MOUNT LAUREL, N.J., July 28 /PRNewswire-FirstCall/ -- Sterling Bank
(NASDAQ:STNJ) today reported income before taxes of $1,090,000 for
the six- month period ended June 30, 2006. This represents a 7%
decrease compared to the six-month period ended June 30, 2005,
which totaled $1,178,000, and reflects the effects of absorption of
the added operating expenses associated with the expansion of the
Bank's branch network into Voorhees Township, NJ, in November 2005.
Net income for the six-month period totaled $676,000, a decrease of
10% over net income for the same period of 2005, which totaled
$754,000. On a basic and diluted per share basis, the net income
for the six- month period was $0.14 per share, compared to net
income of $0.21 per share (adjusted for stock dividends) for the
period ending June 30, 2005, a decrease of 33%. Additionally, of
this decrease in per share earnings, approximately $0.04 per share
is attributable to dilution from the increase in weighted average
shares outstanding as a result of Sterling Bank's public offering
of Common Stock in May 2005. For the quarter ended June 30, 2006,
income before taxes totaled $474,000, decreasing 27% from $650,000
for the second quarter of 2005. Net income amounted to $294,000 for
the second quarter of 2006, compared to net income of $416,000 for
the second quarter of 2005, a decrease of 29%. On a basic and
diluted per share basis, net income for the second quarter of 2006
amounted to $0.06 per share, compared to net income of $0.10 per
share (adjusted for stock dividends) for the second quarter of
2005, a decrease of 40%. Of this decrease in per share earnings,
approximately $0.01 per share is attributable to dilution from the
increase in weighted average shares outstanding as a result of our
public offering of Common Stock in May 2005. Sterling Bank's
decline in earnings is attributable primarily to an increase of
$745,000, or 16%, in non interest expenses, from $4.7 million
during the first six months of 2005, to $5.5 million during the
first six months of 2006. An increase in compensation expense of
$406,000, or 15%, is primarily related to personnel costs for
staffing increases to support growth initiatives, including our new
Voorhees branch. Occupancy, equipment and data processing expenses
increased $224,000, or 19%, primarily as a result of the opening of
our new Voorhees branch in November 2005. Professional services and
other operating expenses increased $125,000, or 21%, primarily as a
result of expenses relating to our previously announced pending
formation of Sterling Banks, Inc., a bank holding company, and our
pending acquisition of Farnsworth Bancorp, Inc. As of June 30,
2006, Sterling Bank's assets totaled $342 million, compared to
assets of $336 million on June 30, 2005, representing a 2%
increase. Total loans amounted to $246 million on June 30, 2006,
reflecting an increase of 1% over total loans as of June 30, 2005
of $243 million. Total deposits expanded to $296 million on June
30, 2006, an increase of 5% from $283 million on June 30, 2005.
Growth in total loans has been adversely impacted by a decrease in
student loans outstanding, which are classified as loans held for
sale, from $40.7 million as of December 31, 2005, to $10.1 million
as of June 30, 2006, a decrease of $30.6 million. Sterling Bank
funds these student loans, and Student Loan Marketing, Inc. ("SLM,
Inc.") purchases them from Sterling Bank within 30 to 45 days. SLM,
Inc. has begun to self-fund these student loans, and Sterling Bank
expects that the remaining balance of these loans will continue to
trend downward, although the timing is uncertain. Loans, other than
those held for sale (SLM advances), expanded to $235.6 million on
June 30, 2006, from $225.3 million on December 31, 2005, an
annualized growth rate of 9% for the period. As a result, deposit
totals were affected by management's efforts to balance the
expansion of deposit balances with the roll-off of student loan
advances. Robert H. King, President and Chief Executive Officer
commented, "From a backdrop of significant industry challenges,
including a persistently inverted to flat yield curve, and intense
deposit and loan pricing competition, Sterling Bank continued to
focus on strategic growth initiatives. Most important of these are
branch expansion, plans to convert to a bank holding company
through the formation of Sterling Banks, Inc., and the positioning
of both the balance sheet and the organization overall, in
preparation for the combination with Farnsworth Bancorp, Inc.,
progressing toward a 4th quarter closing. We are excited about the
ongoing progress of Sterling Bank." Sterling Bank Financial
Highlights (unaudited) As of, and for the six months ended, June
30, 2006 and June 30, 2005 Three Months Ended Six Months Ended
06/30/2006 06/30/2005 06/30/2006 06/30/2005 INCOME STATEMENT
Interest income $5,667,000 $4,634,000 $11,299,000 $8,806,000
Interest expense 2,541,000 1,660,000 4,982,000 3,080,000 Net
interest income 3,126,000 2,974,000 6,317,000 5,726,000 Provision
for loan losses 45,000 87,000 90,000 150,000 Net interest income
after provision for loan losses 3,081,000 2,887,000 6,227,000
5,576,000 Noninterest income 188,000 168,000 343,000 337,000
Noninterest expenses 2,795,000 2,405,000 5,480,000 4,735,000 Income
before taxes 474,000 650,000 1,090,000 1,178,000 Income tax expense
180,000 234,000 414,000 424,000 Net income $294,000 $416,000
$676,000 $754,000 PER SHARE DATA Basic earnings per share $0.06
$0.10 $0.14 $0.21 Diluted earnings per share $0.06 $0.10 $0.14
$0.21 Dividends paid on common shares $0.03 $0.03 $0.06 $0.06
Average shares outstanding - Basic 4,770,817 4,050,732 4,768,394
3,614,147 Average shares outstanding - Diluted 4,867,148 4,102,768
4,867,587 3,665,881 BALANCE SHEET Assets Cash & due from banks
$18,176,000 $16,384,000 Federal funds sold 7,037,000 6,508,000
Total investment securities 58,545,000 60,367,000 Restricted stock
1,654,000 1,513,000 Total loans 245,762,000 242,938,000 Allowance
for loan losses (1,244,000) (1,023,000) Other assets 12,128,000
9,047,000 Total assets $342,058,000 $335,734,000 Liabilities Total
deposits $296,021,000 $282,552,000 Total borrowings 10,735,000
18,376,000 Other liabilities 946,000 695,000 Total liabilities
307,702,000 301,623,000 Shareholders' equity Common stock 9,552,000
9,067,000 Additional paid-in capital 22,892,000 23,239,000 Retained
earnings 3,149,000 2,141,000 Accumulated other comprehensive losses
(1,237,000) (336,000) Total shareholders' equity 34,356,000
34,111,000 Total liabilities and shareholders' equity $342,058,000
$335,734,000 PERFORMANCE RATIOS Book value per share $7.19 $7.17
Return on average assets 0.34% 0.51% 0.38% 0.46% Return on average
equity 3.44% 5.96% 3.99% 5.20% Net interest margin 3.76% 3.88%
3.79% 3.87% Sterling Bank is a community bank headquartered in
Burlington County, New Jersey, with assets of $342 million as of
June 30, 2006. Sterling Bank's main office is located in Mount
Laurel, New Jersey, and its six other Community Banking Centers are
located in Burlington and Camden counties in New Jersey. Sterling
Bank began operations in December 1990 with the purpose of serving
consumers and small to medium-sized businesses in its market area.
The Bank's deposits are insured to the applicable regulatory limits
per depositor by the Federal Deposit Insurance Corporation.
Sterling Bank is a member of the Federal Reserve System. The common
stock of Sterling Bank is traded on the NASDAQ Capital Market under
the symbol "STNJ". For additional information about Sterling Bank
visit our website at http://www.sterlingnj.com/. This news release
may contain certain forward-looking statements, such as statements
of the Bank's plans, objectives, expectations, estimates and
intentions. Forward-looking statements may be identified by the use
of words such as "expects," "subject," "believe," "will,"
"intends," "will be" or "would." These statements are subject to
change based on various important factors (some of which are beyond
the Bank's control). Readers should not place undue reliance on any
forward-looking statements (which reflect management's analysis
only as of the date of which they are given). Sterling Bank
cautions that the foregoing list of important factors is not
exclusive. Sterling Bank, and its directors and executive officers,
may be deemed to be "participants" in Sterling Bank's solicitation
of proxies in connection with the proposed holding company
reorganization and merger. Information regarding the names of
directors and executive officers and their respective interests in
the Bank by security holdings or otherwise is set forth in the
Bank's proxy statement relating to the 2006 annual meeting of
shareholders, which may be obtained free of charge at the Bank' s
website at http://www.sterlingnj.com/ or by calling R. Scott
Horner, Secretary, at 865-273-5900. Sterling Banks, Inc. will amend
its Registration Statement on Form S-4, originally filed with the
Securities and Exchange Commission (SEC), on April 28, 2006 (File
No. 333-133649) which will contain the proxy materials of
Farnsworth Bancorp, Inc. and Sterling Bank and certain other
information regarding the Bank. The Bank will also file its proxy
materials with the Federal Reserve Board. These proxy materials
will set forth complete details of the holding company
reorganization and merger. Investors will be able to obtain a copy
of the Bank's proxy materials free of charge at the SEC's Web site
at http://www.sec.gov/. The materials may also be available free of
charge at the Bank's website address listed above or by calling Mr.
Horner at the number listed above. Investors are urged to carefully
read the proxy materials when filed with the SEC because they will
contain important information. Investors should read the proxy
materials before making a decision regarding the merger. The
foregoing communication does not constitute an offer to sell any
securities and is not a solicitation of an offer to buy any
securities. Such an offer will only be made by means of a
prospectus. DATASOURCE: Sterling Bank CONTACT: Robert H. King,
President, +1-856-273-5900, , or R. Scott Horner, Executive Vice
President, +1-856-273-5900, , both of Sterling Bank Web site:
http://www.sterlingnj.com/
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