HOUSTON (AP) — Sterling Bancshares Inc. swung to a net loss in the second quarter as the company sold a division, offered fewer loans and prepared to be acquired this month by Comerica Inc.
Without the costly spinoff, Sterling still posted a net loss in the quarter ended June 30, dashing the expectations of Wall Street analysts.
Sterling, based in Houston, lost $11.8 million, or 12 cents per share, in the second quarter, after earning net income of $596,000, or a penny per share, in the same period a year earlier.
The biggest contributor to Sterling's loss was a $9.0 million charge for the sale of MBM Advisors Inc., a subsidiary that offered investment advice, pension administration and consulting services. That sale is expected to close in the third quarter.
Sterling shrank its portfolio of loans for commercial real estate, land development and industrial borrowers in the past year, reducing its income from borrowers' interest payments. The bank's net interest income fell 10 percent, to $38.4 million from $42.8 million in the year-ago quarter.
Investments owned by the bank lost about $1.2 million in value, pushing Sterling's noninterest income to $5.8 million from $7 million a year earlier.
Excluding one-time items such as the charge for MBM Advisors, Sterling lost $2.9 million, or 3 cents per share, compared to net income of $545,000, or a penny per share, in the second quarter of 2010.
Wall Street analysts expected stronger results. They projected net income of 2 cents per share, according to a survey by FactSet. Analysts' estimates typically exclude one-time items.
Sterling owns Sterling Bank, which serves consumers and small businesses in Texas. Comerica Inc., based in Dallas, said in January that it will acquire Sterling for $1.03 billion in stock, to expand its presence in the Houston and San Antonio markets.
The deal, set to close this month, expands Comerica's footprint in Texas to 152 banking locations from 95. It values Sterling's shares at about $7.68, based on Comerica's share price Tuesday morning.
Sterling shares edged down 5 cents to $7.58 in Tuesday afternoon trading.
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