- Sterling Financial had $9.6 billion in total assets as of June 30. Nonperforming assets declined to $321.1 million, or 3.35% of total assets as of June 30, improving from 3.68% the previous quarter, and 5.38% a year earlier. Repossessed real estate declined to $55.8 million as of June 30, from $70.4 million in March, and $101.4 million, in June 2011.
- Total loans increased to $6.1 billion as of June 30, from $6.0 billion in March, and $5.6 billion in June 2011. Second-quarter portfolio loan originations (excluding loans held for sale) totaled $458.6 million, from $347.5 million the previous quarter, and $425.9 million a year earlier. Multifamily originations increased 36% sequentially to $62.3 million in the second quarter.
- Second-quarter net interest income totaled $78.9 million, increasing from $74.4 million in the first quarter, and $74.8 million, a year earlier. Sterling Financial's net interest margin -- the difference between the average yield on loans and investments and the average cost for deposits and borrowings -- was a tax-adjusted 3.56%, increasing from 3.38% the previous quarter, and 3.31% a year earlier, bucking the trend for most banks in the prolonged low-rate environment.
- Sterling defines its operating efficiency ratio as "noninterest expense, excluding
repossessed real estate costs and amortization of core deposit intangibles, divided by net interest income (tax equivalent) plus noninterest income, excluding gain on sales of securities, other-than-temporary impairment losses on securities and charge on prepayment of debt." The efficiency ratio is, essentially, the number of pennies of overhead for every dollar of revenue. The company's second-quarter efficiency ratio was 66%, improving from 80% the previous quarter, and 74% a year earlier. CEO Greg Seibly during the company's earnings conference call on July 27 reiterated Sterling's "goal of achieving an efficiency ratio of 60% by the end of 2013," and said that "there are several actions that are currently under way that we believe will enhance our efficiency moving forward," including cost savings from the further integration of First Independent Bank -- acquired in February -- and the sale of Sterling's Montana operations.
The shares trade for 1.1 times tangible book value, and 16 times the consensus 2013 earnings estimate of $1.29, among analysts polled by Thomson Reuters. Miller said that "given our expectation for Sterling to continue strengthening its core operating earnings and deploying excess capital, we believe shares should trade closer to 1.3x
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