Park Sterling Bank (NASDAQ: PSTB) (“Park Sterling” or the “Bank”) today released its unaudited results of operations and other financial information for the three-months ended September 30, 2010. Highlights for the quarter include:
  • Completed successful public offering of 23.1 million shares of common stock priced at $6.50 per share; raised gross proceeds of $150.2 million
  • Increased tangible common equity-to-tangible assets to 29.06%, up from 9.56% in second quarter of 2010 and 9.81% in the third quarter of 2009
  • Expanded executive management team and reconstituted board of directors
  • Fully engaged in new strategy to expand in the Carolinas and Virginia through combination of whole-bank mergers and acquisitions and organic growth
  • Recorded net loss of $3.7 million, or $0.23 per weighted average diluted share, compared to net income of $0.2 million for the second quarter of 2010 and $0.1 million for the third quarter of 2009
  • Recorded provision for loan losses of $6.1 million; related to implementation of refinements to loan loss allowance methodology and the effects of extended economic weakness on the loan portfolio; ratio of allowance-to-total loans now 3.31%, compared to 2.25% for the second quarter of 2010 and 1.79% for the third quarter of 2009
  • Reported non-performing assets-to-total assets of 1.82%, compared to 1.45% in the second quarter of 2010 and 0.27% in the third quarter of 2009

“The successful completion of our stock offering, expansion of our management team and reconstitution of our board of directors have collectively positioned us well to take advantage of anticipated consolidation opportunities in the Carolinas and Virginia,” said Jim Cherry, Chief Executive Officer. “Since closing the offering, we have focused on ensuring Park Sterling Bank is well prepared to execute our new strategy. This effort has included reconfirming that effective risk practices are in place, loans are appropriately graded, and estimated credit risk in the loan portfolio is prudently addressed. It has also included ensuring that we have an effective approach and the necessary resources in place to execute due diligence on potential partner banks.” Cherry said, “We have also actively engaged in executing our new strategy. This effort has included continued in-depth evaluation of potential merger partners and, importantly, direct and indirect dialogue with multiple possible partners spanning each of our three target market states. It has also included ongoing recruiting efforts around key leadership positions both to accelerate our organic growth and to effectively manage a larger banking platform.”

Successful Completion of Public Offering

The Bank successfully completed its offering of 23,100,000 shares of common stock at a price of $6.50 per share in August 2010. The offering raised $150.2 million of gross proceeds, or $140.2 million in net proceeds after deducting underwriting fees equal to 6% of the gross amount, or $9.0 million, and expenses of $0.9 million. Underwriting fees included a contingent portion equal to 2% of the gross amount, or $3.0 million, which will be earned by the underwriters once the market price of the Bank’s stock closes at a price equal to or above 125% of the offering price, or $8.125 per share, for 30 days. This contingent fee has been deducted from capital and is included as a liability on the Bank’s balance sheet. Investable proceeds from the offering total $143.2 million and include proceeds associated with this contingent fee. Objectives for investing these proceeds focus on liquidity, ability to pledge securities, regulatory capital efficiency, minimizing credit risk and ensuring manageable market risk.

Management Team and Board of Directors

Following completion of the offering, the Bank’s senior management team was expanded to comprise: James C. Cherry, Chief Executive Officer; Bryan F. Kennedy, President; David L. Gaines, Chief Financial Officer; Frank W. Ix, Chief Credit Officer; Leonard R. Robinett, Jr., Head of Corporate Development; and Stephen A. Arnall, Treasurer. Cherry, Gaines and Robinett previously worked together at Wachovia Corporation. Kennedy, Ix and Arnall have been with Park Sterling since its inception. The board of directors was concurrently reconstituted to include: Leslie M. “Bud” Baker, Jr., independent Chairman; Walter C. Ayers; Larry W. Carroll; Thomas B. Henson; and Jeffrey S. Kane.

New Strategy

Following completion of the offering and changes to management and the board of directors, the Bank has changed its business plan and is seeking to reach a consolidated asset size of between $8 billion and $10 billion over the next several years by acquiring regional and community banks in the Carolinas and Virginia and by growing organically. “We believe our strong balance sheet and publicly traded stock, coupled with our well regarded and seasoned management team and board, position us well to take advantage of growth opportunities in our target markets,” said Cherry. “We are actively engaged in discussions with potential merger partners,” he added.

Results of Operations

Please refer to the accompanying tables for comparative data on financial results.

Earnings: Third Quarter 2010 Compared to Third Quarter 2009

Park Sterling reported a net loss of $3.7 million for the three months ended September 30, 2010 compared to net income of $ 0.1 million for the same period in 2009. This decline of $3.8 million primarily resulted from a $5.0 million increase in the provision for loan losses and a $1.0 million increase in noninterest expenses, partially offset by a $0.3 million increase in net interest income. Annualized return on average assets was (2.64)% for the quarter compared to 0.10% for the same period in 2009. Annualized return on average equity decreased from 1.00% for the three-month period ended September 30, 2009 to (12.80)% for the same period in 2010.

Net interest income increased by $0.3 million, or 10.5%, to $3.6 million as compared to the prior year period. This improvement resulted from an $83.6 million, or 18.2%, increase in average earning asset balances to $542.1 million, primarily through utilization of net proceeds from the common stock offering. Average loan balances grew by $8.7 million, or 2.2%, to $399.6 million due to increased commercial real estate and commercial and industrial loans. Management continued to allow construction and development loans to decline during the period. Average interest-bearing deposits increased by $14.2 million, or 3.9%, to $379.5 million as compared to the same period in 2009. This net change resulted from a $9.5 million, or 22.2%, increase in average savings and money market accounts, and a $35.8 million, or 22.8%, increase in average core time deposits, partially offset by a $32.5 million, or 20.6%, decline in average brokered time deposits. Core deposits comprised 71.8% of total deposits at September 30, 2010 compared to 61.9% at September 30, 2009.

Provision for loan losses increased by $5.0 million to $6.1 million for the quarter ended September 30, 2010, from $1.1 million during the corresponding period in 2009. The increase in provision related to a refinement in the allowance methodology to incorporate a more comprehensive qualitative component, the effects of extended economic weakness on portfolio trends, and specific reserves related to impaired assets. The Bank recorded $2.0 million in net charge-offs for the three months ended September 30, 2010 compared to $0.3 million for the same period in 2009.

Total noninterest income was nominal for both periods.

Total noninterest expense increased by $1.0 million, or 48.2%, to $3.0 million for the three months ended September 30, 2010, compared to the prior year quarter. This increase included $0.6 million for personnel, occupancy and equipment costs associated with the expanded management team (including $0.2 million of non-cash option expense), $0.2 million for director fees to outgoing board members, and $0.1 million of expenses associated with other real estate owned. The Bank recorded a $1.8 million income tax benefit in the third quarter of 2010.

Earnings: Third Quarter 2010 Compared to Second Quarter 2010

Park Sterling reported a net loss of $3.7 million for the three months ended September 30, 2010 compared to net income of $ 0.2 million for the three months ended June 30, 2010. This decline of $3.9 million primarily resulted from a $5.0 million increase in the provision for loan losses, a $0.5 million increase in noninterest expenses, and a $0.1 million decrease in net interest income. Annualized return on average assets was (2.64)% for the third quarter compared to 0.14% for the second quarter. Annualized return on average equity decreased from 1.48% for the three months ended June 30, 2010 to (12.80)% for the three months ended September 30, 2010.

Net interest income decreased by $0.1 million, or 3.4%, to $3.6 million as compared to the prior quarter. Average earning assets rose $77.9 million, or 16.8%, to $542.1 million, primarily through utilization of net proceeds from the common stock offering. Average loan balances decreased by $0.5 million to $399.6 million primarily due to a decrease in construction and development loans, offset by an increase in home equity lines of credit. Management continued to allow construction and development loans to decline during the period. Average interest bearing deposits increased by $9.4 million, or 2.5%, to $379.5 million as compared to the second quarter. This net change resulted from a $7.1 million, or 15.7%, increase in average savings and money market accounts, and a $11.1 million, or 6.1%, increase in average core time deposits, partially offset by a $7.4 million, or 5.6%, decline in average brokered time deposits. Core deposits comprised 71.8% of total deposits at September 30, 2010 compared to 67.8% at the end of the second quarter.

Provision for loan losses increased by $5.0 million to $6.1 million for the third quarter from $1.1 million for the second quarter. The increase in provision related to a refinement in allowance methodology to incorporate a more comprehensive qualitative component, the effects of extended economic weakness on portfolio trends, and specific reserves related to impaired assets. We recorded $2.0 million in net charge-offs for the three months ended September 30, 2010 compared to $0.5 million for the three months ended June 30, 2010.

Total noninterest income was nominal for both periods.

Total noninterest expense increased by $0.5 million, or 20.7%, to $3.0 million for the three months ended September 30, 2010 compared to the second quarter. This increase included $0.5 million for personnel, occupancy and equipment costs associated with the expanded management team (including $0.2 million of non-cash option expense), and $0.2 million for director fees to outgoing board members, partially offset by a $0.1 million decline in expenses associated with other real estate owned. The Bank recorded a $1.8 million income tax benefit in the third quarter of 2010.

Asset Quality

Non-performing loans rose by $3.5 million, or 53.7%, to $10.0 million from the second quarter to the third quarter. Other real estate owned increased by $0.9 million, or 170%, to $1.4 million. These increases were in part driven by extended economic weakness in the Bank’s operating markets, particularly weakness related to construction and development activity, which is consistent with management’s view of the Carolinas as late-cycle markets. There were no loans past due 90 days or more and still accruing interest at September 30, 2010. Annualized net charge-offs increased from 0.50% to 1.98% of average loans. The ratio of non-performing assets-to-total assets was 1.82% at the end of the third quarter, compared to 1.45% at the end of the second quarter.

Loan Loss Allowance

The Bank introduced refinements to its loan loss allowance methodology during the third quarter. The principal change is the addition of a more comprehensive qualitative component which evaluates six environmental factors, including portfolios trends, portfolio concentrations, general economic and market trends, changes in lending practices, regulatory environment, and other factors. This evaluation is intended to recognize expected losses that may not be identified through quantitative analysis of the Bank’s historical loss experience.

The Bank’s loan loss allowance increased by $4.2 million, or 47%, to $13.2 million from the second quarter to the third quarter. Approximately $1.7 million, or 40%, of this increase resulted from introducing the more comprehensive qualitative component. Another $1.6 million, or 37%, resulted from specific reserves associated with impaired assets. The remaining $0.9 million, or 23%, resulted from downgrades in the Bank’s loan portfolio. The allowance represented 3.31% of total loans at the end of the third quarter, compared to 2.25% at the end of the second quarter. The allowance represented 114.5% of nonperforming assets at the end of the third quarter, compared to 127.0% at the end of the second quarter.

Capitalization

Stockholders’ equity increased from $46.7 million at June 30, 2010 to $183.8 million at September 30, 2010, primarily as a result of the common stock offering. During the third quarter, the Bank also recorded $0.5 million of additional paid in capital relating to the vesting of stock options and a $0.4 million increase, after tax-effect, in accumulated other comprehensive income relating to net unrealized gains on investments available-for-sale and swaps. These increases were offset by the reported net loss of $3.7 million. The Bank had tangible common equity to tangible assets of 29.06% at the end of the third quarter. The tier 1 capital ratio was 44.36%, total risk-based capital ratio 47.31%, and tier 1 leverage ratio 32.80%.

About Park Sterling Bank

Park Sterling Bank, headquartered in Charlotte, N.C., is dedicated to providing personal, comfortable banking services tailored to the needs and goals of its clients and delivered by a remarkably experienced team of bankers. The Bank is committed to building a banking franchise across the Carolinas and Virginia that is noted for sound risk management, superior client service and exceptional client relationships. For more information, visit www.parksterlingbank.com.

Non-GAAP Measures

Tangible assets, tangible common equity, tangible book value and related ratios, as used throughout this release, are non-GAAP financial measures. For additional information, see “Reconciliation of Non-GAAP Measures” in the accompanying tables.

Cautionary Statement Regarding Forward Looking Statements

This news release contains, and Park Sterling and its management may make, certain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts and often use words such as “may,” “plan,” “contemplate,” “anticipate,” “believe,” “intend,” “continue,” “expect,” “project,” “predict,” “estimate,” “could,” “should,” “would,” “will,” “goal,” “target” and similar expressions. The forward-looking statements made represent Park Sterling’s current expectations, plans or forecasts of its future results and condition, including expectations regarding its new business strategy of engaging in bank mergers and organic growth and anticipated asset size, investment of proceeds of its common stock offering, refinement of the loan loss allowance methodology, recruiting of key leadership positions, decreases in construction and development loans, increases in deposit accounts, capital levels, net interest income, credit trends and conditions, including loan losses, allowance, charge-offs, delinquency trends and nonperforming asset levels, and other similar matters. These statements are not guarantees of future results or performance and involve certain risks and uncertainties that are based on our beliefs and assumptions and on the information available to us at the time that these disclosures were prepared. Actual outcomes and results may differ materially from those expressed in, or implied by, any of these forward-looking statements.

You should not place undue reliance on any forward-looking statement and should consider all of the following uncertainties and risks, as well as those more fully discussed in any of Park Sterling’s filings with the FDIC; Park Sterling’s inability to identify and successfully negotiate and complete combinations with potential merger partners or to successfully integrate such businesses into Park Sterling, including the company’s ability to realize the benefits and cost savings from and limit any unexpected liabilities acquired as a result of any such business combination; the effects of negative economic conditions, including stress in the commercial real estate markets or delay or failure of recovery in the residential real estate markets; changes in consumer and investor confidence and the related impact on financial markets and institutions; changes in interest rates; failure of assumptions underlying the establishment of our allowance; deterioration in the credit quality of our loan portfolios or in the value of the collateral securing those loans; deterioration in the value of securities held in our investment securities portfolio; legal and regulatory developments; increased competition from both banks and nonbanks; changes in accounting standards, rules and interpretations, inaccurate estimates or assumptions in accounting and the impact on Park Sterling’s financial statements; Park Sterling’s ability to attract new employees; and management’s ability to effectively manage credit risk, market risk, operational risk, legal risk, and regulatory and compliance risk.

Forward-looking statements speak only as of the date they are made, and Park Sterling undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances or events that arise after the date the forward-looking statement was made.
         
CONDENSED INCOME STATEMENT
THREE MONTH RESULTS September 30, June 30, March 31, December 31, September 30,
    2010 2010 2010 2009 2009
Interest income
Loans, including fees $ 4,963 $ 5,170 $ 5,143 $ 5,148 $ 5,061
Federal funds sold 42 10 9 15 16
Taxable investment securities 370 286 324 319 323
Tax-exempt investment securities 161 161 160 159 160
Interest on deposits at banks   23     12     15     9   8
Total interest income   5,559     5,639   5,651   5,650   5,568
Interest expense
Money market, NOW and savings deposits 104 89 83 89 86
Time deposits 1,490 1,459 1,485 1,594 1,860
Short-term borrowings 1 3 4 6 6
Long-term borrowings 144 141 138 143 143
Subordinated debt   190     190     190     189   188
Total interest expense   1,929     1,882   1,900   2,021   2,283
Net interest income 3,630 3,757 3,751 3,629 3,285
Provision for loan losses   6,143     1,094   1,531   1,418   1,150
Net interest income (loss) after provision (2,513 ) 2,663 2,220 2,211 2,135
Total noninterest income 26 23 38 14 26
Noninterest expenses
Salaries and employee benefits 1,777 1,299 1,252 1,165 1,182
Occupancy and equipment 236 224 206 194 212
Advertising and promotion 84 96 57 62 84
Legal and professional fees 78 80 79 52 54
Deposit charges and FDIC insurance 184 183 176 375 230
Data processing and outside service fees 109 100 93 96 97
Directors fees 164 46 - - -
OREO expense and loss on sales 120 239 36 4 36
Other noninterest expense   238     210   143   130   123
Total noninterest expenses   2,990     2,477   2,042   2,078   2,018
Income (loss) before income taxes (5,477 ) 209 216 147 143
Income tax expense (benefit)   (1,809 )   36   59   29   27
Net income (loss) $ (3,668 ) $ 173 $ 157 $ 118 $ 116
 
Earnings (loss) per share, fully diluted $ (0.23 ) $ 0.03 $ 0.03 $ 0.02 $ 0.02
Weighted average diluted shares 15,998,924 4,951,098 4,951,098 4,951,098 4,951,098
 
         
CONDENSED INCOME STATEMENT
NINE MONTH RESULTS September 30, September 30,
    2010 2009
Interest income
Loans, including fees $ 15,275 $ 14,562
Federal funds sold 60 26
Taxable investment securities 981 1,032
Tax-exempt investment securities 481 374
Interest on deposits at banks   51     14  
Total interest income   16,848     16,008  
Interest expense
Money market, NOW and savings deposits 276 263
Time deposits 4,434 6,374
Short-term borrowings 9 20
Long-term borrowings 423 422
Subordinated debt   569     190  
Total interest expense   5,711     7,269  
Net interest income 11,137 8,739
Provision for loan losses   8,768     1,854  
Net interest income after provision 2,369 6,885
Total noninterest income 88 (299 )
Noninterest expenses
Salaries and employee benefits 4,328 3,558
Occupancy and equipment 666 625
Advertising and promotion 237 174
Legal and professional fees 237 160
Deposit charges and FDIC insurance 543 590
Data processing and outside service fees 302 299
Directors fees 211 -
OREO expense and loss on sales 395 157
Other noninterest expense   591     354  
Total noninterest expenses   7,510     5,917  
Income (loss) before income taxes (5,053 ) 669
Income tax expense (benefit)   (1,714 )   210  
Net income (loss) $ (3,339 ) $ 459  
 
Earnings (loss) per share, fully diluted $ (0.24 ) $ 0.09
Weighted average diluted shares 14,065,754 4,951,098
 
         
CONDENSED BALANCE SHEETS September 30, June 30, March 31, December 31, September 30,
2010 2010 2010 2009 * 2009
(Unaudited) (Unaudited) (Unaudited)   (Unaudited)
ASSETS
Cash and due from banks $ 11,591 $ 7,785 $ 9,872 $ 6,504 $ 7,296
Interest earning balances at banks 5,859 2,290 2,790 2,758 766
Federal funds sold 96,560 30,860 14,090 13,975 21,760
Investment securities available-for-sale 115,357 40,289 43,190 42,567 40,406
Loans 397,658 399,376 394,499 397,564 393,383
Allowance for loan losses   (13,150 )   (8,974 )   (8,380 )   (7,402 )   (7,041 )
Net loans   384,508     390,402     386,119     390,162     386,342  
 
Other real estate owned 1,441 534 3,066 1,550 1,163
Other assets   17,314     16,200     15,923     16,339     13,870  
 
Total assets $ 632,630   $ 488,361   $ 475,050   $ 473,855   $ 471,603  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Deposits:
Demand noninterest-bearing $ 30,468 $ 27,316 $ 26,586 $ 24,085 $ 23,035
Money market, NOW and savings 72,639 62,568 55,811 52,308 56,343
Time deposits   314,042     321,899     310,769     316,240     309,860  
Total deposits 417,149 411,783 393,166 392,633 389,238
 
Short-term borrowings 1,100 1,762 7,146 6,989 7,156
Long-term borrowings 20,000 20,000 20,000 20,000 20,000
Subordinated debt 6,895 6,895 6,895 6,895 6,895
Accrued expenses and other liabilities   3,639     1,231     1,423     1,243     2,027  
Total liabilities 448,783 441,671 428,630 427,760 425,316
 
Stockholders' equity:
Common stock, $4.65 par value 130,438 23,023 23,023 23,023 23,023
Additional paid-in capital 56,778 23,687 23,600 23,496 23,353
Accumulated deficit (4,981 ) (1,313 ) (1,485 ) (1,642 ) (1,761 )
Accumulated other comprehensive income   1,612     1,293     1,284     1,218     1,672  
Total stockholders' equity   183,847     46,690     46,421     46,095     46,287  
 
Total liabilities and stockholders' equity $ 632,630   $ 488,361   $ 475,050   $ 473,855   $ 471,603  
 
Common shares issued and outstanding 28,051,098 4,951,098 4,951,098 4,951,098 4,951,098
 

* Derived from audited financial statements.
 
         
SUMMARY OF LOAN PORTFOLIO
September 30, June 30, March 31, December 31, September 30,
2010 2010 2010 2009 2009
Secured by real estate:
One to four family residential $ 43,791 $ 45,126 $ 44,780 $ 42,782 $ 42,548
Commercial real estate 133,133 132,482 131,108 126,609 118,928
Construction and development 109,138 115,075 117,855 127,811 133,212
Home equity line of credit   58,115     54,982     52,745     52,026     52,189  
Total real estate loans   344,177     347,665     346,488     349,228     346,877  
Commercial and industrial 47,166 45,461 41,693 41,914 40,173
Loans to individuals   6,412     6,350     6,410     6,535     6,473  
Total other loans 53,578 51,811 48,103 48,449 46,646
Deferred fees, net   (97 )   (100 )   (92 )   (113 )   (140 )
Total loans $ 397,658   $ 399,376   $ 394,499   $ 397,564   $ 393,383  
 
         
ALLOWANCE FOR LOAN LOSSES
THREE MONTH RESULTS September 30, June 30, March 31, December 31, September 30,
2010 2010 2010 2009 2009
Beginning of period allowance $ 8,974 $ 8,380 $ 7,402 $ 7,041 $ 6,226
Provision for loan losses 6,143 1,094 1,531 1,418 1,150
Loans charged-off 1,986 502 554 1,057 335
Recoveries of loans charged-off   19     2     1     -     -  
End of period allowance   13,150     8,974     8,380     7,402     7,041  
 
Net loans charged-off $ 1,967 $ 500 $ 553 $ 1,057 $ 335
Annualized net charge-offs 1.98 % 0.50 % 0.56 % 1.06 % 0.34 %
 
 
ALLOWANCE FOR LOAN LOSSES
NINE MONTH RESULTS September 30, September 30,
2010 2009
Beginning of period allowance $ 7,402 $ 5,568
Provision for loan losses 8,768 1,854
Loans charged-off 3,042 381
Recoveries of loans charged-off   22     -  
End of period allowance   13,150     7,041  
 
Net loans charged-off $ 3,020 $ 381
Annualized net charge-offs 1.01 % 0.13 %
 
         
SELECT RATIOS
September 30, June 30, March 31, December 31, September 30,
2010 2010 2010 2009 2009
ASSET QUALITY
Nonperforming loans $ 10,043 $ 6,534 $ 1,656 $ 2,688 $ 110
Nonperforming assets (including OREO) 11,484 7,068 4,722 4,238 1,273
Past due 30-59 days 6,599 343 5,643 594 2,486
Past due 60-89 days 660 1,778 1,188 3,358 750
Past due 90 days plus (and still accruing) - - 553 - -
 
Nonperforming loans to total loans 2.53 % 1.64 % 0.42 % 0.68 % 0.03 %
Nonperforming assets to total assets 1.82 % 1.45 % 0.99 % 0.89 % 0.27 %
Allowance to total loans 3.31 % 2.25 % 2.12 % 1.86 % 1.79 %
Allowance to nonperforming loans 130.94 % 137.34 % 506.04 % 275.37 % 6400.91 %
Allowance to nonperforming assets 114.51 % 126.97 % 177.47 % 174.66 % 553.10 %
 
CAPITAL
Book value per share $ 6.55 $ 9.43 $ 9.38 $ 9.31 $ 9.35
Tangible book value per share $ 6.55 $ 9.43 $ 9.38 $ 9.31 $ 9.35
Common shares outstanding 28,051,098 4,951,098 4,951,098 4,951,098 4,951,098
 
Tier 1 capital $ 182,234 $ 44,262 $ 45,138 $ 44,876 $ 44,615
Tier 2 capital 12,129 12,167 12,167 12,184 12,135
Total risk based capital 194,363 56,429 57,305 57,060 56,750
 
 
Tier 1 ratio 44.36 % 10.59 % 10.78 % 10.66 % 10.69 %
Total risk based capital ratio 47.31 % 13.50 % 13.69 % 13.55 % 13.60 %
Tier 1 leverage ratio 32.80 % 9.26 % 9.53 % 9.40 % 9.49 %
Tangible common equity to total assets 29.06 % 9.56 % 9.77 % 9.73 % 9.81 %
 
LIQUIDITY
Net loans to total deposits 92.18 % 94.81 % 98.21 % 99.37 % 99.26 %
Liquidity ratio 54.99 % 19.56 % 17.34 % 16.31 % 17.55 %
Equity to Total Assets 29.06 % 9.56 % 9.77 % 9.73 % 9.81 %
 
INCOME STATEMENT (THREE MONTH RESULTS)
Return on Average Assets -2.64 % 0.14 % 0.13 % 0.10 % 0.10 %
Return on Average Equity -12.80 % 1.48 % 1.36 % 1.01 % 1.00 %
Net interest margin (tax equivalent) 2.74 % 3.34 % 3.41 % 3.20 % 2.94 %
 
INCOME STATEMENT (NINE MONTH RESULTS)
Return on Average Assets -0.88 % n/a n/a n/a 0.13 %
Return on Average Equity -6.39 % n/a n/a n/a 1.34 %
Net interest margin (tax equivalent) 3.14 % n/a n/a n/a 2.71 %
 
       
AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS
THREE MONTHS    
September 30, 2010 September 30, 2009
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
Assets
Interest-earning assets:
Loans with fees (1) $ 399,580 $ 4,963 4.97 % $ 390,904 $ 5,061 5.18 %
Fed funds sold 70,388 42 0.24 % 25,462 16 0.25 %
Investment securities - taxable 50,216 370 2.95 % 25,578 323 5.05 %
Investment securities - tax-exempt 14,570 161 4.42 % 13,372 160 4.79 %
Other interest-earning assets   7,350     23 1.25 %   3,193     8 1.00 %
 
Total interest-earning assets 542,104 5,559 4.10 % 458,509 5,568 4.86 %
 
Allowance for loan losses (9,061 ) (6,508 )
Cash and due from banks 8,056 6,009
Premises and equipment 4,596 4,728
Other assets   9,960     7,187  
 
Total assets $ 555,655   $ 469,925  
 
Liabilities and stockholders' equity
Interest-bearing liabilities:
Interest-bearing demand $ 9,695 $ 3 0.12 % $ 8,269 $ 2 0.10 %
Savings and money market 52,138 102 0.78 % 42,655 84 0.79 %
Time deposits - core 192,666 909 1.89 % 156,878 1,050 2.68 %
Time deposits - brokered   125,007     581 1.86 %   157,491     810 2.06 %
Total interest-bearing deposits 379,506 1,595 1.68 % 365,293 1,946 2.13 %
Federal Home Loan Bank advances 20,000 144 2.88 % 25,000 149 2.38 %
Other borrowings   8,490     190 8.95 %   9,000     188 8.36 %
Total borrowed funds   28,490     334 4.69 %   34,000     337 3.96 %
 
Total interest-bearing liabilities   407,996     1,929 1.89 %   399,293     2,283 2.29 %
 
Net interest rate spread   3,630 2.21 %   3,285 2.57 %
 
Noninterest-bearing demand deposits 30,828 22,581
Other liabilities 2,168 2,304
Stockholders' equity   114,663     45,747  
 
Total liabilities and equity $ 555,655   $ 469,925  
   
Net interest margin 2.68 % 2.87 %
 
(1) Average loan balances include nonaccrual loans.
 
       
AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS
NINE MONTHS    
September 30, 2010 September 30, 2009
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
Assets
Interest-earning assets:
Loans with fees (1) $ 398,381 $ 15,275 5.11 % $ 387,427 $ 14,562 5.01 %
Fed funds sold 34,358 60 0.23 % 17,149 26 0.20 %
Investment securities - taxable 35,664 981 3.67 % 25,915 1,032 5.31 %
Investment securities - tax-exempt 14,304 481 4.48 % 10,384 374 4.80 %
Other interest-earning assets   5,832     51 1.17 %   3,099     14 0.60 %
 
Total interest-earning assets 488,539 16,848 4.60 % 443,974 16,008 4.81 %
 
Allowance for loan losses (8,408 ) (6,043 )
Cash and due from banks 7,908 3,669
Premises and equipment 4,619 4,825
Other assets   10,446     7,273  
 
Total assets $ 503,104   $ 453,698  
 
Liabilities and stockholders' equity
Interest-bearing liabilities:
Interest-bearing demand $ 9,433 $ 6 0.08 % $ 8,104 $ 4 0.07 %
Savings and money market 46,039 270 0.78 % 41,622 259 0.83 %
Time deposits - core 186,272 2,718 1.95 % 137,489 3,123 3.03 %
Time deposits - brokered   130,114     1,716 1.76 %   167,347     3,251 2.59 %
Total interest-bearing deposits 371,858 4,710 1.69 % 354,562 6,637 2.50 %
Federal Home Loan Bank advances 22,820 430 2.51 % 25,000 440 2.35 %
Other borrowings   8,747     571 8.70 %   5,026     192 5.09 %
Total borrowed funds   31,567     1,001 4.23 %   30,026     632 2.81 %
 
Total interest-bearing liabilities   403,425     5,711 1.89 %   384,588     7,269 2.52 %
 
Net interest rate spread   11,137 2.71 %   8,739 2.29 %
 
Noninterest-bearing demand deposits 28,571 20,403
Other liabilities 1,475 2,995
Stockholders' equity   69,633     45,712  
 
Total liabilities and stockholders' equity $ 503,104   $ 453,698  
   
Net interest margin 3.04 % 2.62 %
 
(1) Average loan balances include nonaccrual loans.
 
       
RECONCILIATION OF NON-GAAP MEASURES
  September 30, June 30, March 31, December 31, September 30,
2010 2010 2010 2009 * 2009
(Unaudited) (Unaudited) (Unaudited)   (Unaudited)
Tangible assets
Total assets $ 633,641 $ 488,361 $ 474,250 $ 473,855 $ 470,701
Less: intangible assets   -     -     -     -     -
Tangible assets $ 633,641   $ 488,361   $ 474,250   $ 473,855   $ 470,701
 
 
Tangible common equity
Total common equity $ 183,847 $ 46,690 $ 46,421 $ 46,095 $ 46,287
Less: intangible assets   -     -     -     -     -
Tangible common equity $ 183,847   $ 46,690   $ 46,421   $ 46,095   $ 46,287
 
 
Tangible book value per share
Tangible common equity $ 183,847 $ 46,690 $ 46,421 $ 46,095 $ 46,287
Divided by: period end outstanding shares   28,051,098     4,951,098     4,951,098     4,951,098     4,951,098
Tangible common book value per share $ 6.55   $ 9.43   $ 9.38   $ 9.31   $ 9.35
 

* Derived from audited financial statements.

Copyright Business Wire 2010

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