SPOKANE, Wash.--()--Sterling Financial Corporation (NASDAQ:STSA) ("Sterling") today announced its operating results for the quarter ended September 30, 2012. For the quarter, Sterling recorded net income of $30.6 million, or $0.49 per diluted common share, compared to $320.9 million, or $5.13 per diluted common share, for the quarter ended June 30, 2012, and $11.3 million, or $0.18 per diluted common share, for the quarter ended September 30, 2011. As previously reported, net income for the prior quarter included an income tax benefit of $288.8 million associated with the release of a deferred tax asset valuation allowance.
“The solid financial performance for the third quarter reflects Sterling's progress on our fundamental operating objectives”
Following are selected financial highlights for the quarter ended September 30, 2012:
- Gross loans were $6.14 billion, a 9 percent increase over September 30, 2011.
- Portfolio loan originations were $457.1 million, a 31 percent increase over the third quarter of 2011.
- Deposit costs were reduced by 33 basis points compared to the third quarter of 2011.
- Income from mortgage banking operations was $28.5 million, up 74 percent over the third quarter of 2011.
- Nonperforming assets to total assets was 2.73 percent, down from 4.74 percent at September 30, 2011.
- Net charge-offs to average loans (annualized) was 0.37 percent, down from 1.99 percent for the third quarter of 2011.
- Tangible book value was $19.44 per common share, compared to $13.66 per common share at September 30, 2011.
- Tier 1 leverage ratio was 12.7 percent, compared to 11.1 percent at September 30, 2011.
"The solid financial performance for the third quarter reflects Sterling's progress on our fundamental operating objectives," said Greg Seibly, Sterling's president and chief executive officer. "We are growing loans and improving the mix and cost of deposits and asset quality metrics. Our management team remains focused on implementing initiatives to reduce our infrastructure costs."
Balance Sheet
Total loan balances were $6.14 billion at September 30, 2012, compared to $6.08 billion at the end of the prior quarter, and $5.62 billion at September 30, 2011. During the third quarter of 2012, Sterling originated $457.1 million of new portfolio loans (which exclude residential loans held for sale), compared to $458.6 million for the prior quarter and $348.4 million for the third quarter of 2011. Commercial loan originations, which include C&I and owner occupied CRE loans, were $155.8 million for the third quarter of 2012, compared to $80.0 million for the prior quarter, and $96.8 million for the same period a year ago.
Investments and mortgage-backed securities available for sale were $2.05 billion at September 30, 2012, compared to $2.12 billion at the end of the prior quarter, and $2.45 billion at the same time last year. The reduction reflects the sale of $140.2 million of MBS during the quarter, for which a gain of $3.1 million was recognized.
At September 30, 2012, total deposits were $6.74 billion, compared to $6.80 billion at the end of the prior quarter, and $6.48 billion at September 30, 2011. The decrease from the prior quarter was primarily a result of expected runoff of retail time deposits, brokered time deposits, and public deposits, which were reduced by $94.3 million, $71.7 million, and $67.0 million, respectively. These decreases were partially offset by growth in transaction deposits, which expanded by $167.5 million, or 7 percent, during the third quarter of 2012.
The deposit composition is set forth in the following table:
|
Annual % |
||||||||||||||||
|
September 30, |
|
September 30, |
||||||||||||||
|
2012 |
June 30, 2012 |
2011 |
Change |
|||||||||||||
|
|
(in thousands) |
|||||||||||||||
| Deposits: | ||||||||||||||||
| Retail: | ||||||||||||||||
| Transaction | $ | 2,403,518 | $ | 2,235,991 | $ | 1,675,741 | 43 | % | ||||||||
| Savings and MMDA | 2,191,517 | 2,182,969 | 1,814,682 | 21 | % | |||||||||||
| Time deposits | 1,717,720 | 1,812,000 | 2,150,998 | (20 | )% | |||||||||||
| Total retail | 6,312,755 | 6,230,960 | 5,641,421 | 12 | % | |||||||||||
| Public | 202,187 | 269,191 | 466,423 | (57 | )% | |||||||||||
| Brokered | 224,968 | 296,623 | 371,396 | (39 | )% | |||||||||||
| Total deposits | $ | 6,739,910 | $ | 6,796,774 | $ | 6,479,240 | 4 | % | ||||||||
| Gross loans to deposits | 91 | % | 90 | % | 87 | % | ||||||||||
| Annual Basis | ||||||||||||||||
| Point Change | ||||||||||||||||
| Funding costs: | ||||||||||||||||
| Cost of deposits | 0.53 | % | 0.58 | % | 0.86 | % | (33 | ) | ||||||||
| Total funding liabilities | 1.01 | % | 1.07 | % | 1.27 | % | (26 | ) | ||||||||
Operating Results
Net Interest Income
Sterling reported net interest income of $75.3 million for the quarter ended September 30, 2012, compared to $78.9 million for the prior quarter and $74.8 million for the quarter ended September 30, 2011. The decrease of $3.6 million from the prior quarter was primarily a result of lower loan yields, and lower balances and yields on MBS. The net interest margin (tax equivalent) for the third quarter of 2012 was 3.47 percent, a decrease of 9 basis points from the prior quarter, and up 13 basis points over the same period a year ago.
| Three Months Ended | |||||||||||||
| September 30, | September 30, | ||||||||||||
| 2012 | June 30, 2012 | 2011 | |||||||||||
| (in thousands) | |||||||||||||
| Net interest income | $ | 75,308 | $ | 78,910 | $ | 74,836 | |||||||
| Net interest margin (tax equivalent) | 3.47 | % | 3.56 | % | 3.34 | % | |||||||
| Loan yield | 5.23 | % | 5.36 | % | 5.47 | % | |||||||
Total interest income was $96.0 million for the third quarter of 2012, compared to $101.0 million for the prior quarter, and $101.4 million for the same period a year ago. Interest income on loans decreased by $2.4 million from the prior quarter as a result of lower loan yields, reflecting the low interest rate environment. Additionally, interest income was impacted by a reduction in interest income on MBS, which declined by $2.6 million compared to the prior quarter and by $6.4 million from the same period in 2011. For the third quarter of 2012, average MBS balances were down $221.5 million, or 11 percent, from the prior quarter.
Total interest expense was $20.7 million for the third quarter of 2012, compared to $22.1 million for the prior quarter and $26.5 million for the third quarter of 2011. Deposit interest expense was $9.0 million for the third quarter of 2012, a reduction of $0.9 million, or 9 percent, from the prior quarter, and down $5.2 million, or 36 percent, from the same period last year, reflecting the improved deposit mix.
Noninterest Income
Noninterest income includes income from mortgage banking operations, fee and service charge income, and other items such as net gains on sales of securities and loan servicing fees. During the third quarter of 2012, noninterest income was $46.7 million, compared to $44.7 million for the prior quarter and $29.1 million for the third quarter of 2011.
Income from mortgage banking operations for the third quarter of 2012 was $28.5 million, compared to $24.7 million for the prior quarter and $16.4 million for the third quarter of 2011. The increase over the comparable prior periods is principally attributable to increased margins associated with residential mortgage banking activity. The margin on residential loan sales was 3.68 percent for the third quarter of 2012, up from 3.07 percent for the prior quarter and 2.66 percent for the same period a year ago.
| Three Months Ended | |||||||||||||
| September 30, | September 30, | ||||||||||||
| 2012 | June 30, 2012 | 2011 | |||||||||||
| (in thousands) | |||||||||||||
| Residential loan sales | $ | 728,642 | $ | 576,545 | $ | 475,034 | |||||||
| Change in warehouse and interest rate locks | 36,018 | 220,252 | 123,859 | ||||||||||
| Total mortgage banking loan activity | $ | 764,660 | $ | 796,797 | $ | 598,893 | |||||||
| Margin on residential loan sales | 3.68 | % | 3.07 | % | 2.66 | % | |||||||
For the quarter ended September 30, 2012, fees and service charges income contributed $14.7 million to noninterest income compared to $14.1 million for the prior quarter and $12.3 million for the third quarter of 2011. The increase in fees and service charges income compared to the year ago period was primarily attributable to increased activity related to the business acquired from First Independent Bank, which was completed during the first quarter of 2012.
Due to a decline in prevailing mortgage interest rates and an increase in estimated prepayment speeds, Sterling recorded a fair value write down of $2.1 million on its mortgage servicing rights asset, which resulted in negative loan servicing fees for the third quarter of 2012. Similar write downs of $1.1 million and $5.1 million were recognized during the second quarter of 2012 and the third quarter of 2011, respectively.
For the third quarter of 2012, the gain on sales of securities was $3.1 million, compared to $9.3 million for the prior quarter. There were no sales of securities in the third quarter of 2011. Also, as previously reported, for the prior quarter Sterling recognized an other-than-temporary impairment charge of $6.8 million and a charge on prepayment of debt of $2.7 million; there were no similar charges in the third quarter of 2012 or the prior year period.
For the quarter ended September 30, 2012, BOLI income was $1.7 million, compared to $3.8 million for the prior quarter and $1.6 million for the third quarter of 2011. The decrease in BOLI income from the prior quarter was due to the recognition of a $2.4 million death benefit during the second quarter of 2012.
Noninterest Expense
Noninterest expenses were $89.4 million for the third quarter of 2012, compared to $87.6 million for the prior quarter and $86.6 million for the third quarter of 2011. The increase from the prior quarter was primarily a result of a Washington State Business and Occupation tax refund of $1.9 million received during the second quarter of 2012, which was included as a reduction in other noninterest expense.
OREO operating expenses were $4.0 million for the third quarter of 2012, compared to $3.3 million for the prior quarter and $10.7 million for the same period last year. As of September 30, 2012, OREO consisted of 70 properties, compared to 81 properties at June 30, 2012 and 178 properties at September 30, 2011.
Income Taxes
During the quarter ended September 30, 2012, Sterling did not recognize any federal or state income tax expense. In the prior period, Sterling recorded a $288.8 million income tax benefit, which was the result of reversing substantially all of the deferred tax asset valuation allowance. As of September 30, 2012, the net deferred tax asset was $280.4 million, including $273.0 million of net operating loss and tax credit carryforwards.
With regard to the deferred tax asset, the benefits of Sterling's accumulated tax losses would be reduced in the event of an "ownership change," as determined under Section 382 of the Internal Revenue Code. During 2010, in order to preserve the benefits of these tax losses, Sterling's shareholders approved a protective amendment to Sterling's restated articles of incorporation and Sterling's board of directors adopted a tax preservation rights plan, both of which restrict certain stock transfers that would result in an investor acquiring more than 4.95 percent of Sterling's total outstanding common stock.
Credit Quality
During the third quarter of 2012, Sterling recognized net charge-offs of $6.0 million, compared to $5.0 million for the prior quarter and $29.9 million for the same period a year ago. For the third quarter of 2012, Sterling recorded a $2.0 million provision for credit losses, compared to $4.0 million for the prior quarter and $6.0 million for the third quarter of 2011. The allowance for loan losses at September 30, 2012 was $154.3 million, or 2.51 percent of total loans, compared to $158.2 million, or 2.60 percent of total loans, at June 30, 2012, and $186.2 million, or 3.32 percent of total loans, at September 30, 2011.
At September 30, 2012, nonperforming assets were $259.0 million, or 2.73 percent of total assets, compared to $321.1 million, or 3.35 percent of total assets, at June 30, 2012, and $434.7 million, or 4.74 percent of total assets, at September 30, 2011.
As a result of Sterling's continued efforts to sell foreclosed properties, OREO decreased to $46.6 million at September 30, 2012, compared to $55.8 million at June 30, 2012, and $111.6 million at September 30, 2011. This represents decreases of 17 percent and 58 percent, respectively.
Recent Events
On October 22, 2012, Sterling announced it had entered into a definitive agreement to acquire American Heritage Holdings ("AHH") of La Mesa, California. AHH is the holding company for Borrego Springs Bank, N.A., which had total assets of $142 million as of September 30, 2012 and operates three depository branches and seven loan production offices. The transaction is subject to regulatory approval and customary closing conditions and is expected to be completed during the first quarter of 2013.
Cash Dividend Declaration
Sterling's board of directors has approved a quarterly cash dividend of $0.15 per share of common stock. The dividend is payable on November 20, 2012 to shareholders of record as of November 6, 2012.
Third Quarter 2012 Earnings Conference Call
Sterling plans to host a conference call October 26, 2012 at 8:00 a.m. PDT to discuss the company's financial results. An audio webcast of the conference call can be accessed at Sterling's website. To access this audio presentation call, click on the audio webcast icon. Additionally, the conference call may be accessed by telephone. To participate in the conference call, domestic callers should dial 1-517-308-9459 approximately five minutes before the scheduled start time. You will be asked by the operator to identify yourself and provide the password “STERLING” to enter the call. A webcast replay of the conference call will be available on Sterling's website approximately one hour following the conclusion of the call. The webcast replay will be offered through November 26, 2012.
| Sterling Financial Corporation | ||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||
| (in thousands, except per share amounts, unaudited) | Sep 30, 2012 | Jun 30, 2012 | Sep 30, 2011 | |||||||||
| ASSETS: | ||||||||||||
| Cash and due from banks | $ | 263,884 | $ | 454,692 | $ | 481,717 | ||||||
| Investments and mortgage-backed securities ("MBS") available for sale | 2,049,961 | 2,119,008 | 2,446,523 | |||||||||
| Investments held to maturity | 1,716 | 1,726 | 1,900 | |||||||||
| Loans held for sale | 320,823 | 226,907 | 241,039 | |||||||||
| Loans receivable, net | 5,990,365 | 5,926,575 | 5,428,355 | |||||||||
| Other real estate owned, net ("OREO") | 46,575 | 55,801 | 111,566 | |||||||||
| Office properties and equipment, net | 92,987 | 86,556 | 84,380 | |||||||||
| Bank owned life insurance ("BOLI") | 178,279 | 176,593 | 174,092 | |||||||||
| Goodwill | 22,577 | 22,577 | 0 | |||||||||
| Other intangible assets, net | 20,864 | 22,656 | 13,290 | |||||||||
| Deferred tax asset, net | 280,373 | 285,141 | 0 | |||||||||
| Other assets | 204,033 | 221,281 | 193,012 | |||||||||
| Total assets | $ | 9,472,437 | $ | 9,599,513 | $ | 9,175,874 | ||||||
| LIABILITIES: | ||||||||||||
| Deposits | $ | 6,739,910 | $ | 6,796,774 | $ | 6,479,240 | ||||||
| Advances from Federal Home Loan Bank | 155,401 | 205,470 | 407,000 | |||||||||
| Repurchase agreements and fed funds | 942,547 | 1,006,324 | 1,056,352 | |||||||||
| Other borrowings | 245,293 | 245,292 | 245,289 | |||||||||
| Accrued expenses and other liabilities | 137,799 | 124,859 | 128,500 | |||||||||
| Total liabilities | 8,220,950 | 8,378,719 | 8,316,381 | |||||||||
| SHAREHOLDERS' EQUITY: | ||||||||||||
| Preferred stock | 0 | 0 | 0 | |||||||||
| Common stock | 1,967,562 | 1,966,307 | 1,963,820 | |||||||||
| Accumulated other comprehensive income | 75,263 | 67,102 | 57,297 | |||||||||
| Accumulated deficit | (791,338 | ) | (812,615 | ) | (1,161,624 | ) | ||||||
| Total shareholders' equity | 1,251,487 | 1,220,794 | 859,493 | |||||||||
| Total liabilities and shareholders' equity | $ | 9,472,437 | $ | 9,599,513 | $ | 9,175,874 | ||||||
| Book value per common share | $ | 20.14 | $ | 19.65 | $ | 13.87 | ||||||
| Tangible book value per common share | $ | 19.44 | $ | 18.92 | $ | 13.66 | ||||||
| Shareholders' equity to total assets | 13.2 | % | 12.7 | % | 9.4 | % | ||||||
| Tangible common equity to tangible assets (1) | 12.8 | % | 12.3 | % | 9.2 | % | ||||||
| Common shares outstanding at end of period | 62,150,650 | 62,124,551 | 61,968,510 | |||||||||
| Common stock warrants outstanding | 2,625,000 | 2,722,541 | 2,722,541 | |||||||||
(1) Common shareholders' equity less goodwill and other intangible assets, divided by assets, less goodwill and other intangible assets.
| Sterling Financial Corporation | ||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME (LOSS) | ||||||||||||||||||||
| (in thousands, except per share amounts, unaudited) | Three Months Ended | Nine Months Ended | ||||||||||||||||||
| Sep 30, 2012 | Jun 30, 2012 | Sep 30, 2011 | Sep 30, 2012 | Sep 30, 2011 | ||||||||||||||||
|
INTEREST INCOME: |
||||||||||||||||||||
| Loans | $ | 83,110 | $ | 85,537 | $ | 82,010 | $ | 248,488 | $ | 242,132 | ||||||||||
| Mortgage-backed securities | 10,361 | 12,936 | 16,719 | 38,632 | 56,681 | |||||||||||||||
| Investments and cash | 2,520 | 2,517 | 2,650 | 7,826 | 8,150 | |||||||||||||||
| Total interest income | 95,991 | 100,990 | 101,379 | 294,946 | 306,963 | |||||||||||||||
| INTEREST EXPENSE: | ||||||||||||||||||||
| Deposits | 8,981 | 9,921 | 14,135 | 30,004 | 46,645 | |||||||||||||||
| Borrowings | 11,702 | 12,159 | 12,408 | 36,371 | 36,932 | |||||||||||||||
| Total interest expense | 20,683 | 22,080 | 26,543 | 66,375 | 83,577 | |||||||||||||||
| Net interest income | 75,308 | 78,910 | 74,836 | 228,571 | 223,386 | |||||||||||||||
| Provision for credit losses | 2,000 | 4,000 | 6,000 | 10,000 | 26,000 | |||||||||||||||
| Net interest income after provision | 73,308 | 74,910 | 68,836 | 218,571 | 197,386 | |||||||||||||||
| NONINTEREST INCOME: | ||||||||||||||||||||
| Fees and service charges | 14,675 | 14,131 | 12,332 | 41,546 | 37,839 | |||||||||||||||
| Mortgage banking operations | 28,502 | 24,652 | 16,360 | 69,318 | 37,481 | |||||||||||||||
| Loan servicing fees | (2,092 | ) | (471 | ) | (4,694 | ) | (183 | ) | (2,884 | ) | ||||||||||
| BOLI | 1,660 | 3,769 | 1,612 | 7,175 | 4,922 | |||||||||||||||
| Gain on sales of securities | 3,129 | 9,321 | 0 | 12,592 | 14,298 | |||||||||||||||
| Other-than-temporary impairment losses on securities | 0 | (6,819 | ) | 0 | (6,819 | ) | 0 | |||||||||||||
| Charge on prepayment of debt | 0 | (2,664 | ) | 0 | (2,664 | ) | 0 | |||||||||||||
| Gains (losses) on other loan sales | 476 | 2,811 | 2,671 | 3,887 | 1,792 | |||||||||||||||
| Other | 348 | 11 | 831 | (1,826 | ) | (19 | ) | |||||||||||||
| Total noninterest income | 46,698 | 44,741 | 29,112 | 123,026 | 93,429 | |||||||||||||||
| NONINTEREST EXPENSE: | ||||||||||||||||||||
| Employee compensation and benefits | 45,636 | 46,485 | 43,828 | 139,502 | 129,514 | |||||||||||||||
| OREO | 4,008 | 3,337 | 10,739 | 9,337 | 36,591 | |||||||||||||||
| Occupancy and equipment | 11,034 | 10,932 | 9,580 | 32,253 | 29,558 | |||||||||||||||
| Depreciation | 2,918 | 2,923 | 3,000 | 8,754 | 9,026 | |||||||||||||||
| Amortization of other intangible assets | 1,792 | 1,791 | 1,190 | 4,988 | 3,639 | |||||||||||||||
| Other | 24,020 | 22,139 | 18,283 | 70,830 | 58,187 | |||||||||||||||
| Total noninterest expense | 89,408 | 87,607 | 86,620 | 265,664 | 266,515 | |||||||||||||||
| Income before income taxes | 30,598 | 32,044 | 11,328 | 75,933 | 24,300 | |||||||||||||||
| Income tax benefit | 0 | 288,842 | 0 | 288,842 | 0 | |||||||||||||||
| Net income | $ | 30,598 | $ | 320,886 | $ | 11,328 | $ | 364,775 | $ | 24,300 | ||||||||||
| Earnings per common share - basic | $ | 0.49 | $ | 5.17 | $ | 0.18 | $ | 5.87 | $ | 0.39 | ||||||||||
| Earnings per common share - diluted | $ | 0.49 | $ | 5.13 | $ | 0.18 | $ | 5.81 | $ | 0.39 | ||||||||||
| Dividends declared per share | $ | 0.15 | $ | 0.00 | $ | 0.00 | $ | 0.15 | $ | 0.00 | ||||||||||
| Average common shares outstanding - basic | 62,139,833 | 62,112,936 | 61,958,183 | 62,110,498 | 61,944,392 | |||||||||||||||
| Average common shares outstanding - diluted | 62,845,864 | 62,610,054 | 62,041,203 | 62,745,177 | 62,236,465 | |||||||||||||||
| Sterling Financial Corporation | ||||||||||||||||||||
| OTHER SELECTED FINANCIAL DATA | ||||||||||||||||||||
| (in thousands, unaudited) | Three Months Ended | Nine Months Ended | ||||||||||||||||||
| Sep 30, 2012 | Jun 30, 2012 | Sep 30, 2011 | Sep 30, 2012 | Sep 30, 2011 | ||||||||||||||||
| LOAN ORIGINATIONS AND PURCHASES: | ||||||||||||||||||||
| Loan originations: | ||||||||||||||||||||
| Residential real estate: | ||||||||||||||||||||
| For sale | $ | 842,197 | $ | 578,418 | $ | 545,278 | $ | 1,997,491 | $ | 1,365,519 | ||||||||||
| Permanent | 77,650 | 46,569 | 14,893 | 152,947 | 65,834 | |||||||||||||||
| Total residential real estate | 919,847 | 624,987 | 560,171 | 2,150,438 | 1,431,353 | |||||||||||||||
| Commercial real estate ("CRE"): | ||||||||||||||||||||
| Investor CRE | 14,889 | 16,190 | 310 | 37,535 | 41,676 | |||||||||||||||
| Multifamily | 144,560 | 234,971 | 203,606 | 552,241 | 540,591 | |||||||||||||||
| Construction | 776 | 845 | 3,223 | 2,444 | 13,105 | |||||||||||||||
| Total commercial real estate | 160,225 | 252,006 | 207,139 | 592,220 | 595,372 | |||||||||||||||
| Commercial: | ||||||||||||||||||||
| Owner occupied CRE | 53,541 | 29,937 | 42,360 | 111,833 | 116,707 | |||||||||||||||
| Commercial & Industrial ("C&I") | 102,255 | 50,069 | 54,446 | 206,310 | 163,723 | |||||||||||||||
| Total commercial | 155,796 | 80,006 | 96,806 | 318,143 | 280,430 | |||||||||||||||
| Consumer | 63,435 | 79,991 | 29,513 | 199,881 | 97,888 | |||||||||||||||
| Total loan originations | 1,299,303 | 1,036,990 | 893,629 | 3,260,682 | 2,405,043 | |||||||||||||||
| Total portfolio loan originations (excludes residential real estate for sale) | 457,106 | 458,572 | 348,351 | 1,263,191 | 1,039,524 | |||||||||||||||
| Loan purchases: | ||||||||||||||||||||
| Residential real estate | 1,646 | 37,734 | 2,701 | 76,408 | 10,251 | |||||||||||||||
| Commercial real estate: | ||||||||||||||||||||
| Investor CRE | 0 | 0 | 0 | 0 | 48,584 | |||||||||||||||
| Multifamily | 292 | 251 | 309 | 683 | 2,749 | |||||||||||||||
| Total commercial real estate | 292 | 251 | 309 | 683 | 51,333 | |||||||||||||||
| Commercial: | ||||||||||||||||||||
| Owner occupied CRE | 0 | 0 | 22,495 | 0 | 74,716 | |||||||||||||||
| C&I | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
| Total commercial | 0 | 0 | 22,495 | 0 | 74,716 | |||||||||||||||
| Consumer | 41,567 | 10,740 | 0 | 52,307 | 0 | |||||||||||||||
| Total loan purchases | 43,505 | 48,725 | 25,505 | 129,398 | 136,300 | |||||||||||||||
| Total loan originations and purchases | $ | 1,342,808 | $ | 1,085,715 | $ | 919,134 | $ | 3,390,080 | $ | 2,541,343 | ||||||||||
| PERFORMANCE RATIOS: | ||||||||||||||||||||
| Return on assets | 1.28 | % | 13.74 | % | 0.49 | % | 5.18 | % | 0.35 | % | ||||||||||
| Return on common equity | 9.8 | % | 138.7 | % | 5.4 | % | 45.5 | % | 4.1 | % | ||||||||||
| Operating efficiency (1) | 69.7 | % | 66.1 | % | 71.1 | % | 71.5 | % | 74.0 | % | ||||||||||
| Noninterest expense to assets | 3.74 | % | 3.75 | % | 3.72 | % | 3.78 | % | 3.81 | % | ||||||||||
| Average assets | $ | 9,520,530 | $ | 9,390,288 | $ | 9,233,112 | $ | 9,398,143 | $ | 9,356,487 | ||||||||||
| Average common equity | $ | 1,237,205 | $ | 930,377 | $ | 832,237 | $ | 1,070,993 | $ | 802,076 | ||||||||||
| REGULATORY CAPITAL RATIOS: | ||||||||||||||||||||
| Sterling Financial Corporation | ||||||||||||||||||||
| Tier 1 leverage ratio | 12.7 | % | 12.2 | % | 11.1 | % | 12.7 | % | 11.1 | % | ||||||||||
| Tier 1 risk-based capital ratio | 17.6 | % | 17.3 | % | 17.1 | % | 17.6 | % | 17.1 | % | ||||||||||
| Total risk-based capital ratio | 18.9 | % | 18.6 | % | 18.4 | % | 18.9 | % | 18.4 | % | ||||||||||
| Sterling Bank: | ||||||||||||||||||||
| Tier 1 leverage ratio | 12.6 | % | 12.0 | % | 10.8 | % | 12.6 | % | 10.8 | % | ||||||||||
| Tier 1 risk-based capital ratio | 17.5 | % | 17.1 | % | 16.6 | % | 17.5 | % | 16.6 | % | ||||||||||
| Total risk-based capital ratio | 18.8 | % | 18.4 | % | 17.9 | % | 18.8 | % | 17.9 | % | ||||||||||
| OTHER: | ||||||||||||||||||||
| FTE employees at end of period (whole numbers) | 2,527 | 2,523 | 2,461 | 2,527 | 2,461 | |||||||||||||||
(1) Operating efficiency ratio calculated as noninterest expense, excluding OREO 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.
| Sterling Financial Corporation | ||||||||||||
| OTHER SELECTED FINANCIAL DATA | ||||||||||||
| (in thousands, unaudited) | Sep 30, 2012 | Jun 30, 2012 | Sep 30, 2011 | |||||||||
| INVESTMENT PORTFOLIO DETAIL: | ||||||||||||
| Available for sale: | ||||||||||||
| MBS | $ | 1,825,448 | $ | 1,897,310 | $ | 2,221,948 | ||||||
| Municipal bonds | 205,405 | 203,537 | 205,005 | |||||||||
| Other | 19,108 | 18,161 | 19,570 | |||||||||
| Total | $ | 2,049,961 | $ | 2,119,008 | $ | 2,446,523 | ||||||
| Held to maturity: | ||||||||||||
| Tax credits | $ | 1,716 | $ | 1,726 | $ | 1,900 | ||||||
| Total | $ | 1,716 | $ | 1,726 | $ | 1,900 | ||||||
| LOAN PORTFOLIO DETAIL: | ||||||||||||
| Residential real estate | $ | 818,323 | $ | 785,482 | $ | 701,921 | ||||||
| Commercial real estate: | ||||||||||||
| Investor CRE | 1,274,774 | 1,324,917 | 1,287,381 | |||||||||
| Multifamily | 1,359,506 | 1,311,247 | 990,707 | |||||||||
| Construction | 99,553 | 111,550 | 221,611 | |||||||||
| Total commercial real estate | 2,733,833 | 2,747,714 | 2,499,699 | |||||||||
| Commercial: | ||||||||||||
| Owner occupied CRE | 1,304,224 | 1,309,587 | 1,299,035 | |||||||||
| C&I | 517,588 | 504,396 | 430,591 | |||||||||
| Total commercial | 1,821,812 | 1,813,983 | 1,729,626 | |||||||||
| Consumer | 768,359 | 736,397 | 683,972 | |||||||||
| Gross loans receivable | 6,142,327 | 6,083,576 | 5,615,218 | |||||||||
| Deferred loan fees, net | 2,317 | 1,243 | (668 | ) | ||||||||
| Allowance for loan losses | (154,279 | ) | (158,244 | ) | (186,195 | ) | ||||||
| Net loans receivable | $ | 5,990,365 | $ | 5,926,575 | $ | 5,428,355 | ||||||
| DEPOSITS DETAIL: | ||||||||||||
| Noninterest bearing transaction | $ | 1,709,612 | $ | 1,539,786 | $ | 1,167,552 | ||||||
| Interest bearing transaction | 693,906 | 696,205 | 508,189 | |||||||||
| Savings and MMDA | 2,286,832 | 2,270,395 | 2,016,594 | |||||||||
| Time deposits | 2,049,560 | 2,290,388 | 2,786,905 | |||||||||
| Total deposits | $ | 6,739,910 | $ | 6,796,774 | $ | 6,479,240 | ||||||
| Number of transaction accounts (whole numbers): | ||||||||||||
| Noninterest bearing transaction accounts | 194,997 | 192,644 | 170,636 | |||||||||
| Interest bearing transaction accounts | 49,678 | 50,617 | 44,428 | |||||||||
| Total transaction accounts | 244,675 | 243,261 | 215,064 | |||||||||
| Sterling Financial Corporation | ||||||||||||
| OTHER SELECTED FINANCIAL DATA | ||||||||||||
| (in thousands, unaudited) | Sep 30, 2012 | Jun 30, 2012 | Sep 30, 2011 | |||||||||
| ALLOWANCE FOR CREDIT LOSSES: | ||||||||||||
| Allowance - loans, beginning of quarter | $ | 158,244 | $ | 161,273 | $ | 212,088 | ||||||
| Provision | 2,000 | 2,000 | 4,000 | |||||||||
| Charge-offs: | ||||||||||||
| Residential real estate | (1,641 | ) | (157 | ) | (4,204 | ) | ||||||
| Commercial real estate: | ||||||||||||
| Investor CRE | (2,329 | ) | (6,577 | ) | (11,189 | ) | ||||||
| Multifamily | (463 | ) | 0 | (1,035 | ) | |||||||
| Construction | (2,106 | ) | (2,904 | ) | (14,426 | ) | ||||||
| Total commercial real estate | (4,898 | ) | (9,481 | ) | (26,650 | ) | ||||||
| Commercial: | ||||||||||||
| Owner occupied CRE | (1,544 | ) | (3,164 | ) | (4,758 | ) | ||||||
| C&I | (514 | ) | (442 | ) | (3,011 | ) | ||||||
| Total commercial | (2,058 | ) | (3,606 | ) | (7,769 | ) | ||||||
| Consumer | (1,882 | ) | (1,643 | ) | (2,554 | ) | ||||||
| Total charge-offs | (10,479 | ) | (14,887 | ) | (41,177 | ) | ||||||
| Recoveries: | ||||||||||||
| Residential real estate | 137 | 673 | 178 | |||||||||
| Commercial real estate: | ||||||||||||
| Investor CRE | 694 | 3,459 | 31 | |||||||||
| Multifamily | 347 | 1 | 684 | |||||||||
| Construction | 2,532 | 2,164 | 6,066 | |||||||||
| Total commercial real estate | 3,573 | 5,624 | 6,781 | |||||||||
| Commercial: | ||||||||||||
| Owner occupied CRE | 236 | 1,249 | 155 | |||||||||
| C&I | 305 | 1,922 | 3,707 | |||||||||
| Total commercial | 541 | 3,171 | 3,862 | |||||||||
| Consumer | 263 | 390 | 463 | |||||||||
| Total recoveries | 4,514 | 9,858 | 11,284 | |||||||||
| Net charge-offs | (5,965 | ) | (5,029 | ) | (29,893 | ) | ||||||
| Allowance - loans, end of quarter | 154,279 | 158,244 | 186,195 | |||||||||
| Reserve for unfunded commitments, beginning of quarter | 7,952 | 10,028 | 7,431 | |||||||||
| Provision | 0 | 2,000 | 2,000 | |||||||||
| Charge-offs | (181 | ) | (4,076 | ) | (55 | ) | ||||||
| Reserve for unfunded commitments, end of quarter | 7,771 | 7,952 | 9,376 | |||||||||
| Total credit allowance | $ | 162,050 | $ | 166,196 | $ | 195,571 | ||||||
| Net charge-offs to average loans (annualized) | 0.37 | % | 0.32 | % | 1.99 | % | ||||||
| Loan loss allowance to total loans | 2.51 | % | 2.60 | % | 3.32 | % | ||||||
| Total credit allowance to total loans | 2.64 | % | 2.73 | % | 3.48 | % | ||||||
| Loan loss allowance to nonperforming loans | 73 | % | 60 | % | 58 | % | ||||||
| Total credit allowance to nonperforming loans | 76 | % | 63 | % | 61 | % | ||||||
| Sterling Financial Corporation | ||||||||||||
| OTHER SELECTED FINANCIAL DATA | ||||||||||||
| (in thousands, unaudited) | Sep 30, 2012 | Jun 30, 2012 | Sep 30, 2011 | |||||||||
| NONPERFORMING ASSETS: | ||||||||||||
| Past 90 days due and accruing | $ | 0 | $ | 0 | $ | 0 | ||||||
| Nonaccrual loans | 146,095 | 176,220 | 240,142 | |||||||||
| Restructured loans | 66,343 | 89,120 | 82,997 | |||||||||
| Total nonperforming loans | 212,438 | 265,340 | 323,139 | |||||||||
| OREO | 46,575 | 55,801 | 111,566 | |||||||||
| Total nonperforming assets | 259,013 | 321,141 | 434,705 | |||||||||
| Specific reserve on nonperforming loans | (10,104 | ) | (10,196 | ) | (15,276 | ) | ||||||
| Net nonperforming assets | $ | 248,909 | $ | 310,945 | $ | 419,429 | ||||||
| Nonperforming loans to total loans | 3.46 | % | 4.36 | % | 5.75 | % | ||||||
| Nonperforming assets to total assets | 2.73 | % | 3.35 | % | 4.74 | % | ||||||
| Loan delinquency ratio (60 days and over) | 1.96 | % | 2.60 | % | 4.23 | % | ||||||
| Classified assets | $ | 267,469 | $ | 327,336 | $ | 500,484 | ||||||
| Classified assets to total assets | 2.82 | % | 3.41 | % | 5.45 | % | ||||||
| Classified assets to Sterling Bank Tier 1 capital plus total credit allowance | 21 | % | 26 | % | 42 | % | ||||||
| Nonperforming assets by collateral type: | ||||||||||||
| Residential real estate | $ | 44,822 | $ | 46,781 | $ | 53,168 | ||||||
| Commercial real estate: | ||||||||||||
| Investor CRE | 59,477 | 80,436 | 68,858 | |||||||||
| Multifamily | 9,221 | 26,508 | 7,325 | |||||||||
| Construction | 55,743 | 68,082 | 197,408 | |||||||||
| Total commercial real estate | 124,441 | 175,026 | 273,591 | |||||||||
| Commercial: | ||||||||||||
| Owner occupied CRE | 71,448 | 81,640 | 84,550 | |||||||||
| C&I | 12,072 | 12,526 | 17,337 | |||||||||
| Total commercial | 83,520 | 94,166 | 101,887 | |||||||||
| Consumer | 6,230 | 5,168 | 6,059 | |||||||||
| Total nonperforming assets | $ | 259,013 | $ | 321,141 | $ | 434,705 | ||||||
|
Sterling Financial Corporation |
|||||||||||||||||||||||||||||||||
|
OTHER SELECTED FINANCIAL DATA |
|||||||||||||||||||||||||||||||||
| (in thousands, unaudited) | Three Months Ended | ||||||||||||||||||||||||||||||||
| Sep 30, 2012 | Jun 30, 2012 | Sep 30, 2011 | |||||||||||||||||||||||||||||||
| Interest | Interest | Interest | |||||||||||||||||||||||||||||||
| Average | Income/ | Yields/ | Average | Income/ | Yields/ | Average | Income/ |
Yields/ |
|||||||||||||||||||||||||
| Balance | Expense | Rates | Balance | Expense | Rates | Balance | Expense |
Rates |
|||||||||||||||||||||||||
| ASSETS: | |||||||||||||||||||||||||||||||||
| Loans: | |||||||||||||||||||||||||||||||||
| Mortgage | $ | 3,820,634 | $ | 47,757 | 5.00 | % | $ | 3,863,940 | $ | 49,486 | 5.12 | % | $ | 3,470,241 | $ | 45,843 | 5.24 | % | |||||||||||||||
| Commercial and consumer | 2,533,474 | 35,479 | 5.57 | % | 2,540,930 | 36,147 | 5.72 | % | 2,483,204 | 36,282 | 5.80 | % | |||||||||||||||||||||
| Total loans | 6,354,108 | 83,236 | 5.23 | % | 6,404,870 | 85,633 | 5.36 | % | 5,953,445 | 82,125 | 5.47 | % | |||||||||||||||||||||
| MBS | 1,762,950 | 10,361 | 2.35 | % | 1,984,471 | 12,936 | 2.61 | % | 2,193,055 | 16,719 | 3.02 | % | |||||||||||||||||||||
| Investments and cash | 529,407 | 3,392 | 2.55 | % | 549,590 | 3,422 | 2.50 | % | 767,714 | 3,596 | 1.86 | % | |||||||||||||||||||||
| FHLB stock | 99,160 | 0 | 0.00 | % | 99,227 | 0 | 0.00 | % | 99,395 | 0 | 0.00 | % | |||||||||||||||||||||
| Total interest earning assets | 8,745,625 | 96,989 | 4.43 | % | 9,038,158 | 101,991 | 4.52 | % | 9,013,609 | 102,440 | 4.51 | % | |||||||||||||||||||||
| Noninterest earning assets | 774,905 | 352,130 | 219,503 | ||||||||||||||||||||||||||||||
| Total average assets | $ | 9,520,530 | $ | 9,390,288 | $ | 9,233,112 | |||||||||||||||||||||||||||
| LIABILITIES and EQUITY: | |||||||||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||||||
| Interest bearing transaction | $ | 684,906 | 73 | 0.04 | % | $ | 666,243 | 93 | 0.06 | % | $ | 501,884 | 123 | 0.10 | % | ||||||||||||||||||
| Savings and MMDA | 2,284,749 | 884 | 0.15 | % | 2,285,426 | 1,025 | 0.18 | % | 1,970,823 | 1,601 | 0.32 | % | |||||||||||||||||||||
| Time deposits | 2,168,056 | 8,024 | 1.47 | % | 2,380,453 | 8,803 | 1.49 | % | 2,952,566 | 12,411 | 1.67 | % | |||||||||||||||||||||
| Total interest bearing deposits | 5,137,711 | 8,981 | 0.70 | % | 5,332,122 | 9,921 | 0.75 | % | 5,425,273 | 14,135 | 1.03 | % | |||||||||||||||||||||
| Borrowings | 1,358,348 | 11,702 | 3.43 | % | 1,486,167 | 12,159 | 3.29 | % | 1,710,388 | 12,408 | 2.88 | % | |||||||||||||||||||||
| Total interest bearing liabilities | 6,496,059 | 20,683 | 1.27 | % | 6,818,289 | 22,080 | 1.30 | % | 7,135,661 | 26,543 | 1.48 | % | |||||||||||||||||||||
| Noninterest bearing transaction | 1,656,318 | 0 | 0.00 | % | 1,510,591 | 0 | 0.00 | % | 1,132,589 | 0 | 0.00 | % | |||||||||||||||||||||
| Total funding liabilities | 8,152,377 | 20,683 | 1.01 | % | 8,328,880 | 22,080 | 1.07 | % | 8,268,250 | 26,543 | 1.27 | % | |||||||||||||||||||||
| Other noninterest bearing liabilities | 130,948 | 131,031 | 132,625 | ||||||||||||||||||||||||||||||
| Total average liabilities | 8,283,325 | 8,459,911 | 8,400,875 | ||||||||||||||||||||||||||||||
| Total average equity | 1,237,205 | 930,377 | 832,237 | ||||||||||||||||||||||||||||||
| Total average liabilities and equity | $ | 9,520,530 | $ | 9,390,288 | $ | 9,233,112 | |||||||||||||||||||||||||||
| Net interest income and spread (tax equivalent) | $ | 76,306 | 3.16 | % | $ | 79,911 | 3.22 | % | $ | 75,897 | 3.03 | % | |||||||||||||||||||||
| Net interest margin (tax equivalent) | 3.47 | % | 3.56 | % | 3.34 | % | |||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||||||
| Total interest bearing deposits | $ | 5,137,711 | $ | 8,981 | 0.70 | % | $ | 5,332,122 | $ | 9,921 | 0.75 | % | $ | 5,425,273 | $ | 14,135 | 1.03 | % | |||||||||||||||
| Noninterest bearing transaction | 1,656,318 | 0 | 0.00 | % | 1,510,591 | 0 | 0.00 | % | 1,132,589 | 0 | 0.00 | % | |||||||||||||||||||||
| Total deposits | $ | 6,794,029 | $ | 8,981 | 0.53 | % | $ | 6,842,713 | $ | 9,921 | 0.58 | % | $ | 6,557,862 | $ | 14,135 | 0.86 | % | |||||||||||||||
About Sterling Financial Corporation
Sterling Financial Corporation (NASDAQ:STSA) of Spokane, Washington, is the bank holding company for Sterling Savings Bank, a Washington state chartered and federally insured commercial bank. Sterling Savings Bank does business as Sterling Bank and Sonoma Bank (in California). Sterling offers banking products and services, mortgage lending, and trust and investment products to individuals, small businesses, corporations and other commercial organizations. As of September 30, 2012, Sterling had assets of $9.47 billion and operated 183 depository branches in Washington, Oregon, Idaho, Montana and California. Visit Sterling's website at www.sterlingfinancialcorporation.com.
Forward-Looking Statements
This release contains forward-looking statements that are not historical facts and that are intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include, but are not limited to, statements about Sterling's plans, objectives, expectations, strategies and intentions and other statements contained in this release that are not historical facts and pertain to Sterling's future operating results and capital position, including Sterling's ability to reduce future loan losses, improve its deposit mix, execute its asset resolution initiatives, execute its lending initiatives, contain costs and potential liabilities, realize operating efficiencies, execute its business strategy, make dividend payments, compete in the marketplace and provide increased customer support and service. When used in this release, the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions are generally intended to identify forward-looking statements. Actual results may differ materially from the results discussed in these forward-looking statements because such statements are inherently subject to significant assumptions, risks and uncertainties, many of which are difficult to predict and are generally beyond Sterling's control. These include but are not limited to: Sterling's ability to execute on its business plan and maintain adequate liquidity; the possibility of continued adverse economic developments that may, among other things, increase default and delinquency risks in Sterling's loan portfolios; shifts in market interest rates that may result in lower interest rate margins; shifts in the demand for Sterling's loan and other products; changes in accounting policies; changes in the monetary and fiscal policies of the federal government; changes in laws, regulations and the competitive environment; exposure to material litigation; and lower-than-expected revenue or cost savings or other issues in connection with mergers and acquisitions. Other factors that could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements may be found under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Sterling's Annual Report on Form 10-K, as updated periodically in Sterling's filings with the Securities and Exchange Commission. Unless legally required, Sterling disclaims any obligation to update any forward-looking statements.
More Stories
Website
News Feed
NASDAQ:STSA
Facebook
Twitter
LinkedIn
Delicious
Reddit
StumbleUpon
Digg
MySpace
Newsvine
Google Bookmark
Yahoo! Bookmark
Mixx
Propeller
Wikio
Email
Email
