UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10 - Q
| x | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended March 31, 2004
| ¨ | Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
Commission File Number: 0-20750
STERLING BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
| Texas | 74-2175590 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) | |
| 2550 North Loop West, Suite 600 Houston, Texas |
77092 | |
| (Address of principal executive office) | (Zip Code) | |
713-466-8300
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 (“Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Act). Yes x No ¨
As of March 31, 2004, there were outstanding 44,757,214 shares of common stock, par value $1.00 per share, of the registrant.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2004
TABLE OF CONTENTS
(i)
STERLING BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share amounts)
| March 31, 2004 |
December 31, 2003 |
|||||||
| ASSETS | ||||||||
| Cash and cash equivalents |
$ | 118,240 | $ | 136,764 | ||||
| Interest-bearing deposits in financial institutions |
1,324 | 1,358 | ||||||
| Trading assets |
137,623 | 172,825 | ||||||
| Available-for-sale securities, at fair value |
542,636 | 522,936 | ||||||
| Held-to-maturity securities, at amortized cost |
39,053 | 42,157 | ||||||
| Loans held for sale |
10,730 | 26,308 | ||||||
| Loans held for investment |
2,137,245 | 2,130,731 | ||||||
| Total loans |
2,147,975 | 2,157,039 | ||||||
| Allowance for credit losses |
(26,609 | ) | (30,722 | ) | ||||
| Loans, net |
2,121,366 | 2,126,317 | ||||||
| Premises and equipment |
48,572 | 48,541 | ||||||
| Real estate acquired by foreclosure |
1,497 | 2,124 | ||||||
| Goodwill |
62,480 | 62,933 | ||||||
| Core deposit intangibles, net |
2,202 | 2,326 | ||||||
| Accrued interest receivable |
12,203 | 12,046 | ||||||
| Other assets |
76,089 | 76,553 | ||||||
| TOTAL ASSETS | $ | 3,163,285 | $ | 3,206,880 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| LIABILITIES: |
||||||||
| Deposits: |
||||||||
| Noninterest-bearing demand |
$ | 862,729 | $ | 834,313 | ||||
| Interest-bearing demand |
911,983 | 929,577 | ||||||
| Certificates and other time deposits |
731,640 | 654,479 | ||||||
| Total deposits |
2,506,352 | 2,418,369 | ||||||
| Other borrowed funds |
201,950 | 324,160 | ||||||
| Subordinated debt |
48,319 | 46,533 | ||||||
| Junior subordinated debt |
82,475 | 82,475 | ||||||
| Accrued interest payable and other liabilities |
24,329 | 42,747 | ||||||
| Total liabilities |
2,863,425 | 2,914,284 | ||||||
| COMMITMENTS AND CONTINGENCIES |
— | — | ||||||
| SHAREHOLDERS’ EQUITY: |
||||||||
| Convertible preferred stock, $1 par value, 1,000,000 shares authorized, 20,000 issued and outstanding |
20 | 20 | ||||||
| Common stock, $1 par value, 100,000,000 shares authorized, 44,756,314 and 44,642,109 issued and outstanding at March 31, 2004 and December 31, 2003, respectively |
44,756 | 44,642 | ||||||
| Capital surplus |
50,036 | 48,953 | ||||||
| Retained earnings |
200,818 | 197,819 | ||||||
| Accumulated other comprehensive income—net unrealized gain on available-for-sale securities, net of tax |
4,230 | 1,162 | ||||||
| Total shareholders’ equity |
299,860 | 292,596 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 3,163,285 | $ | 3,206,880 | ||||
See Notes to Consolidated Financial Statements.
1
STERLING BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per share amounts)
| Three Months Ended March 31, | ||||||
| 2004 |
2003 | |||||
| Interest income: |
||||||
| Loans, including fees |
$ | 33,234 | $ | 40,024 | ||
| Securities: |
||||||
| Taxable |
5,280 | 2,724 | ||||
| Tax-exempt |
455 | 649 | ||||
| Trading assets |
1,202 | 862 | ||||
| Federal funds sold |
20 | 47 | ||||
| Deposits in financial institutions |
15 | 19 | ||||
| Total interest income |
40,206 | 44,325 | ||||
| Interest expense: |
||||||
| Demand and savings deposits |
953 | 1,461 | ||||
| Certificates and other time deposits |
3,365 | 4,226 | ||||
| Other borrowed funds |
681 | 1,348 | ||||
| Notes payable |
— | 165 | ||||
| Subordinated debt |
595 | — | ||||
| Junior subordinated debt |
1,591 | 1,600 | ||||
| Total interest expense |
7,185 | 8,800 | ||||
| Net interest income |
33,021 | 35,525 | ||||
| Provision for credit losses |
3,500 | 4,450 | ||||
| Net interest income after provision for credit losses |
29,521 | 31,075 | ||||
| Noninterest income: |
||||||
| Customer service fees |
3,921 | 4,314 | ||||
| Net gain on the sale of banking office |
— | 3,382 | ||||
| Net gain on the sale of securities |
143 | 374 | ||||
| Net gain on the sale of trading assets |
348 | 347 | ||||
| Other |
2,805 | 2,859 | ||||
| Total noninterest income |
7,217 | 11,276 | ||||
| Noninterest expense: |
||||||
| Salaries and employee benefits |
17,687 | 17,251 | ||||
| Occupancy expense |
3,597 | 3,752 | ||||
| Technology |
1,388 | 1,200 | ||||
| Professional fees |
1,062 | 694 | ||||
| Postage and delivery charges |
535 | 597 | ||||
| Supplies |
340 | 354 | ||||
| Core deposit intangible amortization |
124 | 114 | ||||
| Other |
4,329 | 4,129 | ||||
| Total noninterest expense |
29,062 | 28,091 | ||||
| Income from continuing operations before income taxes |
7,676 | 14,260 | ||||
| Provision for income taxes |
2,442 | 4,719 | ||||
| Income from continuing operations |
5,234 | 9,541 | ||||
| Income from discontinued operations before income taxes |
— | 2,827 | ||||
| Provision for income taxes |
— | 1,131 | ||||
| Income from discontinued operations |
— | 1,696 | ||||
| Net income |
$ | 5,234 | $ | 11,237 | ||
| Earnings per share from continuing operations: |
||||||
| Basic |
$ | 0.12 | $ | 0.22 | ||
| Diluted |
$ | 0.12 | $ | 0.21 | ||
| Earnings per share: |
||||||
| Basic |
$ | 0.12 | $ | 0.26 | ||
| Diluted |
$ | 0.12 | $ | 0.25 | ||
See Notes to Consolidated Financial Statements.
2
STERLING BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(UNAUDITED)
(In thousands)
| Convertible Preferred Stock |
Common Stock |
Capital Surplus |
Retained Earnings |
Accumulated Other Net Unrealized Gain on |
Total |
||||||||||||||||||||
| Shares |
Amount |
Shares |
Amount |
||||||||||||||||||||||
| BALANCE AT JANUARY 1, 2003 |
59 | $ | 59 | 43,983 | $ | 43,983 | $ | 44,633 | $ | 156,664 | $ | 3,988 | $ | 249,327 | |||||||||||
| Net income |
11,237 | 11,237 | |||||||||||||||||||||||
| Net change in unrealized gain on available-for-sale securities, net of tax |
(282 | ) | (282 | ) | |||||||||||||||||||||
| Total comprehensive income |
260,282 | ||||||||||||||||||||||||
| Issuance of common stock |
10 | 10 | 84 | 94 | |||||||||||||||||||||
| Cash dividends paid |
(1,982 | ) | (1,982 | ) | |||||||||||||||||||||
| BALANCE AT MARCH 31, 2003 |
59 | $ | 59 | 43,993 | $ | 43,993 | $ | 44,717 | $ | 165,919 | $ | 3,706 | $ | 258,394 | |||||||||||
| BALANCE AT JANUARY 1, 2004 |
20 | 20 | 44,642 | 44,642 | 48,953 | 197,819 | 1,162 | 292,596 | |||||||||||||||||
| Net income |
5,234 | 5,234 | |||||||||||||||||||||||
| Net change in unrealized gain on available-for-sale securities, net of tax |
3,068 | 3,068 | |||||||||||||||||||||||
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