the past year, the Company has implemented various expense reduction initiatives. Execution of these expense initiatives together with higher revenues produced a 460 basis point improvement in the efficiency ratio. The Company’s efficiency ratio was 65.13% for the second quarter of 2005 compared with 69.73% for the same period of 2004.

At June 30, 2005, Sterling had total assets of $3.6 billion, total loans of $2.6 billion and total deposits of $2.6 billion. Shareholders’ equity of $325 million at June 30, 2005 was 9.06% of total assets. Book value per common share at period-end was $7.19.

Conference Call

Management will host a conference call for investors and analysts that will be broadcast live via telephone and over the Internet on Thursday, July 21, 2005 at 11:00 a.m. Eastern Time. To participate, please visit the Investor Relations section of the Company’s web site at

 

 

Sterling Bancshares, Inc., News Release
July 21, 2005
Page 3

www.banksterling.com or call (847) 619-6398. An audio archive of the call will also be available on the web site beginning Friday, July 22, 2005.

Forward-Looking Statements

This news release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve risks and uncertainties and are based on beliefs and assumptions of management at the time that this release was prepared. The Company does not assume any obligation to update the forward-looking statements. There are several factors, many beyond our control that could cause our results to differ significantly from expectations including our ability to integrate acquisitions and realize expected cost savings and revenue enhancements from acquisitions; adverse changes in the loan portfolio and the resulting credit risk-related losses and expenses; potential inadequacy of our allowance for credit losses; our ability to maintain or improve origination volumes and competitive influences on product pricing. Additional factors can be found in the Company’s 2004 Annual Report on Form 10-K filed with the Securities and Exchange Commission and available at the Securities and Exchange Commission’s web site (www.sec.gov).

About Sterling Bancshares

Sterling Bancshares, Inc., is a Houston-based bank holding company with total assets of $3.6 billion, which operates 35 banking offices in the greater metro areas of Houston, San Antonio, and Dallas, Texas. These cities are the 4th, 8th and 9th largest in the United States, respectively, based on population. The Company’s common stock is traded through the NASDAQ National Market System under the symbol “SBIB”.

–Tables to follow–

 

 

STERLING BANCSHARES, INC.
SELECTED FINANCIAL INFORMATION (Unaudited)
(dollars in thousands, except for per share data)
Page 4

                                         
    Quarter Ended     Year-to-date  
    Jun. 30,     Mar. 31,     Jun. 30,     Jun. 30,     Jun. 30,  
    2005     2005     2004     2005     2004  
Profitability
                                        
Net income
   $ 8,516     $ 7,758     $ 7,073     $ 16,274     $ 12,307  
 
                                        
Earnings per common share (1)
                                        
Basic
   $ 0.19     $ 0.17     $ 0.16     $ 0.36     $ 0.28  
Diluted
   $ 0.19     $ 0.17     $ 0.16     $ 0.36     $ 0.27  
 
                                        
Return on average common equity (2)
     10.55 %     9.88 %     9.45 %     10.22 %     8.28 %
 
                                        
Return on average assets (2)
     0.97 %     0.93 %     0.91 %     0.95 %     0.78 %
 
                                        
Net interest margin
     4.75 %     4.84 %     4.55 %     4.79 %     4.56 %
 
                                        
Efficiency ratio
     65.13 %     66.20 %     69.73 %     65.66 %     70.91 %
 
                                        
Liquidity and Capital Ratios
                                        
Average loans to average deposits
     98.09 %     96.25 %     87.56 %     97.19 %     87.45 %
Period-end shareholders’ equity to total assets
     9.06 %     9.14 %     9.62 %     9.06 %     9.62 %
Average shareholders’ equity to average assets
     9.18 %     9.41 %     9.61 %     9.29 %     9.47 %
Period-end tangible capital to total tangible assets
     7.41 %     7.42 %     7.69 %     7.41 %     7.69 %
Tier 1 capital to risk-weighted assets
     11.05 %     11.37 %     12.58 %     11.05 %     12.58 %
Total capital to risk-weighted assets
     13.64 %     14.00 %     15.46 %     13.64 %     15.46 %
Tier 1 leverage ratio (Tier 1 capital to average assets)
     9.90 %     10.09 %     10.30 %     9.90 %     10.30 %
 
                                        
Other Data
                                        
Shares used in computing earnings per common share
                                        
Basic
     45,250       45,131       44,796       45,191       44,748  
Diluted
     45,713       45,597       45,234       45,664       45,192  
End of period common shares outstanding
     45,283       45,217       44,853       45,283       44,853  
Book value per common share at period-end
                                        
Total
   $ 7.19     $ 6.96     $ 6.62     $ 7.19     $ 6.62  
Tangible
   $ 5.77     $ 5.54     $ 5.18     $ 5.77     $ 5.18  
Cash dividends paid per common share
   $ 0.060     $ 0.060     $ 0.050     $ 0.120     $ 0.100  
Common stock dividend payout ratio
     31.88 %     34.89 %     31.66 %     33.32 %     36.34 %
Full-time equivalent employees
     951       962       1,024       951       1,024  
Number of banking offices
     35       36       37       35       37  

 

 

STERLING BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(dollars in thousands)
Page 5

                                         
    Jun. 30,     Mar. 31,     Dec. 31,     Sep. 30,     Jun. 30,  
    2005     2005     2004     2004     2004  
ASSETS
                                        
Cash and cash equivalents
   $ 90,679     $ 103,774     $ 88,439     $ 94,802     $ 131,489  
Interest-bearing deposits in financial institutions
     199       1,067       595       1,175       1,600  
Trading assets
     15,556       13,639       36,720       123,880       92,751  
Available-for-sale securities, at fair value
     573,564       554,054       540,704       531,702       473,787  
Held-to-maturity securities, at amortized cost
     120,656       119,704       117,414       78,087       45,385  
 
                                        
Loans held for sale
     9,195       10,611       6,881       7,036       13,895  
Loans held for investment
     2,574,450       2,436,426       2,338,096       2,219,397       2,153,589  
 
                              
Total loans
     2,583,645       2,447,037       2,344,977       2,226,433       2,167,484  
Allowance for loan losses
     (32,209 )     (30,760 )     (29,406 )     (26,823 )     (26,129 )
 
                              
Loans, net
     2,551,436       2,416,277       2,315,571       2,199,610       2,141,355  
 
                                        
Premises and equipment, net
     38,299       39,126       40,171       41,683       43,679  
Real estate acquired by foreclosure
     1,472       957       1,536       3,731       2,608  
Goodwill
     62,480       62,480       62,480       62,480       62,480  
Core deposit intangibles, net
     1,625       1,727       1,839       1,954       2,078  
Accrued interest receivable
     13,476       12,759       11,964       10,986       10,787  
Other assets
     121,991       119,825       119,463       85,095       83,409  
 
                              
TOTAL ASSETS
   $ 3,591,433     $ 3,445,389     $ 3,336,896     $ 3,235,185     $ 3,091,408  
 
                              
 
                                        
LIABILITIES AND SHAREHOLDERS’ EQUITY
                                        
LIABILITIES:
                                        
Deposits:
                                        
Noninterest-bearing demand
   $ 928,564     $ 888,384     $ 884,017     $ 879,125     $ 845,874  
Interest-bearing demand
     961,134       995,462       970,281       919,822       977,943  
Certificates and other time deposits
     715,482       610,017       589,669       593,236       664,788  
 
                              
Total deposits
     2,605,180       2,493,863       2,443,967       2,392,183       2,488,605  
Short-term borrowings
     503,725       476,315       420,575       377,750       149,750  
Subordinated debt
     47,956       46,027       47,162       47,360       45,254  
Junior subordinated debt
     82,475       82,475       82,475       82,475       82,475  
Accrued interest payable and other liabilities
     26,739       31,801       29,545       28,052       28,060  
 
                              
Total liabilities
     3,266,075       3,130,481       3,023,724       2,927,820       2,794,144  
 
                                        
COMMITMENTS AND CONTINGENCIES
     —       —       —       —       —  
 
                                        
SHAREHOLDERS’ EQUITY
                                       
Convertible preferred stock
     —       —       —       20       20  
Common stock
     45,283       45,217       45,068       44,917       44,853  
Capital surplus
     56,973       55,976       54,522       51,565       50,853  
Retained earnings
     224,667       218,865       213,814       209,893       205,651  
Accumulated other comprehensive income, net of tax
     (1,565 )     (5,150 )     (232 )     970       (4,113 )
 
                              
Total shareholders’ equity
     325,358       314,908       313,172       307,365       297,264  
 
                              
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 3,591,433     $ 3,445,389     $ 3,336,896     $ 3,235,185     $ 3,091,408  
 
                              

 

 

STERLING BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(dollars in thousands, except for per share data)
Page 6

                                                         
    Quarter Ended     Year-to-date  
    Jun. 30,     Mar. 31,     Dec. 31,     Sep. 30,     Jun. 30,     Jun. 30,     Jun. 30,  
    2005     2005     2004     2004     2004     2005     2004  
Interest income:
                                                        
Loans, including fees
   $ 43,634     $ 39,881     $ 37,131     $ 34,635     $ 33,023     $ 83,515     $ 66,257  
Securities:
                                                        
Taxable
     6,345       6,155       5,750       5,560       4,977       12,500       9,997  
Non-taxable
     612       628       603       520       464       1,240       919  
Trading assets
     322       312       1,032       1,084       991       634       2,453  
Federal funds sold
     122       37       33       25       23       159       43  
Deposits in financial institutions
     6       9       11       13       16       15       31  
 
                                          
Total interest income
     51,041       47,022       44,560       41,837       39,494       98,063       79,700  
 
                                          
 
                                                        
Interest expense:
                                                        
Demand and savings deposits
     1,853       1,774       1,513       1,239       1,080       3,627       2,033  
Certificates and other time deposits
     4,669       3,372       3,048       3,006       3,275       8,041       6,640  
Short-term borrowings
     3,669       2,690       1,849       1,047       586       6,359       1,267  
Subordinated debt
     882       813       773       704       646       1,695       1,267  
Junior subordinated debt
     1,722       1,690       1,667       1,646       1,617       3,412       3,238  
 
                                          
Total interest expense
     12,795       10,339       8,850       7,642       7,204       23,134       14,445  
 
                                          
Net interest income
     38,246       36,683       35,710       34,195       32,290       74,929       65,255  
Provision for credit losses
     3,221       3,340       3,854       2,115       2,781       6,561       6,281  
 
                                          
Net interest income after provision for credit losses
     35,025       33,343       31,856       32,080       29,509       68,368       58,974  
 
                                          
 
                                                        
Noninterest income:
                                                        
Customer service fees
     2,888       2,992       3,432       3,687       3,794       5,880       7,815  
Net gain (loss) on trading assets
     (11 )     109       (743 )     (216 )     152       98       485  
Net gain (loss) on the sale of securities
     (31 )     85       360       310       4,128       54       4,271  
Other
     3,642       3,488       3,103       2,990       2,701       7,130       5,406  
 
                                          
Total noninterest income
     6,488       6,674       6,152       6,771       10,775       13,162       17,977  
 
                                          
 
                                                        
Noninterest expense:
                                                        
Salaries and employee benefits
     16,938       17,181       15,900       17,510       17,175       34,119       34,862  
Occupancy expense
     3,909       3,642       4,041       3,945       3,743       7,551       7,340  
Technology
     1,381       1,214       1,559       1,643       1,537       2,595       2,925  
Professional fees
     1,630       1,296       3,209       1,333       1,395       2,926       2,457  
Postage, delivery and supplies
     778       750       742       746       816       1,528       1,691  
Marketing
     617       645       282       250       539       1,262       925  
Core deposit intangibles amortization
     102       112       114       125       124       214       248  
Other
     3,779       3,863       5,083       3,863       4,698       7,642       8,570  
 
                                          
Total noninterest expense
     29,134       28,703       30,930       29,415       30,027       57,837       59,018  
 
                                          
Income before income taxes
     12,379       11,314       7,078       9,436       10,257       23,693       17,933  
Provision for income taxes
     3,863       3,556       908       2,950       3,184       7,419       5,626  
 
                                          
Net income
   $ 8,516     $ 7,758     $ 6,170     $ 6,486     $ 7,073     $ 16,274     $ 12,307  
 
                                          
 
                                                        
Earnings per share (1):
                                                        
Basic
   $ 0.19     $ 0.17     $ 0.14     $ 0.14     $ 0.16     $ 0.36     $ 0.28  
 
                                          
Diluted
   $ 0.19     $ 0.17     $ 0.14     $ 0.14     $ 0.16     $ 0.36     $ 0.27  
 
                                          

 

 

STERLING BANCSHARES, INC.
SELECTED FINANCIAL INFORMATION (Unaudited)
(dollars in thousands)
Page 7

                                                 
    Quarter Ended  
    Jun. 30, 2005     Mar. 31, 2005  
    Average             Yield/     Average             Yield/  
    Balance     Interest     Rate     Balance     Interest     Rate  
Interest-Earning Assets:
                                                
Loans held for sale
   $ 11,448     $ 200       7.02 %   $ 8,150     $ 146       7.28 %
Loans held for investment:
                                                
Taxable
     2,488,633       43,395       6.99 %     2,367,303       39,670       6.80 %
Non-taxable
     2,343       39       6.65 %     3,086       65       8.50 %
Securities:
                                                
Taxable
     616,753       6,345       4.13 %     597,949       6,155       4.17 %
Non-taxable
     62,945       612       3.90 %     64,967       628       3.92 %
Trading assets
     28,944       322       4.46 %     27,786       312       4.56 %
Federal funds sold
     16,880       122       2.89 %     6,274       37       2.42 %
Deposits in financial institutions
     770       6       3.18 %     1,220       9       3.05 %
 
                                    
Total interest-earning assets
     3,228,716       51,041       6.34 %     3,076,735       47,022       6.20 %
 
Noninterest-earning assets
     297,519                       307,945                  
 
                                            
Total Assets
   $ 3,526,235                     $ 3,384,680                  
 
                                            
 
Interest-Bearing Liabilities:
                                                
Deposits:
                                                
Demand and savings
   $ 959,832       1,853       0.77 %   $ 1,009,359       1,774       0.71 %
Certificates and other time
     680,948       4,669       2.75 %     591,830       3,372       2.31 %
Short-term borrowings
     493,464       3,669       2.98 %     437,547       2,690       2.49 %
Subordinated debt
     46,985       882       7.53 %     47,056       813       7.00 %
Junior subordinated debt
     82,475       1,722       8.37 %     82,475       1,690       8.31 %
 
                                    
Total interest-bearing liabilities
     2,263,704       12,795       2.27 %     2,168,267       10,339       1.93 %
 
Noninterest-bearing sources:
                                                
Noninterest-bearing liabilities
     938,770                       898,055                  
Shareholders’ equity
     323,761                       318,358                  
 
                                            
Total Liabilities and Shareholders’ Equity
   $ 3,526,235                     $ 3,384,680                  
 
                                            
 
 
                                        
 
Net Interest Income & Margin
           $ 38,246       4.75 %           $ 36,683       4.84 %
 
                                        

 

 

STERLING BANCSHARES, INC.
SELECTED FINANCIAL INFORMATION (Unaudited)
(dollars in thousands)
Page 8

                                                 
    Year-to-date  
    Jun. 30, 2005     Jun. 30, 2004  
    Average             Yield/     Average             Yield/  
    Balance     Interest     Rate     Balance     Interest     Rate  
Interest-Earning Assets:
                                                
Loans held for sale
   $ 9,808     $ 347       7.13 %   $ 10,389     $ 315       6.10 %
Loans held for investment:
                                                
Taxable
     2,428,303       83,064       6.90 %     2,143,833       65,810       6.17 %
Non-taxable
     2,713       104       7.73 %     4,126       132       6.43 %
Securities:
                                                
Taxable
     607,403       12,500       4.15 %     528,857       9,997       3.80 %
Non-taxable
     63,951       1,240       3.91 %     42,157       919       4.38 %
Trading assets
     28,368       634       4.51 %     138,600       2,453       3.56 %
Federal funds sold
     11,607       159       2.77 %     10,312       43       0.84 %
Deposits in financial institutions
     994       15       3.10 %     1,677       31       3.69 %
 
                                    
Total interest-earning assets
     3,153,147       98,063       6.27 %     2,879,951       79,700       5.57 %
 
Noninterest-earning assets
     302,701                       278,624                  
 
                                            
Total Assets
   $ 3,455,848                     $ 3,158,575                  
 
                                            
 
Interest-Bearing Liabilities:
                                                
Deposits:
                                                
Demand and savings
   $ 984,459       3,627       0.74 %   $ 937,869       2,033       0.44 %
Certificates and other time
     636,635       8,041       2.55 %     716,452       6,640       1.86 %
Short-term borrowings
     465,660       6,359       2.75 %     229,958       1,267       1.11 %
Subordinated debt
     47,020       1,695       7.27 %     46,705       1,267       5.46 %
Junior subordinated debt
     82,475       3,412       8.34 %     82,475       3,238       7.90 %
 
                                    
Total interest-bearing liabilities
     2,216,249       23,134       2.11 %     2,013,459       14,445       1.44 %
 
Noninterest-bearing sources:
                                                
Noninterest-bearing liabilities
     918,524                       845,989                  
Shareholders’ equity
     321,075                       299,127                  
 
                                            
Total Liabilities and Shareholders’ Equity
   $ 3,455,848                     $ 3,158,575                  
 
                                            
 
 
                                        
 
Net Interest Income & Margin
           $ 74,929       4.79 %           $ 65,255       4.56 %
 
                                        

 

 

STERLING BANCSHARES, INC.
SELECTED FINANCIAL INFORMATION (Unaudited)
(dollars in thousands)
Page 9

                                         
    Quarter Ended  
    Jun. 30,     Mar. 31,     Dec. 31,     Sep. 30,     Jun. 30,  
    2005     2005     2004     2004     2004  
Condensed Average Balance Sheet
                                        
Loans held for sale
   $ 11,448     $ 8,150     $ 6,228     $ 14,356     $ 11,568  
Loans held for investment
     2,490,976       2,370,389       2,263,094       2,162,146       2,148,646  
 
                              
Total loans
     2,502,424       2,378,539       2,269,322       2,176,502       2,160,214  
Securities
     679,698       662,916       630,865       569,126       572,469  
Trading assets
     28,944       27,786       106,950       113,252       113,392  
Other earning assets
     17,650       7,494       9,205       8,451       11,583  
 
                              
Total earning assets
     3,228,716       3,076,735       3,016,342       2,867,331       2,857,658  
Goodwill
     62,480       62,480       62,480       62,481       62,480  
Core deposit intangibles, net
     1,668       1,774       1,887       2,010       2,142  
Other assets
     233,371       243,691       225,362       208,206       213,340  
 
                              
Total assets
   $ 3,526,235     $ 3,384,680     $ 3,306,071     $ 3,140,028     $ 3,135,620  
 
                              
 
                                        
Noninterest bearing deposits
   $ 910,448     $ 870,059     $ 882,977     $ 834,566     $ 819,189  
Interest-bearing deposits:
                                        
Demand and savings
     959,832       1,009,359       1,008,152       959,840       934,732  
Certificates and other time deposits
     639,845       555,141       552,368       554,830       552,292  
Brokered certificates of deposit
     41,103       36,689       23,764       59,411       160,991  
 
                              
Total deposits
     2,551,228       2,471,248       2,467,261       2,408,647       2,467,204  
Short-term borrowings
     493,464       437,547       368,600       270,682       212,123  
Subordinated debt
     46,985       47,056       47,274       45,905       46,298  
Junior subordinated debt
     82,475       82,475       82,475       82,475       82,475  
Accrued interest payable and other liabilities
     28,322       27,996       28,166       28,816       26,319  
 
                              
Total liabilities
     3,202,474       3,066,322       2,993,776       2,836,525       2,834,419  
Shareholders’ equity
     323,761       318,358       312,295       303,503       301,201  
 
                              
Total liabilities and shareholders’ equity
   $ 3,526,235     $ 3,384,680     $ 3,306,071     $ 3,140,028     $ 3,135,620  
 
                              
                                         
    Jun. 30,     Mar. 31,     Dec. 31,     Sep. 30,     Jun. 30,  
    2005     2005     2004     2004     2004  
Period-end Loans:
                                        
Loans held for sale
   $ 9,195     $ 10,611     $ 6,881     $ 7,036     $ 13,895  
Loans held for investment:
                                        
Commercial and industrial
     758,209       727,813       703,994       643,926       634,530  
Real estate:
                                        
Commercial
     1,138,167       1,063,854       1,018,264       964,253       922,135  
Construction and development
     436,875       401,022       363,218       340,916       326,382  
Residential mortgage
     172,488       174,355       179,623       186,479       185,309  
Consumer/other
     68,711       69,382       72,997       83,823       85,233  
 
                              
Loans held for investment
     2,574,450       2,436,426       2,338,096       2,219,397       2,153,589  
 
                              
Total period-end loans
   $ 2,583,645     $ 2,447,037     $ 2,344,977     $ 2,226,433     $ 2,167,484  
 
                              
 
                                        
Period-end Deposits:
                                        
Noninterest-bearing demand
   $ 928,564     $ 888,384     $ 884,017     $ 879,125     $ 845,874  
Interest-bearing demand
     961,134       995,462       970,281       919,822       977,943  
Certificates and other time deposits:
                                        
Jumbo
     451,394       365,405       345,785       344,560       341,691  
Regular
     221,325       200,481       197,561       202,572       205,838  
Brokered
     42,763       44,131       46,323       46,104       117,259  
 
                              
Total period-end deposits
   $ 2,605,180     $ 2,493,863     $ 2,443,967     $ 2,392,183     $ 2,488,605  
 
                              

 

 

STERLING BANCSHARES, INC.
SELECTED FINANCIAL INFORMATION (Unaudited)
(dollars in thousands)
Page 10

                                                         
    Quarter Ended   Year-to-date  
    Jun. 30,     Mar. 31     Dec. 31     Sep. 30,     Jun. 30,     Jun. 30,     Jun. 30,  
    2005     2005     2004     2004     2004     2005     2004  
Allowance for Credit Losses
                                                        
Allowance for loan losses at beginning of period
   $ 30,760     $ 29,406     $ 26,823     $ 26,129     $ 25,534     $ 29,406     $ 30,722  
Charge-offs:
                                                        
Commercial, financial, and industrial
     1,881       1,339       1,315       1,570       1,906       3,220       7,480  
Real estate, mortgage and construction
     1,065       511       190       201       719       1,576       3,014  
Consumer
     323       515       374       355       218       838       717  
 
                                          
Total charge-offs
     3,269       2,365       1,879       2,126       2,843       5,634       11,211  
 
                                          
Recoveries:
                                                        
Commercial, financial, and industrial
     721       313       208       568       732       1,034       1,318  
Real estate, mortgage and construction
     605       5       53       6       9       610       100  
Consumer
     83       69       37       67       41       152       119  
 
                                          
Total recoveries
     1,409       387       298       641       782       1,796       1,537  
 
                                          
Net charge-offs
     1,860       1,978       1,581       1,485       2,061       3,838       9,674  
Provision for loan losses
     3,309       3,332       4,164       2,179       2,656       6,641       5,081  
 
                                          
Allowance for loan losses at end of period
     32,209       30,760       29,406       26,823       26,129       32,209       26,129  
 
                                          
 
                                                        
Reserve for unfunded lending commitments at beginning of period
     834       826       1,136       1,200       1,075       826       —  
Provision for unfunded lending commitments
     (88 )     8       (310 )     (64 )     125       (80 )     1,200  
 
                                          
Reserve for unfunded lending commitments at end of period
     746       834       826       1,136       1,200       746       1,200  
 
                                          
Total allowance for credit losses
   $ 32,955     $ 31,594     $ 30,232     $ 27,959     $ 27,329     $ 32,955     $ 27,329  
 
                                          
 
                                                        
Nonperforming Assets
                                                        
Nonperforming loans:
                                                        
Nonaccrual
   $ 18,450     $ 17,860     $ 20,605     $ 12,028     $ 10,806     $ 18,450     $ 10,806  
Restructured
     51       —       —       —       —       51       —  
Real estate acquired by foreclosure
     1,472       957       1,536       3,731       2,608       1,472       2,608  
Other repossessed assets
     232       226       216       552       273       232       273  
 
                                          
Total nonperforming assets
   $ 20,205     $ 19,043     $ 22,357     $ 16,311     $ 13,687     $ 20,205     $ 13,687  
 
                                          
 
Potential problem loans
   $ 58,817     $ 58,257     $ 54,293     $ 62,417     $ 62,638     $ 58,817     $ 62,638  
 
                                          
Accruing loans past due 90 days or more
   $ 1,629     $ 1,910     $ 2,395     $ 1,195     $ 3,987     $ 1,629     $ 3,987  
 
                                          
 
Ratios
                                                        
Period-end allowance for credit losses to period-end loans
     1.28 %     1.29 %     1.29 %     1.26 %     1.26 %     1.28 %     1.26 %
Period-end allowance for loan losses to period-end loans
     1.25 %     1.26 %     1.25 %     1.20 %     1.21 %     1.25 %     1.21 %
Net charge-offs to average loans (2)
     0.30 %     0.34 %     0.28 %     0.27 %     0.38 %     0.32 %     0.90 %
Period-end allowance for loan losses to nonperforming loans
     174.09 %     172.23 %     142.71 %     223.00 %     241.80 %     174.09 %     241.80 %
Nonperforming assets to period-end loans, real estate acquired by foreclosure and other repossessed assets
     0.78 %     0.78 %     0.95 %     0.73 %     0.63 %     0.78 %     0.63 %
Nonperforming loans to period-end loans
     0.72 %     0.73 %     0.88 %     0.54 %     0.50 %     0.72 %     0.50 %
Nonperforming assets to period-end assets
     0.56 %     0.55 %     0.67 %     0.50 %     0.44 %     0.56 %     0.44 %

 

 

STERLING BANCSHARES, INC.
FOOTNOTES TO EARNINGS RELEASE
Page 11

(1)   Earnings per share in each quarter is computed individually using the weighted-average number of shares outstanding during that quarter while earnings per share for the full period is computed using the weighted-average number of shares outstanding during the year. Thus, the sum for the quarters does not necessarily equal the full period and net income earnings per share.
 
(2)   Interim periods annualized.