Sterling Bancorp announces results for the full year and

Key Performance Highlights for the Twelve Months ended December 31, 2018 vs. December 31, 2017


($ in thousands except per share amounts)	GAAP / As Reported								Non-GAAP / As Adjusted¹
	12/31/2017			12/31/2018			Change % / bps		12/31/2017			12/31/2018			Change % / bps
Total revenue²	$	640,345		$	1,070,600		67.2	%	$	660,744		$	1,085,819		64.3	%
Net income available to common	91,029			439,276			382.6		222,039			449,645			102.5
Diluted EPS available to common	0.58			1.95			236.2		1.40			2.00			42.9
Net interest margin³	3.44		%	3.51		%	7		3.55		%	3.57		%	2
Return on average tangible common equity	6.22			17.87			1,165		15.17			18.29			312
Return on average tangible assets	0.52			1.51			99		1.27			1.55			28
Operating efficiency ratio⁴	67.7			42.8			(2,490	)	41.8			38.8			(300	)

Net income available to common stockholders of $439.3 million (as reported) and $449.6 million (as adjusted).
Total commercial loans of $16.2 billion at December 31, 2018; growth of 11.1% from December 31, 2017.
Operating efficiency ratio of 42.8% (as reported) and 38.8% (as adjusted).
Operating leverage ratio of 2.9x relative to full year 2017.
Tangible book value per common share¹ of $11.78; growth of 11.9% over December 31, 2017.

Key Performance Highlights for the Three Months ended December 31, 2018 vs. December 31, 2017


($ in thousands except per share amounts)	GAAP / As Reported								Non-GAAP / As Adjusted¹
	12/31/2017			12/31/2018			Change % / bps		12/31/2017			12/31/2018			Change % / bps
Total revenue²	$	257,786		$	265,346		2.9	%	$	265,014		$	274,247		3.5	%
Net (loss) income available to common	(35,281		)	112,501			NM		87,171			116,458			33.6
Diluted EPS available to common	(0.16		)	0.51			NM		0.39			0.52			34.4
Net interest margin³	3.57		%	3.48		%	(9	)	3.67		%	3.53		%	(14	)
Return on average tangible common equity	(5.87		)	17.56			NM		14.49			18.17			368
Return on average tangible assets	(0.51		)	1.53			NM		1.25			1.58			33
Operating efficiency ratio⁴	97.3			41.4			(5,590	)	41.4			38.0			(340	)

Growth in commercial loan balances of $413.3 million over linked quarter; 10.4% annualized growth rate.
Entered into agreement to sell $1.6 billion of residential mortgage loans; anticipated to close in February 2019.
Announced pending acquisition of $504 million commercial loan portfolio; anticipated to close in February 2019.
Adjusted operating expenses in the fourth quarter of 2018 were $104.2 million¹; represents an annualized run-rate of $413.5 million.
Average total deposit growth of $868.6 million; cost of total deposits increased 34 basis points to 0.77%.
Repurchased 9,114,771 common shares at a weighted average cost of $17.54 per share in the fourth quarter of 2018.

1. Non-GAAP / as adjusted measures are defined in the non-GAAP tables beginning on page 17.
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 divided by average interest earning assets. Net interest margin as adjusted, or tax equivalent net interest margin, is equal to net interest income plus the tax equivalent adjustment for tax exempt securities divided by average interest earning assets.
4. Operating efficiency ratio is a non-GAAP measure. See page 20 for an explanation of the operating efficiency ratio.

MONTEBELLO, N.Y., Jan. 23, 2019 (GLOBE NEWSWIRE) -- Sterling Bancorp (NYSE: STL) (the “Company”), the parent company of Sterling National Bank (the “Bank”), today announced results for the three and twelve months ended December 31, 2018. Net income available to common stockholders for the quarter ended December 31, 2018 was $112.5 million, or $0.51 per diluted share, compared to net income available to common stockholders of $117.7 million, or $0.52 per diluted share, for the linked quarter ended September 30, 2018, and net loss available to common stockholders of $35.3 million, or $0.16 per diluted share, for the three months ended December 31, 2017.

Net income available to common stockholders for the year ended December 31, 2018 was $439.3 million, or $1.95 per diluted share, compared to net income available to common stockholders of $91.0 million, or $0.58 per diluted share, for the same period in 2017.

President’s Comments
Jack Kopnisky, President and Chief Executive Officer, commented: “We maintained our strong operating momentum in 2018, focusing on the consistent execution of our commercial banking strategy and generating record adjusted net income available to common stockholders and adjusted earnings per share available to common stockholders in the full year and fourth quarter of 2018. Comparing full year results, our adjusted net income available to common stockholders was $449.6 million and our adjusted diluted earnings per share available to common stockholders was $2.00, representing growth of 102.5% and 42.9%, respectively, over 2017. Our profitability metrics continued to strengthen, including adjusted returns on average tangible assets of 1.55% and average tangible common equity of 18.29% in 2018. We ended the year as a larger, more diversified and more profitable company, with total assets of $31.4 billion, gross portfolio loans of $19.2 billion and total deposits of $21.2 billion.

“We achieved every milestone we outlined in the integration of Astoria Financial Corporation (“Astoria” and the “Astoria Merger”), significantly improving our operating efficiency and operating leverage in 2018. Our adjusted operating expenses were $421.8 million for the full year 2018 and were $104.2 million in the fourth quarter, which represented an annualized run-rate of $413.5 million and a decrease of $6.7 million relative to the annualized run-rate in the third quarter. During the year we consolidated a total of 22 financial center locations and two back-office locations; we completed the sale of Astoria’s Lake Success headquarters; and, most importantly, we completed the full conversion of Astoria’s deposit systems and now operate on a single, fully integrated technology platform. Our focus on expense management resulted in an adjusted operating efficiency ratio of below 40% in the full year and fourth quarter of 2018. Since the fourth quarter of 2017, our quarterly adjusted operating revenues have increased by $9.2 million while our adjusted operating expenses have decreased by $5.4 million. We expect to continue generating significant operating leverage as we further grow revenues and reduce expenses in 2019.

“We generated strong commercial loan growth in 2018, with spot balances increasing by $1.6 billion since December 2017. This was offset by run-off of residential mortgage loans, which decreased by $808.6 million relative to the beginning of the year. We will remain disciplined on new loan originations and portfolio acquisitions, focusing on diversified commercial asset classes where we can achieve our target risk-adjusted returns. To that end, we are taking the following actions to accelerate our balance sheet transition to a more optimal mix:

We transferred $1.6 billion of residential mortgage loans held in portfolio to loans held for sale and entered into an agreement to sell these loans, which we anticipate will be completed in February 2019. These loans were acquired in the Astoria Merger.
On January 22, 2019, we entered into a definitive agreement with Woodforest National Bank to acquire $504 million of commercial loans. These loan portfolios are complementary to our existing asset-based lending and equipment finance businesses and have a weighted average interest rate of 5.5%. We expect this transaction to close on February 28, 2019.
We anticipate these balance sheet actions will be accretive to our net interest margin excluding the impact of accretion income by approximately 20 basis points in 2019.

“Our average total deposit balances increased by $237.1 million relative to the linked quarter and grew $868.6 million since the fourth quarter of 2017. We faced a challenging deposit pricing and interest rate environment in 2018, as our cost of total deposits was 0.77% in the fourth quarter of 2018, an increase of nine basis points relative to the linked quarter, and 34 basis points relative to the fourth quarter 2017. The increase in the cost of deposits has been mainly driven by increases in market interest rates and the competitive environment for attracting and retaining higher balance deposits in our commercial, municipal and brokered deposit segments.

“Our tangible common equity ratio was 8.60% and our estimated Tier 1 Leverage ratio was 9.50% at December 31, 2018. Our tangible book value per common share was $11.78, which represented an increase of 11.9% from a year ago. Our ample capital position and strong internal capital generation will support our growth strategy and allow us to return capital to stockholders through share repurchases. In the fourth quarter of 2018, we repurchased 9,114,771 common shares, and we anticipate completing our approved stock repurchase program in the first half of 2019.

“We have provided the Company with greater operating flexibility and are confident that our business mix, growth strategy and strong capital position will allow us to continue generating superior returns and earnings per share growth. We would like to thank our clients, colleagues and shareholders for your support and look forward to working with all of our partners as we continue to build a great company.

“Lastly, we have declared a dividend on our common stock of $0.07 per share payable on February 19, 2019 to holders of record as of February 4, 2019.”

Reconciliation of GAAP Results to Adjusted Results (non-GAAP)
The Company’s GAAP net income available to common stockholders of $112.5 million, or $0.51 per diluted share, for the fourth quarter of 2018, included the following items which are excluded from our adjusted results: a pre-tax loss of $4.9 million on the sale of available for sale securities, a gain of $0.2 million on the early extinguishment of $19.6 million of senior notes assumed in the Astoria Merger, and the pre-tax amortization of non-compete agreements and acquired customer list intangible assets of $295 thousand.

Excluding the impact of these items, adjusted net income available to common stockholders was $116.5 million, or $0.52 per diluted share, for the three months ended December 31, 2018.

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 17.

Net Interest Income and Margin


($ in thousands)	For the three months ended									Change % / bps
	12/31/2017			9/30/2018			12/31/2018			Y-o-Y		Linked Qtr
Interest and dividend income	$	276,495		$	309,025		$	313,197		13.3	%	1.4	%
Interest expense	42,471			65,076			70,326			65.6		8.1
Net interest income	$	234,024		$	243,949		$	242,871		3.8		(0.4	)

Accretion income on acquired loans	$	33,726		$	26,574		$	27,016		(19.9	)%	1.7	%
Yield on loans	4.77		%	5.01		%	5.07		%	30		6
Tax equivalent yield on investment securities	3.03			2.87			2.92			(11	)	5
Tax equivalent yield on interest earning assets	4.32			4.47			4.54			22		7
Cost of total deposits	0.43			0.68			0.77			34		9
Cost of interest bearing deposits	0.54			0.84			0.97			43		13
Cost of borrowings	1.94			2.29			2.43			49		14
Cost of interest bearing liabilities	0.82			1.17			1.28			46		11
Tax equivalent net interest margin⁵	3.67			3.54			3.53			(14	)	(1	)

Average loans, including loans held for sale	$	19,518,485		$	20,386,994		$	20,389,223		4.5	%	—	%
Average investment securities	5,926,824			6,774,712			6,685,989			12.8		(1.3	)
Average total interest earning assets	26,043,748			27,799,933			27,710,655			6.4		(0.3	)
Average deposits and mortgage escrow	20,483,857			21,115,354			21,352,428			4.2		1.1

⁵ Tax equivalent net interest margin is equal to net interest income plus the tax equivalent adjustment for tax exempt securities divided by average interest earning assets. The tax equivalent adjustment is assumed at a 35% federal tax rate in 2017 and 21% in 2018.

Fourth quarter 2018 compared with fourth quarter 2017
Net interest income was $242.9 million, an increase of $8.8 million compared to the fourth quarter of 2017. This was mainly due to an increase in average loans outstanding due to loans originated through our commercial banking teams and the acquisition of Advantage Funding Management Co., Inc, which was partially offset by an increase in interest expense paid to depositors and on borrowings. Other key components of the changes in net interest income and net interest margin were the following:

The yield on loans was 5.07% compared to 4.77% for the three months ended December 31, 2017. The increase in yield on loans was mainly due to the change in portfolio composition as commercial loans represented a greater proportion of our loan portfolio compared to a year ago, and to increases in market rates of interest. Accretion income on acquired loans was $27.0 million in the fourth quarter of 2018 compared to $33.7 million in the fourth quarter of 2017.
Average commercial loans, which includes all commercial and industrial loans, commercial real estate loans (including multi-family) and acquisition development and construction loans, were $15.7 billion compared to $14.0 billion in the fourth quarter of 2017, an increase of $1.8 billion or 12.6%.
The tax equivalent yield on investment securities was 2.92% compared to 3.03% for the three months ended December 31, 2017. The tax equivalent adjustment assumed a 35% federal tax rate in 2017 compared to 21% in 2018, which caused the decline in yield between the periods. Average tax exempt securities balances grew to $2.6 billion for the quarter ended December 31, 2018, compared to $2.1 billion in the fourth quarter of 2017. Average investment securities were $6.7 billion, or 24.1%, of average total interest earning assets for the fourth quarter of 2018 compared to $5.9 billion, or 22.8%, of average earning assets for the fourth quarter of 2017.
The tax equivalent yield on interest earning assets increased 22 basis points between the periods to 4.54%.
The cost of total deposits was 77 basis points and the cost of borrowings was 2.43%, compared to 43 basis points and 1.94%, respectively, for the same period a year ago. The increase was mainly due to increases in market rates of interest. The cost of total deposits has also been impacted by the competitive environment in the Greater New York metropolitan area, as higher interest rates are required to attract and retain higher balance commercial and consumer deposits. Since the fourth quarter of 2017, the change in the cost of total deposits relative to the change in the Federal Funds rate has been 27.2%.
The total cost of interest bearing liabilities increased 46 basis points to 1.28% for the fourth quarter of 2018 compared to 0.82% for the fourth quarter of 2017. The increase was mainly due to an increase in market interest rates, and competitive factors as discussed above.

The tax equivalent net interest margin was 3.53% for the fourth quarter of 2018 compared to 3.67% for the fourth quarter of 2017. The decrease in tax equivalent net interest margin was mainly due to the increase in the cost of interest bearing liabilities and the decrease in accretion income on acquired loans. Excluding accretion income, tax equivalent net interest margin was 3.15% for the fourth quarter of 2018 compared to 3.16% in the fourth quarter of 2017, as the increase in yield on interest earning assets was offset by the change in tax equivalent adjustment rate and the increase in the cost of interest bearing liabilities.

Fourth quarter 2018 compared with linked quarter ended September 30, 2018
Net interest income declined $1.1 million compared to the linked quarter. The decrease in net interest income was mainly due to higher interest expense paid on interest bearing liabilities and lower average balances of interest earning assets. Other key components of the changes in net interest income compared to the linked quarter were the following:

The yield on loans was 5.07% compared to 5.01% for the linked quarter. Accretion income on acquired loans was $27.0 million, an increase of $442 thousand relative to the linked quarter. Interest income and yield on loans were also impacted by a decrease of $1.2 million in loan prepayment penalties.
The average balance of total portfolio loans increased $2.2 million. This included an increase of $216.7 million in the balance of commercial loans, which was offset by decreases of $195.8 million in the balance of residential mortgage loans and $18.6 million in consumer loans. Commercial loan growth was due to originations generated by our commercial banking teams.
The tax equivalent yield on investment securities increased five basis points to 2.92% in the fourth quarter of 2018, as the average balance of taxable securities decreased by $60.5 million and the average balance of tax exempt securities decreased by $28.3 million.
The tax equivalent yield on interest earning assets increased seven basis points and was 4.54% compared to 4.47% in the linked quarter. The increase was mainly due to increases in market rates of interest and a change in the mix of interest earning assets.

The cost of total deposits increased 9 basis points to 77 basis points and the total cost of borrowings increased to 2.43% compared to 2.29% in the linked quarter, mainly due to the factors discussed above.
Average interest bearing deposits increased by $87.7 million and average borrowings decreased $336.2 million relative to the linked quarter. Total interest expense increased by $5.3 million over the linked quarter.

The tax equivalent net interest margin was 3.53% compared to 3.54% in the linked quarter. Excluding accretion income on acquired loans, tax equivalent net interest margin was 3.16% in the linked quarter compared to 3.15% in the fourth quarter of 2018. The decrease in tax equivalent net interest margin excluding accretion income was mainly due to lower commercial loan prepayment activity and higher rates paid on deposits and other interest bearing liabilities.

Non-interest Income


($ in thousands)	For the three months ended									Change %
	12/31/2017			9/30/2018			12/31/2018			Y-o-Y		Linked Qtr
Total non-interest income	$	23,762		$	24,145		$	22,475		(5.4	)%	(6.9	)%
Net (loss) on sale of securities	(70		)	(56		)	(4,886		)	NM		NM
Adjusted non-interest income	$	23,832		$	24,201		$	27,361		14.8		13.1

Fourth quarter 2018 compared with fourth quarter 2017
Excluding net (loss) on sale of securities, adjusted non-interest income increased $3.5 million in the fourth quarter of 2018 to $27.4 million, compared to $23.8 million in the same quarter last year. The change was mainly due to other loan fees, including letters of credit and loan swaps, which are included in other non-interest income and increased $2.6 million; bank owned life insurance income increased by $586 thousand; and payroll finance fee income increased $430 thousand (which are included in accounts receivable management / factoring commissions and other related fees). These increases were partially offset by a decline of $725 thousand in deposit service charges and a $202 thousand decline in wealth management revenue.

In the fourth quarter of 2018, we sold approximately $65 million of available for sale securities and realized a loss of $4.9 million. The securities were sold as we continue our strategy of repositioning our balance sheet and interest earning assets to a more optimal mix.

Fourth quarter 2018 compared with linked quarter ended September 30, 2018
Excluding net (loss) on sale of securities and adjusted non-interest income increased approximately $3.2 million from $24.2 million in the linked quarter to $27.4 million in the fourth quarter of 2018. The increase was mainly due to an increase in loan swap fees, (which are included in other non-interest income) and were $2.9 million compared to $862 thousand in the linked quarter. Loan swap fees are usually generated by new loan originations, which will result in fluctuations in swap fee volume on a linked quarter basis.

Non-interest Expense


($ in thousands)	For the three months ended									Change % / bps
	12/31/2017			9/30/2018			12/31/2018			Y-o-Y		Linked Qtr
Compensation and benefits	$	56,086		$	54,823		$	54,677		(2.5	)%	(0.3	)%
Stock-based compensation plans	2,508			3,115			3,679			46.7		18.1
Occupancy and office operations	18,100			16,558			16,579			(8.4	)	0.1
Information technology	11,984			10,699			8,761			(26.9	)	(18.1	)
Amortization of intangible assets	6,426			5,865			5,865			(8.7	)	—
FDIC insurance and regulatory assessments	5,737			6,043			3,608			(37.1	)	(40.3	)
Other real estate owned, (“OREO”) net	742			1,497			15			(98.0	)	(99.0	)
Merger-related expenses	30,230			—			—			NM		—
Charge for asset write-downs, systems integration, retention and severance	104,506			—			—			NM		—
Other expenses	14,427			13,173			16,737			16.0		27.1
Total non-interest expense	$	250,746		$	111,773		$	109,921		(56.2	)	(1.7	)
Full time equivalent employees (“FTEs”) at period end	2,076			1,959			1,907			(8.1	)	(2.7	)
Financial centers at period end	128			113			106			(17.2	)	(6.2	)
Operating efficiency ratio, as reported⁶	97.3		%	41.7		%	41.4		%	5,590		30
Operating efficiency ratio, as adjusted⁶	41.4			38.9			38.0			340		90

⁶See a reconciliation of non-GAAP financial measures beginning on page 17.

Fourth quarter 2018 compared with fourth quarter 2017
Total non-interest expense decreased $140.8 million relative to the fourth quarter of 2017. Key components of the change in non-interest expense were the following:

Compensation and benefits decreased $1.4 million between the periods. Total FTEs declined to 1,907 from 2,076, which was mainly due to completion of the Astoria Merger integration, including the deposit systems conversion and ongoing financial center consolidation strategy.
Occupancy and office operations decreased $1.5 million mainly due to the consolidation of financial centers and other locations acquired in the Astoria Merger. In the fourth quarter of 2018, we consolidated seven financial centers and in 2018, we consolidated 22 financial centers, closed two back-office locations and sold the Astoria Lake Success headquarters location.
Information technology expense decreased $3.2 million as we completed the conversion of Astoria’s deposit systems in the third quarter of 2018.
Amortization of intangible assets decreased $561 thousand. The decrease is mainly due to the accelerated amortization of the core deposit intangible assets that were recorded in the Astoria Merger and other acquisitions.
FDIC insurance and regulatory assessments decreased $2.1 million to $3.6 million in the fourth quarter of 2018, compared to $5.7 million in the fourth quarter of 2017. This was mainly due to a decrease in FDIC deposit insurance expense.
OREO, net decreased $727 thousand to $15 thousand, compared to $742 thousand for the fourth quarter of 2017. In the fourth quarter of 2018, OREO, net included gain on sale of $331 thousand, which was mainly offset by $126 thousand of write-downs and $255 of operating costs.
Merger-related expenses and charges for asset write-downs, systems integration, retention and severance were incurred in the fourth quarter of 2017 in connection with the Astoria Merger. These charges did not recur in the fourth quarter of 2018.
Other expenses increased $2.3 million to $16.7 million, compared to $14.4 million in the fourth quarter of 2017. The increase is mainly due to higher professional fees, marketing expense and higher loan processing expense.

Fourth quarter 2018 compared with linked quarter ended September 30, 2018
Total non-interest expense decreased $1.9 million to $109.9 million in the fourth quarter of 2018. Key components of the change in non-interest expense were the following:

Compensation and benefits declined $146 thousand and was $54.7 million compared to $54.8 million in the linked quarter. Total FTEs declined to 1,907 at December 31, 2018 from 1,959 at September 30, 2018, as we continue to integrate Astoria’s personnel and operations.

Information technology expense decreased $1.9 million compared to the linked quarter as cost savings from the Astoria deposit systems conversion were realized.
OREO, net was $15 thousand compared to $1.5 million in the linked quarter; as the linked quarter included $617 thousand of property tax, $790 thousand of other OREO operating expense, $190 thousand of property write-downs.

Taxes
For the three months and twelve months ended December 31, 2018, the Company recorded income tax expense at an estimated effective income tax rate of 21.0%.

Key Balance Sheet Highlights as of December 31, 2018


($ in thousands)	As of									Change % / bps
	12/31/2017			9/30/2018			12/31/2018			Y-o-Y		Linked Qtr
Total assets	$	30,359,541		$	31,261,265		$	31,383,307		3.4	%	0.4	%
Total portfolio loans, gross	20,008,983			20,533,214			19,218,530			(4.0	)	(6.4	)
Commercial & industrial (“C&I”) loans	5,306,821			6,244,030			6,533,386			23.1		4.6
Commercial real estate loans (including multi-family)	8,998,419			9,284,657			9,406,541			4.5		1.3
Acquisition, development and construction loans	282,792			265,676			267,754			(5.3	)	0.8
Total commercial loans	14,588,032			15,794,363			16,207,681			11.1		2.6
Residential mortgage loans	5,054,732			4,421,520			2,705,226			(46.5	)	(38.8	)
Total deposits	20,538,204			21,456,057			21,214,148			3.3		(1.1	)
Core deposits ⁸	19,388,254			20,448,343			19,998,967			3.1		(2.2	)
Investment securities	6,474,561			6,685,972			6,667,180			3.0		(0.3	)
Total borrowings	4,991,210			4,825,855			5,214,183			4.5		8.0
Loans to deposits	97.4		%	95.7		%	90.6		%	(680	)	(510	)
Core deposits to total deposits	94.4			95.3			94.3			(10	)	(100	)
Investment securities to total assets	21.3			21.4			21.2			(10	)	(20	)

⁸ Given the Company’s greater proportion of certificates of deposit after completion of the Astoria Merger, the Company modified its definition of core deposits to also include certificates of deposit beginning in the first quarter of 2018. Core deposits include retail, commercial and municipal transaction, money market and savings accounts and certificates of deposit accounts and exclude brokered and wholesale deposits, except for reciprocal Certificate of Deposit Account Registry balances.

Highlights in balance sheet items as of December 31, 2018 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 34.0% of total portfolio loans, commercial real estate loans (which include multi-family loans) represented 49.0%, consumer and residential mortgage loans combined represented 15.7%, and acquisition, development and construction loans represented 1.4% of total portfolio loans. In comparison, consumer and residential mortgage loans were 23.1% of total portfolio loans at September 30, 2018. The pending sale of $1.6 billion of residential mortgage loans resulted in the reclassification of these loans from portfolio loans to held for sale. Upon closure, this sale will have a significant impact on our loan portfolio composition.
Total commercial loans, which include all C&I loans, commercial real estate (including multi-family) and acquisition, development and construction loans, increased by $413.3 million in the linked quarter and $1.6 billion since December 31, 2017.
Residential mortgage loans were $2.7 billion at December 31, 2018, compared to $4.4 billion at September 30, 2018. The decline was mainly due to repayments of loans acquired in the Astoria Merger and the reclassification of $1.6 billion in loans to loans held for sale due to the pending sale.
Total deposits at December 31, 2018 decreased $241.9 million compared to September 30, 2018, as municipal deposits reach their peak at the end of the third quarter. Total deposits increased $675.9 million over December 31, 2017.
Core deposits at December 31, 2018 were $20.0 billion and increased $610.7 million over December 31, 2017.
Municipal deposits at December 31, 2018 were $1.7 billion, and increased $190.8 million relative to December 31, 2017.
Investment securities increased by $192.6 million over December 31, 2017, and represented 21.2% of total assets at December 31, 2018.

Credit Quality


($ in thousands)	For the three months ended									Change % / bps
	12/31/2017			9/30/2018			12/31/2018			Y-o-Y		Linked Qtr
Provision for loan losses	$	12,000		$	9,500		$	10,500		(12.5	)%	10.5	%
Net charge-offs	6,221			4,161			6,188			(0.5	)	48.7
Allowance for loan losses	77,907			91,365			95,677			22.8		4.7
Non-performing loans	187,213			185,222			168,823			(9.8	)	(8.9	)
Loans 30 to 89 days past due	53,533			50,084			97,201			81.6		94.1
Annualized net charge-offs to average loans	0.13		%	0.08		%	0.12		%	(1	)	4
Allowance for loan losses to total loans	0.39			0.44			0.50			11		6
Allowance for loan losses to non-performing loans	41.6			49.3			56.7			1,510		740

Provision for loan losses was $10.5 million, compared to $9.5 million in the linked quarter and $12.0 million in the same period a year ago. In the fourth quarter of 2018, provision for loan losses was $4.3 million in excess of net charge-offs of $6.2 million. Allowance coverage ratios were 0.50% of total loans and 56.7% of non-performing loans at December 31, 2018. The increase from September 30, 2018 was due to the increase in the allowance for loan losses and the reclassification of $1.6 billion of residential mortgage loans from portfolio loans to loans held for sale. Due to the Astoria Merger, a significant portion of the Company’s loan portfolio does not carry an allowance for loan losses, as the acquired loans are recorded at their estimated fair value on the acquisition date. Non-performing loans decreased by $16.4 million to $168.8 million at December 31, 2018 compared to the linked quarter. The decrease in non-performing loans was mainly due to net charge-offs and the return to performing status of certain loans that were previously categorized as non-performing. Loans 30 to 89 days past due increased $47.1 million from the linked quarter, which was mainly due to loans that have matured and are in the process of refinancing or repayment.

Capital


($ in thousands, except share and per share data)	As of									Change % / bps
	12/31/2017			9/30/2018			12/31/2018			Y-o-Y		Three months
Total stockholders’ equity	$	4,240,178		$	4,438,303		$	4,428,853		4.4	%	(0.2	)%
Preferred stock	139,220			138,627			138,423			(0.6	)	(0.1	)
Goodwill and other intangible assets	1,733,082			1,745,181			1,742,578			0.5		(0.1	)
Tangible common stockholders’ equity	$	2,367,876		$	2,554,495		$	2,547,852		7.6		(0.3	)
Common shares outstanding	224,782,694			225,446,089			216,227,852			(3.8	)	(4.1	)
Book value per common share	$	18.24		$	19.07		$	19.84		8.8		4.0
Tangible book value per common share⁹	10.53			11.33			11.78			11.9		4.0
Tangible common equity to tangible assets ⁹	8.27		%	8.65		%	8.60		%	33		(5	)
Estimated Tier 1 leverage ratio - Company	9.39			9.68			9.50			11		(18	)
Estimated Tier 1 leverage ratio - Bank	10.10			10.10			9.94			(16	)	(16	)

⁹See a reconciliation of non-GAAP financial measures beginning on page 17.

Total stockholders’ equity declined $9.4 million to $4.4 billion as of December 31, 2018 compared to September 30, 2018 and increased $188.7 million compared to December 31, 2017.

For 2018, net income available to common stockholders of $439.3 million was partially offset by common dividends of $63.1 million, preferred dividends of $8.8 million, a decline in the fair value of our available for sale investment securities of $34.6 million and common stock repurchases of $159.9 million.

Total goodwill and other intangible assets were $1.7 billion at December 31, 2018, a decrease of $2.6 million compared to September 30, 2018, which was mainly due to amortization of intangibles.

Basic and diluted weighted average common shares outstanding declined relative to the linked quarter by approximately 2.8 million and were 222.3 million and 222.8 million, respectively. Total common shares outstanding at December 31, 2018 were approximately 216.2 million. In the fourth quarter of 2018, we repurchased 9,114,771 shares of common stock in the open market at a weighted average price of $17.54 per share, for total consideration of $159.9 million. We anticipate repurchasing approximately 5,000,000 common shares in the first quarter of 2019, depending on market conditions.

Tangible book value per common share was $11.78 at December 31, 2018, which represented an increase of 11.9% over a year ago and an increase of 4.0% over September 30, 2018.

Conference Call Information
Sterling Bancorp will host a teleconference and webcast on Thursday, January 24, 2019 at 10:30 AM Eastern Time to discuss the Company’s results. Analysts, investors and interested parties are invited to listen to the webcast and view accompanying slides on the Company’s website at www.sterlingbancorp.com or by dialing (888) 394-8218, Conference ID #8905659. 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 services 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: business disruption; 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; 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 Annual Report on Form 10-K for the twelve months ended December 31, 2018. 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 Annual Report on Form 10-K 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)


	12/31/2017			9/30/2018			12/31/2018
Assets:
Cash and cash equivalents	$	479,906		$	533,984		$	438,110
Investment securities	6,474,561			6,685,972			6,667,180
Loans held for sale	5,246			31,042			1,565,979
Portfolio loans:
Commercial and industrial (“C&I”)	5,306,821			6,244,030			6,533,386
Commercial real estate (including multi-family)	8,998,419			9,284,657			9,406,541
Acquisition, development and construction	282,792			265,676			267,754
Residential mortgage	5,054,732			4,421,520			2,705,226
Consumer	366,219			317,331			305,623
Total portfolio loans, gross	20,008,983			20,533,214			19,218,530
Allowance for loan losses	(77,907		)	(91,365		)	(95,677		)
Total portfolio loans, net	19,931,076			20,441,849			19,122,853
Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank Stock, at cost	284,112			351,455			369,690
Accrued interest receivable	94,098			109,377			107,111
Premises and equipment, net	321,722			289,794			264,194
Goodwill	1,579,891			1,609,772			1,613,033
Other intangibles	153,191			135,409			129,545
Bank owned life insurance	651,638			660,279			653,995
Other real estate owned	27,095			22,735			19,377
Other assets	357,005			389,597			432,240
Total assets	$	30,359,541		$	31,261,265		$	31,383,307
Liabilities:
Deposits	$	20,538,204		21,456,057			$	21,214,148
FHLB borrowings	4,510,123			4,429,110			4,838,772
Other borrowings	30,162			22,888			21,338
Senior notes	278,209			200,972			181,130
Subordinated notes	172,716			172,885			172,943
Mortgage escrow funds	122,641			96,952			72,891
Other liabilities	467,308			444,098			453,232
Total liabilities	26,119,363			26,822,962			26,954,454
Stockholders’ equity:
Preferred stock	139,220			138,627			138,423
Common stock	2,299			2,299			2,299
Additional paid-in capital	3,780,908			3,773,164			3,776,461
Treasury stock	(58,039		)	(51,973		)	(213,935		)
Retained earnings	401,956			694,861			791,550
Accumulated other comprehensive (loss)	(26,166		)	(118,675		)	(65,945		)
Total stockholders’ equity	4,240,178			4,438,303			4,428,853
Total liabilities and stockholders’ equity	$	30,359,541		$	31,261,265		$	31,383,307

Shares of common stock outstanding at period end	224,782,694			225,446,089			216,227,852
Book value per common share	$	18.24		$	19.07		$	19.84
Tangible book value per common share¹	10.53			11.33			11.78

¹ See reconciliation of non-GAAP financial measures beginning on page 17.

Sterling Bancorp and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share data)


	For the Quarter Ended									For the Year Ended
	12/31/2017			9/30/2018			12/31/2018			12/31/2017			12/31/2018
Interest and dividend income:
Loans and loan fees	$	234,452		$	257,211		$	260,417		$	570,761		$	1,006,496
Securities taxable	24,743			29,765			30,114			65,278			115,971
Securities non-taxable	13,295			15,244			15,104			37,245			61,062
Other earning assets	4,005			6,805			7,562			9,165			24,944
Total interest and dividend income	276,495			309,025			313,197			682,449			1,208,473
Interest expense:
Deposits	22,305			35,974			41,450			56,110			130,096
Borrowings	20,166			29,102			28,876			50,196			110,974
Total interest expense	42,471			65,076			70,326			106,306			241,070
Net interest income	234,024			243,949			242,871			576,143			967,403
Provision for loan losses	12,000			9,500			10,500			26,000			46,000
Net interest income after provision for loan losses	222,024			234,449			232,371			550,143			921,403
Non-interest income:
Deposit fees and service charges	7,236			6,333			6,511			17,128			26,830
Accounts receivable management / factoring commissions and other related fees	5,133			5,595			6,480			17,803			22,772
Bank owned life insurance	3,474			3,733			4,060			7,816			15,651
Loan commissions and fees	2,995			4,142			4,066			11,637			16,181
Investment management fees	2,103			1,943			1,901			2,928			7,790
Net (loss) on sale of securities	(70		)	(56		)	(4,886		)	(344		)	(10,788		)
(Loss) gain on sale of fixed assets	(1		)	—			—			(1		)	11,800
Other	2,892			2,455			4,343			7,235			12,961
Total non-interest income	23,762			24,145			22,475			64,202			103,197
Non-interest expense:
Compensation and benefits	56,086			54,823			54,677			150,254			220,340
Stock-based compensation plans	2,508			3,115			3,679			8,111			12,984
Occupancy and office operations	18,100			16,558			16,579			43,649			68,536
Information technology	11,984			10,699			8,761			19,387			41,174
Amortization of intangible assets	6,426			5,865			5,865			13,008			23,646
FDIC insurance and regulatory assessments	5,737			6,043			3,608			11,969			20,493
Other real estate owned, net	742			1,497			15			3,423			1,650
Merger-related expenses	30,230			—			—			39,232			—
Charge for asset write-downs, systems integration, retention and severance	104,506			—			—			105,110			13,132
Other	14,427			13,173			16,737			39,232			56,415
Total non-interest expense	250,746			111,773			109,921			433,375			458,370
(Loss) income before income tax expense	(4,960		)	146,821			144,925			180,970			566,230
Income tax expense	28,319			27,171			30,434			87,939			118,976
Net (loss) income	(33,279		)	119,650			114,491			93,031			447,254
Preferred stock dividend	2,002			1,993			1,990			2,002			7,978
Net (loss) income available to common stockholders	$	(35,281	)	$	117,657		$	112,501		$	91,029		$	439,276
Weighted average common shares:
Basic	223,501,073			225,088,511			222,319,682			157,513,639			224,299,488
Diluted	224,055,991			225,622,895			222,769,369			158,124,270			224,816,996
Earnings per common share:
Basic earnings per share	$	(0.16	)	$	0.52		$	0.51		$	0.58		$	1.96
Diluted earnings per share	(0.16		)	0.52			0.51			0.58			1.95
Dividends declared per share	0.07			0.07			0.07			0.28			0.28

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	12/31/2017		3/31/2018		6/30/2018		9/30/2018		12/31/2018
Total assets	$	30,359,541	$	30,468,780	$	31,463,077	$	31,261,265	$	31,383,307
Tangible assets ¹	28,626,459		28,741,750		29,708,659		29,516,084		29,640,729
Securities available for sale	3,612,072		3,760,338		3,929,386		3,843,244		3,870,563
Securities held to maturity	2,862,489		2,874,948		2,859,860		2,842,728		2,796,617
Loans held for sale²	5,246		44,440		30,626		31,042		1,565,979
Portfolio loans	20,008,983		19,939,245		20,674,493		20,533,214		19,218,530
Goodwill	1,579,891		1,579,891		1,613,144		1,609,772		1,613,033
Other intangibles	153,191		147,139		141,274		135,409		129,545
Deposits	20,538,204		20,623,233		20,965,889		21,456,057		21,214,148
Municipal deposits (included above)	1,585,076		1,775,472		1,652,733		2,019,893		1,751,670
Borrowings	4,991,210		4,927,594		5,537,537		4,825,855		5,214,183
Stockholders’ equity	4,240,178		4,273,755		4,352,735		4,438,303		4,428,853
Tangible common equity ¹	2,367,876		2,407,700		2,459,489		2,554,495		2,547,852
Quarterly Average Balances
Total assets	29,277,502		30,018,289		30,994,904		31,036,026		30,925,281
Tangible assets ¹	27,567,351		28,287,337		29,237,608		29,283,093		29,179,942
Loans, gross:
Commercial real estate (includes multi-family)	8,839,256		9,028,849		9,100,098		9,170,117		9,341,579
Acquisition, development and construction	246,141		267,638		247,500		252,710		279,793
Commercial and industrial:
Traditional commercial and industrial	1,911,450		1,933,323		2,026,313		2,037,195		2,150,644
Asset-based lending³	781,732		781,392		778,708		820,060		812,903
Payroll finance³	250,673		229,920		219,545		223,636		223,061
Warehouse lending³	564,593		495,133		731,385		857,280		690,277
Factored receivables³	224,966		217,865		224,159		220,808		267,986
Equipment financing³	677,271		689,493		1,140,803		1,158,945		1,147,269
Public sector finance³	480,800		653,344		725,675		784,260		828,153
Total commercial and industrial	4,891,485		5,000,470		5,846,588		6,102,184		6,120,293
Residential mortgage	5,168,622		4,977,191		4,801,595		4,531,922		4,336,083
Consumer	372,981		361,752		344,183		330,061		311,475
Loans, total⁴	19,518,485		19,635,900		20,339,964		20,386,994		20,389,223
Securities (taxable)	3,840,147		3,997,542		4,130,949		4,193,910		4,133,456
Securities (non-taxable)	2,086,677		2,604,633		2,620,579		2,580,802		2,552,533
Other interest earning assets	598,439		595,847		665,888		638,227		635,443
Total earning assets	26,043,748		26,833,922		27,757,380		27,799,933		27,710,655
Deposits:
Non-interest bearing demand	4,043,213		3,971,079		3,960,683		4,174,908		4,324,247
Interest bearing demand	3,862,461		3,941,749		4,024,972		4,286,278		4,082,526
Savings (including mortgage escrow funds)	2,871,885		2,917,624		2,916,755		2,678,662		2,535,098
Money market	7,324,196		7,393,335		7,337,904		7,404,208		7,880,331
Certificates of deposit	2,382,102		2,464,360		2,528,355		2,571,298		2,530,226
Total deposits and mortgage escrow	20,483,857		20,688,147		20,768,669		21,115,354		21,352,428
Borrowings	4,121,605		4,597,903		5,432,582		5,052,752		4,716,522
Stockholders’ equity	4,235,739		4,243,897		4,305,928		4,397,823		4,426,118
Tangible common equity ¹	2,386,245		2,373,794		2,409,674		2,506,198		2,542,256


¹ See a reconciliation of non-GAAP financial measures beginning on page 17.
²At December 31, 2018 loans held for sale includes $1.6 billion of residential mortgage loans, net of purchase accounting discount.
³Asset-based lending, payroll finance, warehouse lending, factored receivables, equipment finance and public sector finance comprise our commercial finance loan portfolio.
⁴Includes 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 Common Share Data	12/31/2017			3/31/2018			6/30/2018			9/30/2018			12/31/2018
Basic earnings (loss) per share	$	(0.16	)	$	0.43		$	0.50		$	0.52		$	0.51
Diluted earnings (loss) per share	(0.16		)	0.43			0.50			0.52			0.51
Adjusted diluted earnings per share, non-GAAP ¹	0.39			0.45			0.50			0.51			0.52
Dividends declared per common share	0.07			0.07			0.07			0.07			0.07
Book value per common share	18.24			18.34			18.69			19.07			19.84
Tangible book value per common share¹	10.53			10.68			10.91			11.33			11.78
Shares of common stock o/s	224,782,694			225,466,266			225,470,254			225,446,089			216,227,852
Basic weighted average common shares o/s	223,501,073			224,730,686			225,084,232			225,088,511			222,319,682
Diluted weighted average common shares o/s	224,055,991			225,264,147			225,621,856			225,622,895			222,769,369
Performance Ratios (annualized)
Return on average assets	(0.48		)%	1.31		%	1.45		%	1.50		%	1.44		%
Return on average equity	(3.30		)	9.26			10.46			10.61			10.08
Return on average tangible assets	(0.51		)	1.39			1.54			1.59			1.53
Return on average tangible common equity	(5.87		)	16.55			18.68			18.63			17.56
Return on average tangible assets, adjusted ¹	1.25			1.45			1.55			1.55			1.58
Return on avg. tangible common equity, adjusted ¹	14.49			17.24			18.79			18.09			18.17
Operating efficiency ratio, as adjusted ¹	41.4			40.3			38.3			38.9			38.0
Analysis of Net Interest Income
Accretion income on acquired loans	$	33,726		$	30,340		$	28,010		$	26,574		$	27,016
Yield on loans	4.77		%	4.85		%	5.01		%	5.01		%	5.07		%
Yield on investment securities - tax equivalent ²	3.03			2.85			2.88			2.87			2.92
Yield on interest earning assets - tax equivalent ²	4.32			4.31			4.47			4.47			4.54
Cost of interest bearing deposits	0.54			0.59			0.68			0.84			0.97
Cost of total deposits	0.43			0.47			0.55			0.68			0.77
Cost of borrowings	1.94			2.01			2.23			2.29			2.43
Cost of interest bearing liabilities	0.82			0.89			1.06			1.17			1.28
Net interest rate spread - tax equivalent basis ²	3.50			3.42			3.41			3.30			3.26
Net interest margin - GAAP basis	3.57			3.54			3.56			3.48			3.48
Net interest margin - tax equivalent basis ²	3.67			3.60			3.62			3.54			3.53
Capital
Tier 1 leverage ratio - Company ³	9.39		%	9.39		%	9.32		%	9.68		%	9.50		%
Tier 1 leverage ratio - Bank only ³	10.10			10.00			9.84			10.10			9.94
Tier 1 risk-based capital ratio - Bank only ³	12.10			14.23			13.71			14.23			13.60
Total risk-based capital ratio - Bank only ³	13.20			15.51			14.94			15.50			14.85
Tangible equity to tangible assets - Company¹	8.27			8.38			8.28			8.65			8.60
Condensed Five Quarter Income Statement
Interest and dividend income	$	276,495		$	281,346		$	304,906		$	309,025		$	313,197
Interest expense	42,471			46,976			58,690			65,076			70,326
Net interest income	234,024			234,370			246,216			243,949			242,871
Provision for loan losses	12,000			13,000			13,000			9,500			10,500
Net interest income after provision for loan losses	222,024			221,370			233,216			234,449			232,371
Non-interest income	23,762			18,707			37,868			24,145			22,475
Non-interest expense	250,746			111,749			124,928			111,773			109,921
(Loss) income before income tax expense	(4,960		)	128,328			146,156			146,821			144,925
Income tax expense	28,319			29,456			31,915			27,171			30,434
Net (loss) income	$	(33,279	)	$	98,872		$	114,241		$	119,650		$	114,491


¹ See a reconciliation of non-GAAP financial measures beginning on page 17.
² Tax equivalent basis represents interest income earned on tax exempt securities divided by the applicable Federal tax rate of 35% in 2017 and 21% in 2018.
³Regulatory 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	12/31/2017			3/31/2018			6/30/2018			9/30/2018			12/31/2018
Balance, beginning of period	$	72,128		$	77,907		$	82,092		$	86,026		$	91,365
Provision for loan losses	12,000			13,000			13,000			9,500			10,500
Loan charge-offs¹:
Traditional commercial & industrial	(4,570		)	(3,572		)	(1,831		)	(3,415		)	(452		)
Asset-based lending	—			—			—			—			(4,936		)
Payroll finance	—			—			(314		)	(2		)	(21		)
Factored receivables	(110		)	(3		)	(160		)	(18		)	(23		)
Equipment financing	(1,343		)	(4,199		)	(2,477		)	(829		)	(1,060		)
Commercial real estate	(7		)	(1,353		)	(3,166		)	(359		)	(56		)
Multi-family	—			—			—			(168		)	(140		)
Acquisition development & construction	—			—			(721		)	—			—
Residential mortgage	(193		)	(39		)	(544		)	(114		)	(694		)
Consumer	(408		)	(125		)	(491		)	(458		)	(335		)
Total charge offs	(6,631		)	(9,291		)	(9,704		)	(5,363		)	(7,717		)
Recoveries of loans previously charged-off¹:
Traditional commercial & industrial	164			214			225			235			404
Asset-based lending	—			—			9			—			—
Payroll finance	5			22			7			5			10
Factored receivables	—			3			2			2			7
Equipment financing	56			72			190			85			604
Commercial real estate	46			16			74			612			185
Multi-family	—			3			—			4			276
Residential mortgage	2			15			34			5			11
Consumer	137			131			97			254			32
Total recoveries	410			476			638			1,202			1,529
Net loan charge-offs	(6,221		)	(8,815		)	(9,066		)	(4,161		)	(6,188		)
Balance, end of period	$	77,907		$	82,092		$	86,026		$	91,365		$	95,677
Asset Quality Data and Ratios
Non-performing loans (“NPLs”) non-accrual	$	186,357		$	181,745		$	178,626		$	177,876		$	166,400
NPLs still accruing	856			301			12,349			7,346			2,423
Total NPLs	187,213			182,046			190,975			185,222			168,823
Other real estate owned	27,095			24,493			20,264			22,735			19,377
Non-performing assets (“NPAs”)	$	214,308		$	206,539		$	211,239		$	207,957		$	188,200
Loans 30 to 89 days past due	$	53,533		$	59,818		$	73,441		$	50,084		$	97,201
Net charge-offs as a % of average loans (annualized)	0.13		%	0.18		%	0.18		%	0.08		%	0.12		%
NPLs as a % of total loans	0.94			0.91			0.92			0.90			0.88
NPAs as a % of total assets	0.71			0.68			0.67			0.67			0.60
Allowance for loan losses as a % of NPLs	41.6			45.1			45.0			49.3			56.7
Allowance for loan losses as a % of total loans	0.39			0.41			0.42			0.44			0.50
Special mention loans	$	136,558		$	101,904		$	119,718		$	88,472		$	113,180
Substandard loans	232,491			245,910			251,840			280,358			266,046
Doubtful loans	764			968			856			2,219			59


¹There were no charge-offs or recoveries on warehouse lending or public sector finance loans during the periods presented. There were no acquisition development and construction recoveries during the periods presented.

Sterling Bancorp and Subsidiaries
QUARTERLY YIELD TABLE
(unaudited, in thousands, except share and per share data)


	For the Quarter Ended
	September 30, 2018								December 31, 2018
	Average balance			Interest			Yield/ Rate		Average balance			Interest			Yield/ Rate
	(Dollars in thousands)
Interest earning assets:
Traditional C&I and commercial finance loans	$	6,102,184		$	81,296		5.29	%	$	6,120,293		$	82,992		5.38	%
Commercial real estate (includes multi-family)	9,170,117			107,292			4.64		9,341,579			112,266			4.77
Acquisition, development and construction	252,710			4,115			6.46		279,793			4,377			6.21
Commercial loans	15,525,011			192,703			4.92		15,741,665			199,635			5.03
Consumer loans	330,061			4,651			5.59		311,475			4,794			6.11
Residential mortgage loans	4,531,922			59,857			5.28		4,336,083			55,989			5.16
Total gross loans ¹	20,386,994			257,211			5.01		20,389,223			260,418			5.07
Securities taxable	4,193,910			29,765			2.82		4,133,456			30,114			2.89
Securities non-taxable	2,580,802			19,296			2.99		2,552,533			19,118			3.00
Interest earning deposits	278,450			1,038			1.48		291,460			1,063			1.45
FHLB and Federal Reserve Bank Stock	359,777			5,767			6.36		343,983			6,499			7.50
Total securities and other earning assets	7,412,939			55,866			2.99		7,321,432			56,794			3.08
Total interest earning assets	27,799,933			313,077			4.47		27,710,655			317,212			4.54
Non-interest earning assets	3,236,093								3,214,626
Total assets	$	31,036,026							$	30,925,281
Interest bearing liabilities:
Demand and savings ² deposits	$	6,964,940		$	11,368		0.65	%	$	6,617,624		$	11,513		0.69	%
Money market deposits	7,404,208			16,547			0.89		7,880,331			21,204			1.07
Certificates of deposit	2,571,298			8,059			1.24		2,530,226			8,733			1.37
Total interest bearing deposits	16,940,446			35,974			0.84		17,028,181			41,450			0.97
Senior notes	201,894			1,619			3.21		183,499			1,600			3.49
Other borrowings	4,678,011			25,129			2.13		4,360,118			24,921			2.27
Subordinated notes	172,847			2,354			5.45		172,905			2,355			5.45
Total borrowings	5,052,752			29,102			2.29		4,716,522			28,876			2.43
Total interest bearing liabilities	21,993,198			65,076			1.17		21,744,703			70,326			1.28
Non-interest bearing deposits	4,174,908								4,324,247
Other non-interest bearing liabilities	470,097								430,213
Total liabilities	26,638,203								26,499,163
Stockholders’ equity	4,397,823								4,426,118
Total liabilities and stockholders’ equity	$	31,036,026							$	30,925,281
Net interest rate spread ³							3.30	%							3.26	%
Net interest earning assets ⁴	$	5,806,735							$	5,965,952
Net interest margin - tax equivalent				248,001			3.54	%				246,886			3.53	%
Less tax equivalent adjustment				(4,052		)						(4,015		)
Net interest income				$	243,949							$	242,871
Ratio of interest earning assets to interest bearing liabilities	126.4		%						127.4		%

¹Average 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
	December 31, 2017									December 31, 2018
		Average balance			Interest			Yield/ Rate		Average balance			Interest			Yield/ Rate
	(Dollars in thousands)
Interest earning assets:
Traditional C&I and commercial finance loans	$		4,891,485		$	60,452		4.90	%	$	6,120,293		$	82,992		5.38	%
Commercial real estate (includes multi-family)	8,839,256				102,789			4.61		9,341,579			112,266			4.77
Acquisition, development and construction	246,141				3,727			6.01		279,793			4,377			6.21
Commercial loans	13,976,882				166,968			4.74		15,741,665			199,635			5.03
Consumer loans	372,981				5,103			5.43		311,475			4,794			6.11
Residential mortgage loans	5,168,622				62,381			4.83		4,336,083			55,989			5.16
Total gross loans ¹	19,518,485				234,452			4.77		20,389,223			260,418			5.07
Securities taxable	3,840,147				24,743			2.56		4,133,456			30,114			2.89
Securities non-taxable	2,086,677				20,453			3.92		2,552,533			19,118			3.00
Interest earning deposits	361,825				873			0.96		291,460			1,063			1.45
FHLB and Federal Reserve Bank stock	236,614				3,132			5.25		343,983			6,499			7.50
Total securities and other earning assets	6,525,263				49,201			2.99		7,321,432			56,794			3.08
Total interest earning assets	26,043,748				283,653			4.32		27,710,655			317,212			4.54
Non-interest earning assets	3,233,754									3,214,626
Total assets	$		29,277,502							$	30,925,281
Interest bearing liabilities:
Demand and savings ² deposits	$		6,734,346		$	5,904		0.35		$	6,617,624		$	11,513		0.69
Money market deposits	7,324,196				10,790			0.58		7,880,331			21,204			1.07
Certificates of deposit	2,382,102				5,611			0.93		2,530,226			8,733			1.37
Total interest bearing deposits	16,440,644				22,305			0.54		17,028,181			41,450			0.97
Senior notes	276,051				2,759			4.00		183,499			1,600			3.49
Other borrowings	3,672,874				15,055			1.63		4,360,118			24,921			2.27
Subordinated notes	172,680				2,352			5.45		172,905			2,355			5.45
Total borrowings	4,121,605				20,166			1.94		4,716,522			28,876			2.43
Total interest bearing liabilities	20,562,249				42,471			0.82		21,744,703			70,326			1.28
Non-interest bearing deposits	4,043,213									4,324,247
Other non-interest bearing liabilities	436,301									430,213
Total liabilities	25,041,763									26,499,163
Stockholders’ equity	4,235,739									4,426,118
Total liabilities and stockholders’ equity	$		29,277,502							$	30,925,281
Net interest rate spread ³								3.50	%							3.26	%
Net interest earning assets ⁴	$		5,481,499							$	5,965,952
Net interest margin - tax equivalent					241,182			3.67	%				246,886			3.53	%
Less tax equivalent adjustment					(7,158		)						(4,015		)
Net interest income					$	234,024							$	242,871
Ratio of interest earning assets to interest bearing liabilities	126.7			%						127.4		%

¹Average 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 beginning on page 20.


	As of or for the Quarter Ended
	12/31/2017			3/31/2018			6/30/2018			9/30/2018			12/31/2018
The following table shows the reconciliation of stockholders’ equity to tangible common equity and the tangible common equity ratio¹:

Total assets	$	30,359,541		$	30,468,780		$	31,463,077		$	31,261,265		$	31,383,307
Goodwill and other intangibles	(1,733,082		)	(1,727,030		)	(1,754,418		)	(1,745,181		)	(1,742,578		)
Tangible assets	28,626,459			28,741,750			29,708,659			29,516,084			29,640,729
Stockholders’ equity	4,240,178			4,273,755			4,352,735			4,438,303			4,428,853
Preferred stock	(139,220		)	(139,025		)	(138,828		)	(138,627		)	(138,423		)
Goodwill and other intangibles	(1,733,082		)	(1,727,030		)	(1,754,418		)	(1,745,181		)	(1,742,578		)
Tangible common stockholders’ equity	2,367,876			2,407,700			2,459,489			2,554,495			2,547,852
Common stock outstanding at period end	224,782,694			225,466,266			225,470,254			225,446,089			216,227,852
Common stockholders’ equity as a % of total assets	13.51		%	13.57		%	13.39		%	13.75		%	13.67		%
Book value per common share	$	18.24		$	18.34		$	18.69		$	19.07		$	19.84
Tangible common equity as a % of tangible assets	8.27		%	8.38		%	8.28		%	8.65		%	8.60		%
Tangible book value per common share	$	10.53		$	10.68		$	10.91		$	11.33		$	11.78

The following table shows the reconciliation of reported return on average tangible common equity and adjusted return on average tangible common equity²:

Average stockholders’ equity	$	4,235,739		$	4,243,897		$	4,305,928		$	4,397,823		$	4,426,118
Average preferred stock	(139,343		)	(139,151		)	(138,958		)	(138,692		)	(138,523		)
Average goodwill and other intangibles	(1,710,151		)	(1,730,952		)	(1,757,296		)	(1,752,933		)	(1,745,339		)
Average tangible common stockholders’ equity	2,386,245			2,373,794			2,409,674			2,506,198			2,542,256
Net income (loss) available to common	(35,281		)	96,873			112,245			117,657			112,501
Net income (loss), if annualized	(139,974		)	392,874			450,213			466,791			446,335
Reported return on avg tangible common equity	(5.87		)%	16.55		%	18.68		%	18.63		%	17.56		%
Adjusted net income (see reconciliation on page 18)	$	87,171		$	100,880		$	112,868		$	114,273		$	116,458
Annualized adjusted net income	345,840			409,124			452,712			453,366			462,034
Adjusted return on average tangible common equity	14.49		%	17.24		%	18.79		%	18.09		%	18.17		%

The following table shows the reconciliation of reported return on average tangible assets and adjusted return on average tangible assets³:

Average assets	$	29,277,502		$	30,018,289		$	30,994,904		$	31,036,026		$	30,925,281
Average goodwill and other intangibles	(1,710,151		)	(1,730,952		)	(1,757,296		)	(1,752,933		)	(1,745,339		)
Average tangible assets	27,567,351			28,287,337			29,237,608			29,283,093			29,179,942
Net income (loss) available to common	(35,281		)	96,873			112,245			117,657			112,501
Net income (loss), if annualized	(139,974		)	392,874			450,213			466,791			446,335
Reported return on average tangible assets	(0.51		)%	1.39		%	1.54		%	1.59		%	1.53		%
Adjusted net income (see reconciliation on page 18)	$	87,171		$	100,880		$	112,868		$	114,273		$	116,458
Annualized adjusted net income	345,840			409,124			452,712			453,366			462,034
Adjusted return on average tangible assets	1.25		%	1.45		%	1.55		%	1.55		%	1.58		%

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 beginning on page 20.


	As of and for the Quarter Ended
	12/31/2017			3/31/2018			6/30/2018			9/30/2018			12/31/2018
The following table shows the reconciliation of the reported operating efficiency ratio and adjusted operating efficiency ratio⁴:

Net interest income	$	234,024		$	234,370		$	246,216		$	243,949		$	242,871
Non-interest income	23,762			18,707			37,868			24,145			22,475
Total revenue	257,786			253,077			284,084			268,094			265,346
Tax equivalent adjustment on securities	7,158			4,070			4,094			4,052			4,015
Net loss on sale of securities	70			5,421			425			56			4,886
Net (gain) on sale of fixed assets	—			—			(11,797		)	—			—
Adjusted total revenue	265,014			262,568			276,806			272,202			274,247
Non-interest expense	250,746			111,749			124,928			111,773			109,921
Merger-related expense	(30,230		)	—			—			—			—
Charge for asset write-downs, systems integration, retention and severance	(104,506		)	—			(13,132		)	—			—
Gain on extinguishment of borrowings	—			—			—			—			172
Amortization of intangible assets	(6,426		)	(6,052		)	(5,865		)	(5,865		)	(5,865		)
Adjusted non-interest expense	109,584			105,697			105,931			105,908			104,228
Reported operating efficiency ratio	97.3		%	44.2		%	44.0		%	41.7		%	41.4		%
Adjusted operating efficiency ratio	41.4			40.3			38.3			38.9			38.0

The following table shows the reconciliation of reported net income (GAAP) and earnings per share to adjusted net income available to common stockholders (non-GAAP) and adjusted diluted earnings per share(non-GAAP)⁵:

(Loss) income before income tax expense	$	(4,960	)	$	128,328		$	146,156		$	146,821		$	144,925
Income tax expense	28,319			29,456			31,915			27,171			30,434
Net (loss) income (GAAP)	(33,279		)	98,872			114,241			119,650			114,491
Adjustments:
Net loss on sale of securities	70			5,421			425			56			4,886
Net (gain) on sale of fixed assets	—			—			(11,797		)	—			—
(Gain) on extinguishment of debt	—			—			—			—			(172		)
Merger-related expense	30,230			—			—			—			—
Charge for asset write-downs, systems integration, retention and severance	104,506			—			13,132			—			—
Amortization of non-compete agreements and acquired customer list intangible assets	333			295			295			295			295
Total pre-tax adjustments	135,139			5,716			2,055			351			5,009
Adjusted pre-tax income	130,179			134,044			148,211			147,172			149,934
Adjusted income tax expense	(41,006		)	(31,165		)	(33,347		)	(30,906		)	(31,486		)
Adjusted net income (non-GAAP)	89,173			102,879			114,864			116,266			118,448
Preferred stock dividend	2,002			1,999			1,996			1,993			1,990
Adjusted net income available to common stockholders (non-GAAP)	$	87,171		$	100,880		$	112,868		$	114,273		$	116,458

Weighted average diluted shares	224,055,991			225,264,147			225,621,856			225,622,895			222,769,369
Reported diluted EPS (GAAP)	$	(0.16	)	$	0.43		$	0.50		$	0.52		$	0.51
Adjusted diluted EPS (non-GAAP)	0.39			0.45			0.50			0.51			0.52

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 beginning on page 20.


	For the Year Ended December 31,
	2017			2018
The following table shows the reconciliation of reported net income (GAAP) and earnings per share to adjusted net income available to common stockholders (non-GAAP) and adjusted diluted earnings per share (non-GAAP)⁵:
Income before income tax expense	$	180,970		$	566,230
Income tax expense	87,939			118,976
Net income (GAAP)	93,031			447,254

Adjustments:
Net loss on sale of securities	344			10,788
Net loss (gain) on sale of fixed assets	1			(11,800		)
Merger-related expense	39,232			—
Charge for asset write-downs, systems integration, retention and severance	105,110			13,132
(Gain) on extinguishment of borrowings	—			(172		)
Amortization of non-compete agreements and acquired customer list intangible assets	1,410			1,177
Total pre-tax adjustments	146,097			13,125
Adjusted pre-tax income	327,067			579,355
Adjusted income tax expense	(103,026		)	(121,732		)
Adjusted net income (non-GAAP)	$	224,041		$	457,623
Preferred stock dividend	2,002			7,978
Adjusted net income available to common stockholders (non-GAAP)	$	222,039		$	449,645

Weighted average diluted shares	158,124,270			224,816,996
Diluted EPS as reported (GAAP)	$	0.58		$	1.95
Adjusted diluted EPS (non-GAAP)	1.40			2.00

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 Year Ended December 31,
	2017			2018
The following table shows the reconciliation of reported return on average tangible common equity and adjusted return on average tangible common equity²:
Average stockholders’ equity	$	2,498,512		$	4,344,096
Average preferred stock	(35,122		)	(138,829		)
Average goodwill and other intangibles	(999,333		)	(1,746,687		)
Average tangible common stockholders’ equity	1,464,057			2,458,580
Net income available to common stockholders	$	91,029		$	439,276
Reported return on average tangible common equity	6.22		%	17.87		%
Adjusted net income available to common stockholders (see reconciliation on page 19)	$	222,039		$	449,645
Adjusted return on average tangible common equity	15.17		%	18.29		%
The following table shows the reconciliation of reported return on avg tangible assets and adjusted return on avg tangible assets³:
Average assets	$	18,451,301		$	30,746,916
Average goodwill and other intangibles	(999,333		)	(1,746,687		)
Average tangible assets	17,451,968			29,000,229
Net income available to common stockholders	91,030			439,276
Reported return on average tangible assets	0.52		%	1.51		%
Adjusted net income available to common stockholders (see reconciliation on page 19)	$	222,039		$	449,645
Adjusted return on average tangible assets	1.27		%	1.55		%
The following table shows the reconciliation of the reported operating efficiency ratio and adjusted operating efficiency ratio⁴:
Net interest income	$	576,143		$	967,403
Non-interest income	64,202			103,197
Total revenues	640,345			1,070,600
Tax equivalent adjustment on securities	20,054			16,231
Net loss on sale of securities	344			10,788
Net loss (gain) on sale of fixed assets	1			(11,800		)
Adjusted total net revenue	660,744			1,085,819
Non-interest expense	433,375			458,370
Merger-related expense	(39,232		)	—
Charge for asset write-downs, retention and severance	(105,110		)	(13,132		)
Gain on extinguishment of borrowings	—			172
Amortization of intangible assets	(13,008		)	(23,646		)
Adjusted non-interest expense	$	276,025		$	421,764
Reported operating efficiency ratio	67.7		%	42.8		%
Adjusted operating efficiency ratio	41.8		%	38.8		%

The non-GAAP/as adjusted measures presented above are used by our management and the Company’s 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.

Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)

¹ Stockholders’ equity as a percentage of total assets, book value per common share, tangible common equity as a percentage of tangible assets and tangible book common 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 common equity and adjusted return on average tangible common equity measures provide information to evaluate the use of our tangible common equity.

³ Reported return on average tangible assets and adjusted return on average 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 available to common stockholders and adjusted diluted 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

Sterling Bancorp announces results for the full year and fourth quarter of 2018 with record annual earnings per share available to common stockholders of $1.95 (as reported) and $2.00 (as adjusted), representing growth of 236.2% and 42.9%, respectively, over 2017