Key Performance Highlights for the Three Months ended September 30, 2017 vs. September 30, 2016
| ($ in thousands except per share amounts) | GAAP / As Reported | Non-GAAP / As Adjusted1 | |||||||||||||||||||
| 9/30/2016 | 9/30/2017 | Change % / bps | 9/30/2016 | 9/30/2017 | Change % / bps | ||||||||||||||||
| Total revenue2 | $ | 122,169 | $ | 134,061 | 9.7 | % | $ | 122,371 | $ | 138,681 | 13.3 | % | |||||||||
| Net income | 37,422 | 44,852 | 19.9 | 37,793 | 47,865 | 26.7 | |||||||||||||||
| Diluted EPS | 0.29 | 0.33 | 13.8 | 0.29 | 0.35 | 20.7 | |||||||||||||||
| Net interest margin3 | 3.41 | % | 3.29 | % | (12 | ) | 3.53 | % | 3.42 | % | (11 | ) | |||||||||
| Return on average tangible equity1 | 15.13 | 14.86 | (27 | ) | 15.28 | 15.85 | 57 | ||||||||||||||
| Return on average tangible assets1 | 1.20 | 1.19 | (1 | ) | 1.21 | 1.27 | 6 | ||||||||||||||
| Operating efficiency ratio4 | 51.0 | 46.7 | (430 | ) | 45.8 | 40.6 | (520 | ) | |||||||||||||
- Total portfolio loans gross reached a record $10.5 billion as of September 30, 2017.
- Loan growth was $1.3 billion, or 14.4% (end of period balances, including acquired loans).
- Deposit growth was $846.2 million, or 8.3% (end of period balances).
- Loans to deposits ratio of 95.0%; total deposits reached $11.0 billion at September 30, 2017.
Key Performance Highlights for the Three Months ended September 30, 2017 vs. linked quarter June 30, 2017
| ($ in thousands except per share amounts) | GAAP / As Reported | Non-GAAP / As Adjusted1 | |||||||||||||||||||
| 6/30/2017 | 9/30/2017 | Change % / bps | 6/30/2017 | 9/30/2017 | Change % / bps | ||||||||||||||||
| Total revenue2 | $ | 126,876 | $ | 134,061 | 5.7 | % | $ | 131,301 | $ | 138,681 | 5.6 | % | |||||||||
| Net income | 42,400 | 44,852 | 5.8 | 44,393 | 47,865 | 7.8 | |||||||||||||||
| Diluted EPS | 0.31 | 0.33 | 6.5 | 0.33 | 0.35 | 6.1 | |||||||||||||||
| Net interest margin3 | 3.35 | % | 3.29 | % | (6 | ) | 3.47 | % | 3.42 | % | (5 | ) | |||||||||
| Return on average tangible equity1 | 14.74 | 14.86 | 12 | 15.43 | 15.85 | 42 | |||||||||||||||
| Return on average tangible assets1 | 1.22 | 1.19 | (3 | ) | 1.28 | 1.27 | (1 | ) | |||||||||||||
| Operating efficiency ratio4 | 47.0 | 46.7 | (30 | ) | 42.0 | 40.6 | (140 | ) | |||||||||||||
- Annualized loan growth of 10.1% (end of period balances) and 16.2% (average balances) over the linked quarter.
- Total retail, commercial and municipal deposits increased by $529.0 million, or annualized growth of 23.1%.
- As adjusted diluted EPS and return on average tangible equity reached record highs.
- As adjusted operating efficiency ratio1 decreased to a record low of 40.6%.
- Completed merger with Astoria Financial Corporation on October 2, 2017 (the “Astoria Merger”). The combined company had approximately $31 billion in assets, $20 billion in gross loans, and $20 billion in deposits at close.
____________________
1. Non-GAAP / as adjusted measures are defined in the non-GAAP tables beginning on page 16.
2. Total revenue is equal to net interest income plus non interest income. Total revenue as adjusted is equal to tax equivalent net interest income plus non-interest income excluding securities gains and losses.
3. Net interest margin is equal to net interest income as a percentage of interest earning assets. Net interest margin as adjusted is equal to net
interest margin plus the tax equivalent adjustment for tax exempt securities.
4. See page 18 for an explanation of the operating efficiency ratio.
MONTEBELLO, N.Y., Oct. 24, 2017 (GLOBE NEWSWIRE) -- Sterling Bancorp (NYSE:STL) (the “Company”), the parent company of Sterling National Bank (the “Bank”), today announced results for the three and nine months ended September 30, 2017. Net income for the quarter ended September 30, 2017 was $44.9 million, or $0.33 per diluted share, compared to net income of $42.4 million, or $0.31 per diluted share, for the linked quarter ended June 30, 2017 and net income of $37.4 million, or $0.29 per diluted share, for the three months ended September 30, 2016.
Net income for the nine months ended September 30, 2017 was $126.3 million, or $0.93 per diluted share, compared to net income of $99.0 million, or $0.76 per diluted share, for the nine months ended September 30, 2016.
President’s Comments
Jack Kopnisky, President and Chief Executive Officer, commented: “Our positive momentum in operating performance continued in the third quarter of 2017, as we reached new records in loans, deposits, revenues and profitability. As of September 30, 2017, our total assets reached $16.8 billion, compared to $13.6 billion a year ago. Our total portfolio loans, gross were $10.5 billion, compared to $9.2 billion a year ago, and our total deposits were $11.0 billion, compared to $10.2 billion a year ago.
“We had strong earnings performance in the quarter. Our GAAP net income was $44.9 million, or $0.33 per diluted share. Our adjusted net income was $47.9 million and adjusted diluted earnings per share were $0.35, compared to $37.8 million and $0.29, respectively, for the third quarter of 2016. This represents growth in adjusted net income and adjusted diluted earnings per share of 26.7% and 20.7%, respectively. We continue to focus on controlling our operating expenses and improving our operating efficiency. During the quarter, our reported operating efficiency was 46.7% and our adjusted operating efficiency ratio was 40.6%. This represents a decrease of 430 and 520 basis points, respectively, relative to the same quarter a year ago. We also continue to improve our operating leverage. For the quarter ended September 30, 2017, adjusted total revenue grew 13.3% while adjusted non-interest expense increased 0.6% relative to the same quarter a year ago. This is a ratio of 22.2x growth in revenues to growth in operating expenses.
“We have a strong balance sheet with a loan portfolio that has a balanced mix of 46.1% commercial and industrial loans, 42.6% commercial real estate loans, 2.3% acquisition, development and construction loans and 9.0% consumer and residential mortgage loans. During the quarter, the weighted average yield on loans was 4.67%, an increase of nine basis points over the linked quarter. Excluding the impact of accretion income on acquired loans, yield on loans increased seven basis points to 4.54%. We continue to maintain a strong funding profile with a loans to deposits ratio of approximately 95.0% and a weighted average cost of deposits of 0.50%. Our net interest margin for the quarter was 3.42% on a tax equivalent basis, which represented a decrease of five basis points from the linked quarter. The decrease was mainly due to a shift in the composition of our earning assets as we continued to purchase investment securities in anticipation of repositioning our investment portfolio for the Astoria Merger. The average balance of securities increased by $481.5 million to $3.9 billion relative to the linked quarter; this comprised 27.1% of our earning assets in the quarter compared to 25.3% in the linked quarter.
“On October 2, 2017, we completed the Astoria Merger. Astoria operates in highly attractive markets in New York City and Long Island and has a premier low cost deposit base. The Astoria Merger will allow us to further accelerate our strategy of building a high performing regional bank with diversified asset, funding and revenue mix. At closing, the combined company had $31 billion in assets, $20 billion in gross loans and $20 billion in deposits in the Greater New York metropolitan area. The merger was significantly accretive to tangible book value, and is expected to be immediately accretive to earnings per share. The combined company has a robust capital position, substantial excess liquidity and is well-positioned to deliver long-term growth and profitability.
“Lastly, we have declared a dividend on our common stock of $0.07 per share payable on November 20, 2017 to holders of record as of November 6, 2017. In connection with the Astoria Merger, we also issued $135 million of 6.50% non-cumulative perpetual preferred securities to holder’s of Astoria’s preferred securities, and paid a dividend on these securities on October 16, 2017. Thank you to all of our clients, colleagues and stockholders for your continued support, and we look forward to working with our new partners at Astoria to build a stronger, more diversified and more profitable company.”
Reconciliation of GAAP Results to Adjusted Results (non-GAAP)
GAAP net income of $44.9 million, or $0.33 per diluted share, for the third quarter of 2017, included a pre-tax net loss on sale of securities of $21 thousand, a pre-tax charge of $4.1 million due to merger-related expense associated with the Astoria Merger, and the pre-tax amortization of non-compete agreements and acquired customer list intangibles of $333 thousand. Excluding the impact of these items and their corresponding tax adjustment at the Company’s estimated effective tax rate of 32.5% for full year 2017, adjusted net income was $47.9 million, or $0.35 per diluted share.
Non-GAAP financial measures include references to the terms “adjusted” or “excluding”. See the reconciliation of the Company’s non-GAAP financial measures beginning on page 16.
Net Interest Income and Margin
| ($ in thousands) | For the three months ended | Change % / bps | |||||||||||||||
| 9/30/2016 | 6/30/2017 | 9/30/2017 | Y-o-Y | Linked Qtr | |||||||||||||
| Interest income | $ | 118,161 | $ | 134,263 | $ | 145,692 | 23.3 | % | 8.5 | % | |||||||
| Interest expense | 15,031 | 21,005 | 25,619 | 70.4 | 22.0 | ||||||||||||
| Net interest income | $ | 103,130 | $ | 113,258 | $ | 120,073 | 16.4 | 6.0 | |||||||||
| Accretion income on acquired loans | $ | 4,381 | $ | 2,888 | $ | 3,397 | (22.5 | )% | 17.6 | % | |||||||
| Yield on loans | 4.57 | % | 4.58 | % | 4.67 | % | 10 | 9 | |||||||||
| Tax equivalent yield on investment securities | 2.74 | 2.93 | 2.87 | 13 | (6 | ) | |||||||||||
| Tax equivalent yield on interest earning assets | 4.03 | 4.09 | 4.12 | 9 | 3 | ||||||||||||
| Cost of total deposits | 0.37 | 0.43 | 0.50 | 13 | 7 | ||||||||||||
| Cost of interest bearing deposits | 0.54 | 0.62 | 0.69 | 15 | 7 | ||||||||||||
| Cost of borrowings | 1.75 | 1.75 | 1.75 | — | — | ||||||||||||
| Tax equivalent net interest margin5 | 3.53 | 3.47 | 3.42 | (11 | ) | (5 | ) | ||||||||||
| Average loans, includes loans held for sale | $ | 8,744,508 | $ | 9,786,423 | $ | 10,186,414 | 16.5 | % | 4.1 | % | |||||||
| Average investment securities | 2,937,708 | 3,434,535 | 3,916,076 | 33.3 | 14.0 | ||||||||||||
| Average total earning assets | 12,015,838 | 13,562,853 | 14,471,120 | 20.4 | 6.7 | ||||||||||||
| Average deposits and mortgage escrow | 9,915,494 | 10,285,349 | 10,691,006 | 7.8 | 3.9 | ||||||||||||
| 5 Tax equivalent net interest margin is equal to net interest income plus the tax equivalent adjustment for tax exempt securities divided by average earning assets. | |||||||||||||||||
Third quarter 2017 compared with third quarter 2016
Net interest income was $120.1 million, an increase of $16.9 million compared to the third quarter of 2016. This was mainly due to an increase in average loans originated through our commercial banking teams. Other key components of the changes in net interest income and net interest margin were the following:
- The yield on loans was 4.67%, compared to 4.57% for the three months ended September 30, 2016. The increase in yield on loans was mainly due to increases in market rates of interest on loans. This was partially offset by lower accretion income on acquired loans, which was $3.4 million in the third quarter of 2017 compared to $4.4 million in the third quarter of 2016.
- Average commercial loans were $9.2 billion compared to $7.7 billion in the third quarter of 2016, an increase of $1.5 billion or 19.6%.
- The tax equivalent yield on investment securities increased 13 basis points to 2.87%. This was mainly due to an increase in the proportion of tax exempt securities in the investment portfolio and an increase in market interest rates. Average tax exempt securities balances grew to $1.4 billion for the quarter ended September 30, 2017, compared to $1.1 billion in the third quarter of 2016.
- Average investment securities to average total earning assets were 27.1% in the quarter compared to 24.4% in the same quarter a year ago.
- The tax equivalent yield on interest earning assets increased nine basis points between the periods to 4.12%.
- The cost of total deposits was 50 basis points and the cost of borrowings was 1.75%, compared to 37 basis points and 1.75%, respectively, for the same period a year ago.
- The total cost of interest bearing liabilities increased 23 basis points to 0.97% for the third quarter of 2017 compared to 0.74% for third quarter of 2016. This increase was due to an increase in market interest rates, which increased the cost of wholesale, brokered and certificates of deposit between the periods.
Tax equivalent net interest margin was 3.42% for the third quarter of 2017 compared to 3.53% for the third quarter of 2016. In anticipation of the Astoria Merger, we significantly increased our purchases and average balances of investment securities as we will reposition the combined investment portfolio post-merger to meet our yield, duration and interest rate risk objectives. Average investment securities were $3.9 billion, or 27.1%, of average earning assets for the third quarter of 2017 compared to $2.9 billion, or 24.4%, of average earning assets for the third quarter of 2016. The increase in securities as a percentage of total average earning assets reduced our net interest margin by approximately five basis points. The remainder of the decline in net interest margin between the periods was due to lower accretion income and higher cost of deposits.
Third quarter 2017 compared with linked quarter ended June 30, 2017
Net interest income increased $6.8 million, or 23.9% annualized, compared to the linked quarter ended June 30, 2017. The increase in net interest income in the third quarter of 2017 relative to the linked quarter was mainly due to the increase in the average balance of loans and investment securities outstanding in the third quarter of 2017. Key components of the changes in net interest income in the linked quarter were the following:
- The yield on loans was 4.67% compared to 4.58% for the linked quarter, an increase of nine basis points, which was mainly due to an increase in market interest rates and accretion income on acquired loans.
- Accretion income on acquired loans was $3.4 million in the third quarter of 2017 compared to $2.9 million in the linked quarter. Accretion income in the third quarter of 2017 included $1.0 million from the prepayment of one purchase credit impaired construction loan.
- The average balance of loans increased $400.0 million, or 16.2% on an annualized basis, for the third quarter of 2017 compared to the linked quarter. Based on end of period balances, total loans increased $261.2 million, or 10.1% annualized relative to the linked quarter.
- The tax equivalent yield on investment securities decreased six basis points to 2.87% in the third quarter of 2017. Average investment securities increased $481.5 million compared to the linked quarter.
- The tax equivalent yield on interest earning assets increased three basis points in the third quarter of 2017 to 4.12% compared to 4.09% in the linked quarter.
- The cost of total deposits increased seven basis points to 50 basis points in the quarter. The total cost of borrowings was unchanged at 1.75%.
- Average interest bearing deposits increased by $548.8 million and average borrowings increased $465.2 million relative to the linked quarter, which resulted in an increase of $4.6 million in interest expense.
The tax equivalent net interest margin was 3.42% compared to 3.47% in the linked quarter. As mentioned previously, the increase in the securities portfolio as a percentage of total average earning assets reduced our net interest margin by approximately five basis points in the quarter.
Non-interest Income
| ($ in thousands) | For the three months ended | Change % | |||||||||||||||
| 9/30/2016 | 6/30/2017 | 9/30/2017 | Y-o-Y | Linked Qtr | |||||||||||||
| Total non-interest income | $ | 19,039 | $ | 13,618 | $ | 13,988 | (26.5 | )% | 2.7 | % | |||||||
| Net gain (loss) on sale of securities | 3,433 | (230 | ) | (21 | ) | (100.6 | ) | NM | |||||||||
| Adjusted non-interest income | $ | 15,606 | $ | 13,848 | $ | 14,009 | (10.2 | ) | 1.2 | ||||||||
Third quarter 2017 compared with third quarter 2016
Excluding net gain (loss) on sale of securities, adjusted non-interest income declined $1.6 million in the third quarter of 2017 to $14.0 million compared to $15.6 million in the same quarter last year. The change was mainly due to a decrease in mortgage banking fee income of $1.0 million resulting from the sale of our residential mortgage originations business in the third quarter of 2016; a decline in investment management fees of $815 thousand, mainly due to the sale of our trust division in the fourth quarter of 2016; and a decline in bank owned life insurance income of $571 thousand. Partially offsetting these decreases was an increase in other non-interest income of $1.1 million during the third quarter of 2017, which was due to an increase in letters of credit fees, higher other commissions and loan fees, syndication fees and loan swap fees generated by our commercial banking teams.
Third quarter 2017 compared with linked quarter ended June 30, 2017
Excluding net gain (loss) on sale of securities, adjusted non-interest income increased approximately $161 thousand from $13.8 million in the linked quarter ended June 30, 2017 to $14.0 million in the third quarter of 2017. This was mainly due to higher accounts receivable and factoring commissions of $627 thousand, which are seasonal businesses that experience higher volumes in the second half of the year. Other non-interest income decreased by $133 thousand due to a decrease in bank owned life insurance of $332 thousand. This decrease was partially offset by an increase in loan swap fees and higher investment management fees.
Non-interest Expense
| ($ in thousands) | For the three months ended | Change % / bps | |||||||||||||||
| 9/30/2016 | 6/30/2017 | 9/30/2017 | Y-o-Y | Linked Qtr | |||||||||||||
| Compensation and benefits | $ | 32,501 | $ | 31,394 | $ | 32,433 | (0.2 | )% | 3.3 | % | |||||||
| Stock-based compensation plans | 1,673 | 1,897 | 1,969 | 17.7 | 3.8 | ||||||||||||
| Occupancy and office operations | 8,021 | 8,833 | 8,583 | 7.0 | (2.8 | ) | |||||||||||
| Amortization of intangible assets | 3,241 | 2,187 | 2,166 | (33.2 | ) | (1.0 | ) | ||||||||||
| FDIC insurance and regulatory assessments | 2,151 | 2,034 | 2,310 | 7.4 | 13.6 | ||||||||||||
| Other real estate owned, net (“OREO”) | 721 | 112 | 894 | 24.0 | 698.2 | ||||||||||||
| Merger-related expense | — | 1,766 | 4,109 | — | 132.7 | ||||||||||||
| Charge for asset write-downs, retention and severance | 2,000 | 603 | — | (100.0 | ) | (100.0 | ) | ||||||||||
| Loss on extinguishment of borrowings | 1,013 | — | — | (100.0 | ) | — | |||||||||||
| Other expenses | 10,935 | 10,831 | 10,153 | (7.2 | ) | (6.3 | ) | ||||||||||
| Total non-interest expense | $ | 62,256 | $ | 59,657 | $ | 62,617 | 0.6 | 5.0 | |||||||||
| Full time equivalent employees (“FTEs”) at period end | 995 | 997 | 992 | (0.3 | ) | (0.5 | ) | ||||||||||
| Financial centers at period end | 41 | 40 | 40 | (2.4 | ) | — | |||||||||||
| Efficiency ratio, as reported | 51.0 | % | 47.0 | % | 46.7 | % | 430 | 30 | |||||||||
| Efficiency ratio, as adjusted6 | 45.8 | 42.0 | 40.6 | 520 | 140 | ||||||||||||
| 6 See a reconciliation of non-GAAP financial measures beginning on page 16. | |||||||||||||||||
Third quarter 2017 compared with third quarter 2016
Total non-interest expense increased $361 thousand relative to the third quarter of 2016. Key components of the change in non-interest expense were the following:
- Compensation and benefits decreased $68 thousand between the periods. Total FTE declined to 992, which was mainly due to the sale of the residential mortgage originations business, the sale of the trust division and the consolidation of several financial centers over the last 12 months, which was offset by new hires of commercial bankers and risk management personnel.
- Occupancy and office operations increased $562 thousand mainly due to higher equipment expense.
- OREO expense increased $173 thousand to $894 thousand in the third quarter of 2017, compared to $721 thousand for the third quarter of 2016. This was mainly due to write-downs on the value of properties based on updated appraisals.
- Merger-related expense was $4.1 million in the third quarter of 2017. We did not incur merger-related expense in the third quarter of 2016.
- Loss on extinguishment of borrowings of $1.0 million incurred in the third quarter of 2016 was related to the repayment of $23 million of senior notes.
- Charge for asset write-downs of $2.0 million in the third quarter of 2016 was related to the divestiture of our residential mortgage originations business.
- Other expenses declined $0.8 million mainly due to the sale of the residential mortgage originations business and the sale of the trust division.
Third quarter 2017 compared with linked quarter ended June 30, 2017
Total non-interest expense increased nearly $3.0 million from $59.7 million in the linked quarter to $62.6 million in the third quarter of 2017. Key components of the change in non-interest expense were the following:
- Compensation and benefits increased $1.0 million and was $32.4 million in the third quarter of 2017 compared to $31.4 million in the linked quarter. This was mainly due to a $622 thousand increase in the cost of employee benefits associated with our healthcare plan.
- Occupancy and office operations decreased $250 thousand mainly due to lower rent and building maintenance expenses.
- Merger-related expense was $4.1 million in the third quarter of 2017 compared to $1.8 million in the linked quarter. The expense in the third quarter included mainly professional fees, client communications, and temporary signage related to the Astoria Merger.
- OREO expense increased $782 thousand in the third quarter of 2017 due to write-downs of properties to reflect their current fair values based on updated appraisals and the payment of property taxes.
- Other expense declined $678 thousand in the third quarter of 2017 and was $10.2 million compared to $10.8 million in the linked quarter. The decline was mainly due to lower professional fees.
Taxes
We recorded income tax expense at an effective tax rate of 32.5% for the third quarter of 2017, compared to 31.2% in the third quarter of 2016. The effective tax rate in the linked quarter ended June 30, 2017 was 32.4%. We anticipate that due to the closing of the Astoria Merger on October 2, 2017, our effective tax rate will decrease in the fourth quarter as a result of merger-related expense and other charges that will be incurred.
Key Balance Sheet Highlights as of September 30, 2017
| ($ in thousands) | As of | Change % / bps | |||||||||||||||
| 9/30/2016 | 6/30/2017 | 9/30/2017 | Y-o-Y | Linked Qtr | |||||||||||||
| Total assets | $ | 13,617,228 | $ | 15,376,676 | $ | 16,780,097 | 23.2 | % | 9.1 | % | |||||||
| Total portfolio loans, gross | 9,168,741 | 10,232,317 | 10,493,535 | 14.4 | 2.6 | ||||||||||||
| Commercial & industrial (“C&I”) loans | 4,097,767 | 4,619,789 | 4,841,664 | 18.2 | 4.8 | ||||||||||||
| Commercial real estate loans | 4,107,072 | 4,430,985 | 4,473,245 | 8.9 | 1.0 | ||||||||||||
| Acquisition, development and construction loans | 211,896 | 223,713 | 236,456 | 11.6 | 5.7 | ||||||||||||
| Total commercial loans | 8,204,839 | 9,274,487 | 9,551,365 | 16.4 | 3.0 | ||||||||||||
| Total deposits | 10,197,253 | 10,502,710 | 11,043,438 | 8.3 | 5.1 | ||||||||||||
| Core deposits6 | 9,002,189 | 9,230,918 | 9,753,052 | 8.3 | 5.7 | ||||||||||||
| Investment securities | 2,797,717 | 3,552,176 | 4,515,650 | 61.4 | 27.1 | ||||||||||||
| Total borrowings | 1,451,526 | 2,661,838 | 3,453,783 | 137.9 | 29.8 | ||||||||||||
| Loans to deposits | 89.9 | % | 97.4 | % | 95.0 | % | 510 | (240 | ) | ||||||||
| Core deposits to total deposits | 88.3 | 87.9 | 88.3 | — | 40 | ||||||||||||
| Investment securities to total assets | 20.5 | 23.1 | 26.9 | 640 | 380 | ||||||||||||
| 6 Core deposits include retail, commercial and municipal transaction, money market and savings accounts and exclude certificates of deposit and brokered deposits, except for reciprocal Certificate of Deposit Account Registry balances. | |||||||||||||||||
Highlights in balance sheet items as of September 30, 2017 were the following:
- C&I loans (which include traditional C&I, asset-based lending, payroll finance, warehouse lending, factored receivables, equipment financing and public sector finance loans) represented 46.1%, commercial real estate loans represented 42.6%, consumer and residential mortgage loans combined represented 9.0%, and acquisition, development and construction loans represented 2.3% of the total loan portfolio. Loan growth was mainly driven by our commercial banking teams.
- Commercial loan growth, which includes all C&I loans, commercial real estate (including multi-family) and acquisition, development and construction loans, was $1.3 billion for the twelve months ended September 30, 2017. Commercial loan growth was $276.9 million relative to the linked quarter.
- Aggregate exposure to taxi medallion relationships was $48.3 million, which represented 0.46% of total loans as of September 30, 2017, a decline of $3.4 million from $51.7 million as of December 31, 2016. The decline was due to repayments.
- Total deposits at September 30, 2017 increased $540.7 million, or 5.1%, compared to June 30, 2017, and increased $846.2 million, or 8.3%, over September 30, 2016. The increase in deposits was mainly due to growth in commercial deposits.
- Core deposits at September 30, 2017 increased $522.1 million, or 5.7%, compared to June 30, 2017. The increase was mainly due to growth in commercial and municipal deposits. Core deposits increased $750.9 million, or 8.3%, over September 30, 2016.6
- Municipal deposits, excluding municipal certificates of deposit, at September 30, 2017 were $1.7 billion and increased by $464.0 million relative to the linked quarter. Municipal deposits experience seasonal highs at the end of the third quarter.
- Investment securities increased by $963.5 million relative to the linked quarter, and represented 26.9% of total assets at September 30, 2017. As previously discussed, we increased our investment securities holdings in anticipation of the Astoria Merger.
Credit Quality
| ($ in thousands) | For the three months ended | Change % / bps | |||||||||||||||
| 9/30/2016 | 6/30/2017 | 9/30/2017 | Y-o-Y | Linked Qtr | |||||||||||||
| Provision for loan losses | $ | 5,500 | $ | 4,500 | $ | 5,000 | (9.1 | )% | 11.1 | % | |||||||
| Net charge-offs | 1,960 | 1,288 | 3,023 | 54.2 | 134.7 | ||||||||||||
| Allowance for loan losses | 59,405 | 70,151 | 72,128 | 21.4 | 2.8 | ||||||||||||
| Non-performing loans | 81,067 | 71,351 | 69,452 | (14.3 | ) | (2.7 | ) | ||||||||||
| Net charge-offs annualized | 0.09 | % | 0.05 | % | 0.12 | % | 3 | 7 | |||||||||
| Allowance for loan losses to total loans | 0.65 | 0.69 | 0.69 | 4 | — | ||||||||||||
| Allowance for loan losses to non-performing loans | 73.3 | 98.3 | 103.9 | 3,060 | 560 | ||||||||||||
Provision for loan losses was $5.0 million for the third quarter of 2017 compared to $4.5 million in the linked quarter and $5.5 million in the same period a year ago. In the third quarter of 2017, provision for loan losses was $2.0 million in excess of net charge-offs of $3.0 million. Allowance coverage ratios were 0.69% of total loans and 103.9% of non-performing loans at September 30, 2017. Non-performing loans decreased by $1.9 million to $69.5 million at September 30, 2017.
Capital
| ($ in thousands, except share and per share data) | As of | Change % / bps | |||||||||||||||
| 9/30/2016 | 6/30/2017 | 9/30/2017 | Y-o-Y | Three months | |||||||||||||
| Total stockholders’ equity | $ | 1,765,160 | $ | 1,931,383 | $ | 1,971,480 | 11.7 | % | 2.1 | % | |||||||
| Goodwill and intangible assets | 765,858 | 758,484 | 756,290 | (1.2 | ) | (0.3 | ) | ||||||||||
| Tangible stockholders’ equity | $ | 999,302 | $ | 1,172,899 | $ | 1,215,190 | 21.6 | 3.6 | |||||||||
| Common shares outstanding | 130,853,673 | 135,658,226 | 135,807,544 | 3.8 | 0.1 | ||||||||||||
| Book value per share | $ | 13.49 | $ | 14.24 | $ | 14.52 | 7.6 | 2.0 | |||||||||
| Tangible book value per share7 | 7.64 | 8.65 | 8.95 | 17.1 | 3.5 | ||||||||||||
| Tangible equity to tangible assets7 | 7.78 | % | 8.02 | % | 7.58 | % | (20 | ) | (44 | ) | |||||||
| Estimated Tier 1 leverage ratio - Company | 8.31 | 8.72 | 8.42 | 11 | (30 | ) | |||||||||||
| Estimated Tier 1 leverage ratio - Bank | 8.72 | 8.89 | 8.49 | (23 | ) | (40 | ) | ||||||||||
| 7 See a reconciliation of non-GAAP financial measures beginning on page 16. | |||||||||||||||||
The increase in stockholders’ equity of $40.1 million to $2.0 billion as of September 30, 2017 compared to June 30, 2017 was mainly due to net income of $44.9 million. Also contributing to the increase was a decline in accumulated other comprehensive loss of $2.7 million due to an increase in the fair value of our available for sale securities portfolio. Stock-based compensation activity increased stockholders’ equity by $2.0 million. These increases were partially offset by declared dividends of $9.5 million.
Total goodwill and other intangible assets were $756.3 million at September 30, 2017, a decrease of $2.2 million compared to June 30, 2017, which was due to amortization of intangibles.
For the quarter ended September 30, 2017, basic and diluted weighted average common shares outstanding increased to 135.3 million and 136.0 million, respectively, compared to 135.3 million and 135.9 million, respectively, for the quarter ended June 30, 2017. The increase in the diluted weighted average shares was mainly due to option exercises and grants to newly hired personnel. Total common shares outstanding at September 30, 2017 were approximately 135.8 million.
Tangible book value per share was $8.95 at September 30, 2017, which represented an increase of 17.1% over a year ago.
Conference Call Information
Sterling Bancorp will host a teleconference and webcast on Wednesday, October 25, 2017 at 10:30 AM Eastern Time to discuss the Company’s results. Interested parties are invited to listen to the webcast and view accompanying slides on the Company’s website at www.sterlingbancorp.com. Analysts are invited to listen by dialing (800) 239-9838, Conference ID #1602063. A replay of the teleconference can be accessed through the Company’s website.
About Sterling Bancorp
Sterling Bancorp, whose principal subsidiary is Sterling National Bank, specializes in the delivery of service and solutions to business owners, their families and consumers within the communities it serves through teams of dedicated and experienced relationship managers. Sterling National Bank offers a complete line of commercial, business, and consumer banking products and services. For more information, visit the Sterling Bancorp website at www.sterlingbancorp.com.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This release may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may concern Sterling Bancorp’s current expectations about its future results, plans, operations and prospects and involve certain risks, including the following: difficulties and delays in integrating Astoria’s business or fully realizing cost savings and other benefits; business disruption following the Astoria transaction; a failure to grow revenues faster than we grow expenses, a deterioration in general economic conditions, either nationally, internationally, or in our market areas, including extended declines in the real estate market and constrained financial markets; inflation; the effects of, and changes in, trade; changes in asset quality and credit risk; introduction, withdrawal, success and timing of business initiatives; capital management activities; including our ability to effectively deploy recently raised capital; customer disintermediation; and the success of Sterling Bancorp in managing those risks. Other factors that could cause Sterling Bancorp’s actual results to differ from those indicated in forward-looking statements are included in the “Risk Factors” section of Sterling Bancorp’s filings with the Securities and Exchange Commission. The forward-looking statements speak only as of the date they are made and we undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.
Financial information contained in this release should be considered to be an estimate pending the filing with the Securities and Exchange Commission of the Company’s Quarterly Report on Form 10-Q for the three months ended September 30, 2017. While the Company is not aware of any need to revise the results disclosed in this release, accounting literature may require information received by management between the date of this release and the filing of the Quarterly Report on Form 10-Q to be reflected in the results of the fiscal period, even though the new information was received by management subsequent to the date of this release.
| Sterling Bancorp and Subsidiaries | |||||||||||
| CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION | |||||||||||
| (unaudited, in thousands, except share and per share data) | |||||||||||
| 9/30/2016 | 12/31/2016 | 9/30/2017 | |||||||||
| Assets: | |||||||||||
| Cash and cash equivalents | $ | 380,458 | $ | 293,646 | $ | 407,203 | |||||
| Investment securities | 2,797,717 | 3,118,838 | 4,515,650 | ||||||||
| Loans held for sale | 81,695 | 41,889 | — | ||||||||
| Portfolio loans: | |||||||||||
| Commercial and industrial (“C&I”) | 4,097,767 | 4,171,950 | 4,841,664 | ||||||||
| Commercial real estate | 3,895,176 | 4,144,018 | 4,473,245 | ||||||||
| Acquisition, development and construction | 211,896 | 230,086 | 236,456 | ||||||||
| Residential mortgage | 672,355 | 697,108 | 684,093 | ||||||||
| Consumer | 291,547 | 284,068 | 258,077 | ||||||||
| Total portfolio loans, gross | 9,168,741 | 9,527,230 | 10,493,535 | ||||||||
| Allowance for loan losses | (59,405 | ) | (63,622 | ) | (72,128 | ) | |||||
| Total portfolio loans, net | 9,109,336 | 9,463,608 | 10,421,407 | ||||||||
| Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank Stock, at cost | 107,670 | 135,098 | 191,276 | ||||||||
| Accrued interest receivable | 42,107 | 43,319 | 57,561 | ||||||||
| Premises and equipment, net | 58,761 | 57,318 | 56,378 | ||||||||
| Goodwill | 696,600 | 696,600 | 696,600 | ||||||||
| Other intangibles | 69,258 | 66,353 | 59,690 | ||||||||
| Bank owned life insurance | 198,556 | 199,889 | 204,281 | ||||||||
| Other real estate owned | 16,422 | 13,619 | 11,697 | ||||||||
| Other assets | 58,648 | 48,270 | 158,354 | ||||||||
| Total assets | $ | 13,617,228 | $ | 14,178,447 | $ | 16,780,097 | |||||
| Liabilities: | |||||||||||
| Deposits | $ | 10,197,253 | $ | 10,068,259 | $ | 11,043,438 | |||||
| FHLB borrowings | 1,181,498 | 1,791,000 | 3,016,000 | ||||||||
| Other borrowings | 21,191 | 16,642 | 188,403 | ||||||||
| Senior notes | 76,388 | 76,469 | 76,719 | ||||||||
| Subordinated notes | 172,449 | 172,501 | 172,661 | ||||||||
| Mortgage escrow funds | 15,836 | 13,572 | 19,148 | ||||||||
| Other liabilities | 187,453 | 184,821 | 292,248 | ||||||||
| Total liabilities | 11,852,068 | 12,323,264 | 14,808,617 | ||||||||
| Stockholders’ equity: | |||||||||||
| Common stock | 1,367 | 1,411 | 1,411 | ||||||||
| Additional paid-in capital | 1,504,777 | 1,597,287 | 1,590,752 | ||||||||
| Treasury stock | (66,262 | ) | (66,188 | ) | (59,674 | ) | |||||
| Retained earnings | 317,385 | 349,308 | 452,650 | ||||||||
| Accumulated other comprehensive income (loss) | 7,893 | (26,635 | ) | (13,659 | ) | ||||||
| Total stockholders’ equity | 1,765,160 | 1,855,183 | 1,971,480 | ||||||||
| Total liabilities and stockholders’ equity | $ | 13,617,228 | $ | 14,178,447 | $ | 16,780,097 | |||||
| Shares of common stock outstanding at period end | 130,853,673 | 135,257,570 | 135,807,544 | ||||||||
| Book value per share | $ | 13.49 | $ | 13.72 | $ | 14.52 | |||||
| Tangible book value per share1 | 7.64 | 8.08 | 8.95 | ||||||||
| 1 See reconciliation of non-GAAP financial measures beginning on page 16. | |||||||||||
| Sterling Bancorp and Subsidiaries | |||||||||||||||||||
| CONSOLIDATED CONDENSED INCOME STATEMENTS | |||||||||||||||||||
| (unaudited, in thousands, except share and per share data) | |||||||||||||||||||
| For the Quarter Ended | For the Nine Months Ended | ||||||||||||||||||
| 9/30/2016 | 6/30/2017 | 9/30/2017 | 9/30/2016 | 9/30/2017 | |||||||||||||||
| Interest and dividend income: | |||||||||||||||||||
| Loans and loan fees | $ | 100,503 | $ | 111,840 | $ | 119,898 | $ | 286,195 | $ | 336,308 | |||||||||
| Securities taxable | 9,870 | 13,113 | 15,141 | 32,548 | 40,536 | ||||||||||||||
| Securities non-taxable | 6,751 | 7,791 | 8,542 | 16,501 | 23,951 | ||||||||||||||
| Other earning assets | 1,037 | 1,519 | 2,111 | 3,232 | 5,160 | ||||||||||||||
| Total interest and dividend income | 118,161 | 134,263 | 145,692 | 338,476 | 405,955 | ||||||||||||||
| Interest expense: | |||||||||||||||||||
| Deposits | 9,201 | 10,905 | 13,392 | 23,938 | 33,805 | ||||||||||||||
| Borrowings | 5,830 | 10,100 | 12,227 | 17,518 | 30,029 | ||||||||||||||
| Total interest expense | 15,031 | 21,005 | 25,619 | 41,456 | 63,834 | ||||||||||||||
| Net interest income | 103,130 | 113,258 | 120,073 | 297,020 | 342,121 | ||||||||||||||
| Provision for loan losses | 5,500 | 4,500 | 5,000 | 14,500 | 14,000 | ||||||||||||||
| Net interest income after provision for loan losses | 97,630 | 108,758 | 115,073 | 282,520 | 328,121 | ||||||||||||||
| Non-interest income: | |||||||||||||||||||
| Accounts receivable / factoring commissions and other fees | 4,898 | 4,137 | 4,764 | 13,548 | 12,670 | ||||||||||||||
| Mortgage banking income | 1,153 | 130 | 121 | 5,522 | 522 | ||||||||||||||
| Deposit fees and service charges | 3,407 | 3,249 | 3,309 | 11,981 | 9,893 | ||||||||||||||
| Net gain (loss) on sale of securities | 3,433 | (230 | ) | (21 | ) | 7,624 | (274 | ) | |||||||||||
| Bank owned life insurance | 1,891 | 1,652 | 1,320 | 4,499 | 4,342 | ||||||||||||||
| Investment management fees | 1,086 | 323 | 271 | 3,144 | 825 | ||||||||||||||
| Other | 3,171 | 4,357 | 4,224 | 8,593 | 12,464 | ||||||||||||||
| Total non-interest income | 19,039 | 13,618 | 13,988 | 54,911 | 40,442 | ||||||||||||||
| Non-interest expense: | |||||||||||||||||||
| Compensation and benefits | 32,501 | 31,394 | 32,433 | 93,857 | 95,218 | ||||||||||||||
| Stock-based compensation plans | 1,673 | 1,897 | 1,969 | 4,960 | 5,602 | ||||||||||||||
| Occupancy and office operations | 8,021 | 8,833 | 8,583 | 26,113 | 25,550 | ||||||||||||||
| Amortization of intangible assets | 3,241 | 2,187 | 2,166 | 9,535 | 6,582 | ||||||||||||||
| FDIC insurance and regulatory assessments | 2,151 | 2,034 | 2,310 | 6,709 | 6,232 | ||||||||||||||
| Other real estate owned, net | 721 | 112 | 894 | 1,844 | 2,682 | ||||||||||||||
| Merger-related expenses | — | 1,766 | 4,109 | 265 | 9,002 | ||||||||||||||
| Charge for asset write-downs, retention and severance | 2,000 | 603 | — | 4,485 | 603 | ||||||||||||||
| Loss on extinguishment of borrowings | 1,013 | — | — | 9,729 | — | ||||||||||||||
| Other | 10,935 | 10,831 | 10,153 | 33,330 | 31,153 | ||||||||||||||
| Total non-interest expense | 62,256 | 59,657 | 62,617 | 190,827 | 182,624 | ||||||||||||||
| Income before income tax expense | 54,413 | 62,719 | 66,444 | 146,604 | 185,939 | ||||||||||||||
| Income tax expense | 16,991 | 20,319 | 21,592 | 47,646 | 59,620 | ||||||||||||||
| Net income | $ | 37,422 | $ | 42,400 | $ | 44,852 | $ | 98,958 | $ | 126,319 | |||||||||
| Weighted average common shares: | |||||||||||||||||||
| Basic | 130,239,193 | 135,317,866 | 135,346,791 | 130,049,358 | 135,276,634 | ||||||||||||||
| Diluted | 130,875,614 | 135,922,897 | 135,950,160 | 130,645,705 | 135,895,513 | ||||||||||||||
| Earnings per common share: | |||||||||||||||||||
| Basic earnings per share | $ | 0.29 | $ | 0.31 | $ | 0.33 | $ | 0.76 | $ | 0.93 | |||||||||
| Diluted earnings per share | 0.29 | 0.31 | 0.33 | 0.76 | 0.93 | ||||||||||||||
| Dividends declared per share | 0.07 | 0.07 | 0.07 | 0.21 | 0.21 | ||||||||||||||
| Sterling Bancorp and Subsidiaries | |||||||||||||||||||
| SELECTED FINANCIAL DATA | |||||||||||||||||||
| (unaudited, in thousands, except share and per share data) | |||||||||||||||||||
| As of and for the Quarter Ended | |||||||||||||||||||
| End of Period | 9/30/2016 | 12/31/2016 | 3/31/2017 | 6/30/2017 | 9/30/2017 | ||||||||||||||
| Total assets | $ | 13,617,228 | $ | 14,178,447 | $ | 14,659,337 | $ | 15,376,676 | $ | 16,780,097 | |||||||||
| Tangible assets 1 | 12,851,370 | 13,415,494 | 13,898,639 | 14,618,192 | 16,023,807 | ||||||||||||||
| Securities available for sale | 1,417,617 | 1,727,417 | 1,941,671 | 2,095,872 | 2,579,076 | ||||||||||||||
| Securities held to maturity | 1,380,100 | 1,391,421 | 1,474,724 | 1,456,304 | 1,936,574 | ||||||||||||||
| Portfolio loans | 9,168,741 | 9,527,230 | 9,763,967 | 10,232,317 | 10,493,535 | ||||||||||||||
| Goodwill | 696,600 | 696,600 | 696,600 | 696,600 | 696,600 | ||||||||||||||
| Other intangibles | 69,258 | 66,353 | 64,098 | 61,884 | 59,690 | ||||||||||||||
| Deposits | 10,197,253 | 10,068,259 | 10,251,725 | 10,502,710 | 11,043,438 | ||||||||||||||
| Municipal deposits (included above) | 1,551,147 | 1,270,921 | 1,391,221 | 1,297,244 | 1,751,012 | ||||||||||||||
| Borrowings | 1,451,526 | 2,056,612 | 2,328,576 | 2,661,838 | 3,453,783 | ||||||||||||||
| Stockholders’ equity | 1,765,160 | 1,855,183 | 1,888,613 | 1,931,383 | 1,971,480 | ||||||||||||||
| Tangible equity 1 | 999,302 | 1,092,230 | 1,127,915 | 1,172,899 | 1,215,190 | ||||||||||||||
| Quarterly Average Balances | |||||||||||||||||||
| Total assets | 13,148,201 | 13,671,676 | 14,015,953 | 14,704,793 | 15,661,514 | ||||||||||||||
| Tangible assets 1 | 12,380,448 | 12,907,133 | 13,253,877 | 13,944,946 | 14,904,016 | ||||||||||||||
| Loans, gross: | |||||||||||||||||||
| Commercial real estate (includes multi-family) | 3,823,853 | 3,963,216 | 4,190,817 | 4,396,281 | 4,443,142 | ||||||||||||||
| Acquisition, development and construction | 215,798 | 224,735 | 237,451 | 251,404 | 229,242 | ||||||||||||||
| Commercial and industrial: | |||||||||||||||||||
| Traditional commercial and industrial | 1,274,194 | 1,383,013 | 1,410,354 | 1,497,005 | 1,631,436 | ||||||||||||||
| Asset-based lending2 | 640,931 | 700,285 | 713,438 | 737,039 | 740,037 | ||||||||||||||
| Payroll finance2 | 162,938 | 218,365 | 217,031 | 225,080 | 229,522 | ||||||||||||||
| Warehouse lending2 | 404,156 | 551,746 | 379,978 | 430,312 | 607,994 | ||||||||||||||
| Factored receivables2 | 200,471 | 231,554 | 184,859 | 181,499 | 191,749 | ||||||||||||||
| Equipment financing2 | 652,531 | 586,078 | 595,751 | 660,404 | 687,254 | ||||||||||||||
| Public sector finance2 | 350,244 | 361,339 | 370,253 | 441,456 | 476,525 | ||||||||||||||
| Total commercial and industrial | 3,685,465 | 4,032,380 | 3,871,664 | 4,172,795 | 4,564,517 | ||||||||||||||
| Residential mortgage | 727,304 | 729,834 | 700,934 | 697,441 | 686,820 | ||||||||||||||
| Consumer | 292,088 | 287,267 | 280,650 | 268,502 | 262,693 | ||||||||||||||
| Loans, total3 | 8,744,508 | 9,267,290 | 9,281,516 | 9,786,423 | 10,186,414 | ||||||||||||||
| Securities (taxable) | 1,838,775 | 1,789,553 | 2,016,752 | 2,142,168 | 2,483,718 | ||||||||||||||
| Securities (non-taxable) | 1,098,933 | 1,183,857 | 1,256,906 | 1,292,367 | 1,432,358 | ||||||||||||||
| Other interest earning assets | 333,622 | 325,581 | 334,404 | 341,895 | 368,630 | ||||||||||||||
| Total earning assets | 12,015,838 | 12,566,281 | 12,889,578 | 13,562,853 | 14,471,120 | ||||||||||||||
| Deposits: | |||||||||||||||||||
| Non-interest bearing demand | 3,196,204 | 3,217,156 | 3,177,448 | 3,185,506 | 3,042,392 | ||||||||||||||
| Interest bearing demand | 2,107,669 | 2,116,708 | 1,950,332 | 1,973,498 | 2,298,645 | ||||||||||||||
| Savings (including mortgage escrow funds) | 827,647 | 798,090 | 797,386 | 816,092 | 825,620 | ||||||||||||||
| Money market | 3,174,536 | 3,395,542 | 3,681,962 | 3,725,257 | 3,889,780 | ||||||||||||||
| Certificates of deposit | 609,438 | 633,526 | 579,487 | 584,996 | 634,569 | ||||||||||||||
| Total deposits and mortgage escrow | 9,915,494 | 10,161,022 | 10,186,615 | 10,285,349 | 10,691,006 | ||||||||||||||
| Borrowings | 1,324,001 | 1,517,482 | 1,799,204 | 2,313,992 | 2,779,143 | ||||||||||||||
| Stockholders’ equity | 1,751,414 | 1,805,790 | 1,869,085 | 1,913,933 | 1,955,252 | ||||||||||||||
| Tangible equity 1 | 983,661 | 1,041,247 | 1,107,009 | 1,154,086 | 1,197,754 | ||||||||||||||
| 1 See a reconciliation of non-GAAP financial measure beginning on page 16. | |||||||||||||||||||
| 2 Asset-based lending, payroll finance, warehouse lending, factored receivables, equipment finance and public sector finance comprise our commercial finance loan portfolio. | |||||||||||||||||||
| 3 Includes loans held for sale, but excludes allowance for loan losses. | |||||||||||||||||||
| Sterling Bancorp and Subsidiaries | |||||||||||||||||||
| SELECTED FINANCIAL DATA AND PERFORMANCE RATIOS | |||||||||||||||||||
| (unaudited, in thousands, except share and per share data) | |||||||||||||||||||
| As of and for the Quarter Ended | |||||||||||||||||||
| Per Share Data | 9/30/2016 | 12/31/2016 | 3/31/2017 | 6/30/2017 | 9/30/2017 | ||||||||||||||
| Basic earnings per share | $ | 0.29 | $ | 0.31 | $ | 0.29 | $ | 0.31 | $ | 0.33 | |||||||||
| Diluted earnings per share | 0.29 | 0.31 | 0.29 | 0.31 | 0.33 | ||||||||||||||
| Adjusted diluted earnings per share, non-GAAP 1 | 0.29 | 0.30 | 0.31 | 0.33 | 0.35 | ||||||||||||||
| Dividends declared per share | 0.07 | 0.07 | 0.07 | 0.07 | 0.07 | ||||||||||||||
| Book value per share | 13.49 | 13.72 | 13.93 | 14.24 | 14.52 | ||||||||||||||
| Tangible book value per share1 | 7.64 | 8.08 | 8.32 | 8.65 | 8.95 | ||||||||||||||
| Shares of common stock o/s | 130,853,673 | 135,257,570 | 135,604,435 | 135,658,226 | 135,807,544 | ||||||||||||||
| Basic weighted average common shares o/s | 130,239,193 | 132,271,761 | 135,163,347 | 135,317,866 | 135,346,791 | ||||||||||||||
| Diluted weighted average common shares o/s | 130,875,614 | 132,995,762 | 135,811,721 | 135,922,897 | 135,950,160 | ||||||||||||||
| Performance Ratios (annualized) | |||||||||||||||||||
| Return on average assets | 1.13 | % | 1.19 | % | 1.13 | % | 1.16 | % | 1.14 | % | |||||||||
| Return on average equity | 8.50 | % | 9.03 | % | 8.48 | % | 8.89 | % | 9.10 | % | |||||||||
| Return on average tangible assets, as reported 1 | 1.20 | % | 1.26 | % | 1.20 | % | 1.22 | % | 1.19 | % | |||||||||
| Return on average tangible equity, as reported 1 | 15.13 | % | 15.66 | % | 14.31 | % | 14.74 | % | 14.86 | % | |||||||||
| Return on average tangible assets, as adjusted 1 | 1.21 | % | 1.23 | % | 1.27 | % | 1.28 | % | 1.27 | % | |||||||||
| Return on average tangible equity, as adjusted 1 | 15.28 | % | 15.27 | % | 15.19 | % | 15.43 | % | 15.85 | % | |||||||||
| Efficiency ratio, as adjusted 1 | 45.76 | % | 43.35 | % | 43.73 | % | 41.97 | % | 40.63 | % | |||||||||
| Analysis of Net Interest Income | |||||||||||||||||||
| Accretion income on acquired loans | $ | 4,381 | $ | 4,504 | $ | 3,482 | $ | 2,888 | $ | 3,397 | |||||||||
| Yield on loans | 4.57 | % | 4.49 | % | 4.57 | % | 4.58 | % | 4.67 | % | |||||||||
| Yield on investment securities - tax equivalent 2 | 2.74 | % | 2.81 | % | 2.97 | % | 2.93 | % | 2.87 | % | |||||||||
| Yield on interest earning assets - tax equivalent 2 | 4.03 | % | 4.02 | % | 4.09 | % | 4.09 | % | 4.12 | % | |||||||||
| Cost of interest bearing deposits | 0.54 | % | 0.53 | % | 0.55 | % | 0.62 | % | 0.69 | % | |||||||||
| Cost of total deposits | 0.37 | % | 0.36 | % | 0.38 | % | 0.43 | % | 0.50 | % | |||||||||
| Cost of borrowings | 1.75 | % | 1.72 | % | 1.74 | % | 1.75 | % | 1.75 | % | |||||||||
| Cost of interest bearing liabilities | 0.74 | % | 0.74 | % | 0.79 | % | 0.89 | % | 0.97 | % | |||||||||
| Net interest rate spread - tax equivalent basis 2 | 3.29 | % | 3.28 | % | 3.30 | % | 3.20 | % | 3.15 | % | |||||||||
| Net interest margin - GAAP basis | 3.41 | % | 3.40 | % | 3.42 | % | 3.35 | % | 3.29 | % | |||||||||
| Net interest margin - tax equivalent basis 2 | 3.53 | % | 3.52 | % | 3.55 | % | 3.47 | % | 3.42 | % | |||||||||
| Capital | |||||||||||||||||||
| Tier 1 leverage ratio - Company 3 | 8.31 | % | 8.95 | % | 8.89 | % | 8.72 | % | 8.42 | % | |||||||||
| Tier 1 leverage ratio - Bank only 3 | 8.72 | % | 9.08 | % | 8.99 | % | 8.89 | % | 8.49 | % | |||||||||
| Tier 1 risk-based capital ratio - Bank only 3 | 10.42 | % | 10.87 | % | 10.79 | % | 10.67 | % | 10.19 | % | |||||||||
| Total risk-based capital ratio - Bank only 3 | 12.66 | % | 13.06 | % | 12.95 | % | 12.76 | % | 12.16 | % | |||||||||
| Tangible equity to tangible assets - Company 1 | 7.78 | % | 8.14 | % | 8.12 | % | 8.02 | % | 7.58 | % | |||||||||
| Condensed Five Quarter Income Statement | |||||||||||||||||||
| Interest and dividend income | $ | 118,161 | $ | 123,075 | $ | 126,000 | $ | 134,263 | $ | 145,692 | |||||||||
| Interest expense | 15,031 | 15,827 | 17,210 | 21,005 | 25,619 | ||||||||||||||
| Net interest income | 103,130 | 107,248 | 108,790 | 113,258 | 120,073 | ||||||||||||||
| Provision for loan losses | 5,500 | 5,500 | 4,500 | 4,500 | 5,000 | ||||||||||||||
| Net interest income after provision for loan losses | 97,630 | 101,748 | 104,290 | 108,758 | 115,073 | ||||||||||||||
| Non-interest income | 19,039 | 16,057 | 12,836 | 13,618 | 13,988 | ||||||||||||||
| Non-interest expense | 62,256 | 57,072 | 60,350 | 59,657 | 62,617 | ||||||||||||||
| Income before income tax expense | 54,413 | 60,733 | 56,776 | 62,719 | 66,444 | ||||||||||||||
| Income tax expense | 16,991 | 19,737 | 17,709 | 20,319 | 21,592 | ||||||||||||||
| Net income | $ | 37,422 | $ | 40,996 | $ | 39,067 | $ | 42,400 | $ | 44,852 | |||||||||
| 1 See a reconciliation of non-GAAP financial measures beginning on page 16. | |||||||||||||||||||
| 2 Tax equivalent basis represents interest income earned on municipal securities divided by the applicable Federal tax rate of 35%. | |||||||||||||||||||
| 3 Regulatory capital amounts and ratios are preliminary estimates pending filing of the Company’s and Bank’s regulatory reports. | |||||||||||||||||||
| Sterling Bancorp and Subsidiaries | |||||||||||||||||||
| ASSET QUALITY INFORMATION | |||||||||||||||||||
| (unaudited, in thousands, except share and per share data) | |||||||||||||||||||
| As of and for the Quarter Ended | |||||||||||||||||||
| Allowance for Loan Losses Roll Forward | 9/30/2016 | 12/31/2016 | 3/31/2017 | 6/30/2017 | 9/30/2017 | ||||||||||||||
| Balance, beginning of period | $ | 55,865 | $ | 59,405 | $ | 63,622 | $ | 66,939 | $ | 70,151 | |||||||||
| Provision for loan losses | 5,500 | 5,500 | 4,500 | 4,500 | 5,000 | ||||||||||||||
| Loan charge-offs1: | |||||||||||||||||||
| Traditional commercial & industrial | (570 | ) | (219 | ) | (687 | ) | (164 | ) | (68 | ) | |||||||||
| Payroll finance | — | — | — | — | (188 | ) | |||||||||||||
| Warehouse lending | — | — | — | — | — | ||||||||||||||
| Factored receivables | (60 | ) | (267 | ) | (296 | ) | (12 | ) | (564 | ) | |||||||||
| Equipment financing | (377 | ) | (576 | ) | (471 | ) | (610 | ) | (741 | ) | |||||||||
| Commercial real estate | (630 | ) | (225 | ) | (83 | ) | (944 | ) | (1,345 | ) | |||||||||
| Multi-family | (399 | ) | — | — | — | — | |||||||||||||
| Acquisition development & construction | — | — | — | (22 | ) | (5 | ) | ||||||||||||
| Residential mortgage | (338 | ) | (274 | ) | (158 | ) | (120 | ) | (389 | ) | |||||||||
| Consumer | (259 | ) | (313 | ) | (114 | ) | (417 | ) | (156 | ) | |||||||||
| Total charge offs | (2,633 | ) | (1,874 | ) | (1,809 | ) | (2,289 | ) | (3,456 | ) | |||||||||
| Recoveries of loans previously charged-off1: | |||||||||||||||||||
| Traditional commercial & industrial | 381 | 152 | 139 | 523 | 316 | ||||||||||||||
| Asset-based lending | — | — | 3 | 1 | 1 | ||||||||||||||
| Payroll finance | — | — | — | — | 1 | ||||||||||||||
| Warehouse lending | — | — | — | — | — | ||||||||||||||
| Factored receivables | 10 | 10 | 16 | 2 | 5 | ||||||||||||||
| Equipment financing | 123 | 227 | 140 | 146 | 45 | ||||||||||||||
| Commercial real estate | 111 | 168 | 2 | 98 | 17 | ||||||||||||||
| Acquisition development & construction | — | — | 136 | 133 | — | ||||||||||||||
| Residential mortgage | — | 1 | 149 | 10 | — | ||||||||||||||
| Consumer | 48 | 33 | 41 | 88 | 48 | ||||||||||||||
| Total recoveries | 673 | 591 | 626 | 1,001 | 433 | ||||||||||||||
| Net loan charge-offs | (1,960 | ) | (1,283 | ) | (1,183 | ) | (1,288 | ) | (3,023 | ) | |||||||||
| Balance, end of period | $ | 59,405 | $ | 63,622 | $ | 66,939 | $ | 70,151 | $ | 72,128 | |||||||||
| Asset Quality Data and Ratios | |||||||||||||||||||
| Non-performing loans (“NPLs”) non-accrual | $ | 77,794 | $ | 77,163 | $ | 72,136 | $ | 70,416 | $ | 69,060 | |||||||||
| NPLs still accruing | 3,273 | 1,690 | 788 | 935 | 392 | ||||||||||||||
| Total NPLs | 81,067 | 78,853 | 72,924 | 71,351 | 69,452 | ||||||||||||||
| Other real estate owned | 16,422 | 13,619 | 9,632 | 10,198 | 11,697 | ||||||||||||||
| Non-performing assets (“NPAs”) | $ | 97,489 | $ | 92,472 | $ | 82,556 | $ | 81,549 | $ | 81,149 | |||||||||
| Loans 30 to 89 days past due | $ | 17,683 | $ | 15,100 | $ | 15,611 | $ | 15,070 | $ | 21,491 | |||||||||
| Net charge-offs as a % of average loans (annualized) | 0.09 | % | 0.06 | % | 0.05 | % | 0.05 | % | 0.12 | % | |||||||||
| NPLs as a % of total loans | 0.88 | 0.83 | 0.75 | 0.70 | 0.66 | ||||||||||||||
| NPAs as a % of total assets | 0.72 | 0.65 | 0.56 | 0.53 | 0.48 | ||||||||||||||
| Allowance for loan losses as a % of NPLs | 73.3 | 80.7 | 91.8 | 98.3 | 103.9 | ||||||||||||||
| Allowance for loan losses as a % of total loans | 0.65 | 0.67 | 0.69 | 0.69 | 0.69 | ||||||||||||||
| Special mention loans | $ | 101,784 | $ | 104,569 | $ | 110,832 | $ | 102,996 | $ | 117,984 | |||||||||
| Substandard loans | 112,551 | 95,152 | 101,496 | 97,476 | 104,205 | ||||||||||||||
| Doubtful loans | 932 | 442 | 902 | 895 | 795 | ||||||||||||||
| 1 There were no charge-offs or recoveries on warehouse lending or public sector finance loans during the periods presented. | |||||||||||||||||||
| Sterling Bancorp and Subsidiaries | |||||||||||||||||||||
| QUARTERLY YIELD TABLE | |||||||||||||||||||||
| (unaudited, in thousands, except share and per share data) | |||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||
| June 30, 2017 | September 30, 2017 | ||||||||||||||||||||
| Average balance | Interest | Yield/ Rate | Average balance | Interest | Yield/ Rate | ||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||
| Interest earning assets: | |||||||||||||||||||||
| Traditional C&I and commercial finance loans | $ | 4,172,795 | $ | 52,580 | 5.05 | % | $ | 4,564,517 | $ | 58,395 | 5.08 | % | |||||||||
| Commercial real estate (includes multi-family) | 4,396,281 | 45,930 | 4.19 | 4,443,142 | 47,336 | 4.23 | |||||||||||||||
| Acquisition, development and construction | 251,404 | 3,317 | 5.29 | 229,242 | 4,197 | 7.26 | |||||||||||||||
| Commercial loans | 8,820,480 | 101,827 | 4.63 | 9,236,901 | 109,928 | 4.72 | |||||||||||||||
| Consumer loans | 268,502 | 3,073 | 4.59 | 262,693 | 2,891 | 4.37 | |||||||||||||||
| Residential mortgage loans | 697,441 | 6,940 | 3.98 | 686,820 | 7,079 | 4.12 | |||||||||||||||
| Total gross loans 1 | 9,786,423 | 111,840 | 4.58 | 10,186,414 | 119,898 | 4.67 | |||||||||||||||
| Securities taxable | 2,142,168 | 13,113 | 2.46 | 2,483,718 | 15,141 | 2.42 | |||||||||||||||
| Securities non-taxable | 1,292,367 | 11,986 | 3.71 | 1,432,358 | 13,141 | 3.67 | |||||||||||||||
| Interest earning deposits | 195,004 | 302 | 0.62 | 202,650 | 462 | 0.90 | |||||||||||||||
| FHLB and Federal Reserve Bank stock | 146,891 | 1,217 | 3.32 | 165,980 | 1,649 | 3.94 | |||||||||||||||
| Total securities and other earning assets | 3,776,430 | 26,618 | 2.83 | 4,284,706 | 30,393 | 2.81 | |||||||||||||||
| Total interest earning assets | 13,562,853 | 138,458 | 4.09 | 14,471,120 | 150,291 | 4.12 | |||||||||||||||
| Non-interest earning assets | 1,141,940 | 1,190,394 | |||||||||||||||||||
| Total assets | $ | 14,704,793 | $ | 15,661,514 | |||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||
| Demand and savings2 deposits | $ | 2,789,590 | $ | 3,875 | 0.56 | $ | 3,124,265 | $ | 4,626 | 0.59 | |||||||||||
| Money market deposits | 3,725,257 | 5,510 | 0.59 | 3,889,780 | 6,897 | 0.70 | |||||||||||||||
| Certificates of deposit | 584,996 | 1,520 | 1.04 | 634,569 | 1,869 | 1.17 | |||||||||||||||
| Total interest bearing deposits | 7,099,843 | 10,905 | 0.62 | 7,648,614 | 13,392 | 0.69 | |||||||||||||||
| Senior notes | 76,580 | 1,142 | 5.98 | 76,664 | 1,143 | 5.92 | |||||||||||||||
| Other borrowings | 2,064,840 | 6,608 | 1.28 | 2,529,854 | 8,733 | 1.37 | |||||||||||||||
| Subordinated notes | 172,572 | 2,350 | 5.45 | 172,625 | 2,351 | 5.45 | |||||||||||||||
| Total borrowings | 2,313,992 | 10,100 | 1.75 | 2,779,143 | 12,227 | 1.75 | |||||||||||||||
| Total interest bearing liabilities | 9,413,835 | 21,005 | 0.89 | 10,427,757 | 25,619 | 0.97 | |||||||||||||||
| Non-interest bearing deposits | 3,185,506 | 3,042,392 | |||||||||||||||||||
| Other non-interest bearing liabilities | 191,519 | 236,113 | |||||||||||||||||||
| Total liabilities | 12,790,860 | 13,706,262 | |||||||||||||||||||
| Stockholders’ equity | 1,913,933 | 1,955,252 | |||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 14,704,793 | $ | 15,661,514 | |||||||||||||||||
| Net interest rate spread 3 | 3.20 | % | 3.15 | % | |||||||||||||||||
| Net interest earning assets 4 | $ | 4,149,018 | $ | 4,043,363 | |||||||||||||||||
| Net interest margin - tax equivalent | 117,453 | 3.47 | % | 124,672 | 3.42 | % | |||||||||||||||
| Less tax equivalent adjustment | (4,195 | ) | (4,599 | ) | |||||||||||||||||
| Net interest income | $ | 113,258 | $ | 120,073 | |||||||||||||||||
| Ratio of interest earning assets to interest bearing liabilities | 144.1 | % | 138.8 | % | |||||||||||||||||
| 1 Average balances include loans held for sale and non-accrual loans. Interest includes prepayment fees and late charges. | |||||||||||||||||||||
| 2 Includes club accounts and interest bearing mortgage escrow balances. | |||||||||||||||||||||
| 3 Net interest rate spread represents the difference between the tax equivalent yield on average interest earning assets and the cost of average interest bearing liabilities. | |||||||||||||||||||||
| 4 Net interest earning assets represents total interest earning assets less total interest bearing liabilities. | |||||||||||||||||||||
| Sterling Bancorp and Subsidiaries | |||||||||||||||||||||
| QUARTERLY YIELD TABLE | |||||||||||||||||||||
| (unaudited, in thousands, except share and per share data) | |||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||
| September 30, 2016 | September 30, 2017 | ||||||||||||||||||||
| Average balance | Interest | Yield/ Rate | Average balance | Interest | Yield/ Rate | ||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||
| Interest earning assets: | |||||||||||||||||||||
| Traditional C&I and commercial finance loans | $ | 3,685,465 | $ | 45,188 | 4.88 | % | $ | 4,564,517 | $ | 58,395 | 5.08 | % | |||||||||
| Commercial real estate (includes multi-family) | 3,823,853 | 41,975 | 4.37 | 4,443,142 | 47,336 | 4.23 | |||||||||||||||
| Acquisition, development and construction | 215,798 | 2,742 | 5.05 | 229,242 | 4,197 | 7.26 | |||||||||||||||
| Commercial loans | 7,725,116 | 89,905 | 4.63 | 9,236,901 | 109,928 | 4.72 | |||||||||||||||
| Consumer loans | 292,088 | 3,269 | 4.45 | 262,693 | 2,891 | 4.37 | |||||||||||||||
| Residential mortgage loans | 727,304 | 7,329 | 4.03 | 686,820 | 7,079 | 4.12 | |||||||||||||||
| Total gross loans 1 | 8,744,508 | 100,503 | 4.57 | 10,186,414 | 119,898 | 4.67 | |||||||||||||||
| Securities taxable | 1,838,775 | 9,870 | 2.14 | 2,483,718 | 15,141 | 2.42 | |||||||||||||||
| Securities non-taxable | 1,098,933 | 10,386 | 3.78 | 1,432,358 | 13,141 | 3.67 | |||||||||||||||
| Interest earning deposits | 230,478 | 167 | 0.29 | 202,650 | 462 | 0.90 | |||||||||||||||
| FHLB and Federal Reserve Bank stock | 103,144 | 870 | 3.36 | 165,980 | 1,649 | 3.94 | |||||||||||||||
| Total securities and other earning assets | 3,271,330 | 21,293 | 2.59 | 4,284,706 | 30,393 | 2.81 | |||||||||||||||
| Total interest earning assets | 12,015,838 | 121,796 | 4.03 | 14,471,120 | 150,291 | 4.12 | |||||||||||||||
| Non-interest earning assets | 1,132,363 | 1,190,394 | |||||||||||||||||||
| Total assets | $ | 13,148,201 | $ | 15,661,514 | |||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||
| Demand and savings2 deposits | $ | 2,935,316 | $ | 3,371 | 0.46 | $ | 3,124,265 | $ | 4,626 | 0.59 | |||||||||||
| Money market deposits | 3,174,536 | 4,357 | 0.55 | 3,889,780 | 6,897 | 0.70 | |||||||||||||||
| Certificates of deposit | 609,438 | 1,473 | 0.96 | 634,569 | 1,869 | 1.17 | |||||||||||||||
| Total interest bearing deposits | 6,719,290 | 9,201 | 0.54 | 7,648,614 | 13,392 | 0.69 | |||||||||||||||
| Senior notes | 90,954 | 1,328 | 5.84 | 76,664 | 1,143 | 5.96 | |||||||||||||||
| Other borrowings | 1,104,581 | 2,733 | 0.98 | 2,529,854 | 8,733 | 1.37 | |||||||||||||||
| Subordinated notes | 128,466 | 1,769 | 5.51 | 172,625 | 2,351 | 5.45 | |||||||||||||||
| Total borrowings | 1,324,001 | 5,830 | 1.75 | 2,779,143 | 12,227 | 1.75 | |||||||||||||||
| Total interest bearing liabilities | 8,043,291 | 15,031 | 0.74 | 10,427,757 | 25,619 | 0.97 | |||||||||||||||
| Non-interest bearing deposits | 3,196,204 | 3,042,392 | |||||||||||||||||||
| Other non-interest bearing liabilities | 157,292 | 236,113 | |||||||||||||||||||
| Total liabilities | 11,396,787 | 13,706,262 | |||||||||||||||||||
| Stockholders’ equity | 1,751,414 | 1,955,252 | |||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 13,148,201 | $ | 15,661,514 | |||||||||||||||||
| Net interest rate spread 3 | 3.29 | % | 3.15 | % | |||||||||||||||||
| Net interest earning assets 4 | $ | 3,972,547 | $ | 4,043,363 | |||||||||||||||||
| Net interest margin - tax equivalent | 106,765 | 3.53 | % | 124,672 | 3.42 | % | |||||||||||||||
| Less tax equivalent adjustment | (3,635 | ) | (4,599 | ) | |||||||||||||||||
| Net interest income | $ | 103,130 | $ | 120,073 | |||||||||||||||||
| Ratio of interest earning assets to interest bearing liabilities | 149.4 | % | 138.8 | % | |||||||||||||||||
| 1 Average balances include loans held for sale and non-accrual loans. Interest includes prepayment fees and late charges. | |||||||||||||||||||||
| 2 Includes club accounts and interest bearing mortgage escrow balances. | |||||||||||||||||||||
| 3 Net interest rate spread represents the difference between the tax equivalent yield on average interest earning assets and the cost of average interest bearing liabilities. | |||||||||||||||||||||
| 4 Net interest earning assets represents total interest earning assets less total interest bearing liabilities. | |||||||||||||||||||||
| Sterling Bancorp and Subsidiaries | |||||||||||||||||||
| NON-GAAP FINANCIAL MEASURES | |||||||||||||||||||
| (unaudited, in thousands, except share and per share data) | |||||||||||||||||||
| The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors. See legend on page 18. | |||||||||||||||||||
| As of and for the Quarter Ended | |||||||||||||||||||
| 9/30/2016 | 12/31/2016 | 3/31/2017 | 6/30/2017 | 9/30/2017 | |||||||||||||||
| The following table shows the reconciliation of stockholders’ equity to tangible equity and the tangible equity ratio1: | |||||||||||||||||||
| Total assets | $ | 13,617,228 | $ | 14,178,447 | $ | 14,659,337 | $ | 15,376,676 | $ | 16,780,097 | |||||||||
| Goodwill and other intangibles | (765,858 | ) | (762,953 | ) | (760,698 | ) | (758,484 | ) | (756,290 | ) | |||||||||
| Tangible assets | 12,851,370 | 13,415,494 | 13,898,639 | 14,618,192 | 16,023,807 | ||||||||||||||
| Stockholders’ equity | 1,765,160 | 1,855,183 | 1,888,613 | 1,931,383 | 1,971,480 | ||||||||||||||
| Goodwill and other intangibles | (765,858 | ) | (762,953 | ) | (760,698 | ) | (758,484 | ) | (756,290 | ) | |||||||||
| Tangible stockholders’ equity | 999,302 | 1,092,230 | 1,127,915 | 1,172,899 | 1,215,190 | ||||||||||||||
| Common stock outstanding at period end | 130,853,673 | 135,257,570 | 135,604,435 | 135,658,226 | 135,807,544 | ||||||||||||||
| Stockholders’ equity as a % of total assets | 12.96 | % | 13.08 | % | 12.88 | % | 12.56 | % | 11.75 | % | |||||||||
| Book value per share | $ | 13.49 | $ | 13.72 | $ | 13.93 | $ | 14.24 | $ | 14.52 | |||||||||
| Tangible equity as a % of tangible assets | 7.78 | % | 8.14 | % | 8.12 | % | 8.02 | % | 7.58 | % | |||||||||
| Tangible book value per share | $ | 7.64 | $ | 8.08 | $ | 8.32 | $ | 8.65 | $ | 8.95 | |||||||||
| The following table shows the reconciliation of reported return on average tangible equity and adjusted return on average tangible equity2: | |||||||||||||||||||
| Average stockholders’ equity | $ | 1,751,414 | $ | 1,805,790 | $ | 1,869,085 | $ | 1,913,933 | $ | 1,955,252 | |||||||||
| Average goodwill and other intangibles | (767,753 | ) | (764,543 | ) | (762,076 | ) | (759,847 | ) | (757,498 | ) | |||||||||
| Average tangible stockholders’ equity | 983,661 | 1,041,247 | 1,107,009 | 1,154,086 | 1,197,754 | ||||||||||||||
| Net income | 37,422 | 40,996 | 39,067 | 42,400 | 44,852 | ||||||||||||||
| Net income, if annualized | 148,874 | 163,093 | 158,438 | 170,066 | 177,945 | ||||||||||||||
| Reported return on average tangible equity | 15.13 | % | 15.66 | % | 14.31 | % | 14.74 | % | 14.86 | % | |||||||||
| Adjusted net income (see reconciliation on page 17) | $ | 37,793 | $ | 39,954 | $ | 41,461 | $ | 44,393 | $ | 47,865 | |||||||||
| Annualized adjusted net income | 150,350 | 158,947 | 168,147 | 178,060 | 189,899 | ||||||||||||||
| Adjusted return on average tangible equity | 15.28 | % | 15.27 | % | 15.19 | % | 15.43 | % | 15.85 | % | |||||||||
| The following table shows the reconciliation of reported return on tangible assets and adjusted return on tangible assets3: | |||||||||||||||||||
| Average assets | $ | 13,148,201 | $ | 13,671,676 | $ | 14,015,953 | $ | 14,704,793 | $ | 15,661,514 | |||||||||
| Average goodwill and other intangibles | (767,753 | ) | (764,543 | ) | (762,076 | ) | (759,847 | ) | (757,498 | ) | |||||||||
| Average tangible assets | 12,380,448 | 12,907,133 | 13,253,877 | 13,944,946 | 14,904,016 | ||||||||||||||
| Net income | 37,422 | 40,996 | 39,067 | 42,400 | 44,852 | ||||||||||||||
| Net income, if annualized | 148,874 | 163,093 | 158,438 | 170,066 | 177,945 | ||||||||||||||
| Reported return on average tangible assets | 1.20 | % | 1.26 | % | 1.20 | % | 1.22 | % | 1.19 | % | |||||||||
| Adjusted net income (see reconciliation on page 17) | $ | 37,793 | $ | 39,954 | $ | 41,461 | $ | 44,393 | $ | 47,865 | |||||||||
| Annualized adjusted net income | 150,350 | 158,947 | 168,147 | 178,060 | 189,899 | ||||||||||||||
| Adjusted return on average tangible assets | 1.21 | % | 1.23 | % | 1.27 | % | 1.28 | % | 1.27 | % | |||||||||
| Sterling Bancorp and Subsidiaries | ||||||||||||||||||||
| NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||
| (unaudited, in thousands, except share and per share data) | ||||||||||||||||||||
| The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors. See legend on page 18. | ||||||||||||||||||||
| As of and for the Quarter Ended | ||||||||||||||||||||
| 9/30/2016 | 12/31/2016 | 3/31/2017 | 6/30/2017 | 9/30/2017 | ||||||||||||||||
| The following table shows the reconciliation of the reported operating efficiency ratio and adjusted operating efficiency ratio4: | ||||||||||||||||||||
| Net interest income | $ | 103,130 | $ | 107,248 | $ | 108,790 | $ | 113,258 | $ | 120,073 | ||||||||||
| Non-interest income | 19,039 | 16,057 | 12,836 | 13,618 | 13,988 | |||||||||||||||
| Total net revenue | 122,169 | 123,305 | 121,626 | 126,876 | 134,061 | |||||||||||||||
| Tax equivalent adjustment on securities | 3,635 | 3,860 | 4,102 | 4,195 | 4,599 | |||||||||||||||
| Net (gain) loss on sale of securities | (3,433 | ) | 102 | 23 | 230 | 21 | ||||||||||||||
| Net (gain) on sale of trust division | — | (2,255 | ) | — | — | — | ||||||||||||||
| Adjusted total net revenue | 122,371 | 125,012 | 125,751 | 131,301 | 138,681 | |||||||||||||||
| Non-interest expense | 62,256 | 57,072 | 60,350 | 59,657 | 62,617 | |||||||||||||||
| Merger-related expense | — | — | (3,127 | ) | (1,766 | ) | (4,109 | ) | ||||||||||||
| Charge for asset write-downs, retention and severance | (2,000 | ) | — | — | (603 | ) | — | |||||||||||||
| Loss on extinguishment of borrowings | (1,013 | ) | — | — | — | — | ||||||||||||||
| Amortization of intangible assets | (3,241 | ) | (2,881 | ) | (2,229 | ) | (2,187 | ) | (2,166 | ) | ||||||||||
| Adjusted non-interest expense | 56,002 | 54,191 | 54,994 | 55,101 | 56,342 | |||||||||||||||
| Reported operating efficiency ratio | 51.0 | % | 46.3 | % | 49.6 | % | 47.0 | % | 46.7 | % | ||||||||||
| Adjusted operating efficiency ratio | 45.8 | 43.3 | 43.7 | 42.0 | 40.6 | |||||||||||||||
| The following table shows the reconciliation of reported net income (GAAP) and adjusted net income (non-GAAP) and adjusted diluted earnings per share5: | ||||||||||||||||||||
| Income before income tax expense | $ | 54,413 | $ | 60,733 | $ | 56,776 | $ | 62,719 | $ | 66,444 | ||||||||||
| Income tax expense | 16,991 | 19,737 | 17,709 | 20,319 | 21,592 | |||||||||||||||
| Net income (GAAP) | 37,422 | 40,996 | 39,067 | 42,400 | 44,852 | |||||||||||||||
| Adjustments: | ||||||||||||||||||||
| Net (gain) loss on sale of securities | (3,433 | ) | 102 | 23 | 230 | 21 | ||||||||||||||
| Net (gain) on sale of trust division | — | (2,255 | ) | — | — | — | ||||||||||||||
| Merger-related expense | — | — | 3,127 | 1,766 | 4,109 | |||||||||||||||
| Charge for asset write-downs, retention and severance | 2,000 | — | — | 603 | — | |||||||||||||||
| Loss on extinguishment of borrowings | 1,013 | — | — | — | — | |||||||||||||||
| Amortization of non-compete agreements and acquired customer list intangible assets | 970 | 610 | 396 | 354 | 333 | |||||||||||||||
| Total adjustments | 550 | (1,543 | ) | 3,546 | 2,953 | 4,463 | ||||||||||||||
| Income tax expense (benefit) | (179 | ) | 501 | (1,152 | ) | (960 | ) | (1,450 | ) | |||||||||||
| Total adjustments net of taxes | 371 | (1,042 | ) | 2,394 | 1,993 | 3,013 | ||||||||||||||
| Adjusted net income (non-GAAP) | $ | 37,793 | $ | 39,954 | $ | 41,461 | $ | 44,393 | $ | 47,865 | ||||||||||
| Weighted average diluted shares | 130,875,614 | 132,995,762 | 135,811,721 | 135,922,897 | 135,950,160 | |||||||||||||||
| Diluted EPS as reported (GAAP) | $ | 0.29 | $ | 0.31 | $ | 0.29 | $ | 0.31 | $ | 0.33 | ||||||||||
| Adjusted diluted EPS (non-GAAP) | 0.29 | 0.30 | 0.31 | 0.33 | 0.35 | |||||||||||||||
| Sterling Bancorp and Subsidiaries | ||||||||
| NON-GAAP FINANCIAL MEASURES | ||||||||
| (unaudited, in thousands, except share and per share data) | ||||||||
| The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors. See legend below. | ||||||||
| For the Nine Months Ended September 30, | ||||||||
| 2016 | 2017 | |||||||
| The following table shows the reconciliation of reported net income (GAAP) and earnings per share to adjusted net income (non-GAAP) and adjusted diluted earnings per share5: | ||||||||
| Income before income tax expense | $ | 146,604 | $ | 185,939 | ||||
| Income tax expense | 47,646 | 59,620 | ||||||
| Net income (GAAP) | 98,958 | 126,319 | ||||||
| Adjustments: | ||||||||
| Net (gain) on sale of securities | (7,624 | ) | 274 | |||||
| Merger-related expense | 265 | 9,002 | ||||||
| Charge for asset write-downs, retention and severance | 4,485 | 603 | ||||||
| Loss on extinguishment of borrowings | 9,729 | — | ||||||
| Amortization of non-compete agreements and acquired customer list intangible assets | 2,907 | 1,080 | ||||||
| Total adjustments | 9,762 | 10,959 | ||||||
| Income tax (benefit) | (3,354 | ) | (3,562 | ) | ||||
| Total adjustments net of taxes | 6,408 | 7,397 | ||||||
| Adjusted net income (non-GAAP) | $ | 105,366 | $ | 133,716 | ||||
| Weighted average diluted shares | 130,645,705 | 135,895,513 | ||||||
| Diluted EPS as reported (GAAP) | $ | 0.76 | $ | 0.93 | ||||
| Adjusted diluted EPS (non-GAAP) | 0.81 | 0.98 | ||||||
The non-GAAP / adjusted measures presented above are used by our management and Board of Directors on a regular basis in addition to our GAAP results to facilitate the assessment of our financial performance and to assess our performance compared to our annual budget and strategic plans. These non-GAAP/adjusted financial measures complement our GAAP reporting and are presented above to provide investors, analysts, regulators and others information that we use to manage and evaluate our performance each period. This information supplements our GAAP reported results, and should not be viewed in isolation from, or as a substitute for, our GAAP results. When non-GAAP / adjusted measures are impacted by income tax expense, we present the pre-tax amount for the income and expense items that result in the non-GAAP adjustments and present the income tax expense impact at the effective tax rate in effect for the period presented.
1 Stockholders’ equity as a percentage of total assets, book value per share, tangible equity as a percentage of tangible assets and tangible book value per share provides information to help assess our capital position and financial strength. We believe tangible book measures improve comparability to other banking organizations that have not engaged in acquisitions that have resulted in the accumulation of goodwill and other intangible assets.
2 Reported return on average tangible equity and adjusted return on average tangible equity measures provide information to evaluate the use of our tangible equity.
3 Reported return on tangible assets and adjusted return on tangible assets measures provide information to help assess our profitability.
4 The reported operating efficiency ratio is a non-GAAP measure calculated by dividing our GAAP non-interest expense by the sum of our GAAP net interest income plus GAAP non-interest income. The adjusted operating efficiency ratio is a non-GAAP measure calculated by dividing non-interest expense adjusted for intangible asset amortization and certain expenses generally associated with discrete merger transactions and non-recurring strategic plans by the sum of net interest income plus non-interest income plus the tax equivalent adjustment on securities income and elimination of the impact of gain or loss on sale of securities. The adjusted operating efficiency ratio is a measure we use to assess our operating performance.
5 Adjusted net income and adjusted earnings per share present a summary of our earnings which includes adjustments to exclude certain revenues and expenses (generally associated with discrete merger transactions and non-recurring strategic plans) to help in assessing our profitability.
| STERLING BANCORP CONTACT: |
| Luis Massiani, SEVP & Chief Financial Officer |
| 845.369.8040 |
| http://www.sterlingbancorp.com |