STERLING BANCSHARES INC - FORM 8-K - EX-99.1

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8-K - STERLING BANCSHARES INC	v228841_8k.htm

EXHIBIT 99.1

NEWS RELEASE

For More Information Contact:	For Release - July 19, 2011
Chris Reid, Vice President and Director of Investor Relations, (713) 507-2873 Media: Graham Painter, Executive Vice President and Director of Corporate Communication, (713) 507-2770

STERLING BANCSHARES REPORTS SECOND QUARTER 2011 RESULTS

HOUSTON, TX, July 19, 2011 – Sterling Bancshares, Inc. (Nasdaq: SBIB) today reported a net loss from continuing operations of $2.9 million, or $0.03 per diluted share, for the second quarter ended June 30, 2011, compared to a net loss from continuing operations of $495 thousand, or $0.00 per diluted share for the first quarter of 2011.

The Company recorded a loss on discontinued operations of $9.0 million during the second quarter of 2011. This loss was the result of Sterling Bank entering into an agreement to sell all of the shares of MBM Advisors, Inc. (MBM), a wholly-owned subsidiary of Sterling Bank that provides investment advisory and pension administration and consulting services. This sale is expected to close in the third quarter of 2011 following the completion of the Company’s pending merger with Comerica which is expected to close on July 28, 2011. As such, MBM’s operations and the estimated loss on sale are presented as discontinued operations beginning in the second quarter of 2011.

For the second quarter of 2011, loans decreased $191 million or 7.3% to $2.4 billion at June 30, 2011. This decrease was due primarily to combined reductions of $91 million in commercial real estate and construction and development loans, resulting from the Company’s continued efforts to reduce exposure to these loan types. Commercial and industrial loans decreased $87 million during the second quarter of 2011 due to continued low loan demand and line usage.

At June 30, 2011, total deposits were $4.1 billion, an increase of $11.6 million compared to March 31, 2011. This increase was primarily related to growth in interest-bearing demand deposits.

Nonperforming assets were $202 million at June 30, 2011, an increase of $15.9 million compared to March 31, 2011. The increase in nonperforming assets during the quarter was due to an increase in nonperforming commercial real estate loans.

At June 30, 2011, the total allowance for loan losses was $78.0 million or 3.24% of period-end total loans, up from $75.5 million or 2.90% of period-end total loans at March 31, 2011. Net charge-offs for the second quarter of 2011 were $6.7 million or 1.06% of average total loans, compared to $12.4 million or 1.87% of average total loans for the first quarter of 2011. The provision for credit losses decreased $1.6 million on a linked-quarter basis due primarily to lower charge-offs during the second quarter.

Tax-equivalent net interest income for the second quarter of 2011 was $38.9 million, down slightly on a linked-quarter basis. Tax-equivalent net interest margin was 3.39% for the second quarter of 2011, down 13 basis points from 3.52% for the first quarter of 2011. The decrease in the net interest margin during the second quarter of 2011 was due to a decrease in average loans of $138 million which resulted in an increase in lower-yielding average interest-bearing cash of $129 million.

Sterling Bancshares, Inc., News Release

July 19, 2011

Page 2

Noninterest income for the second quarter of 2011 was $5.9 million, a decrease of $2.6 million compared to the first quarter of 2011. Net losses on securities were $1.1 million and $429 thousand for the second and first quarters of 2011, respectively. These losses were due to the sale of certain securities that were downgraded to below investment grade during their respective quarters. Other noninterest income decreased $1.7 million for the second quarter of 2011 compared to the first quarter of 2011 due to payout claims on certain bank-owned life insurance policies during the first quarter.

Total noninterest expense for the second quarter of 2011 was $40.6 million, an increase of $916 thousand compared to the first quarter of 2011. Other noninterest expense increased $3.8 million due to additional write-downs on foreclosed assets. The increase in other noninterest expense was offset by a decrease in salaries and benefits and FDIC insurance assessments of $1.4 million and $501 thousand, respectively on a linked-quarter basis. Additionally, professional fees decreased $837 thousand on a linked-quarter basis due primarily to legal fees that were incurred during the first quarter of 2011 in connection with the pending merger with Comerica.

As of June 30, 2011, Sterling had total assets of $5.1 billion, total loans of $2.4 billion and total deposits of $4.1 billion. Shareholders’ equity of $621 million at June 30, 2011, was 12.26% of total assets. Book value per common share at period-end was $6.07. Tangible capital ratio was 9.16% and all regulatory capital ratios were in excess of those considered to be well-capitalized at June 30, 2011.

Forward-Looking Statements

Any statements in this release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” “believes,” “feels,” “expects,” “estimates,” “seeks,” “strives,” “plans,” “intends,” “outlook,” “forecast,” “position,” “target,” “mission,” “assume,” “achievable,” “potential,” “strategy,” “goal,” “aspiration,” “opportunity,” “initiative,” “outcome,” “continue,” “remain,” “maintain,” “trend,” “objective” and variations of such words and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions, as they relate to Comerica Incorporated (“Comerica”) , Sterling, the proposed transaction or the combined company following the transaction often identify forward-looking statements. These forward-looking statements are predicated on the beliefs and assumptions of management based on information known to management as of the date of this filing and do not purport to speak as of any other date. Forward-looking statements may include descriptions of the expected benefits and costs of the transaction; forecasts of revenue, earnings or other measures of economic performance, including statements of profitability, business segments and subsidiaries; management plans relating to the transaction; the expected timing of the completion of the transaction; the ability to complete the transaction; the ability to obtain any required regulatory or other approvals; any statements of the plans and objectives of management for future or past operations, products or services, including the execution of integration plans; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Such statements reflect the view of management as of this date with respect to future events and are subject to risks and uncertainties. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, actual results could differ materially from those anticipated by the forward-looking statements or historical results. Factors that could cause or contribute to such differences include, but are not limited to, the possibility that expected benefits may not materialize in the timeframe expected or at all, or may be more costly to achieve; that the transaction may not be timely completed, if at all; that prior to the completion of the transaction or thereafter, Comerica’s and Sterling’s respective businesses may not perform as expected due to transaction-related uncertainty or other factors; that the parties are unable to successfully implement integration strategies; that required regulatory or other approvals are not obtained or other closing conditions are not satisfied in a timely manner or at all; reputational risks and the reaction of the companies’ customers to the transaction; diversion of management time on merger-related issues; and those factors referenced in Comerica’s and Sterling’s filings with the Securities and Exchange Commission (the “SEC”). Forward-looking statements speak only as of the date they are made. Comerica and Sterling do not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this release or in any documents, Comerica and Sterling claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Sterling Bancshares, Inc., News Release

July 19, 2011

Page 3

Additional Information

Management of Sterling will not host a conference call.

As previously announced, on January 16, 2011, Sterling Bancshares, Inc, and Comerica Incorporated, a company headquartered in Dallas, Texas, agreed to a strategic business combination in which Sterling will merge with Comerica. The transaction is expected to close on July 28, 2011, following the expiration of the required 15-day Department of Justice waiting period that is detailed in the Federal Reserve Board’s approval order issued on July 13, 2011.

In connection with the proposed merger transaction, Comerica has filed with the SEC a Registration Statement on Form S-4 that includes a Proxy Statement of Sterling and a Prospectus of Comerica, and Sterling mailed the definitive Proxy Statement/Prospectus to its shareholders on or about April 6, 2011. Each of Comerica and Sterling may file other relevant documents concerning the proposed transaction. SHAREHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE DEFINITIVE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION.

A free copy of the definitive Proxy Statement/Prospectus, as well as other filings containing information about Comerica and Sterling, may be obtained at the SEC’s Internet site (http://www.sec.gov). You may be able to obtain these documents, free of charge, from Comerica at www.comerica.com under the tab “Investor Relations” and then under the heading “SEC Filings” or from Sterling by accessing Sterling’s website at www.banksterling.com under the tab “Investor Relations” and then under the heading “SEC Filings.”

About Sterling Bancshares

Sterling Bancshares, Inc. is a Houston-based bank holding company with total assets of $5.1 billion, which operates 57 banking centers in the greater metropolitan areas of Houston, San Antonio, Dallas and Fort Worth, Texas. The Company’s common stock is traded through the NASDAQ Global Select Market under the symbol “SBIB”. For more information on Sterling Bancshares, please visit the Company’s web site at http://www.banksterling.com.

–Tables to follow–

STERLING BANCSHARES, INC.

SELECTED FINANCIAL INFORMATION (Unaudited)

(dollars in thousands, except for per share data)

Page 4

	Quarter Ended									Year-to-date
	Jun. 30,			Mar. 31,			Jun. 30,
	2011			2011			2010			2011			2010
Profitability
Income (loss) from continuing operations	$	(2,860	)	$	(495	)	$	545		$	(3,355	)	$	(5,917	)
Income (loss) from discontinued operations		(8,974	)		125			51			(8,849	)		265
Net income (loss)		(11,834	)		(370	)		596			(12,204	)		(5,652	)

Earnings (loss) per share from continuing operations (1)
Basic	$	(0.03	)	$	(0.00	)	$	0.01		$	(0.03	)	$	(0.06	)
Diluted	$	(0.03	)	$	(0.00	)	$	0.01		$	(0.03	)	$	(0.06	)

Earnings (loss) per share from discontinuing operations (1)
Basic	$	(0.09	)	$	0.00		$	0.00		$	(0.09	)	$	0.00
Diluted	$	(0.09	)	$	0.00		$	0.00		$	(0.09	)	$	0.00

Earnings (loss) per share (1)
Basic	$	(0.12	)	$	(0.00	)	$	0.01		$	(0.12	)	$	(0.06	)
Diluted	$	(0.12	)	$	(0.00	)	$	0.01		$	(0.12	)	$	(0.06	)

Return on average common equity (2)
Continuing operations		(1.82	)%		(0.32	)%		0.35	%		(1.08	)%		(1.99	)%
Total		(7.52	)%		(0.24	)%		0.38	%		(3.92	)%		(1.90	)%

Return on average assets (2)
Continuing operations		(0.23	)%		(0.04	)%		0.04	%		(0.13	)%		(0.24	)%
Total		(0.94	)%		(0.03	)%		0.05	%		(0.49	)%		(0.23	)%

Tax equivalent net interest margin (3)		3.39	%		3.52	%		3.74	%		3.45	%		3.88	%

Efficiency Ratio (4):
Consolidated		88.31	%		81.14	%		78.28	%		84.61	%		77.23	%
Sterling Bank		84.64	%		76.02	%		75.86	%		80.19	%		74.63	%

Liquidity and Capital Ratios
Average loans to average deposits		61.98	%		65.32	%		73.39	%		63.64	%		75.97	%
Period-end stockholders' equity to total assets		12.26	%		12.34	%		12.30	%		12.26	%		12.30	%
Average stockholders' equity to average assets		12.47	%		12.35	%		12.28	%		12.41	%		11.96	%
Period-end tangible capital to total tangible assets		9.16	%		9.06	%		9.01	%		9.16	%		9.01	%
Tier 1 capital to risk-weighted assets		16.50	%		15.41	%		14.45	%		16.50	%		14.45	%
Total capital to risk-weighted assets		18.97	%		18.13	%		17.04	%		18.97	%		17.04	%
Tier 1 leverage ratio (Tier 1 capital to average assets)		10.12	%		10.08	%		10.32	%		10.12	%		10.32	%

Other Data
Shares used in computing earnings (loss) per common share
Basic shares		102,165			102,034			101,898			102,100			95,227
Diluted shares		102,165			102,034			102,144			102,100			95,227
End of period common shares outstanding		102,180			102,141			101,927			102,180			101,927

Book value per common share at period-end	$	6.07		$	6.10		$	6.13		$	6.07		$	6.13
Cash dividends paid per common share	$	0.015		$	0.015		$	0.015		$	0.030		$	0.030
Common stock dividend payout ratio		N/M			N/M			256.65	%		N/M			N/M
Full-time equivalent employees		896			938			991			896			991
Number of banking centers		57			57			57			57			57

STERLING BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(dollars in thousands)

Page 5

	Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,
	2011			2011			2010			2010			2010
ASSETS
Cash and cash equivalents	$	742,880		$	462,700		$	502,894		$	366,590		$	359,388
Available-for-sale securities, at fair value		1,298,567			1,343,536			1,287,555			1,169,519			1,069,964
Held-to-maturity securities, at amortized cost		235,326			246,768			265,080			280,215			280,658

Loans held for sale		2,709			1,877			2,691			7,123			6,509
Loans held for investment		2,407,942			2,599,778			2,752,349			2,862,952			2,992,370
Total loans		2,410,651			2,601,655			2,755,040			2,870,075			2,998,879
Allowance for loan losses		(78,002	)		(75,535	)		(77,141	)		(80,754	)		(80,983	)
Loans, net		2,332,649			2,526,120			2,677,899			2,789,321			2,917,896

Premises and equipment, net		48,811			49,618			49,421			48,507			47,812
Real estate acquired by foreclosure		46,158			49,826			37,064			14,571			18,151
Goodwill		165,309			173,210			173,210			173,210			173,210
Core deposits and other intangibles, net		7,302			8,951			9,477			10,004			10,540
Accrued interest receivable		13,290			13,588			14,673			14,356			14,951
Other assets		171,064			175,230			174,680			173,328			183,429
TOTAL ASSETS	$	5,061,356		$	5,049,547		$	5,191,953		$	5,039,621		$	5,075,999

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing demand	$	1,268,801		$	1,287,921		$	1,322,492		$	1,248,321		$	1,266,781
Interest-bearing demand		2,160,404			2,084,062			2,138,822			2,014,207			1,962,854
Certificates and other time deposits		699,642			745,301			796,116			840,683			921,495
Total deposits		4,128,847			4,117,284			4,257,430			4,103,211			4,151,130
Other borrowed funds		111,959			109,701			112,202			106,546			100,770
Subordinated debt		77,690			77,673			78,059			78,624			78,247
Junior subordinated debt		82,734			82,734			82,734			82,734			82,734
Accrued interest payable and other liabilities		39,578			39,074			39,604			41,704			38,722
Total liabilities		4,440,808			4,426,466			4,570,029			4,412,819			4,451,603

COMMITMENTS AND CONTINGENCIES		-			-			-			-			-

SHAREHOLDERS' EQUITY
Common stock		104,047			104,008			103,852			103,820			103,795
Capital surplus		242,092			241,280			239,940			238,536			238,186
Retained earnings		275,533			288,901			290,800			290,429			287,503
Treasury stock		(21,399	)		(21,399	)		(21,399	)		(21,399	)		(21,399	)
Accumulated other comprehensive income, net of tax		20,275			10,291			8,731			15,416			16,311
Total shareholders' equity		620,548			623,081			621,924			626,802			624,396
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	5,061,356		$	5,049,547		$	5,191,953		$	5,039,621		$	5,075,999

STERLING BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(dollars in thousands, except for per share data)

Page 6

	Quarter Ended														Year-to-date
	Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,
	2011			2011			2010			2010			2010		2011			2010
Interest income:
Loans, including fees	$	33,057		$	34,906		$	37,003		$	40,153		$	42,087	$	67,963		$	85,736
Securities:
Taxable		10,904			10,359			9,342			9,841			9,602		21,263			18,719
Non-taxable		1,027			1,044			1,028			1,013			915		2,071			1,840
Deposits in financial institutions		294			209			258			157			231		503			346
Other interest-earning assets		2			2			2			1			3		4			4
Total interest income		45,284			46,520			47,633			51,165			52,838		91,804			106,645

Interest expense:
Demand and savings deposits		2,683			2,660			3,158			3,583			4,319		5,343			8,531
Certificates and other time deposits		1,655			1,937			2,328			2,823			3,159		3,592			6,511
Other borrowed funds		771			764			781			784			768		1,535			1,216
Subordinated debt		700			696			714			747			705		1,396			1,392
Junior subordinated debt		1,040			1,034			1,043			1,071			1,040		2,074			2,068
Total interest expense		6,849			7,091			8,024			9,008			9,991		13,940			19,718
Net interest income		38,435			39,429			39,609			42,157			42,847		77,864			86,927
Provision for credit losses		9,200			10,800			5,250			7,716			9,336		20,000			32,272
Net interest income after provision for credit losses		29,235			28,629			34,359			34,441			33,511		57,864			54,655

Noninterest income:
Customer service fees		3,159			3,284			3,569			3,728			3,591		6,443			7,079
Net gain (loss) on securities		(1,138	)		(429	)		(136	)		43			17		(1,567	)		37
Wealth management fees		269			342			362			351			651		611			1,207
Other		3,566			5,298			3,333			3,927			2,752		8,864			3,540
Total noninterest income		5,856			8,495			7,128			8,049			7,011		14,351			11,863

Noninterest expense:
Salaries and employee benefits		17,182			18,570			18,975			19,735			19,466		35,752			39,055
Occupancy		5,784			5,959			6,010			5,493			5,637		11,743			11,351
Technology		1,974			1,965			2,052			2,148			2,214		3,939			4,501
Professional fees		1,612			2,449			2,202			1,433			1,319		4,061			3,299
Postage, delivery and supplies		567			533			578			627			689		1,100			1,369
Marketing		80			63			216			198			271		143			540
Core deposits and other intangibles amortization		507			526			527			537			537		1,033			1,086
FDIC insurance assessments		1,637			2,138			2,667			2,478			2,438		3,775			4,985
Other		11,223			7,447			6,855			3,690			6,799		18,670			10,782
Total noninterest expense		40,566			39,650			40,081			36,339			39,370		80,216			76,968

Income (loss) from continuing operations before income taxes		(5,475	)		(2,526	)		1,406			6,151			1,152		(8,001	)		(10,450	)
Income tax provision (benefit)		(2,615	)		(2,031	)		(283	)		1,669			607		(4,646	)		(4,533	)
Income (loss) from continuing operations	$	(2,860	)	$	(495	)	$	1,689		$	4,482		$	545	$	(3,355	)	$	(5,917	)

Income (loss) from discontinued operations before income taxes		(8,936	)		192			326			(0	)		78		(8,744	)		407
Income tax provision		38			67			114			27			27		105			142
Income (loss) from discontinued operations	$	(8,974	)	$	125		$	212		$	(27	)	$	51	$	(8,849	)	$	265

Net income (loss)	$	(11,834	)	$	(370	)	$	1,901		$	4,455		$	596	$	(12,204	)	$	(5,652	)

Earnings (loss) per share from continuing operations (1):
Basic	$	(0.03	)	$	(0.00	)	$	0.02		$	0.04		$	0.01	$	(0.03	)	$	(0.06	)
Diluted	$	(0.03	)	$	(0.00	)	$	0.02		$	0.04		$	0.01	$	(0.03	)	$	(0.06	)

Earnings (loss) per share from discontinuing operations (1):
Basic	$	(0.09	)	$	0.00		$	0.00		$	(0.00	)	$	0.00	$	(0.09	)	$	0.00
Diluted	$	(0.09	)	$	0.00		$	0.00		$	(0.00	)	$	0.00	$	(0.09	)	$	0.00

Earnings (loss) per share (1):
Basic	$	(0.12	)	$	(0.00	)	$	0.02		$	0.04		$	0.01	$	(0.12	)	$	(0.06	)
Diluted	$	(0.12	)	$	(0.00	)	$	0.02		$	0.04		$	0.01	$	(0.12	)	$	(0.06	)

STERLING BANCSHARES, INC.

YIELD/RATE ANALYSIS

(dollars in thousands)

Page 7

	Quarter Ended
	Jun. 30,							Mar. 31,
	2011							2011
	Average Balance		Interest		Yield/Rate			Average Balance		Interest		Yield/Rate
Interest-Earning Assets:
Loans held for sale	$	3,423	$	10		1.21	%	$	3,008	$	12		1.55	%
Loans held for investment:
Taxable		2,554,191		33,046		5.19	%		2,692,192		34,893		5.26	%
Non-taxable (3)		50		1		4.58	%		63		1		6.81	%
Securities:
Taxable		1,464,279		10,904		2.99	%		1,447,767		10,359		2.90	%
Non-taxable (3)		110,948		1,534		5.55	%		112,947		1,558		5.59	%
Deposits in financial institutions		475,731		294		0.25	%		347,116		209		0.24	%
Other interest-earning assets		1,931		2		0.42	%		4,016		2		0.20	%
Total interest-earning assets		4,610,553		45,791		3.98	%		4,607,109		47,034		4.14	%
Noninterest-earning assets		452,699							454,688
Total Assets	$	5,063,252						$	5,061,797

Interest-Bearing Liabilities:
Deposits:
Demand and savings	$	2,127,814	$	2,683		0.51	%	$	2,087,550	$	2,660		0.52	%
Certificates and other time		723,961		1,655		0.92	%		772,172		1,937		1.02	%
Other borrowed funds		105,644		771		2.93	%		109,885		764		2.82	%
Subordinated debt		77,771		700		3.61	%		77,959		696		3.62	%
Junior subordinated debt		82,734		1,040		5.04	%		82,734		1,034		5.07	%
Total interest-bearing liabilities		3,117,924		6,849		0.88	%		3,130,300		7,091		0.92	%
Noninterest-bearing sources:
Noninterest-bearing liabilities		1,314,129							1,306,235
Shareholders' equity		631,199							625,262
Total Liabilities and Shareholders' Equity	$	5,063,252						$	5,061,797

Tax Equivalent Net Interest Income and Margin (3)				38,942		3.39	%				39,943		3.52	%

Non-GAAP to GAAP Reconciliation:
Tax Equivalent Adjustment:
Loans				-							-
Securities				507							514
Total tax equivalent adjustment				507							514
Net Interest Income			$	38,435						$	39,429

STERLING BANCSHARES, INC.

YIELD/RATE ANALYSIS

(dollars in thousands)

Page 8

	Year-to-date
	2011							2010
	Average Balance		Interest		Yield/Rate			Average Balance		Interest		Yield/Rate
Interest-Earning Assets:
Loans held for sale	$	3,217	$	22		1.37	%	$	12,507	$	101		1.63	%
Loans held for investment:
Taxable		2,622,811		67,939		5.22	%		3,106,255		85,555		5.55	%
Non-taxable (3)		56		2		6.50	%		4,546		118		5.26	%
Securities:
Taxable		1,456,069		21,263		2.94	%		1,063,562		18,719		3.55	%
Non-taxable (3)		111,942		3,093		5.57	%		100,814		2,709		5.42	%
Deposits in financial institutions		411,779		503		0.25	%		278,731		346		0.25	%
Other interest-earning assets		2,967		4		0.27	%		1,623		4		0.50	%
Total interest-earning assets		4,608,841		92,826		4.06	%		4,568,038		107,552		4.75	%
Noninterest-earning assets		453,688							444,343
Total Assets	$	5,062,529						$	5,012,381

Interest-Bearing Liabilities:
Deposits:
Demand and savings	$	2,107,794	$	5,343		0.51	%	$	2,010,433	$	8,531		0.86	%
Certificates and other time		747,933		3,592		0.97	%		929,735		6,511		1.41	%
Other borrowed funds		107,753		1,535		2.87	%		100,433		1,216		2.44	%
Subordinated debt		77,865		1,396		3.62	%		77,778		1,392		3.61	%
Junior subordinated debt		82,734		2,074		5.06	%		82,734		2,068		5.04	%
Total interest-bearing liabilities		3,124,079		13,940		0.90	%		3,201,113		19,718		1.24	%
Noninterest-bearing sources:
Noninterest-bearing liabilities		1,310,203							1,211,808
Shareholders' equity		628,247							599,460
Total Liabilities and Shareholders' Equity	$	5,062,529						$	5,012,381
Tax Equivalent Net Interest Income and Margin (3)				78,886		3.45	%				87,834		3.88	%

Non-GAAP to GAAP Reconciliation
Tax Equivalent Adjustment:
Loans				-							38
Securities				1,022							869
Total tax equivalent adjustment				1,022							907
Net Interest Income			$	77,864						$	86,927

STERLING BANCSHARES, INC.

SELECTED FINANCIAL INFORMATION (Unaudited)

(dollars in thousands)

Page 9

	Quarter Ended
	Jun. 30,		Mar. 31,		Dec. 31,		Sep. 30,		Jun. 30,
	2011		2011		2010		2010		2010
Condensed Average Balance Sheet
Loans held for sale	$	3,423	$	3,008	$	6,728	$	5,390	$	11,454
Loans held for investment		2,554,241		2,692,255		2,807,423		2,930,419		3,041,030
Total loans		2,557,664		2,695,263		2,814,151		2,935,809		3,052,484
Available-for-sale securities, at fair value		1,331,079		1,304,941		1,188,610		1,113,780		953,742
Held-to-maturity securities, at amortized cost		244,148		255,773		272,184		284,458		271,967
Deposits in financial institutions		475,731		347,116		416,917		260,167		362,429
Other interest-earning assets		1,931		4,016		4,859		566		840
Total interest-earning assets		4,610,553		4,607,109		4,696,721		4,594,780		4,641,462
Goodwill		173,123		173,210		173,210		173,210		173,210
Core deposits and other intangibles, net		8,676		9,208		9,732		10,262		10,800
All other noninterest-earning assets		270,900		272,270		252,801		255,050		260,923
Total assets	$	5,063,252	$	5,061,797	$	5,132,464	$	5,033,302	$	5,086,395

Noninterest-bearing demand	$	1,275,043	$	1,266,324	$	1,293,021	$	1,224,402	$	1,197,400
Interest-bearing deposits:
Interest-bearing demand		2,127,814		2,087,550		2,069,470		2,003,914		2,027,133
Jumbo certificates of deposit		432,209		468,726		509,458		539,094		582,727
Regular certificates of deposit		202,232		211,043		220,615		227,490		233,592
Brokered certificates of deposit		89,520		92,403		97,501		103,457		118,622
Total deposits		4,126,818		4,126,046		4,190,065		4,098,357		4,159,474
Other borrowed funds		105,644		109,885		108,810		103,902		100,976
Subordinated debt		77,771		77,959		78,517		78,472		77,831
Junior subordinated debt		82,734		82,734		82,734		82,734		82,734
Accrued interest payable and other liabilities		39,086		39,911		42,030		39,079		40,952
Total liabilities		4,432,053		4,436,535		4,502,156		4,402,544		4,461,967
Total shareholders' equity		631,199		625,262		630,308		630,758		624,428
Total liabilities and shareholders' equity	$	5,063,252	$	5,061,797	$	5,132,464	$	5,033,302	$	5,086,395

	Jun. 30,		Mar. 31,		Dec. 31,		Sep. 30,		Jun. 30,
	2011		2011		2010		2010		2010
Period-end Loans:
Loans held for sale	$	2,709	$	1,877	$	2,691	$	7,123	$	6,509
Loans held for investment:
Commercial and industrial		494,389		581,703		623,487		597,205		658,141
Real Estate:
Commercial		1,280,241		1,421,683		1,511,846		1,590,081		1,632,213
Construction and development		263,398		213,102		220,076		268,691		310,689
Residential mortgage		332,454		344,774		354,310		362,404		343,894
Consumer/other		37,460		38,516		42,630		44,571		47,433
Loans held for investment		2,407,942		2,599,778		2,752,349		2,862,952		2,992,370
Total period-end loans	$	2,410,651	$	2,601,655	$	2,755,040	$	2,870,075	$	2,998,879

Period-End Deposits:
Noninterest-bearing demand	$	1,268,801	$	1,287,921	$	1,322,492	$	1,248,321	$	1,266,781
Interest-bearing demand		2,160,404		2,084,062		2,138,822		2,014,207		1,962,854
Certificates and other time deposits:
Jumbo		429,422		445,833		487,037		512,178		587,377
Regular		197,822		205,840		215,867		224,290		231,404
Brokered		72,398		93,628		93,212		104,215		102,714
Total period-end deposits	$	4,128,847	$	4,117,284	$	4,257,430	$	4,103,211	$	4,151,130

STERLING BANCSHARES, INC.

SELECTED FINANCIAL INFORMATION (Unaudited)

(dollars in thousands)

Page 10

	Quarter Ended															Year-to-date
	Jun. 30,			Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,
	2011			2011			2010			2010			2010			2011			2010
Allowance For Credit Losses
Allowance for loan losses at beginning of period	$	75,535		$	77,141		$	80,754		$	80,983		$	76,646		$	77,141		$	74,732
Charge-offs:
Commercial, financial and industrial		657			239			1,845			1,034			1,687			896			3,655
Real estate, mortgage and construction		6,622			12,220			8,535			7,314			5,786			18,842			26,000
Consumer		189			713			323			285			205			902			467
Total charge-offs		7,468			13,172			10,703			8,633			7,678			20,640			30,122
Recoveries:
Commercial, financial and industrial		238			405			342			481			433			643			916
Real estate, mortgage and construction		431			255			631			633			845			686			1,666
Consumer		66			106			67			72			51			172			169
Total recoveries		735			766			1,040			1,186			1,329			1,501			2,751
Net charge-offs		6,733			12,406			9,663			7,447			6,349			19,139			27,371
Provision for loan losses		9,200			10,800			6,050			7,218			10,686			20,000			33,622
Allowance for loan losses at end of period	$	78,002		$	75,535		$	77,141		$	80,754		$	80,983		$	78,002		$	80,983

Allowance for unfunded loan commitments at beginning of period		1,200			1,200			2,000			1,502			2,852			1,200			2,852
Provision for losses on unfunded loan commitments		-			-			(800	)		498			(1,350	)		-			(1,350	)
Allowance for unfunded loan commitments at end of period		1,200			1,200			1,200			2,000			1,502			1,200			1,502
Total allowance for credit losses	$	79,202		$	76,735		$	78,341		$	82,754		$	82,485		$	79,202		$	82,485

Nonperforming Assets
Nonperforming loans:
Loans held for sale	$	1,367		$	-		$	-		$	1,665		$	3,491		$	1,367		$	3,491
Loans held for investment		154,106			135,791			133,264			162,096			162,669			154,106			162,669
Real estate acquired by foreclosure		46,158			49,826			37,064			14,571			18,151			46,158			18,151
Other repossessed assets		25			127			3			50			20			25			20
Total nonperforming assets	$	201,656		$	185,744		$	170,331		$	178,382		$	184,331		$	201,656		$	184,331

Restructured loans - accruing	$	23,075		$	15,001		$	27,699		$	17,495		$	15,001		$	23,075		$	15,001

Potential problem loans	$	152,551		$	171,276		$	166,442		$	169,646		$	142,123		$	152,551		$	142,123

Accruing loans 30 to 89 days past due	$	26,689		$	31,720		$	23,680		$	16,234		$	19,307		$	26,689		$	19,307

Accruing loans past due 90 days or more	$	1,762		$	2,334		$	507		$	953		$	441		$	1,762		$	441

Ratios
Period-end allowance for credit losses to period-end loans		3.29	%		2.95	%		2.84	%		2.88	%		2.75	%		3.29	%		2.75	%
Period-end allowance for loan losses to period-end loans		3.24	%		2.90	%		2.80	%		2.81	%		2.70	%		3.24	%		2.70	%
Period-end allowance for loan losses to nonperforming loans		50.17	%		55.63	%		57.89	%		49.31	%		48.74	%		50.17	%		48.74	%
Nonperforming loans to period-end loans		6.45	%		5.22	%		4.84	%		5.71	%		5.54	%		6.45	%		5.54	%
Nonperforming assets to period-end assets		3.98	%		3.68	%		3.28	%		3.54	%		3.63	%		3.98	%		3.63	%
Net charge-offs to average loans (2)		1.06	%		1.87	%		1.36	%		1.01	%		0.83	%		1.47	%		1.77	%

STERLING BANCSHARES, INC.

FOOTNOTES TO EARNINGS RELEASE

Page 11

(1)	Earnings per share in each quarter is computed individually using the weighted-average number of shares outstanding during that quarter.

(2)	Interim periods annualized.

(3)

Taxable-equivalent basis assuming a 35% tax rate. The Company presents net interest income on a tax-equivalent basis. Accordingly, net interest income from tax-exempt securities and loans is presented in the net interest income results on a basis comparable to taxable securities and loans. This non-GAAP financial measure allows management to assess the comparability of net interest income arising from both taxable and tax-exempt sources.

(4)	The efficiency ratio is calculated by dividing noninterest expense by tax equivalent basis net interest income plus noninterest income less net gain (loss) on investment securities and loss on disposal of assets.

N/M	Not meaningful.

Attached files

STERLING BANCSHARES INC Reports

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