Park Sterling Corporation Announces Results for Second Quarter 2016
/EINPresswire.com/ -- CHARLOTTE, NC --(Marketwired - July 28, 2016) - Park Sterling Corporation (NASDAQ: PSTB), the holding company for Park Sterling Bank, today released unaudited results of operations and other financial information for the second quarter of 2016. Highlights at and for the three months ended June 30, 2016 include:
Highlights
- Net income of $5.6 million, or $0.11 per share, compared to $2.7 million, or $0.05 per share, in the quarter ended March 31, 2016
- Adjusted net income, which excludes merger-related expenses and gain or loss on sale of securities, increased $275,000 (4%) to $6.4 million, or $0.12 per share, compared to $6.2 million, or $0.12 per share, in the prior quarter
- Noninterest income grew 14% over first quarter 2016 with strong performance across several categories
- Noninterest expenses declined from the first quarter of 2016
- Loans, including loans held for sale, showed steady growth of $52.0 million, representing a 9% annualized growth rate
- Nonperforming loans to total loans decreased 9 basis points to 0.33% from 0.42% at March 31, 2016
- Nonperforming assets to total assets decreased 9 basis points to 0.35% from 0.44% at March 31, 2016
- Capital levels remained strong with total common equity to total assets of 11.17%, tangible common equity to tangible assets of 9.00% and Tier 1 leverage ratio of 10.06%
- Core systems conversion with First Capital Bancorp, Inc. were completed (May 2016)
- The Board of Directors declared a 33% increase in the quarterly cash dividend on common shares to $0.04 per share (July 2016)
"We are delighted to report strong results for the second quarter of 2016," said James C. Cherry, Chief Executive Officer. "For the quarter, we achieved higher profitability and returns driven by steady loan growth, strong increases in noninterest income sources and reduced expenses. Our solid financial condition reflects superior asset quality and healthy capital and liquidity levels.
On the capital management front, yesterday the board declared a 33% increase in the quarterly dividend to $0.04 per common share from the prior level of $0.03 per share, payable on August 23, 2016 to all shareholders of record as of the close of business on August 9, 2016. Future dividends will be subject to board approval. Additionally, during the second quarter we repurchased approximately 150,000 shares under our previously announced 2.2 million share repurchase program.
We remain committed to build a full-service, highly regarded regional community bank. With the successful conversion of First Capital Bancorp's core systems onto the Park Sterling platform, we now have a company operating on common core systems with $3.2 billion in assets serving customers through 56 branches in highly attractive markets across the Carolinas, Virginia and North Georgia. The second quarter results reflect management's focus in 2016 on improving performance by leveraging Park Sterling's distinguishing strengths. These include our position in high growth markets, exceptionally talented and experienced bankers, quality products and services, solid financial condition and strong risk culture."
Financial Results
Income Statement -- Three Months Ended June 30, 2016
Park Sterling reported net income of $5.6 million, or $0.11 per share, for the three months ended June 30, 2016 ("2016Q2"). This compares to net income of $2.7 million, or $0.05 per share, for the three months ended March 31, 2016 ("2016Q1") and net income of $4.3 million, or $0.10 per share, for the three months ended June 30, 2015 ("2015Q2"). The increase in net income from both 2016Q1 and 2015Q2 resulted primarily from reduced merger -related costs in 2016Q2 as well as an increase in net interest income from 2015Q2 and noninterest income compared to 2016Q1 and 2015Q2.
Park Sterling reported adjusted net income, which excludes merger-related expenses and gain or loss on sale of securities, of $6.4 million, or $0.12 per share, in 2016Q2. This compares to adjusted net income of $6.2 million, or $0.12 per share, in 2016Q1 and adjusted net income of $4.4 million, or $0.10 per share, in 2015Q2. Compared to 2016Q1 and 2015Q2, adjusted net income reflects higher noninterest income and lower noninterest expense.
Net interest income totaled $26.1 million in 2016Q2, which represents a $547 thousand, or 2%, decrease from $26.6 million in 2016Q1 and a $5.4 million, or 26%, increase from $20.6 million in 2015Q2. Average total earning assets increased $9.5 million in 2016Q2 to $2.84 billion, compared to $2.83 billion in 2016Q1 and increased $657.7 million, or 30%, compared to $2.19 billion in 2015Q2. The increase in average total earning assets in 2016Q2 from 2016Q1 included an increase in average loans (including loans held for sale) of $23.7 million, or 1%, offset by decreases in average marketable securities of $5.0 million, or 1%, and average other interest-earning assets of $9.3 million, or 17%. The increase in average total earning assets in 2016Q2 from 2015Q2 resulted primarily from a $654.7 million, or 40%, increase in average loans (including loans held for sale) as a result of both organic growth and the acquisition of First Capital and a $9.4 million, or 2%, increase in average marketable securities, offset by a $6.4 million, or 12%, decrease in average other earning assets.
Net interest margin was 3.69% in 2016Q2, representing a 9 basis point decrease from 3.78% in both 2016Q1 and 2015Q2. The decrease in net interest margin from 2016Q1 resulted primarily from a 12 basis point decrease in yield on loans to 4.68%, as the yield on loans in 2016Q1 was driven by a higher level of accretion of the acquired performing fair value mark related to the acquisition of First Capital loans. In addition, the cost of interest-bearing liabilities increased 2 basis points from 2016Q1 as the cost of wholesale funding increased slightly. The reduction in net interest margin yield from 20152Q is significantly impacted by the merger with First Capital which was completed on January 1, 2016. The change was primarily driven by higher rates on interest bearing deposits and the cost associated with the $30 million senior term loan that was used to partially fund the merger, offset in part by the addition of higher yielding earning assets as a result of the merger.
The Company reported $882,000 of provision expense in 2016Q2, compared to $556,000 of provision recorded in 2016Q1, and a provision of $134,000 in 2015Q2. Allowance for loan loss levels increased to 0.47% of total loans at 2016Q2 compared to 0.43% at 2016Q1 due to an increase in the qualitative component of the allowance.
Noninterest income increased $648,000, or 14%, to $5.4 million in 2016Q2, compared to $4.7 million in 2016Q1 and increased $1.1 million, or 25%, compared to $4.3 million in 2015Q2. The increase from 2016Q1 was driven primarily by a $699,000 volume-related increase in capital markets income, as well as a $203,000 increase in ATM and card income that resulted from year-to-date EMV-chip card conversion cost adjustments. Other increases include a $122,000, or 83%, decrease in FDIC loss share indemnification asset and true-up liability expense as we approach the expiration date of another agreement and a $98,000, or 13%, increase in mortgage banking income. Partially offsetting these increases was a $462,000, or 47%, decrease in BOLI income due in part to $402,000 of death benefits received in 2016Q1 and an additional $81,000 of losses on the sale of securities. The increase in noninterest income from 2015Q2 reflects higher capital markets income, as well as higher service charges on deposit accounts and lower amortization on the FDIC loss share indemnification asset and true-up liability expense, offset partially by lower income from mortgage banking and wealth management activities.
Noninterest expenses decreased $4.2 million, or 16%, to $21.9 million in 2016Q2 compared to $26.2 million in 2016Q1, and increased $3.7 million, or 20%, compared to $18.2 million in 2015Q2. Adjusted noninterest expenses, which exclude merger-related expenses ($1.3 million in 2016Q2, $5.2 million in 2016Q1 and $167,000 in 2015Q2), decreased $282 thousand, or 1%, to $20.7 million in 2016Q2 compared to $21.0 million in 2016Q1, and increased $2.6 million, or 14%, compared to $18.1 million in 2015Q2. Overall the decrease in adjusted noninterest expenses from 2016Q1 was due primarily to a $351,000 decrease in salaries and compensation expense due to the 2016Q1 increase in the incentive accrual and the realization of additional merger related cost savings. The other notable decrease was the net cost of operation of OREO, which in 2016Q1 included a loss on the sale of a branch that had been transferred to OREO in 2015. Offsetting these decreases was an increase in loan and collection expense due to a recent HELOC program for which the company absorbs borrower closing costs, as well as the timing of loan activity. The increase in adjusted noninterest expenses from 2015Q2 is primarily a function of the merger with First Capital.
The company's effective tax rate was 35.4% in 2016Q2, compared to 40.6% in 2016Q1 and 34.7% in 2015Q2. During 2016Q1, the rate was impacted by certain non-deductible merger-related expenses and adjustments made to deferred tax assets for the true-up in tax rates and re-measurement due to the First Capital merger, partially offset by the non-taxable BOLI death benefits received in 2016Q1.
Balance Sheet
Total assets increased $20.3 million, or 1%, to $3.2 billion at 2016Q2, as compared to total assets of $3.2 billion at 2016Q1. Cash and equivalents decreased $22.6 million, or 28%, to $69.9 million and total securities, including non-marketable securities, decreased $4.8 million, to $509.7 million. Total loans, excluding loans held for sale, increased $47.8 million, or 8% annualized, to $2.3 billion at 2016Q2.
Loan mix remained relatively consistent with 2016Q1. The combination of commercial and industrial and owner-occupied real estate loans decreased slightly from 31.1% to 30.6% of total loans, and investor-owned commercial real estate loans increased from 31.7% to 32.8% of total loans. Acquisition, construction and development loans decreased to 13.8% from 14.2% of total loans. Total consumer loans remained flat at 22% of total loans.
In terms of accounting designations, compared to 2016Q1: (i) non-acquired loans, which include certain renewed and/or restructured acquired performing loans that are re-designated as non-acquired, increased $119.3 million, or 8%, to $1.6 billion; (ii) acquired performing loans decreased $64.1 million, or 9%, to $661.9 million; and (iii) purchase credit impaired ("PCI") loans decreased $7.4 million, or 7%, to $98.7 million. At 2016Q2, noncovered performing acquired loans (which totaled $660.7 million) included a $4.9 million net acquisition accounting fair market value adjustment, representing a 0.74% "mark;" noncovered PCI loans (which totaled $85.4 million) included a $22.8 million adjustment, representing a 21.1% "mark;" and covered performing acquired and PCI loans (which totaled $14.5 million) included a $3.5 million adjustment, representing a 19.7% "mark."
Total deposits decreased $24.6 million, or 1%, to $2.5 billion at 2016Q2, as compared to total deposits of $2.5 billion at 2016Q1. Noninterest bearing demand deposits increased $27.1 million, or 6%, to $496.2 million (20% of total deposits). Non-brokered money market, NOW and savings deposits decreased $22.6 million, or 2%, to $1.2 billion (47% of total deposits). Time deposits less than $250,000 decreased $9.1 million, or 2%, to $547.6 million (22% of total deposits) and time deposits greater than $250,000 decreased $11.7 million, or 10%, to $108.1 million (4% of total deposits). Finally, brokered deposits decreased $8.3 million, or 5%, to $152.2 million (6% of total deposits). Core deposits, which exclude time deposits greater than $250,000 and brokered deposits, represented 89.5% of total deposits at 2016Q2 and 88.8% of total deposits at 2016Q1.
Total borrowings increased $29.9 million, or 11%, to $297.8 million at 2016Q2 compared to $268.0 million at 2016Q1. Borrowings at 2016Q2 included $235.0 million in FHLB borrowings, $29.7 million in a senior unsecured term loan at the bank holding company level, and $33.2 million of acquired trust preferred securities, net of acquisition accounting fair market value adjustments.
Total shareholders' equity increased $4.9 million, or 1%, to $354.5 million at 2016Q2 compared to $349.5 million at 2016Q1, driven by an increase in retained earnings and higher unrealized gains related to available-for-sale securities and balance sheet interest rate hedges. The company's ratio of common equity to assets increased to 11.17% at 2016Q2 from 11.08% at 2016Q1. The company's ratio of tangible common equity to tangible assets increased to 9.00% at 2016Q2 from 8.87% at 2016Q1. The company's Common Equity Tier 1 ("CET1") ratio decreased to 11.14% at 2016Q2 compared to 11.11% at 2016Q1 due to an increase in risk weighted assets. The company's Tier 1 leverage ratio was 10.06% at 2016Q2 compared to 9.76% at 2016Q1.
Asset Quality
Asset quality continues to remain strong. Nonperforming assets were $11.0 million at 2016Q2, or 0.35% of total assets, compared to $14.0 million at 2016Q1, or 0.44% of total assets. Nonperforming loans were $7.8 million at 2016Q2, and represented 0.33% of total loans, compared to $9.6 million at 2016Q1, or 0.42% of total loans. The settlement of two loan relationships that were past due in 2016Q1 as well as the continued sales of other real estate owned contributed to the declines in both ratios. The company reported net recoveries of $159,000, or 0.03% of average loans (annualized), in 2016Q2, compared to net recoveries of $212,000, or 0.04% of average loans (annualized), in 2016Q1.
The allowance for loan losses increased $1 million, or 11%, to $10.9 million, or 0.47% of total loans, at 2016Q2, compared to $9.8 million, or 0.43% of total loans, at 2016Q1. The increase in allowance included (i) a $255,000, or 16%, decrease in the quantitative component, resulting from lower historic loss rates due to a net recovery in 2016Q2 and (ii) a $1.2 million or 15%, increase in the qualitative component, reflecting management's judgment of inherent loss in the loan portfolio not represented in historic loss rates, based on heightened general economic market uncertainty and increased financial market volatility which emerged toward the end of 2016Q2.
As contemplated during the Bank's 2010 public offering, the Company awarded certain performance-based restricted shares to officers and directors following the holding company reorganization. These shares vest one-third each when the Company's stock price per share reaches the following performance thresholds for 30 consecutive trading days: (i) 125% of offer price ($8.13); (ii) 140% of offer price ($9.10); and (iii) 160% of offer price ($10.40). These anti-dilutive restricted shares are issued (and thereby have voting rights), but are not included in earnings per share or tangible book value per share calculations until they vest (and thereby have economic rights). There were 436,590 shares outstanding at each of June 30, 2016 and March 31, 2016 and 554,400 shares outstanding at each of the reported quarters of 2015.
Conference Call
A conference call will be held at 8:30 a.m., Eastern Time this morning (July 28, 2016). The conference call can be accessed by dialing (877) 512-1104 and requesting the Park Sterling Corporation earnings call. Listeners should dial in 10 minutes prior to the start of the call. The live webcast and presentation slides will be available on www.parksterlingbank.com under Investor Relations, "Investor Presentations."
A replay of the webcast will be available on www.parksterlingbank.com under Investor Relations, "Investor Presentations" shortly following the call. A replay of the conference call can be accessed approximately one hour after the call by dialing (877) 344-7529 and requesting conference number 10087667.
About Park Sterling Corporation
Park Sterling Corporation, the holding company for Park Sterling Bank, is headquartered in Charlotte, North Carolina. Park Sterling, a regional community-focused financial services company with $3.2 billion in assets, is the largest community bank headquartered in the Charlotte area and has 56 banking offices stretching across the Carolinas and into North Georgia, as well as in Richmond, Virginia. The bank serves professionals, individuals, and small and mid-sized businesses by offering a full array of financial services, including deposit, mortgage banking, cash management, consumer and business finance, capital markets and wealth management services with a commitment to "Answers You Can Bank On℠." Park Sterling prides itself on being large enough to help customers achieve their financial aspirations, yet small enough to care that they do. Park Sterling is focused on building a banking franchise that is noted for sound risk management, strong community focus and exceptional customer service. For more information, visit www.parksterlingbank.com. Park Sterling Corporation shares are traded on NASDAQ under the symbol PSTB.
Non-GAAP Financial Measures
Tangible assets, tangible common equity, tangible book value, average tangible common equity, adjusted net income, adjusted operating revenues, adjusted noninterest income, adjusted noninterest expenses, adjusted operating expense, adjusted allowance for loan losses, and related ratios and per share measures, including adjusted return on average assets and adjusted return on average equity, as used throughout this release, are non-GAAP financial measures. For additional information, see "Reconciliation of Non-GAAP Financial 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. These forward-looking statements express management's current expectations or forecasts of future events, results and conditions and, by their nature, are subject to risks and uncertainties and there are a number of factors that could cause actual results to differ materially from those in such statements. Factors that might cause such a difference include, but are not limited to: synergies and other financial benefits from the merger with First Capital Bancorp, Inc. ("First Capital") may not be realized within the expected time frames; costs or difficulties related to integration matters might be greater than expected; changes in loan mix, deposit mix, capital and liquidity levels, emerging regulatory expectations and measures, net interest income, noninterest income, noninterest expense, credit trends and conditions, including loan losses, allowance for loan loss, charge-offs, delinquency trends and nonperforming asset levels, deterioration in the credit quality of the loan portfolio or the value of collateral securing loans, deterioration in the value of securities held for investment, the impacts of a potential increasing rate environment, and other similar matters; inability to identify and successfully negotiate and complete additional combinations with other potential merger partners or to successfully integrate such businesses into Park Sterling, including the company's ability to adequately estimate or to realize the benefits and cost savings from and limit any unexpected liabilities acquired as a result of any such business combinations; failure to generate an adequate return on investment related to new branches or other hiring initiatives; inability to generate future organic growth in loan balances, retail banking, wealth management, mortgage banking or capital markets results through the hiring of new personnel, development of new products, including new online and mobile banking platforms for treasury services, opening of de novo branches or otherwise; inability to capitalize on identified revenue enhancements or expense management opportunities, including the inability to achieve or maintain adjusted operating expense to adjusted operating revenue targets; inability to generate future ATM and card income from marketing expenses; variability in the performance of covered loans and associated loss-share related expenses; the effects of negative or soft economic conditions, including stress in the commercial real estate markets or failure of continued recovery in the residential real estate markets; changes in consumer and investor confidence and the related impact on financial markets and institutions; the possibility of recognizing other than temporary impairments on holdings of collateralized loan obligation securities as a result of the Volcker Rule; the potential impacts of any government shutdown or debt ceiling impasse, including the risk of a U.S. credit rating downgrade or default, or continued global economic instability, which could cause disruptions in the financial markets, impact interest rates, and cause other potential unforeseen consequences; fluctuations in the market price of the common stock, regulatory, legal and contractual requirements, other uses of capital, financial performance, market conditions generally, and future actions by the board of directors, in each case impacting repurchases of common stock or declaration of dividends; legal and regulatory developments, including changes in the federal risk-based capital rules; increased competition from both banks and nonbanks; changes in accounting standards, rules and interpretations, inaccurate estimates or assumptions in accounting, including acquisition accounting fair market value assumptions and accounting for purchased credit-impaired loans, and the impact on Park Sterling's financial statements; and management's ability to effectively manage credit risk, market risk, operational risk, legal risk, and regulatory and compliance risk.
You should not place undue reliance on any forward-looking statement and should consider all of the preceding uncertainties and risks, as well as those more fully discussed in any of Park Sterling's filings with the SEC. 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.
PARK STERLING CORPORATION
CONDENSED CONSOLIDATED INCOME
STATEMENT
THREE MONTH RESULTS
($ in thousands, except per share
amounts) June 30, March 31, December 31,
2016 2016 2015
(Unaudited) (Unaudited) (Unaudited)
------------ ------------ -------------
Interest income
Loans, including fees $ 26,729 $ 27,124 $ 19,284
Taxable investment securities 2,640 2,687 2,677
Tax-exempt investment securities 137 147 146
Nonmarketable equity securities 153 154 109
Interest on deposits at banks 34 42 22
Federal funds sold 5 8 1
------------ ------------ -------------
Total interest income 29,698 30,162 22,239
------------ ------------ -------------
Interest expense
Money market, NOW and savings
deposits 1,014 1,017 743
Time deposits 1,449 1,398 903
Short-term borrowings 251 294 205
Long-term debt 440 410 55
Subordinated debt 494 446 358
------------ ------------ -------------
Total interest expense 3,648 3,565 2,264
------------ ------------ -------------
Net interest income 26,050 26,597 19,975
Provision for loan losses 882 556 409
------------ ------------ -------------
Net interest income after
provision 25,168 26,041 19,566
Noninterest income
Service charges on deposit accounts 1,528 1,489 1,439
Mortgage banking income 873 775 699
Income from wealth management
activities 863 803 887
Income from capital market
activities 767 68 437
ATM and card income 776 573 647
Income from bank-owned life
insurance 526 988 371
Gain (loss) on sale of securities
available for sale (87) (6) -
Amortization of indemnification
asset
and true-up liability expense (25) (147) (165)
Other noninterest income 154 184 208
------------ ------------ -------------
Total noninterest income 5,375 4,727 4,523
------------ ------------ -------------
Noninterest expenses
Salaries and employee benefits 11,774 13,018 9,541
Occupancy and equipment 3,041 3,125 2,680
Data processing and outside service
fees 2,224 5,523 1,669
Legal and professional fees 950 725 1,471
Deposit charges and FDIC insurance 478 432 413
Loss on disposal of fixed assets 230 44 50
Communication fees 505 483 480
Postage and supplies 191 173 99
Loan and collection expense 273 37 194
Core deposit intangible
amortization 458 458 347
Advertising and promotion 367 421 271
Net cost of operation of other real
estate owned 70 266 (23)
Other noninterest expense 1,385 1,448 1,170
------------ ------------ -------------
Total noninterest expenses 21,946 26,153 18,362
------------ ------------ -------------
Income before income taxes 8,597 4,615 5,727
Income tax expense 3,045 1,874 1,952
------------ ------------ -------------
Net income $ 5,552 $ 2,741 $ 3,775
============ ============ =============
Earnings per common share, fully
diluted $ 0.11 $ 0.05 $ 0.09
Weighted average diluted common
shares 52,704,537 52,599,584 44,322,428
PARK STERLING CORPORATION
CONDENSED CONSOLIDATED INCOME
STATEMENT
THREE MONTH RESULTS
($ in thousands, except per share
amounts) September 30, June 30,
2015 2015
(Unaudited) (Unaudited)
------------------- -------------------
Interest income
Loans, including fees $ 19,475 $ 19,667
Taxable investment securities 2,636 2,508
Tax-exempt investment securities 152 143
Nonmarketable equity securities 142 122
Interest on deposits at banks 23 18
Federal funds sold 1 -
------------------- -------------------
Total interest income 22,429 22,458
------------------- -------------------
Interest expense
Money market, NOW and savings
deposits 654 532
Time deposits 841 752
Short-term borrowings 90 76
Long-term debt 134 131
Subordinated debt 348 351
------------------- -------------------
Total interest expense 2,067 1,842
------------------- -------------------
Net interest income 20,362 20,616
Provision for loan losses - 134
------------------- -------------------
Net interest income after
provision 20,362 20,482
Noninterest income
Service charges on deposit accounts 1,370 1,107
Mortgage banking income 700 956
Income from wealth management
activities 947 906
Income from capital market
activities 238 394
ATM and card income 537 629
Income from bank-owned life
insurance 1,058 553
Gain (loss) on sale of securities
available for sale 54 -
Amortization of indemnification
asset
and true-up liability expense (162) (165)
Other noninterest income 185 (88)
------------------- -------------------
Total noninterest income 4,927 4,292
------------------- -------------------
Noninterest expenses
Salaries and employee benefits 9,952 10,021
Occupancy and equipment 2,591 2,491
Data processing and outside service
fees 1,668 1,640
Legal and professional fees 472 660
Deposit charges and FDIC insurance 401 433
Loss on disposal of fixed assets 597 113
Communication fees 501 541
Postage and supplies 123 116
Loan and collection expense 151 242
Core deposit intangible
amortization 347 347
Advertising and promotion 313 304
Net cost of operation of other real
estate owned 163 232
Other noninterest expense 1,140 1,092
------------------- -------------------
Total noninterest expenses 18,419 18,232
------------------- -------------------
Income before income taxes 6,870 6,542
Income tax expense 2,092 2,273
------------------- -------------------
Net income $ 4,778 $ 4,269
=================== ===================
Earnings per common share, fully
diluted $ 0.11 $ 0.10
Weighted average diluted common
shares 44,287,019 44,301,895
PARK STERLING CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENT
SIX MONTH RESULTS
($ in thousands, except per share amounts) June 30, June 30,
2016 2015
(Unaudited) (Unaudited)
--------------- ---------------
Interest income
Loans, including fees $ 53,853 $ 38,778
Taxable investment securities 5,327 5,299
Tax-exempt investment securities 284 281
Nonmarketable equity securities 307 249
Interest on deposits at banks 76 36
Federal funds sold 13 -
--------------- ---------------
Total interest income 59,860 44,643
--------------- ---------------
Interest expense
Money market, NOW and savings deposits 2,032 1,052
Time deposits 2,847 1,459
Short-term borrowings 545 152
Long-term debt 850 259
Subordinated debt 940 679
--------------- ---------------
Total interest expense 7,214 3,601
--------------- ---------------
Net interest income 52,646 41,042
Provision for loan losses 1,438 314
--------------- ---------------
Net interest income after provision 51,208 40,728
Noninterest income
Service charges on deposit accounts 3,017 2,126
Mortgage banking income 1,648 1,907
Income from wealth management activities 1,666 1,768
Income from capital market activities 835 792
ATM and card income 1,349 1,323
Income from bank-owned life insurance 1,514 1,321
Gain (loss) on sale of securities available
for sale (93) -
Amortization of indemnification asset and
true-up liability expense (172) (559)
Other noninterest income 338 115
--------------- ---------------
Total noninterest income 10,102 8,793
--------------- ---------------
Noninterest expenses
Salaries and employee benefits 24,792 20,452
Occupancy and equipment 6,166 5,046
Data processing and outside service fees 7,747 3,288
Legal and professional fees 1,675 1,458
Deposit charges and FDIC insurance 910 825
Loss on disposal of fixed assets 274 349
Communication fees 988 1,119
Postage and supplies 364 265
Loan and collection expense 310 396
Core deposit intangible amortization 916 695
Advertising and promotion 788 678
Net cost of operation of other real estate
owned 336 267
Other noninterest expense 2,833 2,533
--------------- ---------------
Total noninterest expenses 48,099 37,371
--------------- ---------------
Income before income taxes 13,211 12,150
Income tax expense 4,919 4,098
--------------- ---------------
Net income $ 8,292 $ 8,052
=============== ===============
Earnings per common share, fully diluted $ 0.16 $ 0.18
Weighted average diluted common shares 52,650,886 44,287,424
PARK STERLING CORPORATION
WEALTH MANAGEMENT ASSETS
($ in thousands)
June 30, March 31, December 31,
2016 2016 2015
(Unaudited) (Unaudited) (Unaudited)
------------ ------------ -------------
Discretionary assets held $ 322,996 $ 339,198 $ 434,346
Non-discretionary assets held 32,173 31,174 32,289
------------ ------------ -------------
Total wealth management assets $ 355,169 $ 370,372 $ 466,635
============ ============ =============
PARK STERLING CORPORATION
WEALTH MANAGEMENT ASSETS
($ in thousands)
September 30, June 30,
2015 2015
(Unaudited) (Unaudited)
------------------- -------------------
Discretionary assets held $ 425,229 $ 438,289
Non-discretionary assets held 32,152 36,067
------------------- -------------------
Total wealth management assets $ 457,381 $ 474,356
=================== ===================
PARK STERLING CORPORATION
MORTGAGE ORIGINATION
($ in thousands)
June 30, March 31, December 31,
2016 2016 2015
(Unaudited) (Unaudited) (Unaudited)
------------ ------------ -------------
Mortgage origination - purchase $ 25,316 $ 14,656 $ 16,101
Mortgage origination - refinance 16,221 13,430 10,049
Mortgage origination - construction 18,403 14,764 18,746
------------ ------------ -------------
Total mortgage origination $ 59,941 $ 42,850 $ 44,896
============ ============ =============
PARK STERLING CORPORATION
MORTGAGE ORIGINATION
($ in thousands)
September 30, June 30,
2015 2015
(Unaudited) (Unaudited)
------------------- -------------------
Mortgage origination - purchase $ 20,063 $ 28,536
Mortgage origination - refinance 15,101 18,479
Mortgage origination - construction 20,452 24,694
------------------- -------------------
Total mortgage origination $ 55,616 $ 71,709
=================== ===================
PARK STERLING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
($in thousands)
June 30, March 31, December 31, September 30, June 30,
2016 2016 2015* 2015 2015
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------ ------------ ------------- ------------------- -------------------
ASSETS
Cash and due from banks $ 33,348 $ 34,038 $ 53,840 $ 16,096 $ 17,042
Interest-earning balances at banks 34,955 47,143 16,451 41,230 26,940
Investment securities available for
sale 393,131 396,863 384,934 401,820 402,489
Investment securities held to
maturity 102,125 104,459 106,458 109,072 111,633
Nonmarketable equity securities 14,420 13,118 11,366 11,377 13,500
Federal funds sold 1,570 11,271 235 920 360
Loans held for sale 11,967 7,593 4,943 5,145 10,701
Loans - Non-covered 2,311,775 2,262,294 1,724,164 1,681,227 1,637,115
Loans - Covered 15,122 16,849 17,651 18,897 20,348
Allowance for loan losses (10,873) (9,832) (9,064) (8,742) (8,468)
------------ ------------ ------------- ------------------- -------------------
Net loans 2,316,024 2,269,311 1,732,751 1,691,382 1,648,995
------------ ------------ ------------- ------------------- -------------------
Premises and equipment, net 65,711 65,494 55,658 56,948 58,979
FDIC receivable for loss share
agreements 1,164 1,477 943 1,190 1,209
Other real estate owned - non-
covered 2,866 3,425 4,211 7,087 8,904
Other real estate owned - covered 380 985 1,240 1,056 884
Bank-owned life insurance 69,695 69,202 58,633 58,286 57,823
Deferred tax asset 28,985 30,088 28,971 29,711 32,137
Goodwill 63,197 63,707 29,197 29,197 29,197
Core deposit intangible 12,354 12,813 9,571 9,918 10,265
Other assets 22,183 22,750 14,862 14,699 12,822
------------ ------------ ------------- ------------------- -------------------
Total assets $ 3,174,075 $ 3,153,737 $ 2,514,264 $ 2,485,134 $ 2,443,880
============ ============ ============= =================== ===================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand noninterest-bearing $ 496,195 $ 469,046 $ 350,836 $ 370,815 $ 347,162
Money market, NOW and savings 1,229,040 1,255,848 1,062,046 1,041,502 988,847
Time deposits 748,188 773,089 539,780 534,541 538,932
------------ ------------ ------------- ------------------- -------------------
Total deposits 2,473,423 2,497,983 1,952,662 1,946,858 1,874,941
Short-term borrowings 200,000 170,000 185,000 130,000 180,000
Long-term debt 64,714 65,000 30,000 55,000 55,000
Subordinated debt 33,176 33,014 24,262 24,092 23,922
Accrued expenses and other
liabilities 48,312 38,229 37,636 44,979 30,274
------------ ------------ ------------- ------------------- -------------------
Total liabilities 2,819,625 2,804,226 2,229,560 2,200,929 2,164,137
Shareholders' equity:
Common stock 53,332 53,038 44,854 44,909 44,911
Additional paid-in capital 275,246 274,706 222,596 222,587 222,271
Retained earnings 25,219 21,263 20,117 17,692 14,261
Accumulated other comprehensive
income (loss) 653 504 (2,863) (983) (1,700)
------------ ------------ ------------- ------------------- -------------------
Total shareholders' equity 354,450 349,511 284,704 284,205 279,743
------------ ------------ ------------- ------------------- -------------------
Total liabilities and shareholders'
equity $ 3,174,075 $ 3,153,737 $ 2,514,264 $ 2,485,134 $ 2,443,880
============ ============ ============= =================== ===================
Common shares issued and
outstanding 53,332,369 53,038,020 44,854,509 44,909,447 44,910,686
* Derived from audited financial
statements.
PARK STERLING CORPORATION
SUMMARY OF LOAN PORTFOLIO
($ in thousands)
June 30, March 31, December 31, September 30, June 30,
2016 2016 2015* 2015 2015
BY LOAN TYPE (Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------ ------------ ------------ ------------------- -------------------
Commercial:
Commercial and industrial $ 334,644 $ 334,027 $ 246,907 $ 211,741 $ 189,356
Commercial real estate (CRE) -
owner-occupied 376,440 374,428 331,222 328,327 330,853
CRE - investor income producing 764,168 723,539 506,110 514,118 498,190
Acquisition, construction and
development (AC&D) - 1-4 Family
Construction 100,604 97,614 32,262 27,299 31,500
AC&D - Lots and land 94,686 88,492 44,411 47,948 48,680
AC&D - CRE construction 125,466 136,561 87,452 85,643 86,570
Other commercial 10,410 10,167 8,601 8,830 7,212
------------ ------------ ------------ ------------------- -------------------
Total commercial loans 1,806,418 1,764,828 1,256,965 1,223,906 1,192,361
------------ ------------ ------------ ------------------- -------------------
Consumer:
Residential mortgage 244,063 235,737 223,884 224,110 214,850
Home equity lines of credit 181,020 177,594 157,378 157,430 156,960
Residential construction 65,867 71,117 72,170 66,823 62,973
Other loans to individuals 26,575 27,245 28,817 24,896 27,696
------------ ------------ ------------ ------------------- -------------------
Total consumer loans 517,525 511,693 482,249 473,259 462,479
------------ ------------ ------------ ------------------- -------------------
Total loans 2,323,943 2,276,521 1,739,214 1,697,165 1,654,840
Deferred costs (fees) 2,954 2,622 2,601 2,959 2,623
------------ ------------ ------------ ------------------- -------------------
Total loans, net of deferred
costs (fees) $ 2,326,897 $ 2,279,143 $ 1,741,815 $ 1,700,124 $ 1,657,463
============ ============ ============ =================== ===================
* Derived from audited financial
statements.
June 30, March 31, December 31,
2016 2016 2015*
BY ACQUIRED AND NON-ACQUIRED (Unaudited) (Unaudited)
----------- ----------- ------------
Acquired loans - performing $ 661,930 $ 726,025 $ 279,949
Acquired loans - purchase credit
impaired 98,672 106,105 94,917
----------- ----------- ------------
Total acquired loans 760,602 832,130 374,866
Non-acquired loans, net of deferred
costs (fees)** 1,566,295 1,447,013 1,366,949
----------- ----------- ------------
Total loans $ 2,326,897 $ 2,279,143 $ 1,741,815
=========== =========== ============
September 30, June 30,
2015 2015
BY ACQUIRED AND NON-ACQUIRED (Unaudited) (Unaudited)
------------------ ------------------
Acquired loans - performing $ 300,102 $ 317,394
Acquired loans - purchase credit
impaired 102,537 112,819
------------------ ------------------
Total acquired loans 402,639 430,213
Non-acquired loans, net of deferred
costs (fees)** 1,297,485 1,227,250
------------------ ------------------
Total loans $ 1,700,124 $ 1,657,463
================== ==================
* Derived from audited financial statements. ** Includes loans transferred from acquired pools following release of acquisition accounting FMV adjustments.
PARK STERLING CORPORATION
ALLOWANCE FOR LOAN LOSSES
THREE MONTH RESULTS
($ in thousands)
June 30, March 31, December 31,
2016 2016 2015
(Unaudited) (Unaudited) (Unaudited)
-------------- -------------- --------------
Beginning of period allowance $ 9,832 $ 9,064 $ 8,742
Loans charged-off (94) (82) (237
Recoveries of loans charged-
off 253 294 150
-------------- -------------- --------------
Net charge-offs 159 212 (87
-------------- -------------- --------------
Provision expense 882 556 409
Benefit attributable to FDIC
loss share agreements - - -
-------------- -------------- --------------
Total provision expense
charged to operations 882 556 409
Provision expense recorded
through FDIC loss share
receivable - - -
-------------- -------------- --------------
End of period allowance $ 10,873 $ 9,832 $ 9,064
============== ============== ==============
Net charge-offs (recoveries) $ (159) $ (212) $ 87
Net charge-offs (recoveries)
to average loans
(annualized) -0.03% -0.04% 0.02
September 30, June 30,
2015 2015
(Unaudited) (Unaudited)
- ---------------------- ----------------------
Beginning of period allowance $ 8,468 $ 8,590
Loans charged-off ) (121) (572)
Recoveries of loans charged-
off 415 245
- ---------------------- ----------------------
Net charge-offs ) 294 (327)
- ---------------------- ----------------------
Provision expense - 205
Benefit attributable to FDIC
loss share agreements - (71)
- ---------------------- ----------------------
Total provision expense
charged to operations - 134
Provision expense recorded
through FDIC loss share
receivable (20) 71
- ---------------------- ----------------------
End of period allowance $ 8,742 $ 8,468
= ====================== ======================
Net charge-offs (recoveries) $ (294) $ 327
Net charge-offs (recoveries)
to average loans
(annualized) % -0.07% 0.08%
PARK STERLING CORPORATION
ACQUIRED LOANS
($ in thousands)
June 30, March 31, December 31, September 30, June 30,
ACQUIRED LOANS AND FAIR MARKET
VALUE (FMV) ADJUSTMENTS 2016 2016 2015* 2015 2015
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------- ------------- ------------- -------------------- --------------------
Non-acquired loans $ 1,566,295 $ 1,447,013 $ 1,366,949 $ 1,297,485 $ 1,227,250
Purchased performing loans 666,894 732,075 282,081 302,296 319,844
Less: remaining FMV adjustments (4,964) (6,050) (2,132) (2,194) (2,450)
------------- ------------- ------------- -------------------- --------------------
Purchased performing loans, net 661,930 726,025 279,949 300,102 317,394
Purchased credit impaired loans 124,985 133,644 120,957 129,890 141,528
Less: remaining FMV adjustments (26,313) (27,539) (26,040) (27,353) (28,709)
------------- ------------- ------------- -------------------- --------------------
Purchased credit impaired loans,
net 98,672 106,105 94,917 102,537 112,819
------------- ------------- ------------- -------------------- --------------------
Total loans $ 2,326,897 $ 2,279,143 $ 1,741,815 $ 1,700,124 $ 1,657,463
============= ============= ============= ==================== ====================
June 30, March 31, December 31,
PURCHASED PERFORMING FMV
ADJUSTMENTS 2016 2016 2015
(Unaudited) (Unaudited)
-------------- -------------- --------------
Beginning FMV adjustment $ (6,050) $ (2,132) $ (2,194)
Increase from First Capital - (5,200) -
Accretion to interest income:
First Capital 777 1,027 -
All other mergers 309 255 62
-------------- -------------- --------------
Ending FMV adjustment $ (4,964) $ (6,050) $ (2,132)
============== ============== ==============
September 30, June 30,
PURCHASED PERFORMING FMV
ADJUSTMENTS 2015 2015
(Unaudited) (Unaudited)
--------------------- ---------------------
Beginning FMV adjustment $ (2,450) $ (2,974)
Increase from First Capital - -
Accretion to interest income:
First Capital - -
All other mergers 256 282
--------------------- ---------------------
Ending FMV adjustment $ (2,194) $ (2,692)
===================== =====================
June 30, March 31, December 31,
PCI FMV ADJUSTMENT 2016 2016 2015
(Unaudited) (Unaudited)
-------------- -------------- --------------
Contractual principal and
interest $ 143,701 $ 153,124 $ 140,269
Nonaccretable difference (14,652) (14,975) (12,843)
-------------- -------------- --------------
Expected cash flows as of the
end of period 129,049 138,149 127,426
Accretable yield (30,377) (32,044) (32,509)
-------------- -------------- --------------
Ending basis in PCI loans-
estimated fair value $ 98,672 $ 106,105 $ 94,917
============== ============== ==============
Beginning accretable yield $ (32,044) $ (32,509) $ (35,049)
Increase from First Capital - (1,663) -
Loan system servicing income 1,434 1,551 1,437
Accretion to interest income 1,343 1,471 1,438
Reclass to (from) non-
accretable yield (522) (993) (553)
Other adjustments (588) 99 218
-------------- -------------- --------------
Period end accretable yield** $ (30,377) $ (32,044) $ (32,509)
============== ============== ==============
September 30, June 30,
PCI FMV ADJUSTMENT 2015 2015
(Unaudited) (Unaudited)
--------------------- ---------------------
Contractual principal and
interest $ 152,098 $ 162,386
Nonaccretable difference (14,512) (12,843)
--------------------- ---------------------
Expected cash flows as of the
end of period 137,586 149,543
Accretable yield (35,049) (36,773)
--------------------- ---------------------
Ending basis in PCI loans-
estimated fair value $ 102,537 $ 112,770
===================== =====================
Beginning accretable yield $ (36,773) $ (38,465)
Increase from First Capital - -
Loan system servicing income 1,525 1,567
Accretion to interest income 1,551 1,733
Reclass to (from) non-
accretable yield (897) (1,653)
Other adjustments (455) 45
--------------------- ---------------------
Period end accretable yield** $ (35,049) $ (36,773)
===================== =====================
* Derived from audited financial statements. ** Difference between the remaining FMV discount on purchased credit impaired loans and the period end accretable yield is a function of projected estimated expected interest income being included in the period end accretable yield.
PARK STERLING CORPORATION
AVERAGE BALANCE SHEETS AND NET
INTEREST ANALYSIS
THREE MONTHS
($ in thousands) June 30, 2016
-----------------
Average Income/ Yield/
Rate
Balance Expense (3)
----------------- -------------- --------
Assets
Interest-earning assets:
Loans and loans held for sale,
net (1)(2) $ 2,298,569 $ 26,729 4.68%
Fed funds sold 3,848 5 0.52%
Taxable investment securities 484,057 2,640 2.18%
Tax-exempt investment securities 14,131 137 3.88%
Other interest-earning assets 42,559 187 1.77%
----------------- -------------- --------
Total interest-earning assets 2,843,164 29,698 4.20%
Allowance for loan losses (9,961)
Cash and due from banks 35,011
Premises and equipment 66,029
Goodwill 63,509
Intangible assets 12,574
Other assets 124,705
-----------------
Total assets $ 3,135,031
=================
Liabilities and shareholders'
equity
Interest-bearing liabilities:
Interest-bearing demand $ 426,427 $ 81 0.08%
Savings and money market 744,945 840 0.45%
Time deposits - core 686,003 1,272 0.75%
Brokered deposits 139,164 270 0.78%
----------------- -------------- --------
Total interest-bearing deposits 1,996,539 2,463 0.50%
Short-term borrowings 163,132 251 0.62%
Long-term debt 64,808 440 2.73%
Subordinated debt 33,102 494 6.00%
----------------- -------------- --------
Total borrowed funds 261,042 1,185 1.83%
----------------- -------------- --------
Total interest-bearing
liabilities 2,257,581 3,648 0.65%
----------------- -------------- --------
Net interest rate spread 26,050 3.55%
-------------- --------
Noninterest-bearing demand
deposits 483,465
Other liabilities 41,480
Shareholders' equity 352,505
-----------------
Total liabilities and
shareholders' equity $ 3,135,031
=================
--------
Net interest margin 3.69%
========
PARK STERLING CORPORATION
AVERAGE BALANCE SHEETS AND NET
INTEREST ANALYSIS
THREE MONTHS
($ in thousands) June 30, 2015
-----------------
Average Income/ Yield/
Rate
Balance Expense (3)
----------------- -------------- --------
Assets
Interest-earning assets:
Loans and loans held for sale,
net (1)(2) $ 1,643,844 $ 19,667 4.80%
Fed funds sold 730 - 0.00%
Taxable investment securities 474,807 2,508 2.11%
Tax-exempt investment securities 13,960 143 4.10%
Other interest-earning assets 52,098 140 1.08%
----------------- -------------- --------
Total interest-earning assets 2,185,439 22,458 4.12%
Allowance for loan losses (8,895)
Cash and due from banks 16,356
Premises and equipment 58,912
Goodwill 29,211
Intangible assets 10,435
Other assets 115,213
-----------------
Total assets $ 2,406,671
=================
Liabilities and shareholders'
equity
Interest-bearing liabilities:
Interest-bearing demand $ 411,806 $ 71 0.07%
Savings and money market 525,359 405 0.31%
Time deposits - core 458,139 632 0.55%
Brokered deposits 133,981 176 0.53%
----------------- -------------- --------
Total interest-bearing deposits 1,529,285 1,284 0.34%
Short-term borrowings 148,901 76 0.20%
Long-term debt 55,000 131 0.96%
Subordinated debt 23,833 351 5.91%
---------------- -------------- --------
Total borrowed funds 227,734 558 0.98%
---------------- -------------- --------
Total interest-bearing
liabilities 1,757,019 1,842 0.42%
----------------- -------------- --------
Net interest rate spread 20,616 3.70%
-------------- --------
Noninterest-bearing demand
deposits 338,092
Other liabilities 30,884
Shareholders' equity 280,676
-----------------
Total liabilities and
shareholders' equity $ 2,406,671
=================
--------
Net interest margin 3.78%
========
(1) Nonaccrual loans are included in the average loan balances.
(2) Interest income and yields for the three months ended June 30, 2016 and
2015 include accretion from acquisition accounting adjustments
associated with acquired loans.
(3) Yield/ rate calculated on Actual/Actual day count basis, except for
yield on investments which is calculated on a 30/360 day count basis.
PARK STERLING CORPORATION
AVERAGE BALANCE SHEETS AND NET
INTEREST ANALYSIS
SIX MONTHS
($ in thousands) June 30, 2016
-----------------
Average Income/ Yield/
Rate
Balance Expense (3)
----------------- -------------- --------
Assets
Interest-earning assets:
Loans and loans held for sale,
net (1)(2) $ 2,286,696 $ 53,853 4.74%
Fed funds sold 5,372 13 0.49%
Taxable investment securities 485,605 5,327 2.19%
Tax-exempt investment securities 15,089 284 3.76%
Other interest-earning assets 45,666 383 1.69%
----------------- -------------- --------
Total interest-earning assets 2,838,428 59,860 4.24%
Allowance for loan losses (9,912)
Cash and due from banks 35,885
Premises and equipment 66,271
Goodwill 62,783
Intangible assets 12,646
Other assets 127,727
-----------------
Total assets $ 3,133,828
=================
Liabilities and shareholders'
equity
Interest-bearing liabilities:
Interest-bearing demand $ 426,610 $ 168 0.08%
Savings and money market 739,124 1,671 0.45%
Time deposits - core 698,146 2,492 0.72%
Brokered deposits 132,994 548 0.83%
----------------- -------------- --------
Total interest-bearing deposits 1,996,874 4,879 0.49%
Short-term borrowings 177,417 545 0.62%
Long-term FHLB borrowings 65,316 850 2.62%
Subordinated debt 33,015 940 5.73%
----------------- -------------- --------
Total borrowed funds 275,748 2,335 1.70%
----------------- -------------- --------
Total interest-bearing
liabilities 2,272,622 7,214 0.64%
----------------- -------------- --------
Net interest rate spread 52,646 3.60%
-------------- --------
Noninterest-bearing demand
deposits 469,961
Other liabilities 40,714
Shareholders' equity 350,531
-----------------
Total liabilities and
shareholders' equity $ 3,133,828
=================
--------
Net interest margin 3.73%
========
PARK STERLING CORPORATION
AVERAGE BALANCE SHEETS AND NET
INTEREST ANALYSIS
SIX MONTHS
($ in thousands) June 30, 2015
-----------------
Average Income/ Yield/
Rate
Balance Expense (3)
----------------- -------------- --------
Assets
Interest-earning assets:
Loans and loans held for sale,
net (1)(2) $ 1,623,279 $ 38,778 4.82%
Fed funds sold 596 - 0.00%
Taxable investment securities 477,255 5,299 2.22%
Tax-exempt investment securities 13,409 281 4.19%
Other interest-earning assets 56,258 285 1.02%
----------------- -------------- --------
Total interest-earning assets 2,170,797 44,643 4.15%
Allowance for loan losses (8,633)
Cash and due from banks 16,646
Premises and equipment 59,133
Goodwill 29,225
Intangible assets 10,606
Other assets 117,376
-----------------
Total assets $ 2,395,150
=================
Liabilities and shareholders'
equity
Interest-bearing liabilities:
Interest-bearing demand $ 409,863 $ 139 0.07%
Savings and money market 521,374 800 0.31%
Time deposits - core 459,713 1,220 0.54%
Brokered deposits 137,254 352 0.52%
---------------- -------------- --------
Total interest-bearing deposits 1,528,204 2,511 0.33%
Short-term borrowings 150,055 152 0.20%
Long-term FHLB borrowings 53,950 259 0.97%
Subordinated debt 23,749 679 5.77%
----------------- -------------- --------
Total borrowed funds 227,754 1,090 0.97%
----------------- -------------- --------
Total interest-bearing
liabilities 1,755,958 3,601 0.41%
----------------- -------------- --------
Net interest rate spread 41,042 3.73%
-------------- --------
Noninterest-bearing demand
deposits 328,805
Other liabilities 30,951
Shareholders' equity 279,436
-----------------
Total liabilities and
shareholders' equity $ 2,395,150
=================
--------
Net interest margin 3.81%
========
(1) Nonaccrual loans are included in the average loan balances.
(2) Interest income and yields for the six months ended June 30, 2016 and
2015 include accretion from acquisition accounting adjustments
associated with acquired loans.
(3) Yield/ rate calculated on Actual/Actual day count basis, except for
yield on investments which is calculated on a 30/360 day count basis.
PARK STERLING CORPORATION
SELECTED RATIOS
($ in thousands, except per
share amounts) June 30, March 31, December 31,
2016 2016 2015
Unaudited Unaudited Unaudited
-------------- -------------- ---------------
ASSET QUALITY
Nonaccrual loans $ 5,185 $ 6,595 $ 4,326
Troubled debt restructuring
(and still accruing) 2,582 2,696 2,774
Past due 90 days plus (and
still accruing) - 293 1,151
Nonperforming loans 7,767 9,584 8,251
OREO 3,246 4,410 5,451
Nonperforming assets 11,013 13,994 13,702
Past due 30-59 days (and
still accruing) 985 217 1,222
Past due 60-89 days (and
still accruing) 5,800 499 1,340
Nonperforming loans to total
loans 0.33% 0.42% 0.47%
Nonperforming assets to
total assets 0.35% 0.44% 0.54%
Allowance to total loans 0.47% 0.43% 0.52%
Allowance to nonperforming
loans 139.99% 102.59% 109.85%
Allowance to nonperforming
assets 98.73% 70.26% 66.15%
Past due 30-89 days
(accruing) to total loans 0.29% 0.03% 0.15%
Net charge-offs (recoveries)
to average loans -0.03 -0.04 0.02
(annualized) % % %
CAPITAL
Book value per common share $ 6.77 $ 6.69 $ 6.49
Tangible book value per
common share** $ 5.33 $ 5.22 $ 5.60
Common shares outstanding 53,332,369 53,038,020 44,854,509
Weighted average dilutive
common shares outstanding 52,704,537 52,599,584 44,322,428
Common Equity Tier 1 (CET1)
capital $ 282,721 $ 275,490 $ 251,807
Tier 1 capital 307,736 300,354 268,605
Tier 2 capital 10,914 9,832 9,064
Total risk based capital 318,650 310,186 277,669
Risk weighted assets 2,538,461 2,478,547 1,939,417
Average assets for leverage
ratio 3,058,742 3,076,505 2,441,811
Common Equity Tier 1 (CET1)
ratio 11.14% 11.11% 12.98%
Tier 1 ratio 12.12% 12.12% 13.85%
Total risk based capital
ratio 12.55% 12.51% 14.32%
Tier 1 leverage ratio 10.06% 9.76% 11.00%
Tangible common equity to
tangible assets** 9.00% 8.87% 9.93%
LIQUIDITY
Net loans to total deposits 93.64% 90.85% 88.74%
Reliance on wholesale
funding 16.25% 15.50% 16.77%
INCOME STATEMENT (THREE MONTH
RESULTS; ANNUALIZED)
Return on Average Assets 0.71% 0.35% 0.60%
Return on Average Common
Equity 6.33% 3.16% 5.26%
Net interest margin (non-tax
equivalent) 3.69% 3.78% 3.52%
** Non-GAAP financial
measure
PARK STERLING CORPORATION
SELECTED RATIOS
($ in thousands, except per
share amounts) September 30, June 30,
2015 2015
Unaudited Unaudited
---------------------- ----------------------
ASSET QUALITY
Nonaccrual loans $ 5,342 $ 5,545
Troubled debt restructuring
(and still accruing) 3,090 3,115
Past due 90 days plus (and
still accruing) 47 -
Nonperforming loans 8,479 8,660
OREO 8,143 9,788
Nonperforming assets 16,622 18,448
Past due 30-59 days (and
still accruing) 1,790 2,559
Past due 60-89 days (and
still accruing) 3,753 481
Nonperforming loans to total
loans 0.50% 0.52%
Nonperforming assets to
total assets 0.67% 0.75%
Allowance to total loans 0.51% 0.51%
Allowance to nonperforming
loans 103.10% 97.78%
Allowance to nonperforming
assets 52.59% 45.90%
Past due 30-89 days
(accruing) to total loans 0.33% 0.18%
Net charge-offs (recoveries)
to average loans -0.07 0.08
(annualized) % %
CAPITAL
Book value per common share $ 6.47 $ 6.37
Tangible book value per
common share** $ 5.58 $ 5.47
Common shares outstanding 44,909,447 44,910,686
Weighted average dilutive
common shares outstanding 44,287,019 44,301,895
Common Equity Tier 1 (CET1)
capital $ 249,289 $ 245,328
Tier 1 capital 265,917 261,596
Tier 2 capital 8,742 8,577
Total risk based capital 274,659 270,173
Risk weighted assets 1,887,065 1,844,540
Average assets for leverage
ratio 2,434,376 2,359,401
Common Equity Tier 1 (CET1)
ratio 13.21% 13.30%
Tier 1 ratio 14.09% 14.18%
Total risk based capital
ratio 14.55% 14.65%
Tier 1 leverage ratio 10.92% 11.09%
Tangible common equity to
tangible assets** 10.02% 9.99%
LIQUIDITY
Net loans to total deposits 86.88% 87.95%
Reliance on wholesale
funding 16.02% 18.45%
INCOME STATEMENT (THREE MONTH
RESULTS; ANNUALIZED)
Return on Average Assets 0.77% 0.71%
Return on Average Common
Equity 6.71% 6.10%
Net interest margin (non-tax
equivalent) 3.58% 3.78%
** Non-GAAP financial
measure
Non-GAAP Financial Measures
Tangible assets, tangible common equity, tangible book value, adjusted average tangible common equity, adjusted net income, adjusted noninterest income, adjusted operating revenues, adjusted noninterest expense, adjusted operating expenses, adjusted allowance for loan losses, and related ratios and per share measures, including adjusted return on average assets and adjusted return on average equity, as used throughout this release, are non-GAAP financial measures. Management uses (i) tangible assets, tangible common equity and tangible book value (which exclude goodwill and other intangibles from equity and assets), and related ratios, to evaluate the adequacy of shareholders' equity and to facilitate comparisons with peers; (ii) adjusted allowance for loan losses (which includes net FMV adjustments related to acquired loans) as supplemental information for comparing the combined allowance and fair market value adjustments to the combined acquired and non-acquired loan portfolios (fair market value adjustments are available only for losses on acquired loans); and (iii) adjusted net income and adjusted noninterest income (which exclude merger-related expenses and gain or loss on sale of securities, as applicable), adjusted noninterest expense (which excludes merger-related expenses), adjusted operating expense (which excludes merger-related expenses and amortization of intangibles) and adjusted operating revenues (which includes net interest income and noninterest income and excludes gain or loss on sale of securities, as applicable) to evaluate core earnings and to facilitate comparisons with peers.
PARK STERLING CORPORATION
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
($ in thousands, except per
share amounts)
June 30, March 31, December 31,
2016 2016 2015
(Unaudited) (Unaudited) (Unaudited)
-------------- -------------- ---------------
Adjusted net income
Pretax income (as reported) $ 8,597 $ 4,615 $ 5,727
Plus: merger-related expenses 1,268 5,193 1,396
(gain) loss on sale of
securities 87 6 -
-------------- -------------- ---------------
Adjusted pretax income 9,952 9,814 7,123
Tax expense 3,509 3,646 2,332
-------------- -------------- ---------------
Adjusted net income $ 6,443 $ 6,168 $ 4,791
============== ============== ===============
Divided by: weighted average
diluted shares 52,704,537 52,599,584 44,322,428
Adjusted net income per
share 0.12 0.12 $ 0.11
Estimated tax rate for
adjustment 34.26% 34.09% 32.75%
Adjusted noninterest income
Noninterest income (as
reported) $ 5,375 $ 4,727 $ 4,523
Less: (gain) loss on sale of
securities 87 6 -
-------------- -------------- ---------------
Adjusted noninterest income $ 5,462 $ 4,733 $ 4,523
============== ============== ===============
Adjusted noninterest expenses
Noninterest expenses (as
reported) $ 21,946 $ 26,153 $ 18,362
Less: merger-related expenses (1,268) (5,193) (1,396)
-------------- -------------- ---------------
Adjusted noninterest
expenses $ 20,678 $ 20,960 $ 16,966
============== ============== ===============
Adjusted operating expense
Noninterest expenses (as
reported) $ 21,946 $ 26,153 $ 18,362
Less: merger-related expenses (1,268) (5,193) (1,396)
Less: amortization of
intangibles (458) (458) (347)
-------------- -------------- ---------------
Adjusted operating expense $ 20,220 $ 20,502 $ 16,619
============== ============== ===============
Adjusted operating revenues
Net Interest Income (as
reported) $ 26,050 $ 26,597 $ 19,975
Plus: noninterest income (as
reported) 5,375 4,727 4,523
Less: (gain) loss on sale of
securities 87 6 -
-------------- -------------- ---------------
Adjusted operating revenues $ 31,512 $ 31,330 $ 24,498
============== ============== ===============
Adjusted operating expense to
adjusted operating revenues
Adjusted operating expense $ 20,220 $ 20,502 $ 16,619
Divided by: adjusted
operating revenues 31,512 31,330 24,498
-------------- -------------- ---------------
Adjusted operating expense
to adjusted operating
revenues 64.17% 65.44% 67.84%
============== ============== ===============
Noninterest expenses to net
interest income plus
noninterest income 69.84% 83.49% 74.95%
============== ============== ===============
Adjusted return on average
assets
Adjusted net income $ 6,443 $ 6,168 $ 4,791
Divided by: average assets 3,135,031 3,132,625 2,480,983
Multiplied by: annualization
factor 4.02 4.02 3.97
-------------- -------------- ---------------
Adjusted return on average
assets 0.83% 0.79% 0.77%
============== ============== ===============
Return on average assets 0.71% 0.35% 0.60%
============== ============== ===============
PARK STERLING CORPORATION
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
($ in thousands, except per
share amounts)
September 30, June 30,
2015 2015
(Unaudited) (Unaudited)
---------------------- ----------------------
Adjusted net income
Pretax income (as reported) $ 6,870 $ 6,542
Plus: merger-related expenses 31 167
(gain) loss on sale of
securities (54) -
---------------------- ----------------------
Adjusted pretax income 6,847 6,709
Tax expense 2,085 2,331
---------------------- ----------------------
Adjusted net income $ 4,762 $ 4,378
====================== ======================
Divided by: weighted average
diluted shares 44,287,019 44,301,895
Adjusted net income per
share $ 0.11 $ 0.10
Estimated tax rate for
adjustment 32.56% 34.75%
Adjusted noninterest income
Noninterest income (as
reported) $ 4,927 $ 4,292
Less: (gain) loss on sale of
securities (54) -
---------------------- ----------------------
Adjusted noninterest income $ 4,873 $ 4,292
====================== ======================
Adjusted noninterest expenses
Noninterest expenses (as
reported) $ 18,419 $ 18,232
Less: merger-related expenses (31) (167)
---------------------- ----------------------
Adjusted noninterest
expenses $ 18,388 $ 18,065
====================== ======================
Adjusted operating expense
Noninterest expenses (as
reported) $ 18,419 $ 18,232
Less: merger-related expenses (31) (167)
Less: amortization of
intangibles (347) (347)
---------------------- ----------------------
Adjusted operating expense $ 18,041 $ 17,718
====================== ======================
Adjusted operating revenues
Net Interest Income (as
reported) $ 20,362 $ 20,616
Plus: noninterest income (as
reported) 4,927 4,292
Less: (gain) loss on sale of
securities (54) -
---------------------- ----------------------
Adjusted operating revenues $ 25,235 $ 24,908
====================== ======================
Adjusted operating expense to
adjusted operating revenues
Adjusted operating expense $ 18,041 $ 17,718
Divided by: adjusted
operating revenues 25,235 24,908
---------------------- ----------------------
Adjusted operating expense
to adjusted operating
revenues 71.49% 71.13%
====================== ======================
Noninterest expenses to net
interest income plus
noninterest income 72.83% 73.20%
====================== ======================
Adjusted return on average
assets
Adjusted net income $ 4,762 $ 4,378
Divided by: average assets 2,473,034 2,406,671
Multiplied by: annualization
factor 3.97 4.01
---------------------- ----------------------
Adjusted return on average
assets 0.76% 0.73%
====================== ======================
Return on average assets 0.77% 0.71%
====================== ======================
PARK STERLING CORPORATION
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
($ in thousands, except per
share amounts)
June 30, March 31, December 31,
2016 2016 2015
(Unaudited) (Unaudited) (Unaudited)
-------------- -------------- ---------------
Adjusted return on average
equity
Adjusted net income $ 6,443 $ 6,168 $ 4,791
Divided by: average common
equity 352,505 348,556 284,671
Multiplied by: annualization
factor 4.02 4.02 3.97
-------------- -------------- ---------------
Adjusted return on average
equity 7.35% 7.12% 6.68%
============== ============== ===============
Return on average equity 6.33% 3.16% 5.26%
============== ============== ===============
Tangible common equity to
tangible assets
Total assets $ 3,174,075 $ 3,153,737 $ 2,514,264
Less: intangible assets (75,551) (76,520) (38,768)
-------------- -------------- ---------------
Tangible assets $ 3,098,524 $ 3,077,217 $ 2,475,496
============== ============== ===============
Total common equity $ 354,450 $ 349,511 $ 284,704
Less: intangible assets (75,551) (76,520) (38,768)
-------------- -------------- ---------------
Tangible common equity $ 278,899 $ 272,991 $ 245,936
============== ============== ===============
Tangible common equity $ 278,899 $ 272,991 $ 245,936
Divided by: tangible assets 3,098,524 3,077,217 2,475,496
-------------- -------------- ---------------
Tangible common equity to
tangible assets 9.00% 8.87% 9.93%
============== ============== ===============
Common equity to assets 11.17% 11.08% 11.32%
============== ============== ===============
Tangible book value per share
Issued and outstanding shares 53,332,369 53,038,020 44,854,509
Less: nondilutive restricted
stock awards (969,991) (785,658) (959,305)
-------------- -------------- ---------------
Period end dilutive shares 52,362,378 52,252,362 43,895,204
============== ============== ===============
Tangible common equity $ 278,899 $ 272,991 $ 245,936
Divided by: period end
dilutive shares 52,362,378 52,252,362 43,895,204
-------------- -------------- ---------------
Tangible common book value
per share $ 5.33 $ 5.22 $ 5.60
============== ============== ===============
Common book value per share $ 6.77 $ 6.69 $ 6.49
============== ============== ===============
Adjusted return on average
tangible common equity
Average common equity $ 352,505 $ 348,556 $ 284,671
Less: average intangible
assets (76,083) (74,773) (38,934)
-------------- -------------- ---------------
Average tangible common
equity $ 276,422 $ 273,783 $ 245,737
============== ============== ===============
Net income $ 5,552 $ 2,741 $ 3,775
Divided by: average tangible
common equity 276,422 273,783 245,737
Multiplied by: annualization
factor 4.02 4.02 3.97
-------------- -------------- ---------------
Return on average tangible
common equity 8.08% 4.03% 6.09%
============== ============== ===============
Adjusted net income $ 6,443 $ 6,168 $ 4,791
Divided by: average tangible
common equity 276,422 273,783 245,737
Multiplied by: annualization
factor 4.02 4.02 3.97
-------------- -------------- ---------------
Adjusted return on average
tangible common equity 9.37% 9.06% 7.74%
============== ============== ===============
Adjusted allowance for loan
losses
Allowance for loan losses $ 10,873 $ 9,832 $ 9,064
Plus: acquisition accounting
FMV adjustments to acquired
loans 31,277 33,589 28,173
-------------- -------------- ---------------
Adjusted allowance for loan
losses $ 42,150 $ 43,421 $ 37,237
============== ============== ===============
Divided by: total loans
(excluding LHFS before FMV
adjustments) $ 2,358,174 $ 2,312,732 $ 1,769,988
-------------- -------------- ---------------
Adjusted allowance for loan
losses to total loans 1.79% 1.88% 2.10%
-------------- -------------- ---------------
Allowance for loan losses to
total loans 0.47% 0.43% 0.52%
============== ============== ===============
PARK STERLING CORPORATION
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
($ in thousands, except per
share amounts)
September 30, June 30,
2015 2015
(Unaudited) (Unaudited)
---------------------- ----------------------
Adjusted return on average
equity
Adjusted net income $ 4,762 $ 4,378
Divided by: average common
equity 282,426 280,676
Multiplied by: annualization
factor 3.97 4.01
---------------------- ----------------------
Adjusted return on average
equity 6.69% 6.26%
====================== ======================
Return on average equity 6.71% 6.10%
====================== ======================
Tangible common equity to
tangible assets
Total assets $ 2,485,134 $ 2,443,880
Less: intangible assets (39,115) (39,462)
---------------------- ----------------------
Tangible assets $ 2,446,019 $ 2,404,418
====================== ======================
Total common equity $ 284,205 $ 279,743
Less: intangible assets (39,115) (39,462)
---------------------- ----------------------
Tangible common equity $ 245,090 $ 240,281
====================== ======================
Tangible common equity $ 245,090 $ 240,281
Divided by: tangible assets 2,446,019 2,404,418
---------------------- ----------------------
Tangible common equity to
tangible assets 10.02% 9.99%
====================== ======================
Common equity to assets 11.44% 11.45%
====================== ======================
Tangible book value per share
Issued and outstanding shares 44,909,447 44,910,686
Less: nondilutive restricted
stock awards (974,183) (985,531)
---------------------- ----------------------
Period end dilutive shares 43,935,264 43,925,155
====================== ======================
Tangible common equity $ 245,090 $ 240,281
Divided by: period end
dilutive shares 43,935,264 43,925,155
---------------------- ----------------------
Tangible common book value
per share $ 5.58 $ 5.47
====================== ======================
Common book value per share $ 6.47 $ 6.37
====================== ======================
Adjusted return on average
tangible common equity
Average common equity $ 282,426 $ 280,676
Less: average intangible
assets (39,284) (39,646)
---------------------- ----------------------
Average tangible common
equity $ 243,142 $ 241,030
====================== ======================
Net income $ 4,778 $ 4,269
Divided by: average tangible
common equity 243,142 241,030
Multiplied by: annualization
factor 3.97 4.01
---------------------- ----------------------
Return on average tangible
common equity 7.80% 7.10%
====================== ======================
Adjusted net income $ 4,762 $ 4,378
Divided by: average tangible
common equity 243,142 241,030
Multiplied by: annualization
factor 3.97 4.01
---------------------- ----------------------
Adjusted return on average
tangible common equity 7.77% 7.29%
====================== ======================
Adjusted allowance for loan
losses
Allowance for loan losses $ 8,742 $ 8,468
Plus: acquisition accounting
FMV adjustments to acquired
loans 29,548 31,159
---------------------- ----------------------
Adjusted allowance for loan
losses $ 38,290 $ 39,627
====================== ======================
Divided by: total loans
(excluding LHFS before FMV
adjustments) $ 1,729,672 $ 1,688,622
---------------------- ----------------------
Adjusted allowance for loan
losses to total loans 2.21% 2.35%
---------------------- ----------------------
Allowance for loan losses to
total loans 0.51% 0.51%
====================== ======================
For additional information contact:
Donald K. Truslow
Chief Financial Officer
(704) 716-2134
don.truslow@parksterlingbank.com
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