Sterling Bancshares Inc. in Houston reported Thursday that it returned to profitability in the fourth quarter, after a sharp loss in the third quarter.

The $4.9 billion-asset company reported earnings of $1.7 million for the fourth quarter, down 82% from a year earlier. Sterling had a third-quarter loss of $24.7 million.

For the year, Sterling reported a loss of $13 million, compared with earnings of $38.6 million for 2008.

The earnings decline was fueled by a 16.5% reduction in net interest income, which totaled $35.7 million at the end of the quarter. Net interest income was reduced by less income from loans as well as a provision for loan losses that increased 46%, to $11 million.

Sterling's nonperforming assets totaled $119.3 million, up 28% from a year earlier, making up 2.42% of total assets. Sterling also reported the sale of a $16 million nonperforming loan it had made to a company that filed for bankruptcy protection in 2009. Despite the sale, nonperforming assets rose 12% from the third quarter.

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