MONTEBELLO, NY--(Marketwired - July 28, 2014) - Sterling Bancorp (NYSE: STL)
Key Highlights for the Third Fiscal Quarter 2014
- Total revenue
1 reached $70.7 million. - Tax equivalent net interest margin was 3.84%, compared to 3.76% in the linked quarter and 3.46% in the third quarter of fiscal 2013.
- Total non-interest income excluding securities gains was $12.3 million, which represented 17.4% of total revenue
1 . - Core total revenue growth
2 of 6.5% versus an increase in core non-interest expense of 12 basis points (linked quarter). - Core operating efficiency
2 ratio was 57.8%. - Annualized commercial loan growth of 33.4% over linked quarter.
- Core return on average tangible assets
2 was 0.95%, compared to 0.84% in the linked quarter and 0.68% in the third quarter of fiscal 2013. - Core return on average tangible equity
2 was 12.4%, compared to 10.7% in the linked quarter and 7.5% in the third quarter of fiscal 2013.
Sterling Bancorp (NYSE: STL), the parent company of Sterling National Bank, today announced results for the quarter and nine months ended June 30, 2014. Net income for the quarter was $15.0 million, or $0.18 per diluted share, compared to net income of $6.4 million, or $0.15 per diluted share for the same quarter last year and net income of $10.3 million, or $0.12 per diluted share, for the linked quarter ended March 31, 2014. For the nine months ended June 30, 2014, net income was $11.3 million, or $0.14 per diluted share, compared to net income of $19.9 million, or $0.45 per diluted share for the nine months ended June 30, 2013.
President's Comments
Jack Kopnisky, President and CEO, commented: "The quarter was highlighted by higher profitability, strong loan growth and significant operating leverage, as we continued to successfully execute our strategy of building a high performance regional bank that delivers superior service to our small and middle market commercial clients and consumers. We continue to make significant progress in the integration of legacy Sterling Bancorp, as evidenced by our strong results in the quarter. Our earnings, balance sheet growth and operating efficiency continue to gain momentum and are on-track to achieve our long-term targets."
1. Total revenue is equal to net interest income plus non-interest income excluding securities gains and losses.
2. Core measures are defined in the Non-GAAP tables beginning on page 10.
"Core net income for the quarter was $15.7 million and core earnings per diluted share were $0.19, increasing over both the linked and year ago quarters. Our core return on average tangible assets was 0.95% and core return on average tangible equity was 12.4%. This compares to 0.68% and 7.5%, respectively for the same quarter a year ago.
"On a linked quarter basis, our core total revenue grew 6.5% while core non-interest expense increased by 0.12%. We are realizing the anticipated revenue and expense benefits of the merger with legacy Sterling Bancorp and the consolidation of our financial centers and other locations. For the quarter, our core operating efficiency ratio was 57.8%, which compares to 61.4% in the linked quarter and 59.1% in the same quarter a year ago.
"We experienced strong loan growth across multiple asset classes. As of June 30, 2014, total loans including loans held for sale were $4.6 billion, which represented annualized growth of 29.4% over the prior quarter end. Our commercial loan balances grew by $286.2 million to $3.7 billion, which represented annualized growth of 33.4% over the prior quarter end.
"Our funding and liquidity position remains strong. As of June 30, 2014, our retail, commercial and municipal transaction, money market and savings accounts were $4.5 billion, which represented 87.4% of our total deposit balances. A key component of our strategy is to continue growing commercial deposits. During the quarter, commercial transaction deposits increased by $48.0 million, which represented growth of 8.5% over the linked quarter.
"We continue to focus on diversifying and improving our revenue mix. Non-interest income excluding securities gains was $12.3 million for the quarter, which represented approximately 17.4% of total revenue. We have a significant opportunity to grow our specialty lending businesses, which we anticipate will allow us to grow fee income and increase the proportion of fee income to total revenue to approximately 20% - 25% over time.
"Net charge-offs against the allowance for loan losses for the quarter ended June 30, 2014 were $1.6 million, compared to $3.4 million in the prior quarter. The allowance for loan losses to total loans, excluding loans acquired in the Gotham and legacy Sterling Bancorp transactions that were recorded at fair value at their acquisition dates and continue to carry no allowance, was 1.05%. The ratio of allowance for loan losses to non-performing loans continues to strengthen and increased from 53.1% at March 31, 2014 to 64.0% at June 30, 2014.
"All of the issued and outstanding 8.375% Cumulative Trust Preferred Securities of Sterling Bancorp Trust I were redeemed on June 1, 2014, which will generate significant interest expense savings.
"Our capital position remains strong. At June 30, 2014, our tangible equity to tangible assets ratio was 7.60% and our Tier 1 leverage ratio at Sterling National Bank was 9.42%. We have ample capital and liquidity to support our growth and execute our strategy. Lastly, I am pleased to announce our Board of Directors has declared a dividend on our common stock of $0.07 per share payable on August 14, 2014 to our holders on the record date of August 4, 2014."
Reconciliation of Core to GAAP Results
Results for the third fiscal quarter of 2014 were impacted by pre-tax gains of $2.8 million and pre-tax charges of $3.8 million, which are listed below. Excluding the impact of these items, net income was $15.7 million, or $0.19 per diluted share.
- A gain on the sale of a financial center location of $925 thousand. The gain was recognized as a reduction of foreclosed property expense.
- A gain on sale of securities of $1.2 million.
- A gain on the redemption of the 8.375% Cumulative Preferred Trust Securities of $712 thousand. The gain was recognized as a reduction of other non-interest expense.
- Costs associated with the banking systems conversion of $1.7 million, which included the payment of a contract termination fee to our current service provider. The charges were recognized as other non-interest expense.
- A charge to exit certain financial center locations of $571 thousand, which was recognized in other non-interest expense.
- Amortization of non-compete intangible assets of $1.5 million.
Results for the nine months ended June 30, 2014 were impacted by merger-related expenses associated with the legacy Sterling Bancorp merger transaction, and charges for asset write-downs, the settlement of benefit plan obligations and other charges. In total, merger-related expenses and other charges were $40.8 million the nine months ended June 30, 2014. Excluding the impact of these items, net income for the nine months ended June 30, 2014 was $39.8 million, or $0.50 per diluted share.
See the reconciliation of the Company's non-GAAP financial measures included in this press release beginning on page 10. Non-GAAP financial measures include references to the terms "core" or "excluding".
Net Interest Income and Margin
Third quarter fiscal 2014 compared to the third quarter fiscal 2013
Net interest income was $58.5 million, up $30.1 million compared to the third quarter of fiscal 2013. This was mainly the result of higher average loans and investment securities balances and an increase in net interest margin due to the merger transaction with legacy Sterling Bancorp. The tax-equivalent yield on investments increased 37 basis points and yield on loans increased 24 basis points. Yield on loans included $2.9 million in accretion of the fair value discount associated with the loans acquired from Gotham and legacy Sterling Bancorp. The cost of total deposits was 18 basis points and the cost of borrowings was 2.44%. The net interest margin on a tax-equivalent basis was 3.84% compared to 3.46% for the same period a year ago.
Third quarter fiscal 2014 compared with linked quarter ended March 31, 2014
Net interest income increased $4.4 million compared to the linked quarter ended March 31, 2014. The increase in net interest income for the third quarter was due to higher average loans and investment securities balances and an increase in net interest margin. Average earning assets for the quarter were $6.3 billion, the yield on loans was 5.04% and tax-equivalent yield on interest earning assets was 4.30%. Tax-equivalent net interest margin increased to 3.84% from 3.76% in the linked quarter.
Non-interest Income
Third quarter fiscal 2014 compared with third quarter fiscal 2013
Excluding net gains on sale of securities, non-interest income increased $7.6 million to $12.3 million during the third quarter of fiscal 2014. The increase was mainly due to an increase in fees associated with service charges on deposits, fees generated in the factoring and payroll finance businesses and gain on sale income in mortgage banking. The Company realized a net gain on sale of securities of $1.2 million for the third quarter of fiscal 2014 compared to net gain on sale of securities of $1.9 million in the year ago quarter.
Third quarter fiscal 2014 compared with linked quarter ended March 31, 2014
Excluding net gains and losses on sale of securities, non-interest income decreased $77 thousand to $12.3 million during the third fiscal quarter of 2014. The decrease was mainly due to lower levels of gain on sale income in mortgage banking. The Company realized a net gain on sale of securities of $60 thousand in the linked quarter ended March 31, 2014.
Non-interest Expense
Third quarter fiscal 2014 compared with third quarter fiscal 2013
Non-interest expense increased $23.1 million relative to the third quarter of fiscal 2013 to $44.9 million, principally the result of increased compensation and benefits expense, occupancy and office operations expense, and other expenses due to the legacy Sterling Bancorp merger transaction. Other expenses for the quarter included a charge related to the banking systems conversion of $1.2 million, a charge to exit certain financial center locations of $571 thousand, and the amortization of non-compete agreements of approximately $1.5 million. The charge related to the banking systems conversion mainly consisted of an early contract termination fee to our current provider and consulting fees and personnel training costs incurred in connection with the integration of the legacy Provident Bank and legacy Sterling National Bank technology systems. Other expenses also included a favorable gain on the sale of a financial center of $925 thousand included in foreclosed property expense, and a gain on the redemption of the Company's 8.375% Cumulative Trust Preferred Securities of $712 thousand.
Third quarter fiscal 2014 compared with the linked quarter ended March 31, 2014
Non-interest expense decreased $1.8 million compared to the linked quarter. Other expenses in the second fiscal quarter included merger-related expenses of $388 thousand, a charge related to the core banking systems conversion of $423 thousand, severance compensation of $255 thousand, a charge on the settlement of the legacy Provident employee stock ownership plan and a portion of the legacy Sterling Bancorp defined benefit pension plan obligations of $1.5 million and the amortization of non-compete agreements of $1.5 million.
Income Taxes
In the third quarter of fiscal 2014 the Company recorded income taxes at a rate of 28.7% compared to an effective tax rate of 30.8% in the linked quarter and 30.8% for the same period in fiscal 2013. During the quarter, the Company completed the income tax returns for fiscal year 2013 which resulted in an adjustment to the effective estimated tax rate for fiscal 2014.
Key Balance Sheet Highlights at June 30, 2014
- Total assets were $7.3 billion.
- Total loans including loans held for sale were $4.6 billion.
- Commercial and industrial loans represented 43.8%, commercial real estate loans represented 37.6%, consumer and residential mortgage loans represented 16.4%, and acquisition, development and construction loans represented 2.2% of the total loan portfolio.
- Commercial loan growth, which includes commercial and industrial loans, commercial real estate loans and specialty lending businesses was $286.3 million for the quarter ended June 30, 2014, and represented annualized growth of 33.4% over the prior quarter.
- Securities, excluding FHLB and FRB stock, were $1.7 billion and represented 23.9% of total assets.
- Total deposits were $5.1 billion.
- Transaction, money market and savings deposits (including municipal deposits) were $4.5 billion and represented 87.4% of total deposits.
- The allowance for loan losses was $36.4 million and represented 1.05% of total loans excluding the impact of loans acquired in the Gotham and the legacy Sterling Bancorp merger transactions that were recorded at fair value at the acquisition date and continue to carry no allowance for loan losses.
- Tangible book value per share was $6.20.
Credit Quality
Non-performing loans decreased $3.5 million to $56.8 million, or 1.18% of total loans at June 30, 2014 compared to $60.3 million, or 1.30% of total loans at March 31, 2014. Net charge-offs for the third quarter that were charged to the allowance for loan losses were $1.6 million compared to $3.4 million in the linked quarter. The allowance for loan losses at June 30, 2014 was $36.4 million, which represented 64.0% of non-performing loans and 0.80% of our total loan portfolio. The increase in the balance of the allowance for loan losses was mainly related to the higher balance of loans outstanding at June 30, 2014. The allowance for loan losses to total loans, excluding loans acquired in the Gotham and legacy Sterling Bancorp merger transactions that were recorded at fair value at the acquisition dates and continue to carry no allowance, was 1.05% at June 30, 2014. Please refer to the Company's reconciliation of this non-GAAP measure on page 10.
Capital
The Company's stockholders' equity was $953.4 million at June 30, 2014, an increase of $470.6 million relative to September 30, 2013. The increase in stockholders' equity was mainly the result of the legacy Sterling Bancorp merger transaction, which increased capital by $457.4 million. Other contributors to the change in capital included fiscal year to date net income of $11.3 million, an increase in other comprehensive income of $7.6 million and items related to stock-based compensation of $5.6 million. These increases were partially offset by dividends of $11.7 million declared during the first nine months of fiscal 2014.
Tangible book value per share decreased from $7.08 at September 30, 2013 to $6.20 at June 30, 2014. Total goodwill and other intangible assets were $435.2 million at June 30, 2014, an increase of $266.2 million over September 30, 2013. For the quarter ended June 30, 2014, basic and diluted weighted average common shares outstanding increased to 83.6 million and 83.8 million, respectively, compared to 43.7 million basic shares and 43.9 million diluted shares, respectively, for the quarter ended September 30, 2013. The increase in weighted average basic and diluted shares is mainly the result of the issuance of 39.1 million shares of common stock on October 31, 2013 in connection with the legacy Sterling Bancorp merger transaction. Total shares outstanding at June 30, 2014 were approximately 83.6 million.
Consolidated tangible equity to tangible assets was 7.60% at June 30, 2014 and Sterling National Bank remained well capitalized with a Tier 1 leverage ratio of 9.42%.
Sterling Bancorp will host a teleconference and webcast on Tuesday, July 29, 2014 at 10:30 AM EDT to discuss the Company's results. Interested parties are invited to listen to the webcast and view accompanying slides on the Company's website www.sterlingbancorp.com. Analysts are invited to listen by dialing (855) 877-0343, Conference ID #68944927. A replay of the teleconference can be accessed through the Company's website.
About Sterling Bancorp
Sterling Bancorp, of which the principal subsidiary is Sterling National Bank, specializes in the delivery of service and solutions to business owners, their families and consumers within the communities we serve through teams of dedicated and experienced relationship managers. Sterling National Bank offers a complete line of commercial, business, and consumer banking products and services. For more information, visit the Sterling Bancorp website at www.sterlingbancorp.com.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This release may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may concern Sterling Bancorp's current expectations about its future results, plans, operations and prospects and involve certain risks, including the following: difficulties and delays in integrating the combined businesses of Provident New York Bancorp and legacy Sterling Bancorp or fully realizing cost savings and other benefits; 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 fiscal quarter ended June 30, 2014. 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 Form 10-Q to be reflected in the results of the fiscal period, even though the new information was received by management subsequent to the date of this release.
Sterling Bancorp and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(unaudited, in thousands, except share and per share data)
6/30/2014 9/30/2013 6/30/2013
----------- ----------- -----------
Assets:
Cash and due from banks $ 216,509 $ 113,090 $ 109,166
Investment securities 1,730,980 1,208,392 1,065,724
Loans held for sale 20,217 1,011 1,539
Loans:
Residential mortgage 528,176 400,009 369,613
Commercial real estate 1,721,522 1,277,037 1,210,248
Commercial and industrial 2,006,008 439,787 453,145
Acquisition, development and
construction 102,090 102,494 106,198
Consumer 200,828 193,571 197,330
----------- ----------- -----------
Total loans, gross 4,558,624 2,412,898 2,336,534
Allowance for loan losses (36,350) (28,877) (28,374)
----------- ----------- -----------
Total loans, net 4,522,274 2,384,021 2,308,160
Federal Home Loan Bank ("FHLB") and
Federal Reserve Bank Stock, at cost 74,078 24,312 28,368
Accrued interest receivable 16,569 11,698 11,320
Premises and equipment, net 48,286 36,520 37,473
Goodwill 387,325 163,117 163,117
Other intangibles 47,860 5,891 6,201
Bank owned life insurance 118,689 60,914 60,412
Other real estate owned 5,017 6,022 4,376
Other assets 62,925 34,184 28,573
----------- ----------- -----------
Total assets $ 7,250,729 $ 4,049,172 $ 3,824,429
=========== =========== ===========
Liabilities:
Deposits $ 5,102,457 $ 2,962,294 $ 2,739,214
FHLB borrowings 939,868 442,602 532,367
Other borrowings 23,601 20,351 20,438
Senior notes 98,308 98,033 -
Mortgage escrow funds 3,980 12,646 25,915
Other liabilities 129,082 30,380 26,330
----------- ----------- -----------
Total liabilities 6,297,296 3,566,306 3,344,264
Stockholders' equity 953,433 482,866 480,165
----------- ----------- -----------
Total liabilities and
stockholders' equity $ 7,250,729 $ 4,049,172 $ 3,824,429
=========== =========== ===========
Shares of common stock outstanding at
period end 83,600,529 44,351,046 44,353,276
Book value per share $ 11.40 $ 10.89 $ 10.83
Tangible book value per share 6.20 7.08 7.01
Sterling Bancorp and Subsidiaries
CONSOLIDATED CONDENSED INCOME STATEMENTS
(unaudited, in thousands, except share and per share data)
For the Nine Months
For the Quarter Ended Ended
----------------------------------- -----------------------
6/30/2014 3/31/2014 6/30/2013 6/30/2014 6/30/2013
----------- ----------- ----------- ----------- -----------
Interest and
dividend
income:
Loans and loan
fees $ 54,189 $ 50,312 $ 26,638 $ 147,789 $ 80,087
Securities
taxable 8,005 7,573 4,189 22,479 12,761
Securities
non-taxable 2,751 2,674 1,500 7,587 4,447
Other earning
assets 816 766 266 1,941 863
----------- ----------- ----------- ----------- -----------
Total interest
income 65,761 61,325 32,593 179,796 98,158
Interest
expense:
Deposits 2,319 2,394 1,151 6,542 4,872
Borrowings 4,991 4,903 3,125 14,899 9,227
----------- ----------- ----------- ----------- -----------
Total interest
expense 7,310 7,297 4,276 21,441 14,099
----------- ----------- ----------- ----------- -----------
Net interest
income 58,451 54,028 28,317 158,355 84,059
Provision for
loan losses 5,950 4,800 3,900 13,750 9,450
----------- ----------- ----------- ----------- -----------
Net interest
income after
provision for
loan losses 52,501 49,228 24,417 144,605 74,609
Non-interest
income:
Accounts
receivable /
factoring
commissions
and other
fees 3,613 3,500 - 9,332 -
Mortgage
banking
income 1,927 2,383 429 5,926 1,682
Deposit fees
and service
charges 3,897 3,904 2,615 11,745 8,129
Net gain on
sale of
securities 1,193 60 1,945 607 5,590
Investment
management
fees 681 542 613 1,763 1,740
Bank owned
life
insurance 820 729 496 2,289 1,496
Other 1,340 1,297 483 3,422 2,455
----------- ----------- ----------- ----------- -----------
Total non-
interest income 13,471 12,415 6,581 35,084 21,092
Non-interest
expense:
Compensation
and benefits 23,381 25,263 11,320 72,199 35,424
Stock-based
compensation
plans 780 927 547 2,698 1,726
Occupancy and
office
operations 6,992 7,254 3,423 20,579 11,187
Merger-related
expenses - 388 1,516 9,455 2,058
Advertising
and promotion 963 422 307 1,694 1,086
Professional
fees 1,683 1,500 526 5,000 2,653
Data and check
processing 1,117 663 588 2,375 2,060
Amortization
of intangible
assets 2,511 2,511 337 6,897 986
FDIC insurance
and
regulatory
assessments 1,795 1,567 875 4,527 2,346
Other real
estate owned,
net (income)
expense (881) 61 (28) (452) 1,172
Other 6,563 6,167 2,378 39,675 6,976
----------- ----------- ----------- ----------- -----------
Total non-
interest
expense 44,904 46,723 21,789 164,647 67,674
----------- ----------- ----------- ----------- -----------
Income before
income tax
expense 21,068 14,920 9,209 15,042 28,027
Income tax
expense 6,057 4,588 2,833 3,701 8,102
----------- ----------- ----------- ----------- -----------
Net income $ 15,011 $ 10,332 $ 6,376 $ 11,341 $ 19,925
=========== =========== =========== =========== ===========
Basic earnings
per share $ 0.18 $ 0.12 $ 0.15 $ 0.14 $ 0.46
Diluted
earnings per
share 0.18 0.12 0.15 0.14 0.45
Dividends
declared per
share 0.07 0.07 0.06 0.14 0.18
Weighted average
common shares:
Basic 83,580,050 83,497,765 43,801,867 79,142,738 43,766,402
Diluted 83,806,135 83,794,107 43,906,158 79,401,731 43,850,601
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 6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013
-------------------- ---------- ---------- ---------- ---------- ----------
Total assets $7,250,729 $6,924,419 $6,667,437 $4,049,172 $3,824,429
Securities available
for sale 1,160,510 1,233,310 1,153,313 954,393 889,747
Securities held to
maturity 570,470 527,265 508,337 253,999 175,977
Loans, gross (1) 4,558,624 4,244,354 4,127,141 2,412,898 2,336,534
Goodwill 387,325 387,286 387,517 163,117 163,117
Other intangibles 47,860 50,441 53,020 5,891 6,201
Deposits 5,102,457 5,211,724 4,920,564 2,962,294 2,739,214
Municipal deposits
(included above) 824,522 926,618 673,656 757,066 465,566
Borrowings 1,061,777 634,516 696,270 560,986 552,805
Stockholders' equity 953,433 936,466 925,109 482,866 480,165
Tangible equity 518,248 498,739 484,572 313,858 310,847
Average Balances
--------------------
Total assets $7,048,328 $6,747,546 $6,013,816 $3,907,960 $3,745,356
Loans, gross:
Residential
mortgage 536,038 520,887 491,231 379,640 366,823
Commercial real
estate 1,680,242 1,580,454 1,466,986 1,247,055 1,175,094
Commercial and
industrial 1,805,048 1,625,720 1,268,492 443,349 398,622
Acquisition,
development and
construction 94,804 93,531 98,691 104,856 114,286
Consumer 199,626 199,834 200,637 194,718 199,861
Loans, total (1) 4,315,758 4,020,426 3,526,037 2,369,618 2,254,686
Securities (taxable) 1,444,507 1,386,538 1,330,646 963,949 909,312
Securities (non-
taxable) 339,417 324,470 250,520 157,480 184,325
Total earning assets 6,265,883 5,985,054 5,207,436 3,529,321 3,378,655
Deposits:
Non-interest
bearing demand 1,681,169 1,640,125 1,361,622 669,067 625,684
Interest bearing
demand 712,051 761,409 619,746 426,602 461,390
Savings (including
mortgage escrow
funds) 606,518 613,131 622,530 601,272 581,106
Money market 1,625,335 1,461,774 1,182,858 715,351 777,857
Certificates of
deposit 549,201 582,580 565,462 335,616 338,017
Total deposits and
mortgage escrow 5,174,274 5,059,019 4,352,218 2,747,908 2,784,054
Borrowings 820,607 660,486 709,125 653,147 440,579
Equity 944,476 934,304 780,241 478,491 494,049
Tangible equity 507,671 494,697 432,703 309,327 324,540
Condensed Tax Equivalent Income Statement
------------------------------------------
Interest and
dividend income $ 65,761 $ 61,325 $ 52,711 $ 33,903 $ 32,593
Tax equivalent
adjustment* 1,481 1,440 1,164 666 808
Interest expense 7,310 7,297 6,835 5,795 4,276
---------- ---------- ---------- ---------- ----------
Net interest income
(tax equivalent) 59,932 55,468 47,040 28,774 29,125
Provision for loan
losses 5,950 4,800 3,000 2,700 3,900
---------- ---------- ---------- ---------- ----------
Net interest income
after provision for
loan losses 53,982 50,668 44,040 26,074 25,225
Non-interest income 13,471 12,415 9,148 6,600 6,581
Non-interest expense 44,904 46,723 72,974 23,367 21,789
---------- ---------- ---------- ---------- ----------
Income (loss) before
income tax expense 22,549 16,360 (19,786) 9,307 10,017
Income tax expense
(benefit) (tax
equivalent)* 7,538 6,028 (5,784) 3,978 3,641
---------- ---------- ---------- ---------- ----------
Net income (loss) $ 15,011 $ 10,332 $ (14,002) $ 5,329 $ 6,376
========== ========== ========== ========== ==========
(1) Does not reflect allowance for loan losses of $36,350, $32,015, $30,612,
$28,877 and $28,374.
*Tax exempt income assumed at a statutory 35% federal tax rate.
Sterling Bancorp and Subsidiaries
SELECTED FINANCIAL RATIOS
(unaudited, in thousands, except share and per share data)
For the Quarter Ended
------------------------------------------------------------
Per Share Data 6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013
----------------------------------------------------------------------------
Basic earnings
per share $ 0.18 $ 0.12 $ (0.20) $ 0.12 $ 0.15
Diluted earnings
per share 0.18 0.12 (0.20) 0.12 0.15
Dividends
declared per
share 0.07 0.07 - 0.12 0.06
Tangible book
value per share 6.20 5.97 5.77 7.08 7.01
Shares of common
stock
outstanding 83,600,529 83,544,307 83,955,647 44,351,046 44,353,276
Basic weighted
average common
shares
outstanding 83,580,050 83,497,765 70,493,305 43,742,903 43,801,867
Diluted weighted
average common
shares
outstanding 83,806,135 83,794,107 70,493,305 43,859,834 43,906,158
Performance
Ratios
(annualized)
----------------
Return on
average assets 0.85% 0.62% (0.92)% 0.54% 0.68%
Return on
average equity 6.37% 4.48% (7.12)% 4.42% 5.18%
Return on
average
tangible equity
(1) 11.86% 8.47% (12.84)% 6.83% 7.88%
Core operating
efficiency (1) 57.8% 61.4% 65.4% 64.7% 59.1%
Analysis of Net
Interest Income
----------------
Yield on loans 5.04% 5.05% 4.88% 4.70% 4.80%
Yield on
investment
securities -
tax equivalent
(2) 2.75% 2.77% 2.57% 2.35% 2.38%
Yield on earning
assets - tax
equivalent (2) 4.30% 4.25% 4.10% 3.89% 3.97%
Cost of deposits 0.18% 0.19% 0.17% 0.15% 0.17%
Cost of
borrowings 2.44% 3.01% 2.80% 2.88% 2.84%
Cost of interest
bearing
liabilities 0.68% 0.73% 0.73% 0.84% 0.66%
Net interest
rate spread -
tax equivalent
basis (2) 3.62% 3.52% 3.37% 3.05% 3.31%
Net interest
margin - tax
equivalent
basis (2) 3.84% 3.76 % 3.58% 3.23% 3.46%
Capital
----------------
Tier 1 leverage
ratio - Bank
only 9.42% 9.83 % 10.58% 9.33% 8.49%
Tier 1 risk-
based capital -
Bank only $ 624,599 $ 622,878 $ 593,462 $ 363,274 $ 311,507
Total risk-based
capital - Bank
only 661,344 655,288 624,469 392,376 340,077
Tangible equity
as a % of
tangible assets
- consolidated
(1) 7.60% 7.69 % 7.78% 8.09% 8.50%
Asset Quality
----------------
Non-performing
loans (NPLs)
non-accrual $ 53,153 $ 54,877 $ 35,597 $ 22,807 $ 27,244
Non-performing
loans (NPLs)
still accruing 3,645 5,394 2,845 4,099 4,216
Other real
estate owned 5,017 9,275 11,751 6,022 4,376
Non-performing
assets (NPAs) 61,815 69,546 50,193 32,928 35,836
Net charge-offs 1,615 3,397 1,265 2,197 3,070
Net charge-offs
as a % of
average loans
(annualized) 0.15% 0.34% 0.14% 0.37% 0.54%
NPLs as a % of
total loans 1.25% 1.42% 0.93% 1.12% 1.35%
NPAs as a % of
total assets 0.85% 1.00% 0.75% 0.81% 0.94%
Allowance for
loan losses as
a % of NPLs 64.0% 53.1% 79.63% 107.3% 90.2%
Allowance for
loan losses as
a % of total
loans 0.80% 0.75% 0.74% 1.20% 1.21%
Allowance for
loan losses as
a % of total
loans,
excluding
Gotham and
legacy Sterling
loans (1) 1.05% 1.12% 1.24% 1.27% 1.30%
Special mention
loans $ 41,829 $ 39,964 $ 38,834 $ 13,530 $ 24,327
Substandard /
doubtful loans 79,110 82,673 77,337 61,095 62,165
----------------------------------------------------------------------------
(1) See reconciliation of non-GAAP measure on following page.
(2) Tax equivalent adjustment represents interest income earned on municipal
securities divided by the applicable Federal tax rate of 35% for all
periods presented.
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
As of and for the Quarter Ended
------------------------------------------------------------
6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013
----------- ----------- ----------- ----------- -----------
The Company provides supplemental reporting of non-GAAP measures as
management believes this information is useful to investors.
The following table shows the reconciliation of stockholders' equity to
tangible equity and the tangible equity ratio:
---------------------------------------------------------------------------
Total assets $ 7,250,729 $ 6,924,419 $ 6,667,437 $ 4,049,172 $ 3,824,429
Goodwill and
other
intangibles (435,185) (437,727) (440,537) (169,008) (169,318)
----------- ----------- ----------- ----------- -----------
Tangible
assets 6,815,544 6,486,692 6,226,900 3,880,164 3,655,111
----------- ----------- ----------- ----------- -----------
Stockholders'
equity 953,433 936,466 925,109 482,866 480,165
Goodwill and
other
intangibles (435,185) (437,727) (440,537) (169,008) (169,318)
----------- ----------- ----------- ----------- -----------
Tangible
stockholders'
equity 518,248 498,739 484,572 313,858 310,847
----------- ----------- ----------- ----------- -----------
Shares of
common stock
outstanding
at period end 83,600,529 83,544,307 83,955,647 44,351,046 44,353,276
Tangible
equity as a %
of tangible
assets 7.60% 7.69% 7.78% 8.09% 8.50%
Tangible book
value per
share $ 6.20 $ 5.97 $ 5.77 $ 7.08 $ 7.01
The Company believes that tangible equity is useful as a tool to help
assess a company's capital position.
The following table shows the reconciliation of return on average tangible
equity and core return on average tangible equity:
---------------------------------------------------------------------------
Average
stockholders'
equity $ 944,476 $ 934,304 $ 780,241 $ 478,491 $ 494,049
Average
goodwill and
other
intangibles (436,805) (439,613) (347,538) (169,164) (169,509)
----------- ----------- ----------- ----------- -----------
Average
tangible
stockholders'
equity 507,671 494,691 432,703 309,327 324,540
----------- ----------- ----------- ----------- -----------
Net income
(loss) 15,011 10,332 (14,002) 5,329 6,376
Net income
(loss), if
annualized 60,209 41,902 (55,551) 21,142 25,574
Return on
average
tangible
equity 11.86% 8.47% (12.84)% 6.83% 7.88%
Core net
income (see
reconciliation
on page 11) $ 15,715 $ 13,094 $ 9,805 $ 5,006 $ 6,079
Annualized
core net
income 63,033 53,103 38,900 19,861 24,383
Core return on
average
tangible
equity 12.42% 10.73% 8.99% 6.42% 7.51%
The Company believes that the return on average tangible stockholders'
equity is useful as a tool to help assess a company's use of tangible
equity.
The following table shows the reconciliation of the allowance for loan
losses to total loans and to total loans excluding Gotham and legacy
Sterling Bancorp loans:
---------------------------------------------------------------------------
Total loans $ 4,558,624 $ 4,244,354 $ 4,127,141 $ 2,412,898 $ 2,336,534
Gotham loans (95,458) (101,273) (117,046) (133,493) (152,825)
Legacy
Sterling
loans (996,759) (1,277,335) (1,539,962) - -
----------- ----------- ----------- ----------- -----------
Total loans,
excluding
Gotham and
legacy
Sterling
loans 3,466,407 2,865,746 2,470,133 2,279,405 2,183,709
Allowance for
loan losses 36,350 32,015 30,612 28,877 28,374
Allowance for
loan losses
to total
loans 0.80% 0.75% 0.74% 1.20% 1.21%
Allowance for
loan losses
to total
loans,
excluding
Gotham and
legacy
Sterling
loans 1.05% 1.12% 1.24% 1.27% 1.30%
----------------------------------------------------------------------------
As required by GAAP, the Company recorded at fair value the loans acquired
in the Gotham and legacy Sterling Bancorp transactions. These loans carry
no allowance for loan losses for the periods reflected above.
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
As of and for the Quarter Ended
-----------------------------------------------------------
6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013
----------- ----------- ----------- ----------- -----------
The following table shows the reconciliation of the core operating
efficiency ratio:
---------------------------------------------------------------------------
Net interest
income $ 58,451 $ 54,028 $ 45,876 $ 28,108 $ 28,317
Non-interest
income 13,471 12,415 9,148 6,600 6,581
----------- ----------- ----------- ----------- -----------
Total net
revenue 71,922 66,443 55,024 34,708 34,898
Tax equivalent
adjustment on
securities
interest
income 1,481 1,440 1,164 666 808
Net (gain) loss
on sale of
securities (1,193) (60) 645 (1,801) (1,945)
Other (other
gains and fair
value loss on
interest rate
caps) - - (93) 81 -
----------- ----------- ----------- ----------- -----------
Core total
revenue 72,210 67,823 56,740 33,654 33,761
----------- ----------- ----------- ----------- -----------
Non-interest
expense 44,904 46,723 72,974 23,367 21,789
Merger-related
expense - (388) (9,068) (714) (1,516)
Charge for
asset write-
downs, banking
systems
conversion,
retention and
severance
compensation (1,078) (678) (22,167) (564) -
Gain on sale of
financial
center and
redemption of
Trust
Preferred
Securities 1,637 - - - -
Banking system
contract
termination
fee (1,243) - - - -
Charge on
benefit plan
settlement - (1,486) (2,743) - -
Amortization of
intangible
assets (2,511) (2,511) (1,875) (310) (337)
----------- ----------- ----------- ----------- -----------
Core non-
interest
expense 41,709 41,660 37,121 21,779 19,936
----------- ----------- ----------- ----------- -----------
Core efficiency
ratio 57.8% 61.4% 65.4% 64.7% 59.1%
The Company believes the core operating efficiency ratio is a useful tool
to help assess the Company's core operating performance.
The following table shows the reconciliation of net income (loss) and
earnings (loss) per share excluding merger-related expenses, a charge for
asset write-downs, core conversion, retention and severance compensation,
a charge on settlement of benefit pension plans and the amortization of
non-compete agreements (core diluted EPS):
---------------------------------------------------------------------------
Income (loss)
before income
tax expense $ 21,068 $ 14,920 $ (20,950)$ 8,641 $ 9,209
Income tax
expense
(benefit) 6,057 4,588 (6,948) 3,312 2,833
----------- ----------- ----------- ----------- -----------
Net income
(loss) 15,011 10,332 (14,002) 5,329 6,376
Net (gain) loss
on sale of
securities (1,193) (60) 645 (1,801) (1,945)
Merger-related
expense - 388 9,068 714 1,516
Charge for
asset write-
downs, banking
systems
conversion,
retention and
severance
compensation 1,078 678 22,167 564 -
Gain on sale of
financial
center and
redemption of
Trust
Preferred
Securities (1,637) - - - -
Banking system
contract
termination
fee 1,243 - - - -
Charge on
benefit plan
settlement - 1,486 2,743 - -
Amortization of
non-compete
agreements 1,497 1,497 998 - -
----------- ----------- ----------- ----------- -----------
Total charges 988 3,989 35,621 (523) (429)
Income tax
(benefit) (284) (1,227) (11,814) 200 132
----------- ----------- ----------- ----------- -----------
Total charges
net of tax
benefit 704 2,762 23,807 (323) (297)
----------- ----------- ----------- ----------- -----------
Core net income $ 15,715 $ 13,094 $ 9,805 $ 5,006 $ 6,079
=========== =========== =========== =========== ===========
Weighted
average
diluted shares
(1) 83,806,135 83,794,107 70,707,292 43,859,834 43,906,158
Diluted EPS as
reported $ 0.18 $ 0.12 $ (0.20)$ 0.12 $ 0.15
Core diluted
EPS (excluding
total charges) 0.19 0.16 0.14 0.11 0.14
---------------------------------------------------------------------------
The Company believes the presentation of its net income excluding total
charges provides a useful tool to help assess the Company's profitability.
(1) For the first fiscal quarter of 2014 represents diluted share
calculation to compute diluted EPS assuming net income.
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
As of and for the Quarter Ended
-------------------------------------------------------------
6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013
The following table shows the reconciliation of return on tangible assets
and core return on tangible assets:
---------------------------------------------------------------------------
Average
assets $ 7,048,328 $ 6,747,546 $6,013,816 $ 3,907,960 $ 3,745,356
Average
goodwill and
other
intangibles (436,805) (439,613) (347,538) (169,164) (169,509)
------------ ------------ ---------- ----------- -----------
Average
tangible
assets 6,611,523 6,307,933 5,666,278 3,738,796 3,575,847
Net income
(loss) 15,011 10,332 (14,002) 5,329 6,376
Net income
(loss), if
annualized 60,209 41,902 (55,551) 21,142 25,574
------------ ------------ ---------- ----------- -----------
Return on
average
tangible
assets 0.91% 0.66% (0.98)% 0.57% 0.72%
Core net
income (see
reconciliation
on page
11) $ 15,715 $ 13,094 $ 9,805 $ 5,006 $ 6,079
Annualized
core net
income 63,033 53,103 38,900 19,861 24,383
------------ ------------ ---------- ----------- -----------
Core return
on average
tangible
assets 0.95% 0.84% 0.69% 0.53% 0.68%
The company believes that the core return on average tangible assets is a
useful tool to help assess the Company's profitability.
The following table shows the reconciliation of net income and core net
income for the nine months ended June 30:
---------------------------------------------------------------------------
For the nine months
ended
-----------------------
6/30/2014 6/30/2013
----------- -----------
Income before
income tax
expense $ 15,042 $ 28,027
Income tax
expense 3,701 8,102
----------- -----------
Net income 11,341 19,925
Net gain on
sale of
securities (607) (5,590)
Gain on sale
of financial
center and
redemption
of Trust
Preferred
Securities (1,637) -
Merger-
related
expenses 9,455 2,058
Charge for
asset write-
downs,
banking
systems
conversion,
retention
and
severance 25,354 -
Charge on
benefit plan
settlement 4,229 -
Amortization
of non-
compete
agreements 3,992 -
----------- -----------
Total charges 40,786 (3,532)
Income tax
(benefit) 12,350 (1,021)
----------- -----------
Total non-
core charges
(gains) net
of taxes 28,436 (2,511)
----------- -----------
Core net
income $ 39,777 $ 17,414
=========== ===========
Weighted
average
diluted
shares 79,401,731 43,850,601
Diluted EPS
as reported $ 0.14 $ 0.45
Diluted EPS
(excluding
total
charges) 0.50 0.40
---------------------------------------------------------------------------
The Company believes the presentation of its net income excluding total
charges provides a useful tool to help assess the Company's profitability.
STERLING BANCORP CONTACT:
Luis Massiani
EVP & Chief Financial Officer
845.369.8040
Sterling Bancorp
400 Rella Boulevard
Montebello, NY 10901-4243
T 845.369.8040
F 845.369.8255
http://www.sterlingbancorp.com
