Key Performance Highlights for the Three Months ended September 30, 2019 vs. September 30, 2018
Net income available to common stockholders of $120.5 million (as reported) and $105.6 million (as adjusted).
Total commercial loans of $18.2 billion at September 30, 2019; growth of 15.3% over September 30, 2018.
Operating efficiency ratio of 38.7% (as reported) and 39.1% (as adjusted)⁴.
Repurchased 2,808,046 common shares in the third quarter of 2019.
Tangible book value per common share¹ of $12.90; growth of 13.9% over September 30, 2018.
Key Performance Highlights for the Three Months ended September 30, 2019 vs. June 30, 2019Growth in commercial loans of $636.4 million over linked quarter; 14.4% annualized growth rate.Total deposits were $21.6 billion with a cost of 0.92%. Municipal deposit balances increased by $534.8 million.Excluding accretion income on acquired loans, net interest margin was 3.15%.Consolidated 10 financial centers and one back-office location in the third quarter of 2019.Completed the restructuring of $394.8 million of bank owned life insurance (“BOLI”).Completed the termination of the Astoria defined benefit pension plan and recorded a $12.1 million gain.Announced agreement to acquire an $843.0 million commercial loan portfolio. Anticipated close in Q4 2019.1. Non-GAAP / as adjusted measures are defined in the non-GAAP tables beginning on page 18.
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 and gain on termination of pension plan.
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. The tax equivalent adjustment assumes a 21% federal tax rate in all periods presented.
4. Operating efficiency ratio is a non-GAAP measure. See page 21 for an explanation of the operating efficiency ratio.1MONTEBELLO, N.Y., Oct. 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 nine months ended September 30, 2019. Net income available to common stockholders for the quarter ended September 30, 2019 was $120.5 million, or $0.59 per diluted share, compared to net income available to common stockholders of $94.5 million, or $0.46 per diluted share, for the linked quarter ended June 30, 2019, and net income available to common stockholders of $117.7 million, or $0.52 per diluted share, for the three months ended September 30, 2018.Net income available to common stockholders for the nine months ended September 30, 2019 was $314.4 million, or $1.51 per diluted share, compared to net income available to common stockholders of $326.8 million, or $1.45 per diluted share, for the nine months ended September 30, 2018.President’s Comments
Jack Kopnisky, President and Chief Executive Officer, commented: “We continued executing our strategy in the third quarter, focusing on growing our commercial businesses, transitioning our balance sheet to a more optimal mix and driving operational efficiency. In the third quarter of 2019, our adjusted net income available to common stockholders was $105.6 million and our adjusted diluted earnings per share available to common stockholders (“adjusted EPS”) was $0.52. Our profitability metrics remained strong, including adjusted return on average tangible assets of 1.50% and adjusted return on average tangible common equity of 16.3%. We have also continued delivering on our track record of growth and profitability. Over the past five years, our adjusted EPS has grown at a compound annual growth rate (“CAGR”) of 18.8%; and our tangible book value per common share has grown at a CAGR of 15.4%.“Our commercial businesses have continued to demonstrate strong performance. We organically grew spot commercial loan balances by $636.4 million in the third quarter of 2019 and $1.5 billion since December 31, 2018. In the same periods, run-off of residential mortgage loans was $165.5 million and $463.8 million, respectively. At September 30, 2019, our loan portfolio consisted of 87.4% in total commercial loans, in-line with our longer-term target of commercial loans representing at least 85.0% of our total portfolio. We continue to exercise discipline on new loan originations and portfolio acquisitions, focusing on diversified commercial asset classes where we can achieve our target risk-adjusted returns.“We continue to focus on generating deposit growth through full client relationships. Total deposits were $21.6 billion and the cost of total deposits was 0.92% in the third quarter of 2019. We are seeing improving market conditions and competitive dynamics in our deposit markets, demonstrated by the increase of one basis point in total cost of deposits relative to the linked quarter. We anticipate that the current interest rate environment will allow us to reduce our cost of total funding liabilities; as of September 30, 2019, our spot cost of total funding liabilities was 1.10%, compared to an average of 1.16% for the third quarter. We will focus on further reducing costs of deposits and borrowings going forward.“The changing interest rate environment resulted in pressure on our interest earning asset and loan origination yields, as our tax equivalent yield excluding accretion income on acquired loans was 3.15% in the third quarter of 2019 compared to 3.22% for the linked quarter. We anticipate that our loan portfolio transition, decreasing balances of Federal Home Loan Bank (“FHLB”) borrowings, and improving deposit market competitive dynamics will allow us to support our current level of tax equivalent net interest margin excluding accretion income. However, a prolonged flat interest rate environment would impact our net interest margin and the profitability of our loan originations and balance sheet growth.“We continue to maintain strong controls over operating expenses. During the third quarter of 2019, we consolidated 10 financial centers, bringing our total to 19 financial centers closed year to date. Our financial center count was 87 at September 30, 2019, and we anticipate our total financial centers will be below 80 in 2020. In the third quarter of 2019, our annualized adjusted operating expenses were $403.4 million and our adjusted operating efficiency ratio was 39.1%.“We are constantly evaluating opportunities to make our business and operations more profitable. To that end, we executed several corporate actions during the quarter. First, we completed the restructuring of the BOLI program we acquired in the merger with Astoria Financial Corp. (the “Astoria Merger”). The restructuring consisted mainly of diversifying the investment asset classes available under the program and a reduction in fees and other charges. Our total BOLI income was $8.1 million in the quarter, and we anticipate BOLI income will be in a range of $5.0 million to $6.0 million per quarter going forward. Second, we completed the termination of the Astoria defined benefit pension plan, and recorded a net pre-tax gain of $12.1 million. Lastly, we announced we have entered into a definitive agreement to acquire $843 million of middle market commercial equipment finance loans and leases, which will augment our loan originations and accelerate our balance sheet and loan portfolio repositioning. The transaction is expected to close in the fourth quarter of 2019. “Our tangible common equity ratio was 9.22% and our estimated Tier 1 Leverage ratio was 9.77% at September 30, 2019. Our tangible book value per common share was $12.90, which represented an increase of 13.9% 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. In the third quarter of 2019, we repurchased 2,808,046 common shares. We anticipate we will repurchase between 4.0 to 5.0 million shares in the fourth quarter of 2019, subject to market conditions.2“We have created a Company with significant 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 November 18, 2019 to holders of record as of November 4, 2019.”Reconciliation of GAAP Results to Adjusted Results (non-GAAP)
The Company’s GAAP net income available to common stockholders of $120.5 million, or $0.59 per diluted share, for the third quarter of 2019, included the following items:a pre-tax gain of $12.1 million on the termination of the legacy Astoria defined benefit pension plan;a pre-tax gain of $6.9 million on the sale of available for sale securities; andthe pre-tax amortization of non-compete agreements and acquired customer list intangible assets of $200 thousand.Excluding the impact of these items, adjusted net income available to common stockholders was $105.6 million, or $0.52 per diluted share, for the three months ended September 30, 2019.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 18.Net Interest Income and Margin⁵ 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 21% federal tax rate in all periods presented.3Third quarter 2019 compared with third quarter 2018
Net interest income was $223.3 million for the quarter ended September 30, 2019, a decrease of $20.6 million compared to the third quarter of 2018. This was mainly due to a $1.4 billion decline in average total interest earning assets and an increase in the cost of interest bearing liabilities. Other key components of the changes in net interest income and net interest margin for the third quarter of 2019 compared to the third quarter of 2018 were the following:The yield on loans was 4.97% compared to 5.01% for the three months ended September 30, 2018. The decrease in yield on loans was mainly due to the decline in accretion income on acquired loans, which was $18.0 million in the third quarter of 2019 compared to $26.6 million in the third quarter of 2018.The tax equivalent yield on investment securities was 2.85% compared to 2.87% for the three months ended September 30, 2018. Average investment securities were $5.4 billion, or 20.6%, of average total interest earning assets for the third quarter of 2019 compared to $6.8 billion, or 24.4%, of average total interest earning assets for the third quarter of 2018. The decline in the average balance of investment securities was mainly due to our balance sheet transition strategy.The tax equivalent yield on interest earning assets increased three basis points between the periods to 4.50%.The cost of total deposits was 92 basis points and the cost of borrowings was 2.41%, compared to 68 basis points and 2.29%, respectively, for the same period a year ago. The increase was mainly due to increases in market rates of interest.The total cost of interest bearing liabilities increased 23 basis points to 1.40% for the third quarter of 2019 compared to 1.17% for the third quarter of 2018, which was mainly due to the increase in market interest rates.Average interest bearing deposits decreased by $415.8 million and average borrowings decreased $1.2 billion compared to the third quarter of 2018. The declines were related to a decrease in average earning assets and lower deposit balances on certain higher balance, higher cost commercial and municipal accounts.Total interest expense increased by $6.8 million compared to the third quarter of 2018.The tax equivalent net interest margin was 3.42% for the third quarter of 2019 compared to 3.54% for the third quarter of 2018. 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 third quarter of 2019 compared to 3.16% in the third quarter of 2018.Third quarter 2019 compared with linked quarter ended June 30, 2019
Net interest income declined $8.5 million for the quarter ended September 30, 2019 compared to the linked quarter. The decrease in net interest income was mainly due to lower accretion income on acquired loans, which declined $5.8 million to $18.0 million for the third quarter of 2019 compared to $23.7 million in the linked quarter. Other key components of the changes in net interest income and net interest margin for the third quarter of 2019 compared to the linked quarter were the following:The yield on loans was 4.97% compared to 5.20% for the linked quarter. The decrease in the yield on loans was mainly due to a decrease in accretion income on acquired loans and a decline in market interest rates. Our balance sheet transition continued as the average balance of commercial loans increased by $599.7 million and the average balance of residential mortgage loans declined by $191.8 million. The growth in commercial loans was due to organic growth generated by our commercial banking teams.The tax equivalent yield on investment securities was 2.85% compared to 2.92% for the linked quarter. The decrease in yield was mainly due to accelerated amortization of securities premiums related to repayments of mortgage-backed securities and the sale of a portion of our higher yielding corporate securities.The tax equivalent yield on interest earning assets was 4.50% compared to 4.66% in the linked quarter.The cost of total deposits increased one basis point to 92 basis points, mainly due to a change in our deposit mix as the proportion of certificate accounts increased. The total cost of borrowings declined 13 basis points to 2.41% due to changes in market rates of interest.Average interest bearing deposits decreased by $406.2 million and average borrowings increased by $328.2 million relative to the linked quarter. The decline in deposits was due to the same factors as discussed above. The increase in borrowings offset the decline in average deposits. Total interest expense increased $1.3 million from the linked quarter.The tax equivalent net interest margin was 3.42% compared to 3.58% in the linked quarter. Excluding accretion income on acquired loans, tax equivalent net interest margin was 3.15% compared to 3.22% in the linked quarter. We anticipate we will be able to support our net interest margin through further reductions in total securities and are targeting a level of 15.0% of average earning assets over time, and reductions in the cost of interest bearing liabilities.4Non-interest IncomeThird quarter 2019 compared with third quarter 2018
Excluding net (loss) gain on sale of securities and gain on termination of pension plan, adjusted non-interest income increased $8.7 million in the third quarter of 2019 to $32.9 million, compared to $24.2 million in the same quarter last year. The change was mainly due to higher BOLI income and loan commissions and fees generated by our commercial banking teams.In the third quarter of 2019, we realized a gain of $6.9 million on the sale of available for sale securities compared to a $56 thousand loss in the year earlier period. We anticipate we will continue to reduce our securities portfolio and are targeting a level of 15% securities to average earning assets over time.We terminated the defined benefit pension plan assumed in the Astoria Merger during the third quarter of 2019. The termination of the plan resulted in a gain of $12.1 million.Third quarter 2019 compared with linked quarter ended June 30, 2019
Excluding net (loss) gain on sale of securities and gain on termination of pension plan, adjusted non-interest income increased approximately $5.3 million from $27.6 million in the linked quarter to $32.9 million in the third quarter of 2019. The increase was due to the same factors discussed above. BOLI income was $4.2 million in the second quarter of 2019 and $8.1 million in the third quarter of 2019. The increase in the third quarter of 2019 was due to the restructuring of the BOLI assets acquired in the Astoria Merger.Non-interest ExpenseThird quarter 2019 compared with third quarter 2018
Total non-interest expense decreased $5.3 million, relative to the third quarter of 2018. Key components of the change in non-interest expense between the periods were the following:
Compensation and benefits decreased $2.0 million, mainly due to a decline in total FTEs between the periods. Total FTEs declined to 1,689 from 1,959, which was mainly due to the completion of the integration and ongoing financial center consolidation strategy following the Astoria Merger. This was partially offset by the hiring of commercial bankers, business development officers and risk management personnel.Occupancy and office operations expense decreased $722 thousand, mainly due to the consolidation of financial centers and other back-office locations. We have consolidated 28 locations over the past twelve months.Information technology expense decreased $2.2 million, mainly due to the completion of the conversion of Astoria’s legacy deposit systems in the third quarter of 2018.FDIC insurance and regulatory assessments decreased $2.8 million to $3.2 million in the third quarter of 2019, compared to $6.0 million in the third quarter of 2018. The decrease was a result of a reduction in FDIC deposit insurance assessments, which was mainly due to the termination of the quarterly Deposit Insurance Fund surcharge that was assessed to institutions with $10 billion or more in assets in 2018.OREO expense, net, declined $1.4 million to $79 thousand for the third quarter of 2019. In the third quarter of 2019, OREO expense, net, included gain on sale of $268 thousand, which was offset by $192 thousand of write-downs and $187 thousand of operating costs.Other expenses increased $3.4 million to $16.6 million, which was mainly due to higher professional fees and higher advertising and promotion expense. The increase in professional fees was mainly due to loan collection matters and higher consulting fees associated with various back-office automation projects. Increase in advertising and promotion expense was mainly due to targeted deposit gathering efforts.5Third quarter 2019 compared with linked quarter ended June 30, 2019
Total non-interest expense declined $20.5 million to $106.5 million in the third quarter of 2019. In the second quarter we recorded an impairment charge in connection with our financial center and back-office consolidation strategy of $14.4 million. Excluding the impairment charge, non-interest expense declined $6.1 million in the third quarter compared to the linked quarter ended June 30, 2019. Key components of the change in non-interest expense were the following:Compensation and benefits decreased $1.6 million to $52.9 million in the third quarter of 2019. The decrease was mainly due to a decrease in FTEs, from 1,820 at June 30, 2019 to 1,689 at September 30, 2019.Other expenses decreased $3.5 million, which was mainly due to a legal settlement expense and operating losses that were incurred in the second quarter of 2019 that did not recur in the third quarter.Taxes
We recorded income tax expense equal to 21.0% of pre-tax income for the three months ended September 30, 2019, and the nine months ended September 30, 2019. For the three months ended June 30, 2019 and September 30, 2018, we recorded income tax expense at an estimated effective income tax rate of 21.0% and 18.5%, respectively.6Key Balance Sheet Highlights as of September 30, 2019⁶ Core deposits include retail, commercial and municipal transaction, money market, savings accounts and certificates of deposits accounts, and reciprocal Certificate of Deposit Account Registry balances and exclude brokered and wholesale deposits.Highlights in balance sheet items as of September 30, 2019 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 37.4%; commercial real estate loans (which include multi-family loans) represented 47.9%; consumer and residential mortgage loans combined represented 12.6%; and acquisition, development and construction loans represented 2.1% of total portfolio loans, respectively. At September 30, 2018, C&I loans represented 30.4%; commercial real estate loans (which include multi-family loans) represented 45.2%; consumer and residential mortgage loans combined represented 23.1%; and acquisition, development and construction loans represented 1.3% of total portfolio loans, respectively. We continue to make significant progress towards our goal of a loan mix comprised of 45% for each of C&I and commercial real estate loans and 10% other loans.ADC loans increased $94.9 million over the linked quarter and $168.2 million since September 30, 2018. The increase was mainly related to construction loans associated with our investments in affordable housing tax credits.Total commercial loans, which include all C&I loans, commercial real estate (including multi-family) and acquisition, development and construction loans, increased by $636.4 million over the linked quarter and $2.4 billion since September 30, 2018.Residential mortgage loans held in our loan portfolio were $2.4 billion at September 30, 2019, a decline of $165.5 million from the linked quarter and a decline of $2.1 billion from the same period a year ago. We sold $1.3 billion of residential mortgage loans in the first quarter of 2019 and sold $94.6 million of residential mortgage loans in the second quarter of 2019.The balance of BOLI increased by $10.8 million relative to the prior quarter and was $609.7 million at September 30, 2019. The increase was due to the restructuring of the Astoria BOLI assets and recurring BOLI income.Total deposits at September 30, 2019 increased $630.9 million compared to June 30, 2019, and total deposits increased $123.3 million compared to September 30, 2018.Core deposits at September 30, 2019 were $20.3 billion and increased $402.5 million compared to June 30, 2019, and decreased $151.9 million compared to September 30, 2018.Municipal deposits at September 30, 2019 were $2.2 billion, and increased $534.8 million relative to June 30, 2019. This increase was due to seasonal inflows. Historically, municipal deposits reach their annual peak at September 30. The balance at September 30, 2019 increased $214.7 million compared to a year ago, mainly due to new client relationships.Investment securities decreased by $1.6 billion from September 30, 2018, and represented 16.8% of total assets at September 30, 2019. We have sold securities during the past twelve months to fund commercial loan growth including various loan portfolio acquisitions. We have sold securities to reduce the proportion of lower yielding assets as a percentage of total assets.Total borrowings at September 30, 2019 were $3.2 billion, and declined $959.8 million relative to June 30, 2019. The sale of securities and deposit inflows allowed us to reduce borrowings.7Credit QualityProvision for loan losses was $13.7 million for the quarter ended September 30, 2019, which approximated net charge-offs. Charge-offs of $9.6 million were related to the work-out of three ABL relationships that were classified in the second quarter of 2019. Two of those relationships were resolved in the quarter, and we are continuing to manage the work-out of the third relationship, which we anticipate will be finalized in the fourth quarter of 2019. Other charge-off activity was mainly due to equipment finance and residential mortgage loans. Allowance coverage ratios were 0.50% of total loans and 54.8% of non-performing loans at September 30, 2019. Note that due to our various acquisitions and mergers, a significant portion of our loan portfolio does not carry an allowance for loan losses, as the acquired loans were recorded at their estimated fair value on the acquisition date.Non-performing loans decreased by $1.7 million to $191.0 million at September 30, 2019 compared to the linked quarter, and net charge-offs were 27 basis points of total loans on an annualized basis. Loans 30 to 89 days past due decreased $11.6 million from the linked quarter.Special mention loans increased $18.0 million and substandard loans decreased $33.4 million in the third quarter of 2019 compared to the linked quarter. The increase in special mention loans was mainly due to loans in the ADC, traditional C&I, CRE and ABL categories and was partially offset by several upgrades of multi-family loans. The decline in substandard loans was mainly due to net charge-offs and a multi-family loan that was upgraded to pass.8Capital⁷ See a reconciliation of non-GAAP financial measures beginning on page 18.Total stockholders’ equity increased $61.8 million to $4.5 billion as of September 30, 2019 compared to June 30, 2019 and increased $82.7 million compared to September 30, 2018. For the third quarter of 2019, net income available to common stockholders of $120.5 million and an increase in accumulated other comprehensive income of $4.8 million was offset by common dividends of $14.3 million, preferred dividends of $2.2 million and common stock repurchases of $53.7 million.Total goodwill and other intangible assets were $1.8 billion at September 30, 2019, a decrease of $4.8 million compared to June 30, 2019, which was due to amortization.Basic and diluted weighted average common shares outstanding declined relative to the linked quarter by approximately 3.8 million shares and were 203.1 million shares and 203.6 million shares, respectively. Total common shares outstanding at September 30, 2019 were approximately 202.4 million. In the third quarter of 2019, we repurchased 2,808,046 shares of common stock at a weighted average price of $19.14 per share. Under our Board of Directors approved repurchase program, we have 5,572,535 shares remaining for repurchase at September 30, 2019, and we anticipate completing the repurchase program by the end of the first quarter of 2020.Tangible book value per common share was $12.90 at September 30, 2019, which represented an increase of 13.8% over a year ago and an increase of 4.0% over June 30, 2019.Conference Call Information
Sterling Bancorp will host a teleconference and webcast on Thursday, October 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 (800) 239-9838, Conference ID #9897520. 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.
9CAUTION 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 Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2019. 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.10¹ See reconciliation of non-GAAP financial measures beginning on page 18.1112¹ See a reconciliation of non-GAAP financial measures beginning on page 18.
² At December 31, 2018 and March 31, 2019, loans held for sale included $1.54 billion and $222 million of residential mortgage loans, respectively; the other balances of loans held for sale are commercial syndication loans.
³ Asset-based lending, payroll finance, warehouse lending, factored receivables, equipment finance and public sector finance comprise our commercial finance loan portfolio.
⁴ Includes loans held for sale, but excludes allowance for loan losses.
13¹ See a reconciliation of non-GAAP financial measures beginning on page 18.
² Tax equivalent basis represents interest income earned on tax exempt securities divided by the applicable Federal tax rate of 21%.
³ Regulatory capital amounts and ratios are preliminary estimates pending filing of the Company’s and Bank’s regulatory reports.
14¹ There were no charge-offs or recoveries on warehouse lending or public sector finance loans during the periods presented. There were no asset-based lending or acquisition development and construction recoveries during the periods presented.15¹ 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.16¹ 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.1718192021Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)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.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.22STERLING BANCORP CONTACT:
Luis Massiani, SEVP & Chief Financial Officer
845.369.8040
http://www.sterlingbancorp.com
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