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Sterling Bancshares Posts Declining Earnings

Higher provisions for credit losses and non-interest expenses contributed to lower first quarter earnings.

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On April 23, 2009,

Sterling Bancshares


reported a 52.4% decline in its Q1 FY09 earnings, hurt by higher provisions for credit losses and non-interest expenses. Net income available to common shareholders plunged to $5.52 million, or $0.08 per share, from $11.61 million, or $0.16 per share, in the prior-year quarter. The quarterly earnings missed the consensus estimate of $0.10 per share.

Total interest income dropped 11.5% to $62.46 million from $70.57 million a year ago, due to a decrease in interest income from loans, including fees. Interest income from loans, including fees, fell 15.9% to $53.00 million. Total interest-earnings assets increased 10.5% to $4.60 billion, while yield on earnings assets dipped 131 basis points to 5.55%. Total interest expense decreased 38.2% to $13.95 million, as the average rate paid on interest-bearing liabilities lowered 127 basis points to 1.74%. As a result, net interest income before provisions for loan losses inched up 1.1% to $48.51 million from $48.00 million. Tax equivalent net interest margin deteriorated to 4.32% from 4.67% a year ago. Finally, non-interest income decreased marginally to $10.80 million from $10.72 million, as higher customer service fees was offset by lower wealth management fees. Moreover, consolidated efficiency ratio worsened to 66.12% from 62.34% in the year-ago quarter.

SBIB provided $9.00 million for credit losses compared to $4.15 million provided a year earlier. Net charge-offs decreased to $2.03 million, or 0.22% of average total loans, from $2.92 million, or 0.34%, in the last year quarter. Non-performing loans as a percentage of period-end loans soared to 2.75% from 0.62%. Furthermore, SBIB continued to be well-capitalized, by having total capital to risk-weighted assets ratio of 15.37%, and Tier-1 capital to risk-weighted assets ratio at 12.49% as of March 31, 2009.