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Sterling Financial Corporation Of Spokane, Wash., Reports Second Quarter 2013 Earnings And Declares Quarterly Cash Dividend

Stocks in this article: STSA

Sterling Financial Corporation (NASDAQ:STSA) ("Sterling") today announced its operating results for the quarter ended June 30, 2013. For the quarter, Sterling recorded net income of $27.8 million, or $0.44 per diluted common share, compared to $22.7 million, or $0.36 per diluted common share, for the quarter ended March 31, 2013, and $320.9 million, or $5.13 per diluted common share, for the quarter ended June 30, 2012. As previously disclosed, the results for the prior year period include an income tax benefit of $288.8 million resulting from the release of the deferred tax asset valuation allowance.

Following are selected financial highlights for the second quarter of 2013:

  • Annualized organic loan growth of 14 percent.
  • Net interest margin (tax equivalent) of 3.70 percent, one basis point higher than the prior quarter.
  • Deposit costs were 37 basis points, two basis points lower than the prior quarter.
  • Completed the acquisition of the Puget Sound operations of Boston Private Bank & Trust Co.
  • Declared a $0.35 special dividend on June 17, 2013, and paid a quarterly cash dividend of $0.20 per share on May 20, 2013.

"From a performance perspective, the second quarter of 2013 was one of the best in Sterling's history," said Greg Seibly, Sterling's president and chief executive officer. "We had strong organic loan growth, lower funding costs, better efficiency and improved asset quality metrics. Our continued focus on these key operating objectives, combined with the positive impact from our investments in recently completed acquisitions, helped drive the improved financial results."

Operating Results

Net Interest Income

Sterling reported net interest income of $80.4 million for the quarter ended June 30, 2013, compared to $76.9 million for the prior quarter and $78.9 million for the quarter ended June 30, 2012. The net interest margin (tax equivalent) for the second quarter of 2013 was 3.70 percent, an increase of one basis point from the prior quarter, and an increase of 14 basis points from the second quarter of 2012.

Three Months Ended
June 30, 2013   March 31, 2013   June 30, 2012
(in thousands)
Net interest income $ 80,414 $ 76,894 $ 78,910
Net interest margin (tax equivalent) 3.70 % 3.69 % 3.56 %
Loan yield 4.76 % 4.81 % 5.36 %
Funding costs:
Cost of deposits 0.37 % 0.39 % 0.58 %
Total funding liabilities 0.67 % 0.72 % 1.07 %

Total interest income was $94.0 million for the second quarter of 2013, compared to $90.8 million for the prior quarter, and $101.0 million for the same period a year ago. The increase over the prior quarter was primarily due to higher average loan balances, which were up $320.0 million, or 5 percent, contributing to an increase in interest income of $3.2 million. The yield on earning assets remained flat from the prior quarter at 4.32 percent, and was down from 4.52 percent for the second quarter of 2012.

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