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Sterlingsouth Bank & Trust Company

Greensboro, NC · Cert 35570

FDIC

Q2 2006

$168.9MAssets
$137.9MLoans
$138.8MDeposits
$14.0MEquity
Loan mix
61%RE $38.3M35%C&I $21.6M4%Consumer $2.4MQ2 2005Q2 2006
Deposit mix
90%Interest-bearing $125.3M10%Noninterest $13.5MQ2 2005Q2 2006

NIM

4.09%Q2 ’045.48%Q2 ’056.84%Q2 ’06+33%+9%

Non-interest income vs. expense

2.42%Q2 ’042.44%Q2 ’052.50%Q2 ’06-6%+7%

Executive Summary

  • Earnings: ROA of 0.81%, down 10 bps year over year; NIM at 3.83%.
  • Asset quality: problem loans at 0.00% of loans (0 bps YoY), with net charge-offs at 0.16%.
  • Funding: loans stand at 99.39% of deposits as of Q2 2006.

Financial Results

Return on Assets (quarter, annualized)

0.81%-10 bps YoY

Net Interest Margin (quarter, annualized)

3.83%+32 bps YoY

Efficiency Ratio (quarter, annualized)

62.12%-225 bps YoY

Tier 1 Leverage Ratio

n/a

Discrete quarter, annualized.

MetricQ2 2005Q3 2005Q4 2005Q1 2006Q2 2006YoY ΔTrend
Earnings
Return on Assets0.91%0.97%1.22%0.83%0.81%-10 bps
Return on Equity10.34%11.13%14.58%10.13%9.85%-49 bps
Net Interest Margin3.51%3.60%3.74%3.78%3.83%+32 bps
Efficiency Ratio64.37%60.92%61.59%70.70%62.12%-225 bps
Non-Interest Burden2.16%2.12%2.21%2.62%2.31%+15 bps
Growth
Asset Growth (YoY)31.36%31.89%27.95%18.81%21.28%-1,008 bps
Loan Growth (YoY)32.00%30.05%29.77%21.01%21.36%-1,064 bps
Deposit Growth (YoY)25.96%31.37%29.06%23.04%20.80%-517 bps
Asset Quality
Nonperforming Loans / Loans0.00%0.00%0.00%0.00%0.00%0 bps
Net Charge-Offs / Loans0.04%0.34%0.10%0.00%0.16%+12 bps
Allowance / Loans1.32%1.33%1.32%1.32%1.32%0 bps
Allowance Coverage of NPLsn/an/an/an/an/an/an/a
Capital
Tier 1 Leverage Ration/an/an/an/an/an/an/a
Total Risk-Based Capital11.38%11.17%11.06%11.08%11.06%-33 bps
Equity / Assets8.87%8.53%8.21%8.22%8.29%-59 bps
Liquidity & Funding
Loans / Deposits98.92%98.31%94.79%91.43%99.39%+46 bps
Liquid Assets / Assets0.08%0.07%0.15%0.07%0.10%+1 bps
CRE / Total Capitaln/an/an/an/an/an/an/a