CHARLOTTE, NC--(Marketwired - January 26, 2017) - 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 2016. Highlights at and for the three and twelve months ended December 31, 2016 include:

Three Month Highlights

• Net income of $5.3 million, or $0.10 per share, compared to $6.3 million, or $0.12 per share, in the quarter ended September 30, 2016
• Adjusted net income, which excludes merger-related expenses and gain on sale of securities, was $7.3 million, or $0.14 per share, and was equal to the third quarter
• Merger-related costs were $3.0 million, an increase of $1.5 million from the third quarter, due to final First Capital Bancorp, Inc. ("First Capital") merger costs associated with the consolidation of our operations center and a Richmond branch
• Noninterest income increased $398 thousand from a strong third quarter; with continued growth in deposit service charges, exceptional capital markets income and a decline in mortgage banking income
• Noninterest expenses totaled $25.0 million, an increase of $3.9 million from the prior quarter
• Adjusted noninterest expenses, which excludes merger-related costs, increased $2.4 million from the prior quarter reflecting in part a $1.5 million loss on an interest rate hedge on variable rate debt repaid during the quarter
• Income tax expense declined to an effective rate of 22% due a $798 thousand benefit associated with the early adoption of ASU 2016-09, Stock-based Compensation
• Average loans, excluding loans held for sale, showed steady growth at an 10% annualized growth rate from the prior quarter
• Total average deposits increased $30 million or 5% annualized from the prior quarter
• Credit quality remained strong
• Capital levels remained strong with Tier 1 leverage ratio of 9.98%
• The Board of Directors declared a quarterly cash dividend on common shares of $0.04 per share (January 2017)

Twelve Month Highlights

• Net income increased $3.3 million from 2015 to a record $19.9 million, or $0.38 per share
• Adjusted net income, which excludes merger-related expenses and gain or loss on sale of securities, was $27.2 million compared to $17.8 million in 2015, an increase of $9.4 million or 53%, and adjusted earnings per share increased to $0.52 from $0.40 in 2015, an increase of 29%
• These results include the acquisition of First Capital which was completed on January 1, 2016

"We are very pleased with Park Sterling's results for the 2016 fourth quarter and full year which continue to confirm the attractiveness of a regional community bank that delivers high quality products and services through exceptionally talented and experienced in-market banking professionals," said Jim Cherry, Chief Executive Officer. "Our distinctive value proposition is clearly resonating with customers. They are embracing our capabilities and rewarding us with strong growth in loans, deposits and revenue, which enables us to deliver increasing earnings and returns for our shareholders, while offering an engaging work environment for our employees."

Financial Results

Income Statement -- Three Months Ended December 31, 2016

Park Sterling reported net income of $5.3 million, or $0.10 per share, for the three months ended December 31, 2016 ("2016Q4"). This compares to net income of $6.3 million, or $0.12 per share, for the three months ended September 30, 2016 ("2016Q3") and net income of $3.8 million, or $0.09 per share, for the three months ended December 31, 2015 ("2015Q4"). The decrease in net income from 2016Q3 resulted from increases in net interest income and noninterest income, a decrease in income tax expense, offset by increases in noninterest expense. The increase in net income from 2015Q4 resulted from an increase in net interest income, offset by an increase in noninterest expenses, reflecting the inclusion of First Capital, which was completed on January 1, 2016.

Park Sterling reported adjusted net income, which excludes merger-related expenses and gain or loss on sale of securities, of $7.3 million, or $0.14 per share, in 2016Q4. This compares to adjusted net income of $7.3 million, or $0.14 per share, in 2016Q3 and adjusted net income of $4.8 million, or $0.11 per share, in 2015Q4. Compared to 2016Q3, the level of adjusted net income reflects higher levels of both net interest income and noninterest income partially offset by an increase in noninterest expense and a reduction in income tax expense associated with the adoption of ASU 2016-09. Compared to 2015Q3, the increase in adjusted net income reflects higher net interest income and noninterest income, partially offset by increased noninterest expense, reflecting the inclusion of First Capital.

Net interest income totaled $26.6 million in 2016Q4, which represents a $768 thousand, or 3%, increase from $25.8 million in 2016Q3 and a $6.6 million, or 33%, increase from $20 million in 2015Q4. Average total earning assets increased $49.1 million in 2016Q4 to $2.95 billion, compared to $2.90 billion in 2016Q3 and increased $696.1 million, or 31%, compared to $2.25 billion in 2015Q4. The increase in average total earning assets in 2016Q4 from 2016Q3 included an increase in average loans (including loans held for sale) of $57.8 million, or 9.8% annualized, a decrease in average marketable securities of $15.7 million, and an increase in average other interest-earning assets of $7.0 million. The increase in average total earning assets in 2016Q4 from 2015Q4 resulted primarily from a $700.2 million, or 41%, increase in average loans (including loans held for sale) as a result of both organic growth and the merger with First Capital, a $19.8 million, or 4%, decrease in average marketable securities and a $16.5 million, or 37%, increase in average other earning assets.

Net interest margin was 3.58% in 2016Q4, representing a 4 basis point increase from 3.54% in 2016Q3 and a 6 basis point increase from 3.52% in 2015Q4. The increase in net interest margin from 2016Q3 resulted primarily from a 2 basis point increase in yield on investment securities resulting from a bond called at a premium to book value, a 1 basis point increase from accretion on acquired loans, a 2 basis point increase caused by the collection of interest on non accruing loans, and a 1 basis point decrease in net margin compression. The increase in net interest margin from 2015Q4 was significantly impacted by the merger with First Capital which was completed on January 1, 2016. The change was primarily driven by a 16 basis point increase in the yield on interest-earning assets, offset by a 7 basis point increase in the cost of interest-bearing deposits and an increase in the cost of borrowed funds. In addition, the net interest margin in 2016Q4 benefitted from a $157.9 million increase in noninterest-bearing deposits from 2015Q4.

The Company reported $550 thousand of provision expense in 2016Q4, compared to $642 thousand of provision recorded in 2016Q3, and $409 thousand of provision recorded in 2015Q4. Allowance for loan loss levels increased to 0.50% of total loans at 2016Q4 compared to 0.49% at 2016Q3.

Noninterest income totaled $5.8 million in 2016Q4, compared to $5.4 million in 2016Q3 and increased $1.3 million, or 29%, compared to $4.5 million in 2015Q4. Compared to 2016Q3, service charges on deposit accounts and income from capital markets activities increased by $90 thousand and $390 thousand, respectively. In addition, increased BOLI income and the absence of FDIC loss share indemnification asset activity increased noninterest income by $131 thousand and $139 thousand respectively. Offsetting these increases was a $250 thousand decrease in mortgage banking income caused by a decline in the year-end pipeline from record levels in 2016Q3. The increase in noninterest income from 2015Q3 reflects the impact of the First Capital merger, higher service charges on deposit accounts and increases in capital markets income and income from bank owned-life insurance, partially offset by lower wealth management income.

Noninterest expense increased $3.9 million, or 19%, to $25.0 million in 2016Q4 compared to $21.3 million in 2016Q3, and compared to $18.4 million in 2015Q4. Adjusted noninterest expenses, which exclude merger-related expenses ($3.0 million in 2016Q4, $1.5 million in 2016Q3 and $1.4 million in 2015Q4), increased $2.4 million, or 12%, to $22.0 million in 2016Q4 compared to $19.6 million in 2016Q3, and increased $5.1 million, or 30%, compared to $17.0 million in 2015Q4. The increase in adjusted noninterest expenses from 2016Q3 was due primarily to a $1.5 million loss on an interest rate hedge related to variable rate debt repaid during the quarter as well as to increases of $323 thousand in salaries and employee benefits, $152 thousand in legal and professional fees and $154 thousand in advertising and promotion. Offsetting these increases was a $372 thousand reduction in loan and collection expense. The increase in adjusted noninterest expenses from 2015Q3 is primarily a function of the merger with First Capital.

The Company's effective tax rate was 22.07% in 2016Q4, compared to 33.5% in 2016Q3 and 34.1% in 2015Q4. The decline in the effective tax rate experienced in 2016Q4 was the result of the early adoption of ASU 2016-09, which requires that excess tax benefits on stock-based compensation be recognized as a reduction of tax expense rather than as a component of other comprehensive income. Excluding the effect of the $798 thousand reduction in tax expense caused by the adoption of this standard, the effective tax rate was 33.74%.

Income Statement -- Twelve Months Ended December 31, 2016

Park Sterling reported a $3.3 million, or 20%, increase in net income for the twelve months ended December 31, 2016 ("FY2016") to $19.9 million, or $0.38 per share, compared to net income for the twelve months ended December 31, 2015 ("FY2015") of $16.6 million, or $0.37 per share. The increase in net income from FY2015 was significantly impacted by the First Capital merger. Net interest income and non interest income increased by a total of $26.8 million, while increased provision for loan losses and noninterest expense increased by $1.9 million and $20.1 million, respectively.

Net interest income totaled $105.0 million in FY2016, which represents a $23.7 million, or 29%, increase from $81.4 million in FY2015. This increase is primarily attributable to having higher average earning assets in 2016 as a result of the merger with First Capital as well as organic loan growth. Net interest margin was 3.64% in FY2016, representing a 4 basis point decrease from 3.68% in FY2015. The reduction in net interest margin resulted primarily from a 9 basis point increase in yield on interest-earning assets, offset by a 19 basis point increase in the cost of interest-bearing liabilities.

The Company reported $2.6 million in provision for loan losses in FY2016, compared to $723 thousand in provision for loan losses in FY2015. The increase in provision expense is primarily a factor of continued organic loan growth.

Noninterest income increased $3.2 million, or 17%, to $21.4 million in FY2016, compared to $18.2 million in FY2015. The increase from FY2015 reflects higher levels of service charges on deposit accounts, income from capital markets activities, and ATM and card income as well as lower amortization on the FDIC loss share indemnification asset and true-up liability expense. Offsetting these increases are decreases in income from wealth management activities and a decrease in the gain (loss) on sale of securities available for sale.

Noninterest expense increased $20.8 million, or 27%, in FY2016 to $94.2 million compared to $74.2 million in FY2015. The increase in noninterest expense from FY2015 resulted primarily from increased expenses as a result of organic growth and the merger with First Capital, including an increase in merger related expense of $9.2 million.

The company's effective tax rate decreased to 32.5% in FY2016 compared to 32.9% in FY2015. The early adoption of ASU 2016-09 resulted in a decrease in income tax expense of $798 thousand; excluding the impact of this new standard, the effective rate was 35.24%.

Balance Sheet

Total assets increased $28.5 million, or 4% annualized, to $3.3 billion at 2016Q4, as compared to total assets of $3.2 billion at 2016Q3. Total securities, including non-marketable securities, decreased $9.0 million, to $511.8 million. Total loans, excluding loans held for sale, increased $43.2 million, or 7% annualized, to $2.4 billion at 2016Q4.

The mix of commercial and consumer loans remained consistent with 2016Q3. Total commercial loans increased $51.4 million and represent 79% of the loan portfolio. Acquisition, construction and development loans increased $35.8 million and represent 15% of the portfolio. Total consumer loans decreased $8.2 million and remain flat as a percentage of total loans at 21% of the portfolio.

Total deposits increased $29.5 million, or 5% annualized, to $2.5 billion at 2016Q4. Noninterest bearing demand deposits increased $15.7 million, or 12% annualized, to $521.3 million (21% of total deposits). Money market, NOW and savings deposits were up $22.7 million from 2016Q3 and represent 50% of total deposits. Time deposits decreased $8.9 million to $741.1 million at 2016Q4.

Total borrowings increased $5.2 million, or 6% annualized, to $348.2 million at 2016Q4 compared to $343.1 million at 2016Q3. At 2016Q4, FHLB borrowings totaled $285 million, the senior unsecured term loan at the holding company totaled $29.7 million, and acquired trust preferred securities, net of acquisition accounting fair value marks, totaled $33.5 million.

Total shareholders' equity decreased $2.9 million to $355.8 million at 2016Q4 compared to $358.7 million at 2016Q3, driven by a $3.2 million increase in retained earnings and offset by a reduction of $3.9 million in accumulated other comprehensive income and by a reduction in common stock and additional paid in capital totaling $2.1 million. The change in accumulated other comprehensive income was caused by the effect of market interest rate increases on the fair value of available for sale investment securities. During 2016Q4, there were 476,900 shares of common stock repurchased at a cost of $4.7 million to neutralize the effect of stock compensation vestings and exercises.

The Company's capital ratios remain strong at December 31, 2016 with Common Equity Tier 1 ("CET1") at 11.05% and Tier 1 leverage ratio at 9.98%.

Asset Quality

Asset quality remains strong. Nonperforming assets were $15.4 million at 2016Q4, or 0.47% of total assets, compared to $14.2 million at 2016Q3, or 0.44% of total assets. Nonperforming loans were $12.9 million at 2016Q4, and represented 0.54% of total loans, compared to $11.5 million at 2016Q3, or 0.48% of total loans. The Company reported net charge offs of $37 thousand, or 0.01% of average loans (annualized) in 2016Q4, compared to net recoveries of $97 thousand, or (0.02%) of average loans (annualized), in 2016Q3.

The allowance for loan losses increased $513 thousand, or 2%, to $12.1 million, or 0.50% of total loans, at 2016Q4, compared to $11.6 million, or 0.49%, of total loans at 2016Q3. The increase in allowance is primarily attributable to the increase in outstanding loans at period end.

Conference Call

A conference call will be held at 8:30 a.m., Eastern Time this morning (January 26, 2017). The conference call can be accessed by dialing (877) 512-1104 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 10099223.

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 $3.3 billion in assets, is the largest community bank headquartered in the Charlotte area and has 55 banking offices stretching across the Carolinas and into North Georgia, as well as in Richmond, Virginia. The bank serves professionals, individuals, and small and mid-sized businesses by offering a full array of financial services, including deposit, mortgage banking, cash management, consumer and business finance, capital markets and wealth management services with a commitment to "Answers You Can Bank On℠." 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, average tangible common equity, adjusted net income, adjusted operating revenues, adjusted noninterest income, adjusted noninterest expenses, adjusted operating expense, adjusted allowance for loan losses, 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. 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. These forward-looking statements express management's current expectations or forecasts of future events, results and conditions and, by their nature, are subject to risks and uncertainties and there are a number of factors that could cause actual results to differ materially from those in such statements. Factors that might cause such a difference include, but are not limited to: changes in loan mix, deposit mix, capital and liquidity levels, emerging regulatory expectations and measures, net interest income, noninterest income, noninterest expense, credit trends and conditions, including loan losses, allowance for loan loss, charge-offs, delinquency trends and nonperforming asset levels, deterioration in the credit quality of the loan portfolio or the value of collateral securing loans, deterioration in the value of securities held for investment, the impacts of an increasing rate environment, and other similar matters; inability to identify and successfully negotiate and complete additional combinations with other 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 combinations; failure to generate an adequate return on investment related to new branches or other hiring initiatives; inability to generate future organic growth in loan balances, retail banking, wealth management, mortgage banking or capital markets results through the hiring of new personnel, development of new products, including new online and mobile banking platforms for treasury services, opening of de novo branches or otherwise; inability to capitalize on identified revenue enhancements or expense management opportunities, including the inability to achieve or maintain adjusted operating expense to adjusted operating revenue targets; inability to generate future ATM and card income from marketing expenses; the effects of negative or soft economic conditions, including stress in the commercial real estate markets or failure of continued recovery in the residential real estate markets; changes in consumer and investor confidence and the related impact on financial markets and institutions; the potential impacts of any government shutdown or 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, 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.

You should not place undue reliance on any forward-looking statement and should consider all of the preceding uncertainties and risks, as well as those more fully discussed in any of Park Sterling's filings with the SEC. 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, except per share amounts)				December 31,			September 30,			June 30,			March 31,			December 31,
				2016			2016			2016			2016			2015
				(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Interest income
	Loans, including fees			$	27,066		$	26,521		$	26,729		$	27,124		$	19,284
	Taxable investment securities				2,793			2,583			2,640			2,687			2,677
	Tax-exempt investment securities				135			137			137			147			146
	Nonmarketable equity securities				163			151			153			154			109
	Interest on deposits at banks				54			51			34			42			22
	Federal funds sold				1			1			5			8			1
		Total interest income			30,212			29,444			29,698			30,162			22,239
Interest expense
	Money market, NOW and savings deposits				941			953			1,014			1,017			743
	Time deposits				1,469			1,447			1,449			1,398			903
	Short-term borrowings				361			345			251			294			205
	Long-term debt				371			379			440			410			55
	Subordinated debt				499			497			494			446			358
		Total interest expense			3,641			3,621			3,648			3,565			2,264
		Net interest income			26,571			25,823			26,050			26,597			19,975
Provision for loan losses					550			642			882			556			409
		Net interest income after provision			26,021			25,181			25,168			26,041			19,566
Noninterest income
	Service charges on deposit accounts				1,761			1,671			1,528			1,489			1,439
	Mortgage banking income				765			1,015			873			775			699
	Income from wealth management activities				682			739			863			803			887
	Income from capital market activities				1,070			680			767			68			437
	ATM and card income				713			730			776			573			647
	Income from bank-owned life insurance				663			532			526			988			371
	Gain (loss) on sale of securities available for sale				6			-			(87)			(6)			-
	Amortization of indemnification asset and true-up liability expense				-			(139)			(25)			(147)			(165)
	Other noninterest income				185			219			154			184			208
	Total noninterest income				5,845			5,447			5,375			4,727			4,523
Noninterest expenses
	Salaries and employee benefits				11,480			11,755			11,774			13,018			9,541
	Occupancy and equipment				3,577			3,111			3,041			3,125			2,680
	Data processing and outside service fees				2,105			2,331			2,224			5,523			1,669
	Legal and professional fees				869			978			950			725			1,471
	Deposit charges and FDIC insurance				391			405			478			432			413
	Loss on disposal of fixed assets				2,175			144			230			44			50
	Communication fees				504			532			505			483			480
	Postage and supplies				125			115			191			173			99
	Loan and collection expense				57			425			273			37			194
	Core deposit intangible amortization				458			458			458			458			347
	Advertising and promotion				254			44			367			421			271
	Net cost of operation of other real estate owned				11			(92)			70			266			(23)
	Other noninterest expense				3,019			906			1,385			1,448			1,170
		Total noninterest expenses			25,025			21,112			21,946			26,153			18,362
		Income before income taxes			6,841			9,516			8,597			4,615			5,727
Income tax expense					1,510			3,192			3,045			1,874			1,952
		Net income		$	5,331		$	6,324		$	5,552		$	2,741		$	3,775
Earnings per common share, fully diluted				$	0.10		$	0.12		$	0.11		$	0.05		$	0.09
Weighted average diluted common shares					53,147,221			52,743,928			52,704,537			52,599,584			44,322,428

PARK STERLING CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENT
TWELVE MONTH RESULTS
($ in thousands, except per share amounts)						December 31,				December 31,
						2016				2015*
						(Unaudited)
Interest income
	Loans, including fees				$	107,440			$	77,537
	Taxable investment securities					10,703				10,612
	Tax-exempt investment securities					556				579
	Nonmarketable equity securities					621				500
	Interest on deposits at banks					181				82
	Federal funds sold					15				2
		Total interest income				119,516				89,312
Interest expense
	Money market, NOW and savings deposits					3,925				2,449
	Time deposits					5,763				3,202
	Short-term borrowings					1,251				528
	Long-term debt					1,600				367
	Subordinated debt					1,936				1,385
		Total interest expense				14,475				7,931
		Net interest income				105,041				81,381
Provision for loan losses						2,630				723
		Net interest income after provision				102,411				80,658
Noninterest income
	Service charges on deposit accounts					6,449				4,934
	Mortgage banking income					3,428				3,306
	Income from wealth management activities					3,087				3,602
	Income from capital market activities					2,585				1,467
	ATM and card income					2,792				2,507
	Income from bank-owned life insurance					2,709				2,749
	Gain (loss) on sale of securities available for sale					(87	)			54
	Amortization of indemnification asset					-
	and true-up liability expense					(311	)			(886	)
	Other noninterest income					742				510
		Total noninterest income				21,394				18,243
Noninterest expenses
	Salaries and employee benefits					48,027				39,945
	Occupancy and equipment					12,854				10,317
	Data processing and outside service fees					12,183				6,625
	Legal and professional fees					3,522				3,402
	Deposit charges and FDIC insurance					1,706				1,639
	Loss on disposal of fixed assets					2,593				996
	Communication fees					2,024				2,099
	Postage and supplies					604				488
	Loan and collection expense					792				740
	Core deposit intangible amortization					1,832				1,389
	Advertising and promotion					1,086				1,263
	Net cost of operation of other real estate owned					255				406
	Other noninterest expense					6,758				4,844
		Total noninterest expenses				94,236				74,153
		Income before income taxes				29,569				24,748
Income tax expense						9,621				8,142
			Net income		$	19,948			$	16,606
Earnings per common share, fully diluted					$	0.38			$	0.37
Weighted average diluted common shares						52,846,949				44,304,888

	* Derived from audited financial statements.

PARK STERLING CORPORATION
WEALTH MANAGEMENT ASSETS
($ in thousands)
	as of the period ended
	December 31,			September 30,			June 30,			March 31,			December 31,
	2016			2016			2016			2016			2015
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Discretionary assets held	$	278,872		$	294,849		$	322,996		$	339,198		$	434,346
Non-discretionary assets held		36,522			28,476			32,173			31,174			32,289
Total wealth management assets	$	315,394		$	323,325		$	355,169		$	370,372		$	466,635
PARK STERLING CORPORATION
MORTGAGE ORIGINATION
($ in thousands)
	for the three month period ended
	December 31,			September 30,			June 30,			March 31,			December 31,
	2016			2016			2016			2016			2015
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Mortgage origination - purchase	$	14,767		$	21,982		$	25,316		$	14,656		$	16,101
Mortgage origination - refinance		21,316			20,552			16,221			13,430			10,049
Mortgage origination - construction		18,535			19,440			18,403			14,764			18,746
Total mortgage origination	$	54,618		$	61,974		$	59,941		$	42,850		$	44,896

PARK STERLING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)				December 31,			September 30,			June 30,			March 31,			December 31,
				2016			2016			2016			2016			2015*
				(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
ASSETS
Cash and due from banks				$	34,162		$	35,066		$	33,348		$	34,038		$	53,840
Interest-earning balances at banks					48,882			38,540			34,955			47,143			16,451
Investment securities available for sale					402,501			405,010			393,131			396,863			384,934
Investment securities held to maturity					91,752			99,415			102,125			104,459			106,458
Nonmarketable equity securities					17,501			16,289			14,420			13,118			11,366
Federal funds sold					570			345			1,570			11,271			235
Loans held for sale					7,996			15,203			11,967			7,593			4,943
Loans - Non-covered					2,412,186			2,368,950			2,311,775			2,262,294			1,724,164
Loans - Covered					-			-			15,122			16,849			17,651
Allowance for loan losses					(12,125	)		(11,612	)		(10,873	)		(9,832	)		(9,064	)
		Net loans			2,400,061			2,357,338			2,316,024			2,269,311			1,732,751
Premises and equipment, net					63,080			64,632			65,711			65,494			55,658
FDIC receivable for loss share agreements					-			-			1,164			1,477			943
Other real estate owned - non-covered					2,438			2,730			2,866			3,425			4,211
Other real estate owned - covered					-			-			380			985			1,240
Bank-owned life insurance					70,785			70,167			69,695			69,202			58,633
Deferred tax asset					25,721			26,947			28,985			30,088			28,971
Goodwill					63,317			63,030			63,197			63,707			29,197
Core deposit intangible					11,438			11,896			12,354			12,813			9,571
Other assets					15,192			20,330			22,183			22,750			14,862
		Total assets		$	3,255,396		$	3,226,938		$	3,174,075		$	3,153,737		$	2,514,264
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand noninterest-bearing				$	521,295		$	505,591		$	496,195		$	469,046		$	350,836
Money market, NOW and savings					1,251,385			1,228,687			1,229,040			1,255,848			1,062,046
Time deposits					741,072			749,999			748,188			773,089			539,780
		Total deposits			2,513,752			2,484,277			2,473,423			2,497,983			1,952,662
Short-term borrowings					285,000			280,000			200,000			170,000			185,000
Long-term debt					29,736			29,725			64,714			65,000			30,000
Subordinated debt					33,501			33,339			33,176			33,014			24,262
Accrued expenses and other liabilities					37,562			40,901			48,312			38,229			37,636
		Total liabilities			2,899,551			2,868,242			2,819,625			2,804,226			2,229,560
Shareholders' equity:
		Common stock			53,117			53,306			53,332			53,038			44,854
		Additional paid-in capital			273,400			275,323			275,246			274,706			222,596
		Retained earnings			32,608			29,409			25,219			21,263			20,117
		Accumulated other comprehensive income (loss)			(3,280	)		658			653			504			(2,863	)
		Total shareholders' equity			355,845			358,696			354,450			349,511			284,704
Total liabilities and shareholders' equity				$	3,255,396		$	3,226,938		$	3,174,075		$	3,153,737		$	2,514,264
		Common shares issued and outstanding			53,116,519			53,305,834			53,332,369			53,038,020			44,854,509

* Derived from audited financial statements.

PARK STERLING CORPORATION
SUMMARY OF LOAN PORTFOLIO
($ in thousands)
					December 31,			September 30,			June 30,			March 31,			December 31,
					2016			2016			2016			2016			2015*
BY LOAN TYPE					(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Commercial:
	Commercial and industrial				$	391,338		$	351,506		$	334,644		$	334,027		$	246,907
	Commercial real estate (CRE) - owner-occupied					367,547			366,506			376,440			374,428			331,222
	CRE - investor income producing					740,964			768,513			764,168			723,539			506,110
	Acquisition, construction and development (AC&D) -
	1-4 Family Construction					81,753			108,706			100,604			97,614			32,262
	AC&D - Lots and land					105,362			88,620			94,686			88,492			44,411
	AC&D - CRE construction					194,732			148,696			125,466			136,561			87,452
	Other commercial					12,900			10,653			10,410			10,167			8,601
		Total commercial loans				1,894,596			1,843,200			1,806,418			1,764,828			1,256,965
Consumer:
	Residential mortgage					259,836			254,298			244,063			235,737			223,884
	Home equity lines of credit					176,799			181,246			181,020			177,594			157,378
	Residential construction					59,060			63,847			65,867			71,117			72,171
	Other loans to individuals					18,756			23,281			26,575			27,245			28,816
		Total consumer loans				514,451			522,672			517,525			511,693			482,249
			Total loans			2,409,047			2,365,872			2,323,943			2,276,521			1,739,214
	Deferred costs (fees)					3,139			3,078			2,954			2,622			2,601
			Total loans, net of deferred costs (fees)		$	2,412,186		$	2,368,950		$	2,326,897		$	2,279,143		$	1,741,815
* Derived from audited financial statements.
					December 31,			September 30,			June 30,			March 31,			December 31,
					2016			2016			2016			2016			2015*
BY ACQUIRED AND NON-ACQUIRED					(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Acquired loans - performing					$	538,845		$	599,840		$	661,930		$	726,025		$	279,949
Acquired loans - purchase credit impaired						85,456			90,571			98,672			106,105			94,917
	Total acquired loans					624,301			690,411			760,602			832,130			374,866
Non-acquired loans, net of deferred costs (fees)**						1,787,885			1,678,539			1,566,295			1,447,013			1,366,949
			Total loans		$	2,412,186		$	2,368,950		$	2,326,897		$	2,279,143		$	1,741,815

*Derived from audited financial statements.

**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 30,				June 30,				March 31,				December 31,
			2016				2016				2016				2016				2015*
			(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Beginning of period allowance			$	11,612			$	10,873			$	9,832			$	9,064			$	8,742
Loans charged-off				(223	)			(156	)			(94	)			(82	)			(237	)
Recoveries of loans charged-off				186				253				253				294				150
	Net charge-offs			(37	)			97				159				212				(87	)
Provision expense				550				642				882				556				409
Benefit attributable to FDIC loss share agreements				-				-				-				-				-
	Total provision expense charged to operations			550				642				882				556				409
Provision expense recorded through FDIC loss share receivable				-				-				-				-				(20	)
	End of period allowance		$	12,125			$	11,612			$	10,873			$	9,832			$	9,064
Net charge-offs (recoveries)			$	37			$	(97	)		$	(159	)		$	(212	)		$	87
Net charge-offs (recoveries) to average loans (annualized)				0.01	%			-0.02	%			-0.03	%			-0.04	%			0.02	%

* Derived from audited financial statements.

PARK STERLING CORPORATION
ACQUIRED LOANS
($ in thousands)
			December 31,				September 30,				June 30,				March 31,				December 31,
ACQUIRED LOANS AND FAIR MARKET			2016				2016				2016				2016				2015*
VALUE (FMV) ADJUSTMENTS			(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Non-acquired loans			$	1,787,885			$	1,678,539			$	1,566,295			$	1,447,013			$	1,366,949
	Purchased performing loans			542,269				604,000				666,894				732,075				282,081
	Less: remaining FMV adjustments			(3,424	)			(4,160	)			(4,964	)			(6,050	)			(2,132	)
	Purchased performing loans, net			538,845				599,840				661,930				726,025				279,949
	Purchased credit impaired loans			109,805				115,736				124,985				133,644				120,957
	Less: remaining FMV adjustments			(24,349	)			(25,165	)			(26,313	)			(27,539	)			(26,040	)
	Purchased credit impaired loans, net			85,456				90,571				98,672				106,105				94,917
Total loans			$	2,412,186			$	2,368,950			$	2,326,897			$	2,279,143			$	1,741,815
			December 31,				September 30,				June 30,				March 31,				December 31,
PURCHASED PERFORMING FMV			2016				2016				2016				2016				2015*
ADJUSTMENTS			(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Beginning FMV adjustment			$	(4,160	)		$	(4,964	)		$	(6,050	)		$	(2,132	)		$	(2,194	)
Increase from First Capital				-				-				-				(5,200	)			-
Accretion to interest income:
	First Capital			503				623				777				1,027				-
	All other mergers			233				181				309				255				62
Ending FMV adjustment			$	(3,424	)		$	(4,160	)		$	(4,964	)		$	(6,050	)		$	(2,132	)
			December 31,				September 30,				June 30,				March 31,				December 31,
			2016				2016				2016				2016				2015*
PCI FMV ADJUSTMENT			(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Contractual principal and interest			$	125,512			$	133,223			$	143,701			$	153,124			$	140,269
Nonaccretable difference				(10,448	)			(11,529	)			(14,652	)			(14,975	)			(12,843	)
	Expected cash flows as of the end of period			115,064				121,694				129,049				138,149				127,426
Accretable yield				(29,608	)			(31,123	)			(30,377	)			(32,044	)			(32,509	)
Ending basis in PCI loans- estimated fair value			$	85,456			$	90,571			$	98,672			$	106,105			$	94,917
Beginning accretable yield			$	(31,123	)		$	(30,377	)		$	(32,044	)		$	(32,509	)		$	(35,049	)
Increase from First Capital				-				-				-				(1,663	)			-
Loan system servicing income				1,389				1,532				1,434				1,551				1,437
Accretion to interest income				1,285				1,241				1,343				1,471				1,438
Reclass to (from) non-accretable yield				(929	)			(2,691	)			(522	)			(993	)			(553	)
Other adjustments				(230	)			(828	)			(588	)			99				218
Period end accretable yield**			$	(29,608	)		$	(31,123	)		$	(30,377	)		$	(32,044	)		$	(32,509	)

*Derived from audited financial statements.

**Difference between the remaining FMV discount on purchased credit impaired loans and the period end accretable yield is a function of projected estimated expected interest income being included in the period end accretable yield.

PARK STERLING CORPORATION
AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS
THREE MONTHS
($ in thousands)				December 31, 2016										December 31, 2015
				Average				Income/			Yield/			Average				Income/			Yield/
				Balance				Expense			Rate (3)			Balance				Expense			Rate (3)
Assets
Interest-earning assets:
	Loans and loans held for sale, net (1)(2)			$	2,406,142			$	27,066		4.48	%		$	1,705,899			$	19,284		4.48	%
	Fed funds sold				808				1		0.49	%			762				1		0.52	%
	Taxable investment securities				468,632				2,793		2.38	%			487,113				2,677		2.20	%
	Tax-exempt investment securities				13,489				135		4.00	%			14,794				146		3.95	%
	Other interest-earning assets				60,245				217		1.43	%			43,837				131		1.19	%
		Total interest-earning assets			2,949,316				30,212		4.08	%			2,252,405				22,239		3.92	%
Allowance for loan losses					(11,723	)									(8,809	)
Cash and due from banks					35,021										30,518
Premises and equipment					64,595										56,299
Goodwill					63,153										29,197
Intangible assets					11,659										9,737
Other assets					117,278										111,636
		Total assets		$	3,229,299									$	2,480,983
Liabilities and shareholders' equity
Interest-bearing liabilities:
	Interest-bearing demand			$	435,705			$	78		0.07	%		$	392,661			$	61		0.06	%
	Savings and money market				733,880				747		0.40	%			590,993				614		0.41	%
	Time deposits - core				655,455				1,204		0.73	%			470,564				791		0.67	%
	Brokered deposits				152,662				381		0.99	%			132,821				180		0.54	%
		Total interest-bearing deposits			1,977,702				2,410		0.48	%			1,587,039				1,646		0.41	%
	Short-term borrowings				244,620				361		0.59	%			159,458				205		0.51	%
	Long-term debt				29,729				371		4.96	%			4,565				55		4.78	%
	Subordinated debt				33,426				499		5.94	%			24,172				358		5.88	%
		Total borrowed funds			307,775				1,231		1.59	%			188,195				618		1.30	%
		Total interest-bearing liabilities			2,285,477				3,641		0.63	%			1,775,234				2,264		0.51	%
Net interest rate spread									26,571		3.44	%							19,975		3.41	%
Noninterest-bearing demand deposits					537,325										379,413
Other liabilities					46,512										41,665
Shareholders' equity					359,985										284,671
Total liabilities and shareholders' equity				$	3,229,299									$	2,480,983
Net interest margin											3.58	%									3.52	%

(1) Nonaccrual loans are included in the average loan balances.

(2) Interest income and yields for the three months ended December 31, 2016 and 2015 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.

PARK STERLING CORPORATION
AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS
TWELVE MONTHS
($ in thousands)				December 31, 2016										December 31, 2015
				Average				Income/			Yield/			Average				Income/			Yield/
				Balance				Expense			Rate (3)			Balance				Expense			Rate (3)
Assets
Interest-earning assets:
	Loans and loans held for sale, net (1)(2)			$	2,332,205			$	107,440		4.61	%		$	1,658,657			$	77,537		4.67	%
	Fed funds sold				3,118				15		0.48	%			799				2		0.25	%
	Taxable investment securities				495,305				10,703		2.16	%			483,352				10,612		2.20	%
	Tax-exempt investment securities				14,416				556		3.86	%			14,222				579		4.07	%
	Other interest-earning assets				36,781				802		2.18	%			55,889				582		1.04	%
		Total interest-earning assets			2,881,825				119,516		4.15	%			2,212,919				89,312		4.04	%
Allowance for loan losses					(10,655	)									(8,700	)
Cash and due from banks					35,371										19,982
Premises and equipment					65,613										58,100
Goodwill					62,949										29,211
Intangible assets					12,266										10,256
Other assets					123,772										114,647
		Total assets		$	3,171,141									$	2,436,415
Liabilities and shareholders' equity
Interest-bearing liabilities:
	Interest-bearing demand			$	428,933			$	314		0.07	%		$	398,731			$	259		0.06	%
	Savings and money market				739,265				3,194		0.43	%			549,713				1,945		0.35	%
	Time deposits - core				676,302				4,874		0.72	%			464,423				2,729		0.59	%
	Brokered deposits				143,939				1,306		0.91	%			136,489				718		0.53	%
		Total interest-bearing deposits			1,988,439				9,688		0.49	%			1,549,356				5,651		0.36	%
	Short-term borrowings				209,004				1,251		0.60	%			142,890				528		0.37	%
	Long-term debt				47,422				1,600		3.37	%			55,480				367		0.66	%
	Subordinated debt				33,180				1,936		5.83	%			23,920				1,385		5.79	%
		Total borrowed funds			289,606				4,787		1.65	%			222,290				2,280		1.03	%
		Total interest-bearing liabilities			2,278,045				14,475		0.64	%			1,771,646				7,931		0.45	%
Net interest rate spread									105,041		3.51	%							81,381		3.59	%
Noninterest-bearing demand deposits					494,987										349,373
Other liabilities					43,431										33,887
Shareholders' equity					354,678										281,509
Total liabilities and shareholders' equity				$	3,171,141									$	2,436,415
Net interest margin											3.64	%									3.68	%

(1) Nonaccrual loans are included in the average loan balances.

(2) Interest income and yields for the twelve months ended December 31, 2016 and 2015 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.

PARK STERLING CORPORATION
SELECTED RATIOS
($ in thousands, except per share amounts)		December 31,			September 30,			June 30,			March 31,			December 31,
		2016			2016			2016			2016			2015
		Unaudited			Unaudited			Unaudited			Unaudited			Unaudited
ASSET QUALITY
	Nonaccrual loans	$	8,819		$	8,623		$	5,185		$	6,595		$	4,326
	Troubled debt restructuring (and still accruing)		2,892			2,549			2,582			2,696			2,774
	Past due 90 days plus (and still accruing)		1,230			293			-			293			1,151
	Nonperforming loans		12,941			11,465			7,767			9,584			8,251
	OREO		2,438			2,730			3,246			4,410			5,451
	Nonperforming assets		15,379			14,195			11,013			13,994			13,702
	Past due 30-59 days (and still accruing)		1,175			1,104			985			217			1,222
	Past due 60-89 days (and still accruing)		1,836			2,558			5,800			499			1,340
	Nonperforming loans to total loans		0.54	%		0.48	%		0.33	%		0.42	%		0.47	%
	Nonperforming assets to total assets		0.47	%		0.44	%		0.35	%		0.44	%		0.54	%
	Allowance to total loans		0.50	%		0.49	%		0.47	%		0.43	%		0.52	%
	Allowance to nonperforming loans		93.69	%		101.28	%		139.99	%		102.59	%		109.85	%
	Allowance to nonperforming assets		78.84	%		81.80	%		98.73	%		70.26	%		66.15	%
	Past due 30-89 days (accruing) to total loans		0.12	%		0.15	%		0.29	%		0.03	%		0.15	%
	Net charge-offs (recoveries) to average loans (annualized)		0.01	%		-0.02	%		-0.03	%		-0.04	%		0.02	%
CAPITAL
	Book value per common share	$	6.75		$	6.84		$	6.77		$	6.69		$	6.49
	Tangible book value per common share**	$	5.33		$	5.41		$	5.33		$	5.22		$	5.60
	Common shares outstanding		53,116,519			53,305,834			53,332,369			53,038,020			44,854,509
	Weighted average dilutive common shares outstanding		53,147,221			52,743,928			52,704,537			52,599,584			44,322,428
	Common Equity Tier 1 (CET1) capital	$	288,594		$	287,518		$	282,721		$	275,490		$	251,807
	Tier 1 capital		314,043			312,781			307,736			300,354			268,605
	Tier 2 capital		12,125			11,615			10,914			9,832			9,064
	Total risk based capital		326,168			324,396			318,650			310,186			277,669
	Risk weighted assets		2,610,908			2,596,463			2,538,461			2,478,547			1,939,417
	Average assets for leverage ratio		3,146,928			3,108,707			3,058,742			3,076,505			2,441,811
	Common Equity Tier 1 (CET1) ratio		11.05	%		11.07	%		11.14	%		11.11	%		12.98	%
	Tier 1 ratio		12.03	%		12.04	%		12.12	%		12.12	%		13.85	%
	Total risk based capital ratio		12.49	%		12.49	%		12.55	%		12.51	%		14.32	%
	Tier 1 leverage ratio		9.98	%		10.06	%		10.06	%		9.76	%		11.00	%
	Tangible common equity to tangible assets**		8.84	%		9.00	%		9.00	%		8.87	%		9.93	%
LIQUIDITY
	Net loans to total deposits		95.48	%		94.89	%		93.64	%		90.85	%		88.74	%
	Reliance on wholesale funding		17.39	%		17.65	%		16.25	%		15.50	%		16.77	%
INCOME STATEMENT (THREE MONTH RESULTS; ANNUALIZED)
	Return on Average Assets		0.66	%		0.79	%		0.71	%		0.35	%		0.60	%
	Return on Average Common Equity		5.89	%		7.04	%		6.33	%		3.16	%		5.26	%
	Net interest margin (non-tax equivalent)		3.58	%		3.54	%		3.69	%		3.78	%		3.52	%

** Non-GAAP financial measure

Non-GAAP Financial Measures

Tangible assets, tangible common equity, tangible book value, adjusted average tangible common equity, adjusted net income, adjusted noninterest income, adjusted operating revenues, adjusted noninterest expense, adjusted operating expenses, adjusted allowance for loan losses, 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) as supplemental information for comparing the combined allowance and fair market value adjustments to the combined acquired and non-acquired loan portfolios (fair market value adjustments are available only for losses on acquired loans); and (iii) adjusted net income and adjusted noninterest income (which exclude merger-related expenses and gain or loss on sale of securities, as applicable), adjusted noninterest expense (which excludes merger-related expenses), adjusted operating expense (which excludes merger-related expenses and amortization of intangibles) and adjusted operating revenues (which includes net interest income and noninterest income and excludes gain or loss on sale of securities, as applicable) to evaluate core earnings and to facilitate comparisons with peers.

PARK STERLING CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

($ in thousands, except per share amounts)					as of or for the three month period ended																				as of or for the year ended
					December 31,				September 30,				June 30,				March 31,				December 31,				December 31,				December 31,
					2016				2016				2016				2016				2015				2016				2015
					(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Adjusted net income
	Pretax income (as reported)				$	6,841			$	9,516			$	8,597			$	4,615			$	5,727			$	29,569			$	24,748
	Plus: merger-related expenses					2,984				1,487				1,268				5,193				1,396				10,932				1,715
			(gain) loss on sale of securities			(6	)			-				87				6				-				87				(54	)
		Adjusted pretax income				9,819				11,003				9,952				9,814				7,123				40,588				26,409
	Tax expense					2,514				3,691				3,509				3,646				2,332				13,360				8,615
		Adjusted net income			$	7,305			$	7,312			$	6,443			$	6,168			$	4,791			$	27,228			$	17,794
	Divided by: weighted average diluted shares					53,147,221				52,743,928				52,704,537				52,599,584				44,322,428				52,846,949				44,304,888
		Adjusted net income per share				0.14				0.14				0.12			$	0.12			$	0.11				0.52			$	0.40
	Estimated tax rate for adjustment					33.73	%			33.54	%			34.26	%			34.09	%			32.75	%			32.92	%			32.62	%
Adjusted noninterest income
	Noninterest income (as reported)				$	5,845			$	5,447			$	5,375			$	4,727			$	4,523			$	21,394			$	18,243
	Less: (gain) loss on sale of securities					(6	)			-				87				6				-				87				(54	)
		Adjusted noninterest income			$	5,839			$	5,447			$	5,462			$	4,733			$	4,523			$	21,481			$	18,189
Adjusted noninterest expenses
	Noninterest expenses (as reported)				$	25,025			$	21,112			$	21,946			$	26,153			$	18,362			$	94,236			$	74,153
	Less: merger-related expenses					(2,984	)			(1,487	)			(1,268	)			(5,193	)			(1,396	)			(10,932	)			(1,715	)
		Adjusted noninterest expenses			$	22,041			$	19,625			$	20,678			$	20,960			$	16,966			$	83,304			$	72,438
Adjusted operating expense
	Noninterest expenses (as reported)				$	25,025			$	21,112			$	21,946			$	26,153			$	18,362			$	94,236			$	74,153
	Less: merger-related expenses					(2,984	)			(1,487	)			(1,268	)			(5,193	)			(1,396	)			(10,932	)			(1,715	)
	Less: amortization of intangibles					(458	)			(458	)			(458	)			(458	)			(347	)			(1,832	)			(1,389	)
		Adjusted operating expense			$	21,583			$	19,167			$	20,220			$	20,502			$	16,619			$	81,472			$	71,049
Adjusted operating revenues
	Net Interest Income (as reported)				$	26,571			$	25,823			$	26,050			$	26,597			$	19,975			$	105,041			$	81,381
	Plus: noninterest income (as reported)					5,845				5,447				5,375				4,727				4,523				21,394				18,243
	Less: (gain) loss on sale of securities					(6	)			-				87				6				-				87				(54	)
		Adjusted operating revenues			$	32,410			$	31,270			$	31,512			$	31,330			$	24,498			$	126,522			$	99,570
Adjusted operating expense to adjusted operating revenues
	Adjusted operating expense				$	21,583			$	19,167			$	20,220			$	20,502			$	16,619			$	81,472			$	71,049
	Divided by: adjusted operating revenues					32,410				31,270				31,512				31,330				24,498				126,522				99,570
		Adjusted operating expense to adjusted operating revenues				66.59	%			61.30	%			64.17	%			65.44	%			67.84	%			64.39	%			71.36	%
		Noninterest expenses to net interest income plus noninterest income				77.20	%			67.52	%			69.84	%			83.49	%			74.95	%			74.53	%			74.43	%
Adjusted return on average assets
	Adjusted net income				$	7,305			$	7,312			$	6,443			$	6,168			$	4,791			$	27,228			$	17,794
	Divided by: average assets					3,229,299				3,186,799				3,135,031				3,132,625				2,480,983				3,171,141				2,436,415
	Multiplied by: annualization factor					3.98				3.98				4.02				4.02				3.97				1.00				1.00
		Adjusted return on average assets				0.90	%			0.91	%			0.83	%			0.79	%			0.77	%			0.86	%			0.73	%
		Return on average assets				0.66	%			0.79	%			0.71	%			0.35	%			0.60	%			0.63	%			0.68	%

PARK STERLING CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

($ in thousands, except per share amounts)				as of or for the three month period ended																				as of or for the year ended
				December 31,				September 30,				June 30,				March 31,				December 31,				December 31,				December 31,
				2016				2016				2016				2016				2015				2016				2015
				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Adjusted return on average equity
	Adjusted net income			$	7,305			$	7,312			$	6,443			$	6,168			$	4,791			$	27,228			$	17,794
	Divided by: average common equity				359,985				357,577				352,505				348,556				284,671				354,678				281,509
	Multiplied by: annualization factor				3.98				3.98				4.02				4.02				3.97				1.00				1.00
		Adjusted return on average equity			8.07	%			8.14	%			7.35	%			7.12	%			6.68	%			7.68	%			6.32	%
		Return on average equity			5.89	%			7.04	%			6.33	%			3.16	%			5.26	%			0.00	%			0.00	%
Tangible common equity to tangible assets
	Total assets			$	3,255,396			$	3,226,938			$	3,174,075			$	3,153,737			$	2,514,264			$	3,255,396			$	2,514,264
	Less: intangible assets				(74,755	)			(74,926	)			(75,551	)			(76,520	)			(38,768	)			(74,755	)			(38,768	)
		Tangible assets		$	3,180,641			$	3,152,012			$	3,098,524			$	3,077,217			$	2,475,496			$	3,180,641			$	2,475,496
	Total common equity			$	355,845			$	358,696			$	354,450			$	349,511			$	284,704			$	355,845			$	284,704
	Less: intangible assets				(74,755	)			(74,926	)			(75,551	)			(76,520	)			(38,768	)			(74,755	)			(38,768	)
		Tangible common equity		$	281,090			$	283,770			$	278,899			$	272,991			$	245,936			$	281,090			$	245,936
	Tangible common equity			$	281,090			$	283,770			$	278,899			$	272,991			$	245,936			$	281,090			$	245,936
	Divided by: tangible assets				3,180,641				3,152,012				3,098,524				3,077,217				2,475,496				3,180,641				2,475,496
		Tangible common equity to tangible assets			8.84	%			9.00	%			9.00	%			8.87	%			9.93	%			8.84	%			9.93	%
		Common equity to assets			10.93	%			11.12	%			11.17	%			11.08	%			11.32	%			10.93	%			11.32	%
Tangible book value per share
	Issued and outstanding shares				53,116,519				53,305,834				53,332,369				53,038,020				44,854,509				53,116,519				44,854,509
	Less: nondilutive restricted stock awards				(405,732	)			(837,561	)			(969,991	)			(785,658	)			(959,305	)			(405,732	)			(959,305	)
		Period end dilutive shares			52,710,787				52,468,273				52,362,378				52,252,362				43,895,204				52,710,787				43,895,204
	Tangible common equity			$	281,090			$	283,770			$	278,899			$	272,991			$	245,936			$	281,090			$	245,936
	Divided by: period end dilutive shares				52,710,787				52,468,273				52,362,378				52,252,362				43,895,204				52,710,787				43,895,204
		Tangible common book value per share		$	5.33			$	5.41			$	5.33			$	5.22			$	5.60			$	5.33			$	5.60
		Common book value per share		$	6.75			$	6.84			$	6.77			$	6.69			$	6.49			$	6.75			$	6.49
Adjusted return on average tangible common equity
	Average common equity			$	359,985			$	357,577			$	352,505			$	348,556			$	284,671			$	354,678			$	281,509
	Less: average intangible assets				(74,812	)			(75,196	)			(76,083	)			(74,773	)			(38,934	)			(75,215	)			(39,467	)
		Average tangible common equity		$	285,173			$	282,381			$	276,422			$	273,783			$	245,737			$	279,463			$	242,042
	Net income			$	5,331			$	6,324			$	5,552			$	2,741			$	3,775			$	19,948			$	16,606
	Divided by: average tangible common equity				285,173				282,381				276,422				273,783				245,737				279,463				242,042
	Multiplied by: annualization factor				3.98				3.98				4.02				4.02				3.97				1.00				1.00
		Return on average tangible common equity			7.44	%			8.91	%			8.08	%			4.03	%			6.09	%			7.14	%			6.86	%
	Adjusted net income			$	7,305			$	7,312			$	6,443			$	6,168			$	4,791			$	27,228			$	17,794
	Divided by: average tangible common equity				285,173				282,381				276,422				273,783				245,737				279,463				242,042
	Multiplied by: annualization factor				3.98				3.98				4.02				4.02				3.97				1.00				1.00
		Adjusted return on average tangible common equity			10.19	%			10.31	%			9.37	%			9.06	%			7.74	%			9.74	%			7.35	%
Adjusted allowance for loan losses
	Allowance for loan losses			$	12,125			$	11,612			$	10,873			$	9,832			$	9,064			$	12,125			$	9,064
	Plus: acquisition accounting FMV adjustments to acquired loans				27,773				29,325				31,277				33,589				28,173				27,773				28,173
		Adjusted allowance for loan losses		$	39,898			$	40,937			$	42,150			$	43,421			$	37,237			$	39,898			$	37,237
	Divided by: total loans (excluding LHFS before FMV adjustments)			$	2,439,959			$	2,398,275			$	2,358,174			$	2,312,732			$	1,769,988			$	2,439,959			$	1,769,988
		Adjusted allowance for loan losses to total loans			1.64	%			1.71	%			1.79	%			1.88	%			2.10	%			1.64	%			2.10	%
		Allowance for loan losses to total loans			0.50	%			0.49	%			0.47	%			0.43	%			0.52	%			0.50	%			0.52	%