STNJ Sterling Bank (MM)

MOUNT LAUREL, N.J., Nov. 1 /PRNewswire-FirstCall/ -- Sterling Bank (NASDAQ:STNJ) today reported income before taxes of $1,572,000 for the nine month period ended September 30, 2006. This compared to the nine month period ended September 30, 2005, which totaled $2,036,000, reflects the absorption of the enhanced operating expenses related to the expansion of the Bank's branch system; the effects of the industry wide compression of net interest margins; and a decline in the held for sale loan totals associated with advances in support of the national student loan program. Net income for the nine month period totaled $975,000, compared to net income for the same period of 2005, which totaled $1,286,000. On a basic and diluted per share basis, the net income for the nine month period was $0.20 per share, compared to net income of $0.32 per share (adjusted for stock dividends) for the period ending September 30, 2005. In addition, Sterling Bank today announced that its Board of Directors has authorized a regular quarterly cash dividend payment of $0.03 per common share. This cash dividend will be paid on November 22, 2006, to shareholders of record as of November 8, 2006. This represents the twelfth consecutive quarterly cash dividend authorized and paid by Sterling Bank. Robert H. King, President and Chief Executive Officer noted, "The current operating environment continues to provide challenges, with industry-wide net interest margin pressures and heightened pricing competition in both the lending and deposit gathering arenas. However, our progress in expanding Sterling Bank's retail network and the quarter to quarter growth of core commercial loans, coupled with the pending combination with Peoples Savings Bank, which is expected to be finalized during the fourth quarter of 2006, or the first quarter of 2007, represents meaningful progress and important opportunities for the enhancement of our local market share and operating performance." For the quarter ended September 30, 2006, income before taxes totaled $482,000, compared to net income of $858,000 for the third quarter of 2005. Net income amounted to $299,000 for the third quarter of 2006, compared to net income of $532,000 for the third quarter of 2005. On a basic and diluted per share basis, net income for the third quarter of 2006 amounted to $0.06 per share, compared to net income of $0.11 per share (adjusted for stock dividends) for the third quarter of 2005. Sterling Bank's change in earnings is attributable primarily to an increase of $1,033,000, or 15%, in noninterest expenses, from $7.1 million during the first nine months of 2005, to $8.1 million during the first nine months of 2006. An increase in compensation expense of $590,000, 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 expense increases of $369,000, or 21%, primarily as a result of the opening of our new Voorhees branch in November 2005. As of September 30, 2006, Sterling Bank's assets totaled $335 million, compared to assets of $343 million on September 30, 2005, representing a 2% decrease. Total loans amounted to $248 million on September 30, 2006, reflecting a decrease of 6% over total loans as of September 30, 2005 of $265 million. Total deposits expanded to $288 million on September 30, 2006, an increase of 3% from $279 million on September 30, 2005. The decrease in total loans is primarily attributable to the decline in initial advances for student loans originated through SLM, Inc. the national student loan marketing association. These loans are classified as held for sale, and have declined from $43.0 million as of September 30, 2005, to $4.2 million as of September 30, 2006. This decrease of $38.8 million results from SLM's decision to self fund these specific student loans. Core loan outstanding balances expanded to $243.6 million on September 30, 2006, from $221.9 million on September 30, 2005, a 10% increase. Sterling Bank Financial Highlights (unaudited) As of, and for the nine months ended, September 30, 2006 and September 30, 2005 Three Months Ended Nine Months Ended 09/30/2006 09/30/2005 09/30/2006 09/30/2005 INCOME STATEMENT Interest income $5,606,000 5,024,000 $16,905,000 13,830,000 Interest expense 2,635,000 1,898,000 7,617,000 4,978,000 Net interest income 2,971,000 3,126,000 9,288,000 8,852,000 Provision for loan losses 45,000 102,000 135,000 252,000 Net interest income after provision for loan losses 2,926,000 3,024,000 9,153,000 8,600,000 Noninterest income 175,000 165,000 518,000 502,000 Noninterest expenses 2,619,000 2,331,000 8,099,000 7,066,000 Income before taxes 482,000 858,000 1,572,000 2,036,000 Income tax expense 183,000 326,000 597,000 750,000 Net income $299,000 532,000 $975,000 1,286,000 PER SHARE DATA Basic and Diluted earnings per share $0.06 $0.11 $0.20 $0.32 Dividends paid on common shares $0.03 $0.03 $0.09 $0.09 Average shares outstanding - Basic 4,775,810 4,760,171 4,770,885 4,000,335 Average shares outstanding - Diluted 4,857,477 4,842,114 4,863,913 4,062,408 BALANCE SHEET Assets Cash & due from banks $12,161,000 $9,127,000 Federal funds sold 2,017,000 260,000 Total investment securities 59,895,000 57,454,000 Restricted stock 1,655,000 2,394,000 Total loans 247,831,000 264,919,000 Allowance for loan losses (1,290,000) (1,121,000) Other assets 12,393,000 9,658,000 Total assets $334,662,000 $342,691,000 Liabilities Total deposits $287,703,000 $279,479,000 Total borrowings 10,735,000 28,291,000 Other liabilities 1,209,000 740,000 Total liabilities 299,647,000 308,510,000 Shareholders' equity Common stock 9,552,000 9,067,000 Additional paid-in capital 22,892,000 23,233,000 Retained earnings 3,311,000 2,538,000 Accumulated other comprehensive losses (740,000) (657,000) Total shareholders' equity 35,015,000 34,181,000 Total liabilities and shareholders' equity $334,662,000 $342,691,000 PERFORMANCE RATIOS Book value per share $7.33 $7.18 Return on average assets 0.35% 0.63% 0.37% 0.53% Return on average equity 3.43% 6.20% 3.80% 6.23% Net interest margin 3.67% 3.89% 3.75% 3.88% Sterling Bank is a community bank headquartered in Burlington County, New Jersey, with assets of $335 million as of September 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. amended 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 now contains 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/

Copyright