Sterling Financial (NASDAQ:STSA) vastly improved its credit health in the latest quarter in a number of areas.
FBR says, "Sterling's credit, a key concern for the company, showed significant improvement as NCOs dropped 59% and NPAs fell 14%. Further, the balance of classified assets declined 16%, as management continues to proactively work through problem credits. The better-than-expected credit results drove a $1.5M reserve release as the company only provisioned $30M this quarter...Overall, we believe that this quarter has set STSA down the road to profitability, and we expect credit trends to continue to improve into 2011 and 2012. We are adjusting our FY11E GAAP EPS estimate to $0.42 from $0.32 and our FY12E EPS estimate to $1.88 from $1.31."
FBR Capital maintains a 'Market Perform' on Sterling Financial (STSA), which closed at $18.20, down $1.49, or 7.57 percent. FBR has a price target of $19 on Sterling.
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