Sterling Bancshares, Inc. (SBIB), the holding company of Sterling Bank, Thursday reported a plunge in fourth quarter profit, hurt by substantial increases in allowance for loan losses. Results for the quarter also reflect lower interest and non-interest income.
For the fourth quarter, net income applicable to common shareholders of Sterling Bancshares plunged to $1.74 million or $0.02 per share from $9.22 million or $0.30 per share in the same quarter a year ago.
On average, 13 analysts polled by Thomson Reuters expected earnings of $0.04 per share for the quarter. Analysts' estimate typically excludes one-time items.
Profit of the Houston, Texas-based company was negatively impacted, with allowance for credit losses increasing to $77.6 million from $50.8 million recorded in the prior-year quarter. During the quarter, the company also recorded acquisition cost of $980 thousand related to the terminated First Bank acquisition.
Net charge-offs were $6.3 million or 0.76% of average total loans, compared to $37.4 million or 4.27% of average total loans for the third quarter of 2009.
Downey Bridgwater, Sterling's President and Chief Executive Officer said, "Our 2009 results were impacted by an extremely difficult economic environment. Elevated credit costs, historically low interest rates, and low loan demand significantly reduced our profitability this past year."
Sterling's, net interest income for the quarter decreased to $46.78 million from $50.38 million, while total non-interest income plunged to $5.49 million from $9.64 million in the year-ago quarter.
Street expected revenues of $55.80 million for the quarter.
Tax-equivalent net interest margin was 4.11% for the quarter, down 9 basis points from 4.20% for the third quarter of 2009.
Total interest expense decreased to $10.89 million from $16.91 million and total non-interest expense increased marginally to $39.49 million from $39.12 million in the year-earlier quarter.
As of December 31, 2009, Sterling had total assets of $4.9 billion, total loans of $3.2 billion and total deposits of $4.1 billion.
For full year 2009, net loss applicable to common shareholders was $22.3 million or $0.28 per common share, compared to net income of $38.2 million or $0.52 per common share earned in 2008. Net loss was $13.0 million, compared to net income of $38.6 million for 2008. Net interest income decreased to $191.71 million from $198.08 million a year ago. The Street expected a loss of $0.25 per share on revenues of $227.37 million for the year.
SBIB is currently trading at $5.41, down $0.01 or 0.18%, on a volume of 1.12 million shares.
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