Park Sterling Corporation Announces Results for Fourth Quarter 2013; Matches Prior Quarter Record Operating Results

Park Sterling Corporation Announces Results for Fourth Quarter 2013; Matches
Prior Quarter Record Operating Results

CHARLOTTE, N.C., Jan. 30, 2014 (GLOBE NEWSWIRE) -- Park Sterling Corporation
(Nasdaq:PSTB), the holding company for Park Sterling Bank, today released
unaudited results of operations and other financial information for the fourth
quarter of 2013. Highlights at and for the three months ended December 31,
2013 include:

Highlights

  *Net income available to common shareholders of $4.0 million, or $0.09 per
    share, compared to $4.2 million, or $0.10 per share, in the prior quarter
  *Adjusted net income available to common shareholders, which excludes
    merger-related expenses and gain or loss on sale of securities, of $4.3
    million, or $0.10 per share, matching record results of $4.3 million, or
    $0.10 per share, in the prior quarter
  *Annualized return on average assets of 0.83% compared to 0.85% in the
    prior quarter
  *Adjusted annualized return on average assets, which excludes
    merger-related expenses and gain or loss on sale of securities, of 0.88%
    compared to 0.87% in the prior quarter
  *Nonperforming loans decreased to 0.95% of total loans from 1.11% at
    September 30, 2013
  *Nonperforming assets decreased to 1.37% of total assets from 1.52% at
    September 30, 2013
  *Tangible common equity increased to 11.79% of tangible assets from 11.78%
    at September 30, 2013
  *Declared quarterly cash dividend on common shares of $0.02 per share
    (January 2014)
  *Announced de novo entry into Virginia with opening of Richmond loan
    production office (January 2014)
  *Announced new leadership for operations and information technology, wealth
    management and mortgage banking (January 2014)

"Park Sterling's fourth quarter capped an exceptional year for the company,"
said James C. Cherry, Chief Executive Officer. "For the three months ended
December 31, 2013, we reported strong operating results with adjusted net
income available to common shareholders, which excludes merger-related
expenses and gain or loss on sale of securities, of $4.3 million, or $0.10 per
share, which matched our record results from the prior quarter. For the twelve
months ended December 31, 2013, we reported record operating results with
adjusted net income available to common shareholders of $16.3 million, or
$0.37 per share, compared to $7.5 million, or $0.21 per share, for the twelve
months ended December 31, 2012.

Since our last earnings announcement, we finalized our long-awaited entry into
Virginia by hiring three experienced bankers – Rob Leitch, Tom Zachry and
Bobby Cowgill – to open a loan production office in Richmond. We also
strengthened our management team by recruiting Mark Ladnier to lead operations
and information technology, Michael Williams to lead wealth management, and
Steve Farbstein to lead mortgage banking. In addition, we completed our
initial sales and credit training initiatives in the retail bank, rolled-out
the second phase of our new mobile banking platform, and introduced our new
workplace banking retail product package. Finally, we completed implementation
of a new human resources information system as part of our continuing
commitment to improve both operating efficiency and our employee experience.

Fourth quarter earnings benefited from continued strength in our metro markets
of Charlotte, Raleigh and Wilmington, North Carolina and Greenville and
Charleston, South Carolina, which together posted loan growth of $8.0 million,
or 6% annualized. The quarter also continued to benefit from good cost
controls resulting from process improvements following the integration of
Citizens South Banking Corporation ("Citizens South"). We are very pleased
with our consistent performance throughout the year on both of these fronts.
Asset quality improved from already sound levels, as nonperforming loans
decreased to 0.95% of total loans from 1.11% in the prior quarter, and
nonperforming assets decreased to 1.37% of total assets from 1.52%. The
company remains proactive in addressing potential problem assets. During the
quarter, we recorded $982,000 in aggregate reserves and charge-offs related to
a deteriorating loan from the legacy Park Sterling portfolio. We also expensed
approximately $430,000 from the write-down of certain obsolete acquired fixed
assets, including one shuttered facility that was moved into other real estate
owned. The cost of these actions was offset by a $1.1 million gain generated
from settling, at a discount, the contingent underwriting fee liability
remaining from Park Sterling Bank's public offering in 2010.

On the capital management front, the company repurchased approximately 56,000
shares at an average cost of $6.49 per share during the fourth quarter under
our previously announced 2.2 million share authorization. In addition,
yesterday the board declared a quarterly dividend of $0.02 per common share,
payable on February 10, 2014 to all shareholders of record as of the close of
business on February 24, 2014. Future dividends will be subject to board
approval. We remain very well capitalized with tangible common equity to
tangible assets of 11.79% and a Tier 1 leverage ratio of 11.63% at December
31, 2013.

Overall, we are pleased to report these strong financial results and believe
that Park Sterling is well positioned to continue pursuing our growth
strategies. We remain confident in our ability to both grow our existing
franchise and to unite with attractive, like-minded partners that share Park
Sterling's vision of building a full-service regional community bank."

Financial Results

Income Statement – Three Months Ended December 31, 2013

Park Sterling reported net income available to common shareholders of $4.0
million, or $0.09 per share, for the three months ended December 31, 2013
("2013Q4"). This compares to net income available to common shareholders of
$4.2 million, or $0.10 per share, for the three months ended September 30,
2013 ("2013Q3") and net income available to common shareholders of $1.3
million, or $0.03 per share, for the three months ended December 31, 2012
("2012Q4"). The decrease in net income available to common shareholders from
2013Q3 resulted from lower net interest income and higher provision expense,
which were partially offset by higher noninterest income, including a
nontaxable $1.1 million gain generated from settling, at a discount, the
contingent underwriting fee liability remaining from Park Sterling Bank's
public offering in 2010.

Park Sterling reported adjusted net income available to common shareholders,
which excludes merger-related expenses and gain or loss on sale of securities,
of $4.3 million, or $0.10 per share, in 2013Q4. This compares to adjusted net
income available to common shareholders of $4.3 million, or $0.10 per share,
in 2013Q3 and adjusted net income available to common shareholders of $3.6
million, or $0.08 per share, in 2012Q4. Compared to 2013Q3, adjusted net
income available to common shareholders reflects higher noninterest income and
sound expense controls, which were partially offset by lower net interest
income and higher provision expense.

Net interest income totaled $17.7 million in 2013Q4, which represented a 3%
decrease from $18.3 million in 2013Q3 and a 9% decrease from $19.5 million in
2012Q4, due both to lower average earning asset levels and to reduced net
interest margin. Average total earning assets decreased $25.2 million, or 1%,
in 2013Q4 to $1.72 billion, compared to $1.75 billion in 2013Q3 and decreased
$60.6 million, or 3%, compared to $1.78 billion in 2012Q4. The reduction in
2013Q4 from 2013Q3 resulted from an $8.6 million, or 1%, decrease in average
loans (excluding loans held for sale) to $1.31 billion and a $29.9 million, or
38%, decrease in average other earning assets, driven by reduced
interest-earning balances at banks, which together more than offset a $13.4
million, or 4%, increase in average securities to $363.1 million. The
reduction in 2013Q4 from 2012Q4 resulted from a $78.2 million, or 6%, decrease
in average loans (excluding loans held for sale) and a $76.0 million, or 61%,
decrease in average other earning assets, which together more than offset a
$94.0 million, or 35%, increase in average securities.

Net interest margin was 4.08% in 2013Q4, representing an 8 basis point
decrease from 4.16% in 2013Q3 and a 28 basis point decrease from 4.36% in
2012Q4. The reduction in net interest margin in 2013Q4 from 2013Q3 resulted
primarily from a 14 basis point increase in the cost of interest-bearing
liabilities, due to the expiration of accounting related fair market value
adjustments on acquired deposits, which more than offset a 3 basis point
increase in the yield on interest-earning assets. The reduction in net
interest margin in 2013Q4 from 2012Q4 resulted primarily from a 27 basis point
decrease in the yield on interest-earning assets, due to a decrease in
accelerated accretion from net acquisition accounting fair market value
adjustments on performing acquired loans and the aforementioned increase in
the cost of interest-bearing liabilities. Accelerated accretion of net
acquisition accounting fair market value adjustments, which totaled $365,000
in 2013Q4, $529,000 in 2013Q3 and $1.0 million in 2012Q4, reflects accelerated
accretion of credit and interest rate marks resulting from borrowers repaying
performing acquired loans faster than required by their contractual terms
and/or restructuring loans in such a way as to effectively result in a new
loan under the contractual cash flow method of accounting, both of which
result in the associated remaining credit and interest rate marks being fully
accreted into interest income.

Adjusted net interest margin, which excludes accelerated accretion from net
acquisition accounting fair market value adjustments, was 3.99% in 2013Q4,
representing a 5 basis point decrease from 4.04% in 2013Q3 and a 14 basis
point decrease from 4.13% in 2012Q4. The reduction in adjusted net interest
margin in 2013Q4 from 2013Q3 resulted primarily from the increased cost of
interest-bearing liabilities discussed above. The reduction in adjusted net
interest margin in 2013Q4 from 2012Q4 resulted primarily from the decreased
yield on interest-earning assets discussed above together with the increased
cost of interest-bearing liabilities.

Provision expense increased $1.2 million, or 286%, to $780,000 in 2013Q4,
compared to a $419,000 net release in 2013Q3 and decreased $214,000, or 22%,
compared to $994,000 in 2012Q4. Provision expense in 2013Q4 was driven, in
part, by $982,000 in combined reserves and charge-offs related to a single
troubled debt restructuring that is now designated a nonaccrual loan. The net
recovery in 2013Q3 reflected the reversal of previous impairments in the
company's purchase credit impaired (PCI) loan pools, as accounted for under
ASC 310-30. Provision expense in 2012Q4 included a $676,000 impairment in two
of the company's PCI loan pools and a $230,000 qualitative allowance
associated with performing loans acquired in the merger with Citizens South.

Noninterest income increased $1.2 million, or 35%, to $4.4 million in 2013Q4,
compared to $3.3 million in 2013Q3 and increased $812,000, or 23%, compared to
$3.6 million in 2012Q4. Adjusted noninterest income, which excludes gain or
loss on sale of securities (loss of $6,000 in 2013Q4, $0 in 2013Q3 and $0 in
2012Q4), increased $1.2 million, or 35%, to $4.4 million in 2013Q4, compared
to $3.3 million in 2013Q3 and increased $818,000, or 23%, compared to $3.6
million in 2012Q4. Results for 2013Q4 included a $1.1 million gain generated
from settling, at a discount, the contingent underwriting fee liability
remaining from Park Sterling Bank's public offering in August 2010. The
company recorded the full $3.0 million amount of this fee as a liability on
its balance sheet at the time of the offering. Payment to the underwriters was
contingent upon the company's stock trading at a market price of $8.125 per
share for thirty consecutive days. The company pursued this negotiated
settlement in order to remove the liability from its balance sheet. 

The increase in noninterest income in 2013Q4 from 2013Q3 also included a
$376,000, or 94%, increase in mortgage banking income due, in part, to a
$291,000 benefit from ASC 815-10-S99-1 (formerly SAB 109). This increase in
mortgage banking income was partially offset by an $8,000, or 1%, decrease in
service charges on deposit accounts, a $62,000, or 7%, decrease in income from
wealth management activities, and an $84,000, or 13%, decrease in net ATM and
card income.

Noninterest expenses were flat in 2013Q4 at $15.7 million, compared to 2013Q3
and decreased $4.3 million, or 22%, compared to $20.0 million in 2012Q4.
Adjusted noninterest expenses, which exclude merger-related expenses ($386,000
in 2013Q4, $167,000 in 2013Q3 and $3.2 million in 2012Q4), decreased $163,000,
or 1%, in 2013Q4 to $15.3 million, compared to $15.5 million in 2013Q3 and
decreased $1.5 million, or 9%, compared to $16.9 million in 2012Q4. The
decrease in adjusted noninterest expenses in 2013Q4 from 2013Q3 included
reductions in several expense categories, such as salaries and employee
benefits, legal and professional fees, and loan and collection expenses. Data
processing and service fees increased $121,000, or 9%, due in part to $75,000
in one-time processing fees related both to exiting the custody business and
to installation of a new data management system for allowance calculations.
Loss on disposal of fixed assets increased $432,000, due primarily to the
write-off of a former branch which had contained a now relocated ATM, that has
been shuttered and moved into other real estate owned following the 2014
business planning process. The company reported a net recovery of $48,000 in
the cost of operation of OREO in 2013Q4, compared to a net cost of $142,000 in
2013Q3 and a net cost of $1.2 million in 2012Q4. The reduction in adjusted
noninterest expense in 2013Q4 from 2012Q4 resulted primarily from cost savings
associated with the merger with Citizens South.

The company's effective tax rate decreased to 27.9% in 2013Q4, compared to
33.3% in 2013Q3, due primarily to the nontaxable $1.1 million gain on settling
the contingent underwriting fee liability.The company's effective tax rate
decreased to 27.9% in 2013Q4, compared to 36.9% in 2012Q4, due both to the
nontaxable gain and to lower nondeductible merger-related expenses.

Income Statement – Twelve Months Ended December 31, 2013

Park Sterling reported a $10.7 million, or 248%, increase in net income
available to common shareholders to $15.0 million, or $0.34 per share, for the
twelve months ended December 31, 2013 ("FY2013"), compared to net income
available to common shareholders of $4.3 million, or $0.12 per share, for the
twelve months ended December 31, 2012 ("FY2012").

Park Sterling reported an $8.9 million, or 119%, increase in adjusted net
income available to common shareholders, which excludes merger-related
expenses and gain or loss on sale of securities, to $16.3 million, or $0.37
per share, in FY2013, compared to adjusted net income available to common
shareholders of $7.5 million, or $0.20 per share, in FY2012.

The increase in net income available to common shareholders in FY2013 from
FY2012 stemmed primarily from the inclusion of a full year of operating
results from Citizens South, which merged with the company in 2012Q4. Net
interest income increased $20.9 million, or 36%, in FY2013 to $72.4 million,
compared to $51.3 million in FY2012. Noninterest income increased $3.5
million, or 30.0%, in FY2013 to $15.2 million, compared to $11.6 million in
FY2012. Provision expense decreased $1.3 million, or 63%, in FY2013 to
$746,000, compared to $2.0 million in FY2012, reflecting improved asset
quality. Noninterest expenses increased $9.8 million, or 18.1%, in FY2013 to
$64.1 million, compared to $54.3 million in FY2012.

Balance Sheet

Total assets increased $20.9 million, or 1%, at 2013Q4 to $1.96 billion,
compared to total assets at 2013Q3 of $1.94 billion. Securities increased
$45.5 million, or 13%, to $407.4 million at 2013Q4, compared to $361.8 million
at 2013Q3. The increase in securities resulted from the company initiating a
$50 million investment strategy in December 2013. Interest income from the
strategy is intended to partially offset expenses associated with the new
Richmond loan production office and other hiring initiatives. The strategy
includes $25 million of agency collateralized mortgage obligations and $25
million of agency pass-through mortgage-backed securities, which were funded
by a seven-year commitment of floating rate broker-dealer sweep accounts
through a brokered money market deposit program. The future interest rate risk
on these floating rate deposits is hedged through the combination of a $12.5
million five-year interest rate swap, a $12.5 million seven-year interest rate
swap and a $25 million two-year forward starting five-year interest rate swap.

The company held four investments in senior tranches of collateralized loan
obligations (CLOs) totaling $23.6 million at 2013Q4. The collateral
eligibility language in one of the securities, totaling $5.0 million, was
amended during the fourth quarter to comply with the new bank investment
criteria under the Volcker Rule. The company is awaiting final regulatory
clarification on bank investment criteria, if any, and intended document
amendment strategies, if any, from the CLO managers on the three other
securities before determining any disposition plans for those investments. The
three other securities had a net unrealized loss of $274,000 at 2013Q4 that
may result in the company recognizing other than temporary impairment should
they be determined not to comply with the Volcker Rule. The company held no
other securities potentially affected by the Volcker Rule at 2013Q4.

Total loans, excluding loans held for sale, decreased $20.5 million, or 2%, to
$1.30 billion in 2013Q4, compared to $1.32 billion in 2013Q3. In terms of
geographic mix, the company's metropolitan markets, which include Charlotte,
Raleigh and Wilmington, North Carolina and Greenville and Charleston, South
Carolina, reported an $8.0 million, or 6% annualized, increase in total loans
to $579.5 million, due to successful origination efforts. The community
markets reported a $12.1 million, or 11% annualized, decrease in total loans
to $414.2 million, primarily due to expected runoff in acquired loans. The
company's central business units, which include mortgage, builder finance,
asset-based lending, special assets and net acquisition accounting fair market
value adjustments, reported a $16.4 million, or 20% annualized, decrease in
total loans to $302.0 million, as a reduction in special asset loans,
including covered loans, more than offset growth in builder finance.

The company's loan mix shifted slightly at 2013Q4 compared to 2013Q3. Total
consumer loans decreased to 29% from 30% of total loans, with residential
mortgages and home equity lines of credit at 13% and 11% of total,
respectively. The combination of commercial and industrial and owner-occupied
real estate loans decreased to 30% from 31% of total loans. Investor owned
commercial real estate increased to 30% from 28% of total loans. Acquisition,
construction and development (AC&D) remained at 11% of total loans.
Residential development lending (lots and land), which are included in AC&D,
decreased to 4% from 5% of total loans.Residential development lending, which
led to material charge-offs in 2010 and 2011, is no longer a focus area for
the company.

In terms of accounting designations, compared to 2013Q3, (i) noncovered PCI
loans decreased $16.2 million, or 14%, net of fair market value acquisition
related adjustments, to $95.8 million in 2013Q4; (ii) noncovered acquired
performing loans decreased $29.1 million, or 7%, net of fair market value
acquisition related adjustments, to $402.0 million; (iii) covered PCI and
acquired performing loans decreased $4.9 million, or 7%, net of fair market
value acquisition adjustments, to $70.4 million; and (iv) non-acquired loans
increased $29.7 million, or 4%, to $727.6 million. Non-acquired loans include
certain renewed and/or restructured acquired performing loans that are
redesignated as non-acquired. Noncovered acquired performing loans include a
remaining $4.4 million net acquisition accounting fair market value
adjustment, representing a 1.08% "mark," noncovered PCI loans include a
remaining $20.5 million net acquisition accounting fair market value
adjustment, representing a 17.63% "mark," and covered PCI and acquired
performing loans include a remaining $12.9 million net acquisition accounting
fair market value adjustment, representing a 15.44% "mark."

Total deposits increased $43.9 million, or 3%, to $1.60 billion at 2013Q4,
compared to $1.56 billion at 2013Q3. Noninterest bearing demand deposits
decreased $6.3 million, or 2%, to $255.9 million (16% of total deposits).
Non-brokered money market, NOW and savings deposits increased $6.8 million, or
1%, to $736.0 million (46% of total deposits). Local time deposits decreased
$26.2 million, or 6%, to $442.0 million (28% of total deposits). Finally,
brokered deposits increased $69.4 million, or 72%, to $166.0 million (10% of
total deposits). The increase in brokered deposits was driven by the
previously discussed broker-dealer sweep accounts used to fund the investment
strategy. Core deposits, which exclude time deposits greater than $250,000 and
brokered deposits, represented 87% of total deposits at 2013Q4 compared to 91%
at 2013Q3.

Total borrowings decreased $21.6 million, or 22%, to $78.0 million at 2013Q4
compared to $99.6 million at 2013Q3, as the company replaced short-term
borrowings with brokered deposits. Borrowings at 2013Q4 included $55.0 million
in FHLB borrowings, $15.2 million of acquired trust preferred securities, net
of acquisition accounting fair market value adjustments, and $6.9 million of
Tier 2-eligible subordinated debt. The company entered into a $20 million
three-year forward starting, five-year interest rate swap in October 2013 as a
cash flow hedge against future interest rate risk in a portion of its floating
rate FHLB borrowings. 

Total shareholders' equity increased $2.3 million, or 1%, to $262.1 million at
2013Q4 compared to $259.8 million at 2013Q3, driven by retained earnings. In
2013Q4, the company repurchased approximately 56,000 shares of common stock at
an average cost of $6.49 per share, for a total of approximately $365,000. The
repurchases were conducted in the open market under the previously announced
2.2 million share repurchase authorization. The company's ratio of tangible
common equity to tangible assets increased to 11.79% at 2013Q4 from 11.78% at
2013Q3. The company's Tier 1 leverage ratio increased to 11.63% at 2013Q4 from
11.11% at 2013Q3. 

Asset Quality

Asset quality continued to improve in the fourth quarter and remains a point
of strength for the company. Nonperforming loans decreased $2.4 million, or
16%, to $12.3 million at 2013Q4, or 0.95% of total loans, compared to $14.7
million at 2013Q3, or 1.11% of total loans. Nonperforming assets decreased
$2.8 million, or 9%, to $26.8 million at 2013Q4, or 1.37% of total assets,
compared to $29.5 million at 2013Q3, or 1.52% of total assets. Nonperforming
assets include $5.1 million of covered OREO for which the company expects 80%
of losses and associated expenses to be reimbursed under its FDIC loss share
agreements.

The company reported net charge-offs of $805,000, or 0.24% of average loans
(annualized), in 2013Q4, compared to net charge-offs of $1.8 million, or 0.53%
of average loans (annualized), in 2013Q3 and a net recovery of $390,000, or
0.11% of average loans (annualized), in 2012Q4. The company reported adjusted
net charge-offs, which exclude net charge-offs related to PCI loans, of
$805,000, or 0.24% of average loans (annualized) in 2013Q4, compared to
adjusted net charge-offs of $816,000, or 0.25% of average loans (annualized),
in 2013Q3 and an adjusted net recovery of $390,000, or 0.11% of average loans
(annualized), in 2013Q4.

The allowance for loan losses was $8.8 million, or 0.68% of total loans, at
2013Q4, compared to $8.7 million, or 0.66% of total loans, at 2013Q3. The
increase in allowance included (i) a $232,000, or 4%, increase in the
quantitative component, resulting from higher charge-offs in 2013Q4 that
increased the historical lookback rates for certain loan categories, including
commercial real estate; (ii) a $345,000, or 24%, reduction in the qualitative
component, resulting from an adjustment relating to commercial real estate to
account for the capture of higher charge-offs in the historical lookback rate;
(iii) a $62,000, or 7%, decrease in the specific component; and (iv) a
$354,000, or 5900%, increase in the PCI component resulting from impairment on
a single covered loan pool due to a decline in estimated cash flows.

During the first quarter of 2011, and as contemplated in Park Sterling Bank's
2010 public offering, 568,260 shares of restricted stock were issued but will
not vest until the company's share price achieves certain performance
thresholds above the equity offering price (these restricted stock awards, of
which 554,400 remained outstanding at 2013Q4, vest one-third each when the
share price reaches, for 30 consecutive days, $8.125, $9.10 and $10.40 per
share, respectively). These performance thresholds have not yet been achieved.
Accordingly, these additional shares have been excluded from earnings and
tangible book value per share calculations.As of December 31, 2013, 13,860 of
these restricted shares had been forfeited.

Conference Call

A conference call will be held at 8:30 a.m., Eastern Time this morning
(January 30, 2014).The conference call can be accessed by dialing (888)
317-6016 and requesting the Park Sterling Corporation earnings call.Listeners
should dial in 10 minutes prior to the start of the call. The live webcast and
presentation slides will be available on www.parksterlingbank.com under
Investor Relations, "Investor Presentations."

A replay of the webcast will be available on www.parksterlingbank.com under
Investor Relations, "Investor Presentations" shortly following the call.A
replay of the conference call can be accessed approximately one hour after the
call by dialing (877) 344-7529 and requesting conference number 10039428.

About Park Sterling Corporation

Park Sterling Corporation, the holding company for Park Sterling Bank, is
headquartered in Charlotte, North Carolina.Park Sterling, a regional
community-focused financial services company with approximately $2 billion in
assets, is the largest community bank headquartered in the Charlotte area and
has 43 banking offices stretching across the Carolinas and into North Georgia,
as well as a loan production office in the Greater Richmond region. The bank
serves professionals, individuals, and small and mid-sized businesses by
offering a full array of financial services, including deposit, mortgage
brokerage, cash management, consumer and business finance, and wealth
management services. Park Sterling prides itself on being large enough to help
customers achieve their financial aspirations, yet small enough to care that
they do. Park Sterling is focused on building a banking franchise that is
noted for sound risk management, strong community focus and exceptional
customer service. For more information, visit www.parksterlingbank.com. Park
Sterling Corporation shares are traded on NASDAQ under the symbol PSTB.

Non-GAAP Financial Measures

Tangible assets, tangible common equity, tangible book value, adjusted net
income available to common shareholders, adjusted net interest margin,
adjusted noninterest income, adjusted noninterest expenses, adjusted allowance
for loan losses, adjusted net charge-offs/ recoveries, and related ratios and
per share measures, including adjusted return on average assets, as used
throughout this release, are non-GAAP financial measures. For additional
information, see "Reconciliation of Non-GAAP Financial Measures" in the
accompanying tables.

Cautionary Statement Regarding Forward Looking Statements

This news release contains, and Park Sterling and its management may make,
certain statements that constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements can be identified by the fact that they do not relate strictly to
historical or current facts and often use words such as "may," "plan,"
"contemplate," "anticipate," "believe," "intend," "continue," "expect,"
"project," "predict," "estimate," "could," "should," "would," "will," "goal,"
"target" and similar expressions. Park Sterling cautions you that a number of
important factors could cause actual results to differ materially from those
currently anticipated in any forward-looking statement. Such factors include,
but are not limited to: inability to identify and successfully negotiate and
complete additional combinations with potential merger partners or to
successfully integrate such businesses into Park Sterling, including the
company's ability to adequately estimate or to realize the benefits and cost
savings from and limit any unexpected liabilities acquired as a result of any
such business combination; failure to effectively redeploy resources from
custody business to the core asset management business; failure to generate an
adequate return on investment related to the Richmond loan production office
or other hiring initiatives; failure to generate future growth in metropolitan
market loan balances; the effects of negative or soft economic conditions or a
"double dip" recession, including stress in the commercial real estate markets
or delay or failure of recovery in the residential real estate markets;
changes in consumer and investor confidence and the related impact on
financial markets and institutions; changes in interest rates; failure of
assumptions underlying the establishment of allowances for loan losses;
deterioration in the credit quality of the loan portfolio or in the value of
the collateral securing those loans; deterioration in the value of securities
held in the investment securities portfolio; the possibility of recognizing
other than temporary impairments on holdings of collateralized loan obligation
securities as a result of the Volcker Rule; the impacts on the company of a
potential increasing rate environment; the potential impacts of any additional
government shutdown and further debt ceiling impasse, including the risk of a
U.S. credit rating downgrade or default, or continued global economic
instability, which could cause disruptions in the financial markets, impact
interest rates, and cause other potential unforeseen consequences;
fluctuations in the market price of the common stock,regulatory, legal and
contractual requirements, other uses of capital, the company's financial
performance, market conditions generally, and future actions by the board of
directors, in each case impacting repurchases of common stock or declaration
of dividends; legal and regulatory developments, including changes in the
federal risk-based capital rules; increased competition from both banks and
nonbanks; changes in accounting standards, rules and interpretations,
inaccurate estimates or assumptions in accounting, including acquisition
accounting fair market value assumptions and accounting for purchased
credit-impaired loans, and the impact on Park Sterling's financial statements;
and management's ability to effectively manage credit risk, market risk,
operational risk, legal risk, and regulatory and compliance risk.

Forward-looking statements speak only as of the date they are made, and Park
Sterling undertakes no obligation to update any forward-looking statement to
reflect the impact of circumstances or events that arise after the date the
forward-looking statement was made.

PARK STERLING CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENT
THREE MONTH RESULTS
($ in thousands,  December   September                          December
except per share   31,        30,        June 30,  March 31, 31,
amounts)
                  2013        2013        2013        2013        2012
                  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest income                                              
Loans, including  $17,753   $17,970   $18,805   $18,140   $20,269
fees
Taxable
investment         1,599      1,494      1,068      866        792
securities
Tax-exempt
investment         185        187        195        190        191
securities
Nonmarketable     41         37         25         48         80
equity securities
Interest on       24         48         44         62         79
deposits at banks
Federal funds     --        --        7          17         11
sold
Total interest    19,602     19,736     20,144     19,323     21,422
income
Interest expense                                             
Money market, NOW
and savings        384        399        379        407        491
deposits
Time deposits    948        455        527        608        777
Short-term        --         --         1          6          7
borrowings
FHLB advances    139        137        137        137        143
Subordinated      429        431        429        429        472
debt
Total interest    1,900      1,422      1,473      1,587      1,890
expense
Net interest      17,702     18,314     18,671     17,736     19,532
income
Provision for     780        (419)      75         309        994
loan losses
Net interest
income after       16,922     18,733     18,596     17,427     18,538
provision
Noninterest                                                   
income
Service charges
on deposit         629        637        616        764        879
accounts
Mortgage banking  777        401        977        968        815
income
Income from
wealth management  848        910        731        708        693
activities
ATM and card      555        639        692        488        448
income
Income from
bank-owned life    417        537        528        381        450
insurance
Gain (loss) on
sale of securities (6)        --         104        --         --
available for
sale
Other noninterest 1,184      133        320        149        307
income
Total noninterest 4,404      3,257      3,968      3,458      3,592
income
Noninterest                                                   
expenses
Salaries and      8,386      8,606      8,800      8,778      11,041
employee benefits
Occupancy and     1,941      1,861      1,980      1,908      1,942
equipment
Data processing
and outside        1,389      1,268      1,640      1,653      1,599
service fees
Legal and         655        732        861        893        1,077
professional fees
Deposit charges
and FDIC           379        372        409        487        473
insurance
(Gain) loss on
disposal of fixed  430        (2)        --         (16)       6
assets
Communication     425        432        448        432        319
fees
Postage and       194        188        298        329        360
supplies
Loan and
collection         411        556        679        326        248
expense
Core deposit
intangible         257        257        257        257        257
amortization
Advertising and   282        186        150        220        367
promotion
Net cost of
operation of other (48)       142        (36)       (428)      1,167
real estate owned
Other noninterest 1,025      1,072      1,298      1,082      1,181
expense
Total noninterest 15,726     15,670     16,784     15,921     20,037
expenses
Income before     5,600      6,320      5,780      4,964      2,093
income taxes
Income tax        1,561      2,106      1,968      1,724      771
expense
Net income       4,039      4,214      3,812      3,240      1,322
Preferred         --         --         302        51         51
dividends
Net income
available to       $4,039    $4,214    $3,510    $3,189    $1,271
common shares
                                                              
Earnings per
common share,      $0.09     $0.10     $0.08     $0.07     $0.03
fully diluted
Weighted average
diluted common     44,288,998 44,273,821 44,204,581 44,069,053 44,025,874
shares
                                                              


PARK STERLING CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENT
TWELVE MONTH RESULTS
($ in thousands, except per share amounts)           December 31, December 31,
                                                    2013         2012
                                                    (Unaudited)  (Unaudited)
Interest income                                                  
Loans, including fees                                $72,669    $53,142
Taxable investment securities                        5,029       3,606
Tax-exempt investment securities                     756         750
Nonmarketable equity securities                      150         194
Interest on deposits at banks                        177         153
Federal funds sold                                   24          49
Total interest income                                78,805      57,894
Interest expense                                                 
Money market, NOW and savings deposits               1,570       1,488
Time deposits                                        2,538       2,951
Short-term borrowings                                7           11
FHLB advances                                        550         600
Subordinated debt                                    1,717       1,520
Total interest expense                               6,382       6,570
Net interest income                                  72,423      51,324
Provision for loan losses                            746         2,023
Net interest income after provision                  71,677      49,301
Noninterest income                                               
Service charges on deposit accounts                  2,646       1,814
Mortgage banking income                              3,123       2,478
Income from wealth management activities             3,198       2,619
ATM and card income                                  2,373       1,322
Income from bank-owned life insurance                1,863       1,264
Gain (loss) on sale of securities available for sale 98          1,478
Other noninterest income                             1,785       634
Total noninterest income                             15,086      11,609
Noninterest expenses                                             
Salaries and employee benefits                       34,570      29,343
Occupancy and equipment                              7,691       4,654
Data processing and outside service fees             5,950       4,371
Legal and professional fees                          3,142       3,190
Deposit charges and FDIC insurance                   1,647       1,250
(Gain) loss on disposal of fixed assets              412         84
Communication fees                                   1,737       945
Postage and supplies                                 1,009       791
Loan and collection expense                          1,972       1,221
Core deposit intangible amortization                 1,029       564
Advertising and promotion                            839         781
Net cost of operation of other real estate owned     (371)       3,462
Other noninterest expense                            4,472       3,605
Total noninterest expenses                           64,099      54,261
Income before income taxes                           22,664      6,649
Income tax expense                                   7,359       2,306
Net income                                           15,305      4,343
Preferred dividends                                  353         51
Net income available to common shares                $14,952    $4,292
                                                                
Earnings per common share, fully diluted             $0.34      $0.12
Weighted average diluted common shares               44,053,253  35,108,229
                                                                


PARK STERLING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)   December     September    June30,    March 31,   December
                     31,          30,                                      31,
                    2013          2013          2013          2013          2012*
                    (Unaudited) (Unaudited) (Unaudited) (Unaudited) 
ASSETS                                                                 
Cash and due from   $13,087     $11,780     $11,746     $19,249     $36,716
banks
Interest-earning    41,680       40,222       100,469      51,861       101,431
balances at banks
Investment
securities available 349,491      328,396      329,720      299,073      245,571
for sale
Investment
securities held to   51,972       26,636       --           --           --
maturity
Nonmarketable       5,905        6,805        5,905        5,913        7,422
equity securities
Federal funds sold 300          695          495          51,155       45,995
Loans held for      2,430        3,070        10,985       11,659       14,147
sale
Loans -             1,224,674    1,240,307    1,219,513    1,237,813    1,255,019
Non-covered
Loans - Covered    71,134       76,035       85,146       91,936       101,688
Allowance for loan  (8,831)      (8,652)      (10,847)     (10,749)     (10,591)
losses
Net loans          1,286,977    1,307,690    1,293,812    1,319,000    1,346,116
                                                                        
Premises and        55,923       56,670       56,929       57,596       57,222
equipment, net
FDIC receivable for
loss share           10,025       13,959       14,848       15,340       18,697
agreements
Other real estate   9,404        8,708        9,741        13,597       18,427
owned - non-covered
Other real estate   5,088        6,173        6,542        7,654        6,646
owned - covered
Bank-owned life     47,832       47,485       47,019       46,546       46,133
insurance
Deferred tax asset 36,318       38,528       40,595       39,140       40,926
Goodwill           26,420       26,420       26,420       26,420       26,420
Core deposit        8,629        8,886        9,143        9,401        9,658
intangible
Other assets       9,309        7,768        8,554        9,967        11,267
                                                                        
Total assets       $1,960,790  $1,939,891  $1,972,923  $1,983,571  $2,032,794
                                                                        
LIABILITIES AND
SHAREHOLDERS'                                                            
EQUITY
                                                                        
Deposits:                                                              
Demand              $255,861    $262,114    $265,246    $256,931    $243,495
noninterest-bearing
Money market, NOW   799,596      729,209      743,791      733,493      758,763
and savings
Time deposits      544,428      564,640      584,068      604,397      629,746
Total deposits     1,599,885    1,555,963    1,593,105    1,594,821    1,632,004
                                                                        
Short-term          996          2,702        2,176        10,368       10,143
borrowings
FHLB advances      55,000       75,000       55,000       55,000       70,000
Subordinated debt  22,052       21,932       21,812       21,692       21,573
Accrued expenses
and other            20,774       24,541       23,773       22,705       23,372
liabilities
Total liabilities  1,698,707    1,680,138    1,695,866    1,704,586    1,757,092
                                                                        
Shareholders'                                                           
equity:
Preferred stock    --           --           20,500       20,500       20,500
Common stock       44,731       44,761       44,701       44,648       44,576
Additional paid-in  222,559      222,559      221,935      221,450      220,996
capital
Accumulated         (405)        (3,549)      (6,869)      (10,379)     (13,568)
deficit
Accumulated other
comprehensive        (4,802)      (4,018)      (3,210)      2,766        3,198
income
Total shareholders' 262,083      259,753      277,057      278,985      275,702
equity
                                                                        
Total liabilities
and shareholders'    $1,960,790  $1,939,891  $1,972,923  $1,983,571  $2,032,794
equity
                                                                        
Common shares
issued and           44,730,669   44,761,384   44,700,805   44,648,165   44,575,853
outstanding

* Derived from audited financial statements. Revised to reflect measurement
period adjustments to goodwill.



PARK STERLING CORPORATION
SUMMARY OF LOAN PORTFOLIO
($ in thousands)
              December 31, September    June 30,     March 31,    December 31,
                            30,
              2013         2013         2013         2013         2012*
BY LOAN TYPE   (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)  
Commercial:                                                    
Commercial    $122,400   $131,523   $124,773   $118,796   $119,132
and industrial
Commercial
real estate    267,581     273,340     274,043     285,353     299,416
(CRE) -
owner-occupied
CRE -
investor       382,187     371,903     368,556     367,434     371,957
income
producing
Acquisition,
construction
and
development    19,959      23,028      16,886      18,207      33,467
(AC&D) --1-4
Family
Construction
AC&D - CRE    65,589      55,812      39,702      45,410      42,555
construction
AC&D - Lots   56,759      63,944      72,566      77,252      64,639
and land
Other         3,849       3,941       3,521       4,894       5,628
commercial
Total
commercial     918,324     923,491     900,047     917,346     936,794
loans
                                                              
Consumer:                                                      
Residential   173,376     174,780     180,195     180,368     188,532
mortgage
Home equity
lines of       143,754     146,484     148,686     156,802     163,625
credit
Residential   40,821      46,499      52,669      55,205      52,812
construction
Other loans   18,795      24,725      22,896      20,237      15,553
to individuals
Total         376,746     392,488     404,446     412,612     420,522
consumer loans
Total loans   1,295,070   1,315,979   1,304,493   1,329,958   1,357,316
Deferred      738         363         166         (209)       (609)
costs (fees)
Total loans,
net of         $1,295,808 $1,316,342 $1,304,659 $1,329,749 $1,356,707
deferred costs
(fees)
                                                              
*Derived from
audited                                                        
financial
statements.
                                                              
              December 31, September    June 30,     March 31,    December 31,
                            30,
              2013         2013         2013         2013         2012
BY ACQUIRED
AND            (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)
NON-ACQUIRED
Acquired loans $404,440   $433,695   $493,660   $556,135   $614,518
- performing
Acquired loans
- purchase     163,787     184,762     201,585     215,968     234,282
credit
impaired
Total acquired 568,227     618,457     695,245     772,103     848,800
loans
Non-acquired
loans, net of  727,581     697,885     609,414     557,646     507,907
deferred costs
(fees)**
Total loans    $1,295,808 $1,316,342 $1,304,659 $1,329,749 $1,356,707
                                                              
** Includes loans transferred from acquired pools following release of
acquisition accounting FMV adjustments.
                                                              


PARK STERLING CORPORATION
ALLOWANCE FOR LOAN LOSSES
THREE MONTH RESULTS
($ in thousands) December 31, September   June 30,    March 31,   December 31,
                              30,
                2013         2013        2013        2013        2012
                (Unaudited)  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Beginning of     $8,652     $10,847   $10,749   $10,591   $9,207
period allowance
Loans            (1,471)     (1,917)    (1,133)    (782)      (330)
charged-off
Recoveries of
loans            666         141        859        631        720
charged-off
Net charge-offs (805)       (1,776)    (274)      (151)      390
                                                             
Provision
expense          984         (419)      372        309        994
(release)
Benefit
attributable to  (204)       --         (297)      --         --
FDIC loss share
agreements
Total provision
expense charged  780         (419)      75         309        994
to operations
Provision
expense recorded
through FDIC     204         --         297        --         --
lossshare
receivable
End of period    $8,831     $8,652    $10,847   $10,749   $10,591
allowance
                                                             
Net charge-offs  $805       $1,776    $274      $151      $(390)
(recoveries)
Net charge-offs
(recoveries) to  0.24%        0.53%       0.08%       0.05%       -0.11%
average loans
(annualized)
                                                             

                                                                   
PARK STERLING CORPORATION
AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS
THREE MONTHS
($ in thousands)    December 31,                December 31,          
                    2013                          2012
                   Average      Income/   Yield/ Average      Income/   Yield/
                   Balance      Expense   Rate   Balance      Expense   Rate
                                           (3)                           (3)
Assets                                                              
Interest-earning                                                    
assets:
Loans and loans
held for sale, net  $1,310,381 $17,753 5.38%  $1,388,648 $20,269 5.81%
(1)(2)
Fed funds sold     658         --       0.00%  24,930      11       0.18%
Taxable investment 340,316     1,599    1.88%  242,606     792      1.31%
securities
Tax-exempt
investment          16,614      185      4.45%  18,384      191      4.16%
securities
Other
interest-earning    54,719      65       0.47%  108,675     159      0.58%
assets
                                                                   
Total
interest-earning    1,722,688   19,602   4.51%  1,783,243   21,422   4.78%
assets
                                                                   
Allowance for loan  (9,458)                    (10,594)             
losses
Cash and due from   12,650                     33,500               
banks
Premises and        56,551                     57,399               
equipment
Goodwill            26,587                     7,325                
Intangible assets   8,715                      9,262                
Other assets        119,026                    140,362              
                                                                   
Total assets       $1,936,759                $2,020,497          
                                                                   
Liabilities and
shareholders'                                                       
equity
Interest-bearing                                                    
liabilities:
Interest-bearing   $294,056   $61     0.08%  $293,533   $118    0.16%
demand
Savings and money  451,395     323      0.28%  434,766     373      0.34%
market
Time deposits -    455,284     763      0.66%  537,469     437      0.32%
core
Time deposits -    101,046     185      0.73%  122,470     340      1.10%
brokered
Total
interest-bearing    1,301,781   1,332    0.41%  1,388,238   1,268    0.36%
deposits
Federal Home Loan  61,304      139      0.90%  55,163      143      1.03%
Bank advances
Subordinated debt  21,994      429      7.74%  16,810      472      11.17%
Other borrowings   2,313       --       0.00%  11,350      7        0.26%
Total borrowed     85,611      568      2.63%  83,323      622      2.97%
funds
                                                                   
Total
interest-bearing    1,387,392   1,900    0.54%  1,471,561   1,890    0.51%
liabilities
                                                                   
Net interest rate               17,702   3.97%              19,532   4.27%
spread
                                                                   
Noninterest-bearing 262,142                    259,604              
demand deposits
Other liabilities   24,008                     11,642               
Shareholders'       263,217                    277,690              
equity
                                                                   
Total liabilities
and shareholders'   $1,936,759                $2,020,497          
equity
                                                                   
Net interest                             4.08%                       4.36%
margin
Net interest margin
(fully                                   4.11%                       4.39%
tax-equivalent) (4)
                                                                   

(1)Nonaccrual loans are included in the average loan balances.
(2)Interest income and yields for the three months ended December 31, 2013
and 2012 include accretion from acquisition accounting adjustments associated
with acquired loans.
(3) Yield/ rate calculated on Actual/Actual day count basis, except for yield
on investments which is calculated on a 30/360 day count basis.
(4)Fully tax-equivalent basis at 34.70% and 32.15% tax rate at December 31,
2013 and 2012, respectively, for nontaxable securities and loans.



PARK STERLING CORPORATION
SELECTED RATIOS
($ in thousands,   December    September                           December
except per share   31,         30,         June 30,    March 31,   31,
amounts)
                  2013        2013        2013        2013        2012
                  Unaudited   Unaudited   Unaudited   Unaudited   Unaudited
ASSET QUALITY                                                  
Nonaccrual loans   $8,428    $6,778    $6,832    $9,725    $10,374
Troubled debt      3,854      7,527      7,767      7,383      7,367
restructuring
Past due 90 days
plus (and still    17         357        196        2          77
accruing)
Nonperforming      12,299     14,662     14,795     17,110     17,818
loans
OREO               14,492     14,881     16,283     21,251     25,073
Nonperforming      26,791     29,543     31,078     38,361     42,891
assets
Past due 30-59
days (and still    1,437      663        2,488      1,250      607
accruing)
Past due 60-89
days (and still    255        459        1,606      521        121
accruing)
                                                              
Nonperforming
loans to total     0.95%       1.11%       1.13%       1.29%       1.31%
loans
Nonperforming
assets to total    1.37%       1.52%       1.58%       1.93%       2.11%
assets
Allowance to total 0.68%       0.66%       0.83%       0.81%       0.78%
loans
Allowance to
nonperforming      71.80%      59.01%      73.32%      62.82%      59.44%
loans
Allowance to
nonperforming      32.96%      29.29%      34.90%      28.02%      24.69%
assets
Past due 30-89
days (accruing) to 0.13%       0.09%       0.31%       0.13%       0.05%
total loans
Net charge-offs
(recoveries) to    0.24%       0.53%       0.08%       0.05%       -0.11%
average loans
(annualized)                                                   
                                                              
CAPITAL                                                        
Book value per     $5.92     $5.87     $5.80     $5.87     $5.80
common share
Tangible book
value per common   $5.16     $5.10     $5.03     $5.07     $4.99
share**
Common shares      44,730,669 44,761,384 44,700,805 44,648,165 44,575,853
outstanding
Average dilutive
common shares      44,288,998 44,273,821 44,204,581 44,069,053 44,025,874
outstanding
                                                              
Tier 1 capital     $218,552  $211,121  $223,516  $221,435  $217,188
Tier 2 capital     15,725     15,418     17,742     17,644     17,611
Total risk based   234,277    226,539    241,258    239,079    234,799
capital
Risk weighted      1,424,112  1,435,214  1,399,273  1,436,350  1,452,229
assets
Average assets for 1,879,283  1,900,990  1,894,989  1,906,061  1,947,156
leverage ratio
                                                              
Tier 1 ratio       15.35%      14.71%      15.97%      15.42%      14.96%
Total risk based   16.45%      15.78%      17.24%      16.64%      16.17%
capital ratio
Tier 1 leverage    11.63%      11.11%      11.80%      11.62%      11.15%
ratio
Tangible common
equity to tangible 11.79%      11.78%      11.41%      11.43%      10.97%
assets**
                                                              
LIQUIDITY                                                      
Net loans to total 80.44%      84.04%      81.21%      82.71%      82.48%
deposits
Reliance on        14.55%      11.85%      10.61%      11.35%      12.27%
wholesale funding
                                                              
INCOME STATEMENT (THREE MONTH                                   
RESULTS; ANNUALIZED)
Return on Average  0.83%       0.85%       0.72%       0.65%       0.25%
Assets
Return on Average  6.09%       6.46%       5.38%       5.01%       1.96%
Common Equity
Net interest
margin (non-tax    4.08%       4.16%       4.30%       4.15%       4.36%
equivalent)
                                                              
INCOME STATEMENT                                               
(ANNUAL RESULTS)
Return on Average  0.76%       n/a         n/a         n/a         0.32%
Assets
Return on Average  5.42%       n/a         n/a         n/a         1.99%
Equity
Net interest
margin (non-tax    4.17%       n/a         n/a         n/a         4.27%
equivalent)
                                                              
** Non-GAAP                                                    
financialmeasure
                                                              

Non-GAAP Financial Measures

Tangible assets, tangible common equity, tangible book value, adjusted net
income available to common shareholders, adjusted net interest margin,
adjusted noninterest income, adjusted noninterest expenses, adjusted total
revenues, adjusted allowance for loan losses, adjusted net charge-offs
(recoveries) to average loans (annualized), and related ratios and per share
measures, including adjusted return on average assets and adjusted return on
average equity, as used throughout this release, are non-GAAP financial
measures. Management uses (i) tangible assets, tangible common equity and
tangible book value (which exclude goodwill and other intangibles from equity
and assets), and related ratios, to evaluate the adequacy of shareholders'
equity and to facilitate comparisons with peers; (ii) adjusted allowance for
loan losses (which includes net FMV adjustments related to acquired loans) and
adjusted net charge-offs/ recoveries (which exclude the impact of acquisition
accounting related to PCI loans) to evaluate both its asset quality and asset
quality trends, and to facilitate comparisons with peers; and (iii) adjusted
net income, adjusted noninterest income, adjusted noninterest expenses and
adjusted total revenues (which exclude merger-related expenses and gain on
sale of securities, as applicable), adjusted net interest margin (which
excludes accelerated accretion of net acquisition accounting fair market value
adjustments), adjusted return on average assets and adjusted return on average
equity (which exclude merger-related expenses and gain on sale of securities)
to evaluate core earnings and to facilitate comparisons with peers.

                                                                  
PARK STERLING CORPORATION
RECONCILIATION OF NON-GAAP MEASURES
($ in thousands, except per share amounts)
(three month
and period end December     September                                December
results unless 31,          30,          June 30,    March 31,   31,
otherwise
stated)
              2013          2013          2013          2013          2012
              (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Adjusted net
income (three                                                      
months)
Pretax income  $5,600      $6,320      $5,780      $4,964      $2,093
(as reported)
Plus:
merger-related 386          167          822          836          3,167
expenses
(gain) loss
on sale of     6            --           (104)        --           --
securities
Adjusted       5,992        6,487        6,498        5,800        5,260
pretax income
Tax expense    1,697        2,162        2,235        1,995        1,691
Adjusted net   $4,295      $4,325      $4,263      $3,805      $3,569
income
Preferred      --          --          302          51           51
dividends
Adjusted net
income
available to   $4,295      $4,325      $3,961      $3,754      $3,518
common
shareholders
                                                                  
Divided by:
weighted       44,288,998   44,273,821   44,204,581   44,069,053   44,025,874
average
diluted shares
Adjusted net
income
available to   $0.10       $0.10       $0.09       $0.09       $0.08
common
shareholders
per share
Estimated tax  28.32%        33.40%        34.40%        34.40%        32.15%
rate
                                                                  
Adjusted net
income (twelve                                                     
months)
Pretax income  $22,664                                            $6,649
(as reported)
Plus:
merger-related 2,211                                               5,895
expenses
(gain) loss
on sale of     (98)                                                (1,478)
securities
Adjusted       24,777                                              11,066
pretax income
Tax expense    8,089                                               3,558
Adjusted net   $16,688                                            $7,508
income
Preferred      353                                                 51
dividends
Adjusted net
income
available to   $16,335                                            $7,457
common
shareholders
                                                                  
Divided by:
weighted       44,053,253                                          35,108,229
average
diluted shares
Adjusted net
income
available to   $0.37                                              $0.21
common
shareholders
per share
Estimated tax  32.65%                                               32.15%
rate
                                                                  
Adjusted net
interest                                                           
margin
Net interest
income (as     $17,702     $18,314     $18,671     $17,736     $19,532
reported)
Less:
accelerated    (365)        (529)        (560)        --           (921)
mark accretion
Less: other
accelerated    --           --           --           --           (121)
accretion
Adjusted net
interest       17,337       17,785       18,111       17,736       18,490
income
Divided by:
average        1,722,688    1,747,886    1,742,312    1,732,366    1,782,922
earning assets
Mutliplied by:
annualization  3.97         3.97         4.01         4.06         3.98
factor
Adjusted net
interest       3.99%         4.04%         4.17%         4.15%         4.13%
margin
Net interest   4.08%         4.16%         4.30%         4.15%         4.36%
margin
                                                                  
Adjusted
noninterest                                                        
income
Noninterest
income (as     $4,404      $3,257      $3,968      $3,458      $3,592
reported)
Less: (gain)
loss on sale   6            --           (104)        --           --
of securities
Adjusted
noninterest    $4,410      $3,257      $3,864      $3,458      $3,592
income
                                                                  
Adjusted
noninterest                                                        
expense
Noninterest
expense (as    $15,726     $15,670     $16,784     $15,921     $20,037
reported)
Less:
merger-related (386)        (167)        (822)        (836)        (3,167)
expenses
Adjusted
noninterest    15,340       15,503       15,962       15,085       16,870
expense
                                                                  
Adjusted
total                                                              
revenues
Net interest
income (as     $17,702     $18,314     $18,671     $17,736     $19,532
reported)
Adjusted
noninterest    4,410        3,257        3,864        3,458        3,592
income
Adjusted total $22,112     $21,571     $22,535     $21,194     $23,124
revenues
                                                                  
                                                                  
PARK STERLING CORPORATION
RECONCILIATION OF NON-GAAP MEASURES
($ in thousands, except per share amounts)
(three month
and period end December     September                                December
results unless 31,          30,          June 30,    March 31,   31,
otherwise
stated)
              2013          2013          2013          2013          2012
              (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Adjusted
return on                                                          
average
assets
Adjusted net
income
available to   $4,295      $4,325      $3,961      $3,754      $3,518
common
shareholders
Divided by:    1,936,759    1,967,904    1,967,736    1,978,144    2,020,662
average assets
Mutliplied by:
annualization  3.97         3.97         4.01         4.06         3.98
factor
Adjusted
return on      0.88%         0.87%         0.81%         0.77%         0.69%
average assets
Return on      0.83%         0.85%         0.72%         0.65%         0.25%
average assets
                                                                  
Adjusted
return on                                                          
average
equity
Adjusted net
income
available to   $4,295      $4,325      $3,961      $3,754      $3,518
common
shareholders
Divided by:
average common 263,217      258,860      261,511      258,234      257,335
equity
Mutliplied by:
annualization  3.97         3.97         4.01         4.06         3.98
factor
Adjusted
return on      6.47%         6.63%         6.07%         5.90%         5.44%
average equity
Return on      6.09%         6.46%         5.38%         5.01%         1.96%
average equity
                                                                  
Tangible
common equity                                                      
to tangible
assets
Total assets   $1,960,790  $1,939,891  $1,972,923  $1,983,571  $2,032,794
Less:
intangible     (35,049)     (35,306)     (35,563)     (35,821)     (36,078)
assets
Tangible       $1,925,741  $1,904,585  $1,937,360  $1,947,750  $1,996,716
assets
                                                                  
Total common   $262,083    $259,753    $256,557    $258,485    $255,202
equity
Less:
intangible     (35,049)     (35,306)     (35,563)     (35,821)     (36,078)
assets
Tangible       $227,034    $224,447    $220,994    $222,664    $219,124
common equity
                                                                  
Tangible       $227,034    $224,447    $220,994    $222,664    $219,124
common equity
Divided by:
tangible       $1,925,741  $1,904,585  $1,937,360  $1,947,750  $1,996,716
assets
Tangible
common equity  11.79%        11.78%        11.41%        11.43%        10.97%
to tangible
assets
Common equity  13.37%        13.39%        13.00%        13.03%        12.55%
to assets
                                                                  
Tangible book
value per                                                          
share
Issued and
outstanding    44,730,669   44,761,384   44,700,805   44,648,165   44,575,853
shares
Less:
nondilutive    (770,399)    (753,900)    (749,900)    (718,260)    (646,260)
restricted
stock awards
Period end
dilutive       43,960,270   44,007,484   43,950,905   43,929,905   43,929,593
shares
                                                                  
Tangible       $227,034    $224,447    $220,994    $222,664    $219,124
common equity
Divided by:
period end     43,960,270   44,007,484   43,950,905   43,929,905   43,929,593
dilutive
shares
Tangible
common book    $5.16       $5.10       $5.03       $5.07       $4.99
value per
share
Common book
value per      $5.96       $5.90       $5.84       $5.88       $5.81
share
                                                                  
Adjusted
allowance for                                                      
loan losses
Allowance for  $8,831      $8,652      $10,847     $10,749     $10,591
loan losses
Plus:
acquisition
accounting FMV 37,783       41,389       44,179       49,633       53,719
adjustments to
acquired loans
Adjusted
allowance for  $46,614     $50,041     $55,026     $60,382     $64,310
loan losses
Divided by:
total loans    $1,295,808  $1,316,342  $1,304,659  $1,329,749  $1,356,707
(excluding
LHFS)
Adjusted
allowance for  3.60%         3.80%         4.22%         4.54%         4.74%
loan losses to
total loans
Allowance for
loan losses to 0.68%         0.66%         0.83%         0.81%         0.78%
total loans
                                                                  
Adjusted net
charge-offs                                                        
(recoveries)
(annualized)
Net
charge-offs    $805        $1,776      $274        $151        $(390)
(recoveries)
Less: net
charge-offs
(recoveries)   --           (960)        23           (414)        --
of PCI loans
(ASC 310-30)
Adjusted net
charge-offs    $805        $816        $297        $(263)      $(390)
(recoveries)
Divided by:    $1,310,381  $1,319,026  $1,337,318  $1,346,603  $1,388,627
average loans
Mutliplied by:
annualization  3.97         3.97         4.01         4.06         3.98
factor
Adjusted net
charge-offs    0.24%         0.25%         0.09%         -0.08%        -0.11%
(recoveries)
(annualized)
Net
charge-offs    0.24%         0.53%         0.08%         0.05%         -0.11%
(recoveries)
(annualized)
                                                                  

CONTACT: For additional information contact:
         David Gaines
         Chief Financial Officer
         (704) 716-2134
         david.gaines@parksterlingbank.com
 
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