Sterling Bancorp announces operating results for the three months and year ended December 31, 2017

Strong organic growth and merger with Astoria Financial Corporation create a diversified full service commercial bank with ~$30 billion in total assets and over $20 billion in deposits serving the greater New York metropolitan area

Company Release - 1/23/2018 4:10 PM ET

Key Performance Highlights for the Twelve Months ended December 31, 2017 vs. December 31, 2016

($ in thousands except per share amounts)GAAP / As Reported Non-GAAP / As Adjusted1
 12/31/2016 12/31/2017 Change 
% / bps
 12/31/2016 12/31/2017 Change 
% / bps
Total revenue2$475,256  $640,345  34.7% $478,224  $660,743  38.2%
Net income available to common139,972  91,029  (35.0) 145,518  222,039  52.6 
Diluted EPS1.07  0.58  (45.8) 1.11  1.40  26.1 
Net interest margin33.44% 3.44%   3.55% 3.55%  
Return on average tangible common equity14.34  6.22  (812) 14.90  15.17  27 
Return on average tangible assets1.15  0.52  (63) 1.20  1.27  7 
Operating efficiency ratio452.2  67.7  1,550  46.2  41.8  (440)
                  
  • Total portfolio loans, gross were $20.0 billion as of December 31, 2017.
  • Loans to deposits ratio of 97.4%; total deposits reached $20.5 billion at December 31, 2017.
  • Recorded record volumes in loans, deposits, adjusted revenues and adjusted earnings available to common stockholders.
  • Adjusted diluted earnings per share available to common stockholders were $1.40, representing growth of 26.1% over the prior year.

Key Performance Highlights for the Three Months ended December 31, 2017 vs. quarter ended September 30, 2017

($ in thousands except per share amounts)GAAP / As Reported Non-GAAP / As Adjusted1
 9/30/2017 12/31/2017 Change 
% / bps
 9/30/2017 12/31/2017 Change 
% / bps
Total revenue2$134,061  $257,786  92.3% $138,681  $265,014  91.1%
Net income (loss) available to common44,852  (35,281) (178.7) 47,865  87,171  82.1 
Diluted EPS0.33  (0.16) (148.5) 0.35  0.39  11.4 
Net interest margin33.29% 3.57% 28  3.42% 3.67% 25 
Return on average tangible common equity14.86  (5.87) (2,073) 15.85  14.49  (136)
Return on average tangible assets1.19  (0.51) (170) 1.27  1.25  (2)
Operating efficiency ratio446.7  97.3  5,060  40.6  41.4  80 
                  
  • Completed merger with Astoria Financial Corporation (“Astoria” and the “Astoria Merger”) on October 2, 2017.
  • Incurred pre-tax merger-related expense of $30.2 million and a restructuring charge of $104.5 million due to the Astoria Merger.
  • Income tax expense included a write-down of $40.3 million to our net deferred tax assets due to changes in tax laws.
  • Adjusted diluted earnings per share available to common stockholders of $0.39, a new record
  • Tangible book value per common share of $10.53 at December 31, 2017, representing growth of 17.7% over the prior quarter.

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 as a percentage of interest earning assets. Net interest margin as adjusted is equal to net interest margin plus the tax equivalent adjustment for tax exempt securities.
4. See page 18 and 20 for an explanation of the operating efficiency ratio.

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MONTEBELLO, N.Y., Jan. 23, 2018 (GLOBE NEWSWIRE) -- Sterling Bancorp (NYSE:STL) (the “Company”), the parent company of Sterling National Bank (the “Bank”), today announced results for the three months and year ended December 31, 2017. Net loss available to common stockholders for the quarter ended December 31, 2017 was $(35.3) million, or $(0.16) per diluted share, compared to net income available to common stockholders of $44.9 million, or $0.33 per diluted share, for the linked quarter ended September 30, 2017 and net income available to common stockholders of $41.0 million, or $0.31 per diluted share, for the three months ended December 31, 2016. 

Net income available to common stockholders for the year ended December 31, 2017 was $91.0 million, or $0.58 per diluted share, compared to net income available to common stockholders of $140.0 million, or $1.07 per diluted share, for the year ended December 31, 2016.

Results for the fourth quarter and full year 2017 were impacted by merger-related expense and restructuring charges incurred in connection with the Astoria Merger, and a charge to income tax expense related to the Company’s net deferred tax assets due to the changes in tax law. Please refer to the section below “Reconciliation of GAAP Results to Adjusted Results (Non-GAAP)” for additional information on these charges.

President’s Comments
Jack Kopnisky, President and Chief Executive Officer, commented: “We delivered another year of strong operating performance, closing 2017 as a larger, more diversified and more profitable company. As of December 31, 2017, our total assets increased to $30.4 billion, from $14.2 billion a year ago; our total gross loans increased to $20.0 billion from $9.5 billion a year ago; and our total deposits increased to $20.5 billion, from $10.1 billion a year ago. 

“Our strategy and execution have remained consistent since the current management team joined the Company in July 2011. Our primary focus has always been to deliver consistent improvements in operating leverage and efficiency, targeting growth in operating revenues at 2-3x the growth in operating expenses. To achieve this, we grow loans and deposits organically by generating higher levels of productivity from our existing commercial banking teams, we recruit and hire new commercial banking teams that fit our culture and strategy, we allocate capital to business lines and client segments that are scalable and that meet our risk-adjusted return hurdles, and we augment organic growth through opportunistic acquisitions that allow us to accelerate reaching new levels of efficiency and profitability. We are creating a company with a performance driven culture in which our colleagues are highly motivated and rewarded for delivering superior service and results.

“Our strategy is working; since December 2011, our total assets, adjusted earnings available to common stockholders and adjusted diluted earnings per share available to common stockholders have grown at a compound annual growth rate of 46.3%, 68.5% and 32.5%, respectively. Our growth has resulted in significant improvements in profitability and returns. For the year ended December 31, 2017, our adjusted diluted earnings per share available to common stockholders were $1.40, our adjusted return on average tangible assets was 1.27% and our adjusted return on average tangible common equity was 15.17%. We have also delivered substantial efficiency improvements. Since 2011, our total operating revenues have grown at almost 2x our total operating expenses. For the year ended December 31, 2017, our adjusted operating efficiency ratio was 41.8%. 

“The fundamentals of our business are strong heading into 2018.  Adjusting for the balances acquired in the Astoria Merger, we grew total commercial loans by $543.7 million in the fourth quarter, representing an annualized growth rate of 15.4% over the prior quarter. Astoria’s attractive deposit franchise and the significant investments we have made in hiring commercial banking teams across all of our business lines will allow us to continue growing and building a diversified balance sheet with strong core funding. With over 8% in tangible common equity to tangible assets and an estimated Tier 1 Leverage ratio of 9.40%, we have ample capital to support our strategy.

“The Astoria Merger has allowed us to identify significant revenue enhancement and cost savings opportunities. Through the continued execution of our strategy, we anticipate we will transition the combined balance sheet, increase profitability and efficiency, and achieve our goal of building a high performing, diversified regional bank that serves middle market commercial clients and consumers. We are well positioned to capitalize on these opportunities.

“We would like to thank our clients, colleagues and shareholders for your support and look forward to continuing to work 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 20, 2018 to holders of record as of February 5, 2018.”

Reconciliation of GAAP Results to Adjusted Results (non-GAAP)
The Company’s GAAP net loss available to common stockholders of $(35.3) million, or $(0.16) per diluted share, for the fourth quarter of 2017, included the following items:

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  • a pre-tax charge of $30.2 million due to merger-related expense associated with the Astoria Merger for professional fees, change-in-control payments, insurance, client communications, and due diligence expenses;
  • a pre-tax charge of $104.5 million associated with the Astoria Merger for asset write-downs, systems integration expenses, and severance and retention compensation;
  • a pre-tax net loss on sale of securities of $70 thousand; and
  • the pre-tax amortization of non-compete agreements and acquired customer list intangible assets of $333 thousand.

In addition, in the fourth quarter of 2017, in connection with the Tax Cuts and Jobs Act of 2017, we recorded a charge of $40.3 million in income tax expense to write-down our net deferred tax assets to their estimated value. Excluding the impact of these items and their corresponding tax adjustment at the Company’s estimated effective tax rate of 31.5% for full year 2017, adjusted net income available to common stockholders was $87.2 million, or $0.39 per diluted share.

Non-GAAP financial measures include references to the terms “adjusted” or “excluding”. See the reconciliation of the Company’s non-GAAP financial measures beginning on page 17.

Net Interest Income and Margin

($ in thousands)For the three months ended Change % / bps
 12/31/2016 9/30/2017 12/31/2017 Y-o-Y Linked Qtr
Interest income$123,075  $145,692  $276,495  124.7% 89.8%
Interest expense15,827  25,619  42,471  168.3  65.8 
Net interest income$107,248  $120,073  $234,024  118.2  94.9 
          
Accretion income on acquired loans$4,504  $3,397  $33,726  648.8% 892.8%
Yield on loans4.49% 4.67% 4.77% 28  10 
Tax equivalent yield on investment securities2.81  2.87  3.03  22  16 
Tax equivalent yield on interest earning assets4.02  4.12  4.32  30  20 
Cost of total deposits0.36  0.50  0.43  7  (7)
Cost of interest bearing deposits0.53  0.69  0.54  1  (15)
Cost of borrowings1.72  1.75  1.94  22  19 
Tax equivalent net interest margin53.52  3.42  3.67  15  25 
          
Average loans, including loans held for sale$9,267,290  $10,186,414  $19,518,485  110.6% 91.6%
Average investment securities2,973,410  3,916,076  5,926,824  99.3  51.3 
Average total earning assets12,566,281  14,471,120  26,043,748  107.3  80.0 
Average deposits and mortgage escrow10,161,022  10,691,006  20,483,857  101.6  91.6 
5 Tax equivalent net interest margin is equal to net interest income plus the tax equivalent adjustment for tax exempt securities divided by average earning assets. The tax equivalent adjustment is assumed at 35% federal tax rate for all periods presented.
 

Fourth quarter 2017 compared with fourth quarter 2016 
Net interest income was $234.0 million, an increase of $126.8 million compared to the fourth quarter of 2016.  This was mainly due to an increase in average loans outstanding between the periods as a result of the Astoria Merger and loans originated through our commercial banking teams. Other key components of the changes in net interest income and net interest margin were the following:

  • The yield on loans was 4.77%, compared to 4.49% for the three months ended December 31, 2016.  The increase in yield on loans was mainly due to an increase in accretion income on acquired loans, which was $33.7 million in the fourth quarter of 2017 compared to $4.5 million in the fourth quarter of 2016. Accretion income on acquired loans  in the fourth quarter of 2017 included $29.9 million related to the Astoria Merger.
  • Average commercial loans were $14.0 billion compared to $8.2 billion in the fourth quarter of 2016, an increase of $5.8 billion or 70.0%.
  • The tax equivalent yield on investment securities increased 22 basis points to 3.03%.  This was mainly due to an increase in the proportion of tax exempt securities in the investment portfolio and an increase in market interest rates.  Average tax exempt securities balances grew to $2.1 billion for the quarter ended December 31, 2017, compared to $1.2 billion in the fourth quarter of 2016. Average investment securities were $5.9 billion, or 22.8%, of average earning assets for the fourth quarter of 2017 compared to $3.0 billion, or 23.7%, of average earning assets for the fourth quarter of 2016.

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  • The tax equivalent yield on interest earning assets increased 30 basis points between the periods to 4.32%.
  • The cost of total deposits was 43 basis points and the cost of borrowings was 1.94%, compared to 36 basis points and 1.72%, respectively, for the same period a year ago.
  • The total cost of interest bearing liabilities increased eight basis points to 0.82% for the fourth quarter of 2017 compared to 0.74% for fourth quarter of 2016.  This increase was due to an increase in market interest rates, which increased the cost of wholesale, brokered and certificates of deposit between the periods.

The tax equivalent net interest margin was 3.67% for the fourth quarter of 2017 compared to 3.52% for the fourth quarter of 2016. The increase in tax equivalent net interest margin was mainly due to an increase in accretion income on acquired loans.  Excluding accretion income, tax equivalent net interest margin was 3.16% for the fourth quarter of 2017 compared to 3.37% in the fourth quarter of 2016.

Fourth quarter 2017 compared with linked quarter ended September 30, 2017
Net interest income increased $114.0 million compared to the linked quarter ended September 30, 2017.  The increase in net interest income in the fourth quarter of 2017 relative to the linked quarter was mainly due to the Astoria Merger and the resulting increase in the average balance of loans and investment securities outstanding.  Key components of the changes in net interest income in the linked quarter were the following:

  • The yield on loans was 4.77% compared to 4.67% for the linked quarter, an increase of 10 basis points, which was mainly due to accretion income on acquired loans. Accretion income on acquired loans was $33.7 million in the fourth quarter of 2017 compared to $3.4 million in the linked quarter.
  • The average balance of loans increased $9.3 billion for the fourth quarter of 2017 compared to the linked quarter. Based on end of period balances, total loans increased $9.5 billion relative to the linked quarter.
  • The tax equivalent yield on investment securities increased 16 basis points to 3.03% in the fourth quarter of 2017.  Average investment securities increased $2.0 billion compared to the linked quarter.
  • The tax equivalent yield on interest earning assets increased 20 basis points in the fourth quarter of 2017 to 4.32% compared to 4.12% in the linked quarter.
  • The cost of total deposits decreased seven basis points to 43 basis points in the quarter. This was mainly due to the deposits assumed in the Astoria Merger.  The total cost of borrowings increased to 1.94% compared to 1.75% in the linked quarter due to $200.0 million of principal balance of senior notes assumed in the Astoria Merger and an increase in other borrowings.
  • Average interest bearing deposits increased by $8.8 billion and average borrowings increased $1.3 billion relative to the linked quarter, which resulted in an increase of $16.9 million in interest expense.

The tax equivalent net interest margin was 3.67% compared to 3.42% in the linked quarter. Excluding accretion income on acquired loans of $3.4 million, net interest margin was 3.32% in the linked quarter.

The decline in tax equivalent net interest margin excluding accretion income between the current quarter and the prior periods presented was due to a change in the composition of our loan portfolio as a result of the Astoria Merger. In the fourth quarter of 2017, residential mortgage loans represented 26.5% of average loans and multi-family loans represented 24.4%. A year earlier, residential mortgage loans comprised 8.2% of average earning assets and multi-family loans comprised 10.3% of average loans.  Residential mortgage and multi-family loans typically have lower yields than our commercial loans. We anticipate replacing the run-off of residential mortgage and multi-family loans with higher yielding commercial loans, which we expect will offset a significant portion of future declines in accretion income on acquired loans.

Through the fourth quarter of 2017, we calculated the tax equivalent adjustment on securities assuming a federal tax rate of 35%.  Due to the tax law changes, we will begin reporting the tax equivalent adjustment assuming a federal tax rate of 21% in the first quarter of 2018.  Although this change will have no impact on our GAAP net interest margin or the cash flows received from our securities portfolio, we anticipate this change will result in a decrease of 15 to 20 basis points in tax equivalent yield on securities and a decrease of eight to 10 basis points in tax equivalent net interest margin. We anticipate the decrease in tax equivalent net interest margin will be offset by a reduction in our estimated effective income tax rate, which will likely result in an increase to net income.

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Non-interest Income

($ in thousands)For the three months ended Change %
 12/31/2016 9/30/2017 12/31/2017 Y-o-Y Linked Qtr
Total non-interest income$16,057  $13,988  $23,762  48.0% 69.9%
Net (loss) on sale of securities(102) (21) (70) (31.4) 233.3 
Net gain on sale of trust division2,255      (100.0) NM 
Adjusted non-interest income$13,904  $14,009  $23,832  71.4  70.1 
                  

Fourth quarter 2017 compared with fourth quarter 2016
Excluding net (loss) on sale of securities and net gain on sale of trust division, adjusted non-interest income increased $9.9 million in the fourth quarter of 2017 to $23.8 million compared to $13.9 million in the same quarter last year.  The change was mainly due to the Astoria Merger.  Deposit fees and service charges increased by $4.1 million, bank owned life insurance income increased by $2.1 million and investment management fees increased by $1.5 million, which were all related to the completion of the Astoria Merger. In addition, fee income on loan swaps in the fourth quarter of 2017 increased to $1.1 million compared to $539 thousand for the year ago period.

Fourth quarter 2017 compared with linked quarter ended September 30, 2017
Excluding net (loss) on sale of securities, adjusted non-interest income increased approximately $9.8 million from $14.0 million in the linked quarter to $23.8 million in the fourth quarter of 2017.  This was mainly due to the same factors as discussed above.

Non-interest Expense

($ in thousands)For the three months ended Change % / bps
 12/31/2016 9/30/2017 12/31/2017 Y-o-Y Linked Qtr
Compensation and benefits$32,060  $32,433  $55,670  73.6% 71.6%
Stock-based compensation plans1,557  1,969  2,508  61.1  27.4 
Occupancy and office operations8,372  8,583  18,100  116.2  110.9 
Amortization of intangible assets2,881  2,166  6,426  123.0  196.7 
FDIC insurance and regulatory assessments1,531  2,310  5,737  274.7  148.4 
Other real estate owned, net (“OREO”)206  894  742  260.2  (17.0)
Merger-related expenses  4,109  30,230    635.7 
Charge for asset write-downs, systems integration, retention and severance    104,506  NM  NM 
Other expenses10,465  10,153  26,827  156.3  164.2 
Total non-interest expense$57,072  $62,617  $250,746  339.4  300.4 
Full time equivalent employees (“FTEs”) at period end970  992  2,076  114.0  109.3 
Financial centers at period end42  40  128  204.8  220.0 
Efficiency ratio, as reported46.3% 46.7% 97.3% (5,100) (5,060)
Efficiency ratio, as adjusted643.3  40.6  41.4  190  (80)
6 See a reconciliation of non-GAAP financial measures beginning on page 17.
 

Fourth quarter 2017 compared with fourth quarter 2016 
Total non-interest expense increased $193.7 million relative to the fourth quarter of 2016.   Key components of the change in non-interest expense were the following:

  • Compensation and benefits increased $23.6 million between the periods.  Total FTEs increased to 2,076, which was mainly due to the Astoria Merger.  In addition, we continued to hire commercial bankers and risk management personnel.
  • Occupancy and office operations increased $9.7 million mainly due to 88 financial centers and other locations acquired in the Astoria Merger.
  • Amortization of intangible assets increased $3.5 million between the periods.  This was due to the Astoria Merger; the increase represents the amortization of the core deposit intangible asset that was recorded.

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  • FDIC insurance and regulatory assessments increased $4.2 million to $5.7 million in the fourth quarter of 2017, compared to $1.5 million for the fourth quarter of 2016.  This was mainly due to growth in our total assets.
  • OREO expense increased $536 thousand to $742 thousand in the fourth quarter of 2017, compared to $206 thousand for the fourth quarter of 2016.  This was mainly due to write-downs on the value of properties based on updated appraisals.
  • Merger-related expense was $30.2 million in the fourth quarter of 2017, and included advisory fees, accounting and consulting fees, change-in-control payments, insurance premium expense and client communications expense. We did not incur merger-related expense in the fourth quarter of 2016.
  • Charge for asset write-downs, systems integration, retention and severance was $104.5 million, and included charges for severance and retention compensation, systems integration expense, and asset write-downs to continue our financial center and real estate  consolidation strategy. We did not incur similar charges in the fourth quarter of 2016.
  • Other expenses increased $16.4 million mainly due to the Astoria Merger and included a $9.5 million increase in data processing expense, a $1.0 million increase in communications expense, $999 thousand increase in advertising expense, and a $851 thousand increase in operational losses.

Fourth quarter 2017 compared with linked quarter ended September 30, 2017
Total non-interest expense increased $188.1 million from $62.6 million in the linked quarter to $250.7 million in the fourth quarter of 2017. Key components of the change in non-interest expense were the following:

  • Compensation and benefits increased $23.2 million and was $55.7 million in the fourth quarter of 2017 compared to $32.4 million in the linked quarter.  This was mainly due to the Astoria Merger.
  • Occupancy and office operations increased $9.5 million mainly due to 88 financial centers and other locations acquired in the Astoria Merger.
  • Merger-related expense was $30.2 million in the fourth quarter of 2017 compared to $4.1 million in the linked quarter.
  • Charges for asset write-downs, systems integration, severance and retention was $104.5 million in the fourth quarter of 2017.
  • OREO expense declined $152 thousand in the fourth quarter of 2017 due to lower property taxes incurred in the fourth quarter of 2017 compared to the linked quarter.
  • Other expense increased $16.7 million in the fourth quarter of 2017 and was $26.8 million compared to $10.2 million in the linked quarter. The increase was mainly due to the Astoria Merger.

Through December 31, 2017, we have recorded merger-related expense and other charges related to the Astoria Merger of $143.7 million, which is below the estimate of $165.0 million that we presented at the announcement of the Astoria Merger.  The difference between the actual amounts recorded and the initial estimate is mainly due to lower asset write-downs and restructuring charges on real estate and facilities.  As we continue to execute the integration of Astoria, we may incur incremental charges related mainly to additional financial center and real estate consolidations.  We estimate that in aggregate, these charges will be below our initial $165.0 million estimate and will be recognized once the GAAP requirements for recording these expenses are met.

Taxes
For the three months ended December 31, 2017, the Company incurred a pre-tax loss of $(5.0) million. However, we recorded income tax expense of $28.3 million which included a charge of $40.3 million to write-down our net deferred tax assets to their estimated value due to the enactment of the Tax Cuts and Jobs Act of 2017.

Due to the completion of the Astoria Merger and the merger-related expense and other charges discussed above, we revised our 2017 GAAP estimated effective income tax rate to 26.5% from 32.5%.  As a result, we reduced year to date income tax expense by recording an income tax benefit in the fourth quarter of 2017. The components of income tax expense in the fourth quarter were a benefit of $1.3 million based on our pre-tax loss of $(5.0) million and our 26.5% GAAP estimated effective tax rate; a benefit of $810 thousand related to vesting of stock-based compensation; the charge of $40.3 million related to the tax law change; and a benefit of $9.8 million related to the first nine months of 2017 to reduce income tax expense to 26.5% of pre-tax income for full year 2017.

The Company’s adjusted earnings (non-GAAP) measures are calculated using an estimated effective tax rate of 31.5% for the full year and fourth quarter of 2017. This estimate excludes the impact that merger-related expense and other charges had on the Company’s GAAP effective tax rate.  Through the first three quarters of 2017, the Company estimated an effective tax rate of 32.5% for GAAP and adjusted earnings.  The decrease to 31.5% in the fourth quarter  is due to an increase in the proportion of non-taxable income given strong origination volumes in public sector finance, purchases of municipal securities, an increase in bank owned life insurance income and an income tax benefit associated with the vesting of stock-based compensation in the fourth quarter of 2017. 

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Given the changes in tax laws, the Company anticipates it will record income taxes at an estimated effective tax rate of approximately 24% in 2018.

Key Balance Sheet Highlights as of December 31, 2017

($ in thousands)As of Change % / bps
 12/31/2016 9/30/2017 12/31/2017 Y-o-Y Linked Qtr
Total assets$14,178,447  $16,780,097  $30,359,541  114.1% 80.9%
Total portfolio loans, gross9,527,230  10,493,535  20,008,983  110.0  90.7 
Commercial & industrial (“C&I”) loans4,171,950  4,841,664  5,306,821  27.2  9.6 
Commercial real estate loans4,144,018  4,473,245  8,998,419  117.1  101.2 
Acquisition, development and construction loans230,086  236,456  282,792  22.9  19.6 
Total commercial loans8,546,054  9,551,365  14,588,032  70.7  52.7 
Total deposits10,068,259  11,043,438  20,538,204  104.0  86.0 
Core deposits68,805,301  9,753,052  17,100,838  94.2  75.3 
Investment securities3,118,838  4,515,650  6,474,561  107.6  43.4 
Total borrowings2,056,612  3,453,783  4,991,210  142.7  44.5 
Loans to deposits94.6% 95.0% 97.4% 280  240 
Core deposits to total deposits87.5  88.3  83.3  (420) (500)
Investment securities to total assets22.0  26.9  21.3  (70) (560)
6 Core deposits include retail, commercial and municipal transaction, money market and savings accounts and exclude certificates of deposit and brokered deposits, except for reciprocal Certificate of Deposit Account Registry balances.
 

Highlights in balance sheet items as of December 31, 2017 were the following:

  • C&I loans (which include traditional C&I, asset-based lending, payroll finance, warehouse lending, factored receivables, equipment financing and public sector finance loans) represented 26.5%, commercial real estate loans represented 45.0%, consumer and residential mortgage loans combined represented 27.1%, and acquisition, development and construction loans represented 1.4% of the total loan portfolio.  Loan growth was a result of the Astoria Merger and originations generated by commercial banking teams.
  • C&I loans grew $465.2 million in the fourth quarter of 2017 compared to the linked quarter.  We acquired $96.9 million of C&I loans in the Astoria Merger.  Excluding loans acquired in the Astoria Merger, C&I loans increased $368.3 million, or 29.6% annualized in the fourth quarter of 2017.
  • Commercial loans, which includes all C&I loans, commercial real estate (including multi-family) and acquisition, development and construction loans, increased by $6.0 billion for the twelve months ended December 31, 2017. Commercial loans increased by $5.0 billion relative to the linked quarter.  Loans acquired in the Astoria Merger represented $4.5 billion of this increase.
  • Multi-family loans, which are included in commercial real estate in the table above increased $3.8 billion in the fourth quarter of 2017 and reached $4.9 billion.  The increase was due to the Astoria Merger.
  • Residential mortgage loans were $5.1 billion at December 31, 2017 compared to $672 million at September 30, 2017, the increase was due to the Astoria Merger.
  • Aggregate exposure to taxi medallion relationships was $46.0 million, which represented 0.23% of total loans as of December 31, 2017, a decline of $5.7 million from $51.7 million as of December 31, 2016.  The decline was mainly due to a charge-off of $2.0 million and repayments.
  • Total deposits at December 31, 2017 increased $9.5 billion compared to September 30, 2017, and increased $10.5 billion over December 31, 2016.  We assumed $9.0 billion of deposits in the Astoria Merger.  The remaining increase in deposits was mainly due to growth in commercial deposits and certificates of deposit.
  • Core deposits at December 31, 2017 increased $7.3 billion compared to September 30, 2017.  The increase was mainly due to the Astoria Merger. Core deposits increased $8.3 billion over December 31, 2016.

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  • Municipal deposits at December 31, 2017 were $1.6 billion and decreased by $165.9 million relative to the linked quarter. Municipal deposits experience seasonal highs at the end of the third quarter.
  • Investment securities increased by $2.0 billion relative to the linked quarter, and represented 21.3% of total assets at December 31, 2017.

Credit Quality

($ in thousands)For the three months ended Change % / bps
 12/31/2016 9/30/2017 12/31/2017 Y-o-Y Linked Qtr
Provision for loan losses$5,500  $5,000  $12,000  118.2% 140.0%
Net charge-offs1,283  3,023  6,221  384.9  105.8 
Allowance for loan losses63,622  72,128  77,907  22.5  8.0 
Non-performing loans78,853  69,452  187,213  137.4  169.6 
Net charge-offs annualized0.06% 0.12% 0.13% 7  1 
Allowance for loan losses to total loans0.67  0.69  0.39  (28) (30)
Allowance for loan losses to non-performing loans80.7  103.9  41.6  (3,910) (6,230)
               

Provision for loan losses was $12.0 million for the fourth quarter of 2017 compared to $5.0 million in the linked quarter and $5.5 million in the same period a year ago. In the fourth quarter of 2017, provision for loan losses was $5.8 million in excess of net charge-offs of $6.2 million.  Allowance coverage ratios were 0.39% of total loans and 41.6% of non-performing loans at December 31, 2017.  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 increased by $117.8 million to $187.2 million at December 31, 2017 compared to the linked quarter.  The increase in non-performing loans at December 31, 2017 is mainly due to $99.9 million of non-performing loans acquired in the Astoria Merger.

Capital

($ in thousands, except share and per share data)As of Change % / bps
 12/31/2016 9/30/2017 12/31/2017 Y-o-Y Three
months
Total stockholders’ equity$1,855,183  $1,971,480  $4,240,178  128.6% 115.1%
Preferred stock    139,220  NM  NM 
Goodwill and intangible assets762,953  756,290  1,733,082  127.2  129.2 
Tangible common stockholders’ equity$1,092,230  $1,215,190  $2,367,876  116.8  94.9 
Common shares outstanding135,257,570  135,807,544  224,782,694  66.2  65.5 
Book value per common share$13.72  $14.52  $18.24  32.9  25.6 
Tangible book value per common share78.08  8.95  10.53  30.3  17.7 
Tangible common equity to tangible assets78.14% 7.58% 8.27% 13  69 
Estimated Tier 1 leverage ratio - Company8.95  8.42  9.40  45  98 
Estimated Tier 1 leverage ratio - Bank9.08  8.49  10.08  100  159 
7 See a reconciliation of non-GAAP financial measures beginning on page 17.
 

In connection with the Astoria Merger, the Company issued $135 million of 6.50% Non-Cumulative Perpetual Preferred Stock with a liquidation preference of $1,000 per share (the “Preferred Stock”) in exchange for each share of Astoria’s 6.50% Non-Cumulative Perpetual Preferred Stock issued and outstanding immediately prior to the the Astoria Merger. The Preferred Stock is redeemable in whole or in part from time to time, on October 15, 2022 or any dividend payment date thereafter.

The increase in total stockholders’ equity of $2.3 billion to $4.2 billion as of December 31, 2017 compared to September 30, 2017 was mainly due to the Astoria Merger.  We issued 88.8 million shares of our common stock with a value of $2.2 billion as consideration for Astoria. Stock-based compensation activity increased stockholders’ equity by  $3.3 million. These increases were partially offset by a net loss of $33.3 million, common dividends of $15.7 million and preferred dividends of $2.2 million.

8

Total goodwill and other intangible assets were $1.7 billion at December 31, 2017, an increase of $976.8 million compared to September 30, 2017, which was due to goodwill and the core deposit intangible asset recorded in the Astoria Merger, net of amortization of intangibles for the period.

For the quarter ended December 31, 2017, basic and diluted weighted average common shares outstanding increased to 223.5 million and 224.1 million, respectively, compared to 135.3 million and 136.0 million, respectively, for the quarter ended September 30, 2017.  The increase in the diluted weighted average shares was mainly due to the shares issued in the Astoria Merger. Total common shares outstanding at December 31, 2017 were approximately 224.8 million.

Tangible book value per share was $10.53 at December 31, 2017, which represented an increase of 30.3% over a year ago and an increase of 17.7% over September 30, 2017.

Conference Call Information
Sterling Bancorp will host a teleconference and webcast on Wednesday, January 24, 2018 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) 281-7829, Conference ID #1173570.  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: difficulties and delays in integrating Astoria’s business or fully realizing cost savings and other benefits; business disruption following the Astoria transaction; a failure to grow revenues faster than we grow expenses, a deterioration in general economic conditions, either nationally, internationally, or in our market areas, including extended declines in the real estate market and constrained financial markets; inflation; the effects of, and changes in, trade; changes in asset quality and credit risk; introduction, withdrawal, success and timing of business initiatives; capital management activities; including our ability to effectively deploy recently raised capital; customer disintermediation; and the success of Sterling Bancorp in managing those risks.  Other factors that could cause Sterling Bancorp’s actual results to differ from those indicated in forward-looking statements are included in the “Risk Factors” section of Sterling Bancorp’s filings with the Securities and Exchange Commission.  The forward-looking statements speak only as of the date they are made and we undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.

Financial information contained in this release should be considered to be an estimate pending the filing with the Securities and Exchange Commission of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. While the Company is not aware of any need to revise the results disclosed in this release, accounting literature may require information received by management between the date of this release and the filing of the 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.

9

 
Sterling Bancorp and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(unaudited, in thousands, except share and per share data)
      
 12/31/2016 9/30/2017 12/31/2017
Assets:     
Cash and cash equivalents$293,646  $407,203  $479,906 
Investment securities3,118,838  4,515,650  6,474,561 
Loans held for sale41,889    5,246 
Portfolio loans:     
Commercial and industrial (“C&I”)4,171,950  4,841,664  5,306,821 
Commercial real estate4,144,018  4,473,245  8,998,419 
Acquisition, development and construction230,086  236,456  282,792 
Residential mortgage697,108  684,093  5,054,732 
Consumer284,068  258,077  366,219 
Total portfolio loans, gross9,527,230  10,493,535  20,008,983 
Allowance for loan losses(63,622) (72,128) (77,907)
Total portfolio loans, net9,463,608  10,421,407  19,931,076 
Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank Stock, at cost135,098  191,276  284,112 
Accrued interest receivable43,319  57,561  94,098 
Premises and equipment, net57,318  56,378  321,722 
Goodwill696,600  696,600  1,579,891 
Other intangibles66,353  59,690  153,191 
Bank owned life insurance199,889  204,281  651,638 
Other real estate owned13,619  11,697  27,095 
Other assets48,270  158,354  357,005 
Total assets$14,178,447  $16,780,097  $30,359,541 
Liabilities:     
Deposits$10,068,259  $11,043,438  $20,538,204 
FHLB borrowings1,791,000  3,016,000  4,510,123 
Other borrowings16,642  188,403  30,162 
Senior notes76,469  76,719  278,209 
Subordinated notes172,501  172,661  172,716 
Mortgage escrow funds13,572  19,148  122,641 
Other liabilities184,821  292,248  467,308 
Total liabilities12,323,264  14,808,617  26,119,363 
Stockholders’ equity:     
Preferred stock    139,220 
Common stock1,411  1,411  2,299 
Additional paid-in capital1,597,287  1,590,752  3,780,908 
Treasury stock(66,188) (59,674) (58,039)
Retained earnings349,308  452,650  401,956 
Accumulated other comprehensive (loss)(26,635) (13,659) (26,166)
Total stockholders’ equity1,855,183  1,971,480  4,240,178 
Total liabilities and stockholders’ equity$14,178,447  $16,780,097  $30,359,541 
      
Shares of common stock outstanding at period end135,257,570  135,807,544  224,782,694 
Book value per common share$13.72  $14.52  $18.24 
Tangible book value per common share18.08  8.95  10.53 
1 See reconciliation of non-GAAP financial measures beginning on page 17.
 

10

 
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
 12/31/2016 9/30/2017 12/31/2017 12/31/2016 12/31/2017
Interest and dividend income:         
Loans and loan fees$104,651  $119,898  $234,452  $390,847  $570,761 
Securities taxable9,993  15,141  24,743  42,540  65,278 
Securities non-taxable7,168  8,542  13,295  23,669  37,245 
Other earning assets1,263  2,111  4,005  4,495  9,165 
Total interest and dividend income123,075  145,692  276,495  461,551  682,449 
Interest expense:         
Deposits9,252  13,392  22,305  33,189  56,110 
Borrowings6,575  12,227  20,166  24,093  50,196 
Total interest expense15,827  25,619  42,471  57,282  106,306 
Net interest income107,248  120,073  234,024  404,269  576,143 
Provision for loan losses5,500  5,000  12,000  20,000  26,000 
Net interest income after provision for loan losses101,748  115,073  222,024  384,269  550,143 
Non-interest income:         
Accounts receivable management / factoring commissions and other related fees4,148  4,764  5,133  17,695  17,803 
Deposit fees and service charges3,167  3,309  7,236  15,166  17,128 
Loan commissions and fees3,282  2,819  2,995  9,524  11,637 
Bank owned life insurance1,333  1,320  3,474  5,832  7,816 
Investment management fees565  271  2,103  3,710  2,928 
Mortgage banking income651  121  2  6,173  524 
Net (loss) gain on sale of securities(102) (21) (70) 7,522  (344)
Other3,013  1,405  2,889  5,365  6,710 
Total non-interest income16,057  13,988  23,762  70,987  64,202 
Non-interest expense:         
Compensation and benefits32,060  32,433  55,670  125,916  149,948 
Stock-based compensation plans1,557  1,969  2,508  6,518  8,111 
Occupancy and office operations8,372  8,583  18,100  34,486  43,649 
Amortization of intangible assets2,881  2,166  6,426  12,416  13,008 
FDIC insurance and regulatory assessments1,531  2,310  5,737  8,240  11,969 
Other real estate owned, net206  894  742  2,051  3,423 
Merger-related expenses  4,109  30,230  265  39,232 
Charge for asset write-downs, systems integration, retention and severance    104,506  4,485  105,110 
Loss on extinguishment of borrowings      9,729   
Other10,465  10,153  26,827  43,796  58,925 
Total non-interest expense57,072  62,617  250,746  247,902  433,375 
Income before income tax expense60,733  66,444  (4,960) 207,354  180,970 
Income tax expense19,737  21,592  28,319  67,382  87,939 
Net income (loss)$40,996  $44,852  $(33,279) $139,972  $93,031 
Preferred stock dividend    2,002    2,002 
Net income (loss) available to common stockholders$40,996  $44,852  $(35,281) $139,972  $91,029 
Weighted average common shares:         
Basic132,271,761  135,346,791  223,501,073  130,607,994  157,513,639 
Diluted132,995,762  135,950,160  224,055,991  131,234,462  158,124,270 
Earnings per common share:         
Basic earnings per share$0.31  $0.33  $(0.16) $1.07  $0.58 
Diluted earnings per share0.31  0.33  (0.16) 1.07  0.58 
Dividends declared per share0.07  0.07  0.07  0.28  0.28 
               

11

 
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 Period12/31/2016 3/31/2017 6/30/2017 9/30/2017 12/31/2017
Total assets$14,178,447  $14,659,337  $15,376,676  $16,780,097  $30,359,541 
Tangible assets 113,415,494  13,898,639  14,618,192  16,023,807  28,626,459 
Securities available for sale1,727,417  1,941,671  2,095,872  2,579,076  3,612,072 
Securities held to maturity1,391,421  1,474,724  1,456,304  1,936,574  2,862,489 
Portfolio loans9,527,230  9,763,967  10,232,317  10,493,535  20,008,983 
Goodwill696,600  696,600  696,600  696,600  1,579,891 
Other intangibles66,353  64,098  61,884  59,690  153,191 
Deposits10,068,259  10,251,725  10,502,710  11,043,438  20,538,204 
Municipal deposits (included above)1,270,921  1,391,221  1,297,244  1,751,012  1,585,076 
Borrowings2,056,612  2,328,576  2,661,838  3,453,783  4,991,210 
Stockholders’ equity1,855,183  1,888,613  1,931,383  1,971,480  4,240,178 
Tangible common equity 11,092,230  1,127,915  1,172,899  1,215,190  2,367,876 
Quarterly Average Balances         
Total assets13,671,676  14,015,953  14,704,793  15,661,514  29,277,502 
Tangible assets 112,907,133  13,253,877  13,944,946  14,904,016  27,567,351 
Loans, gross:         
Commercial real estate (includes multi-family)3,963,216  4,190,817  4,396,281  4,443,142  8,839,256 
Acquisition, development and construction224,735  237,451  251,404  229,242  246,141 
Commercial and industrial:         
Traditional commercial and industrial1,383,013  1,410,354  1,497,005  1,631,436  1,911,450 
Asset-based lending2700,285  713,438  737,039  740,037  781,732 
Payroll finance2218,365  217,031  225,080  229,522  250,673 
Warehouse lending2551,746  379,978  430,312  607,994  564,593 
Factored receivables2231,554  184,859  181,499  191,749  224,966 
Equipment financing2586,078  595,751  660,404  687,254  677,271 
Public sector finance2361,339  370,253  441,456  476,525  480,800 
Total commercial and industrial4,032,380  3,871,664  4,172,795  4,564,517  4,891,485 
Residential mortgage759,692  700,934  697,441  686,820  5,168,622 
Consumer287,267  280,650  268,502  262,693  372,981 
Loans, total39,267,290  9,281,516  9,786,423  10,186,414  19,518,485 
Securities (taxable)1,789,553  2,016,752  2,142,168  2,483,718  3,840,147 
Securities (non-taxable)1,183,857  1,256,906  1,292,367  1,432,358  2,086,677 
Other interest earning assets325,581  334,404  341,895  368,630  598,439 
Total earning assets12,566,281  12,889,578  13,562,853  14,471,120  26,043,748 
Deposits:         
Non-interest bearing demand3,217,156  3,177,448  3,185,506  3,042,392  4,043,213 
Interest bearing demand2,116,708  1,950,332  1,973,498  2,298,645  3,862,461 
Savings (including mortgage escrow funds)798,090  797,386  816,092  825,620  2,871,885 
Money market3,395,542  3,681,962  3,725,257  3,889,780  7,324,196 
Certificates of deposit633,526  579,487  584,996  634,569  2,382,102 
Total deposits and mortgage escrow10,161,022  10,186,615  10,285,349  10,691,006  20,483,857 
Borrowings1,517,482  1,799,204  2,313,992  2,779,143  4,121,605 
Stockholders’ equity1,805,790  1,869,085  1,913,933  1,955,252  4,235,739 
Tangible common equity 11,041,247  1,107,009  1,154,086  1,197,754  2,386,245 
          
1 See a reconciliation of non-GAAP financial measure beginning on page 17.
2 Asset-based lending, payroll finance, warehouse lending, factored receivables, equipment finance and public sector finance comprise our commercial finance loan portfolio.
3 Includes loans held for sale, but excludes allowance for loan losses.
 

12

 
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 Data12/31/2016 3/31/2017 6/30/2017 9/30/2017 12/31/2017
Basic earnings (loss) per share$0.31  $0.29  $0.31  $0.33  $(0.16)
Diluted earnings (loss) per share0.31  0.29  0.31  0.33  (0.16)
Adjusted diluted earnings per share, non-GAAP 10.30  0.31  0.33  0.35  0.39 
Dividends declared per share0.07  0.07  0.07  0.07  0.07 
Book value per share13.72  13.93  14.24  14.52  18.24 
Tangible book value per share18.08  8.32  8.65  8.95  10.53 
Shares of common stock o/s135,257,570  135,604,435  135,658,226  135,807,544  224,782,694 
Basic weighted average common shares o/s132,271,761  135,163,347  135,317,866  135,346,791  223,501,073 
Diluted weighted average common shares o/s132,995,762  135,811,721  135,922,897  135,950,160  224,055,991 
Performance Ratios (annualized)         
Return on average assets1.19% 1.13% 1.16% 1.14% (0.48)%
Return on average equity9.03% 8.48% 8.89% 9.10% (3.30)%
Return on average tangible assets1.26% 1.20% 1.22% 1.19% (0.51)%
Return on avg tangible common equity15.66% 14.31% 14.74% 14.86% (5.87)%
Return on average tangible assets, adjusted 11.23% 1.27% 1.28% 1.27% 1.25%
Return on avg tangible common equity, adjusted 115.27% 15.19% 15.43% 15.85% 14.49%
Efficiency ratio, as adjusted 143.35% 43.73% 41.97% 40.63% 41.35%
Analysis of Net Interest Income         
Accretion income on acquired loans$4,504  $3,482  $2,888  $3,397  $33,726 
Yield on loans4.49% 4.57% 4.58% 4.67% 4.77%
Yield on investment securities - tax equivalent 22.81% 2.97% 2.93% 2.87% 3.03%
Yield on interest earning assets - tax equivalent 24.02% 4.09% 4.09% 4.12% 4.32%
Cost of interest bearing deposits0.53% 0.55% 0.62% 0.69% 0.54%
Cost of total deposits0.36% 0.38% 0.43% 0.50% 0.43%
Cost of borrowings1.72% 1.74% 1.75% 1.75% 1.94%
Cost of interest bearing liabilities0.74% 0.79% 0.89% 0.97% 0.82%
Net interest rate spread - tax equivalent basis 23.28% 3.30% 3.20% 3.15% 3.50%
Net interest margin - GAAP basis3.40% 3.42% 3.35% 3.29% 3.57%
Net interest margin - tax equivalent basis 23.52% 3.55% 3.47% 3.42% 3.67%
Capital         
Tier 1 leverage ratio - Company 38.95% 8.89% 8.72% 8.42% 9.40%
Tier 1 leverage ratio - Bank only 39.08% 8.99% 8.89% 8.49% 10.08%
Tier 1 risk-based capital ratio - Bank only 310.87% 10.79% 10.67% 10.19% 12.10%
Total risk-based capital ratio - Bank only 313.06% 12.95% 12.76% 12.16% 13.20%
Tangible equity to tangible assets - Company 18.14% 8.12% 8.02% 7.58% 8.27%
Condensed Five Quarter Income Statement         
Interest and dividend income$123,075  $126,000  $134,263  $145,692  $276,495 
Interest expense15,827  17,210  21,005  25,619  42,471 
Net interest income107,248  108,790  113,258  120,073  234,024 
Provision for loan losses5,500  4,500  4,500  5,000  12,000 
Net interest income after provision for loan losses101,748  104,290  108,758  115,073  222,024 
Non-interest income16,057  12,836  13,618  13,988  23,762 
Non-interest expense57,072  60,350  59,657  62,617  250,746 
Income (loss) before income tax expense60,733  56,776  62,719  66,444  (4,960)
Income tax expense19,737  17,709  20,319  21,592  28,319 
Net income (loss)$40,996  $39,067  $42,400  $44,852  $(33,279)
          
1 See a reconciliation of non-GAAP financial measures beginning on page 17.
2 Tax equivalent basis represents interest income earned on municipal securities divided by the applicable Federal tax rate of 35%.
3 Regulatory capital amounts and ratios are preliminary estimates pending filing of the Company’s and Bank’s regulatory reports.
 

13

 
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 Forward12/31/2016 3/31/2017 6/30/2017 9/30/2017 12/31/2017
Balance, beginning of period$59,405  $63,622  $66,939  $70,151  $72,128 
Provision for loan losses5,500  4,500  4,500  5,000  12,000 
Loan charge-offs1:         
Traditional commercial & industrial(219) (687) (164) (68) (4,570)
Asset based lending         
Payroll finance      (188)  
Factored receivables(267) (296) (12) (564) (110)
Equipment financing(576) (471) (610) (741) (1,343)
Commercial real estate(225) (83) (944) (1,345) (7)
Acquisition development & construction    (22) (5)  
Residential mortgage(274) (158) (120) (389) (193)
Consumer(313) (114) (417) (156) (408)
Total charge offs(1,874) (1,809) (2,289) (3,456) (6,631)
Recoveries of loans previously charged-off1:         
Traditional commercial & industrial152  139  523  316  164 
Asset-based lending  3  1  1   
Payroll finance      1  5 
Factored receivables10  16  2  5   
Equipment financing227  140  146  45  56 
Commercial real estate168  2  98  17  46 
Acquisition development & construction  136  133     
Residential mortgage1  149  10    2 
Consumer33  41  88  48  137 
Total recoveries591  626  1,001  433  410 
Net loan charge-offs(1,283) (1,183) (1,288) (3,023) (6,221)
Balance, end of period$63,622  $66,939  $70,151  $72,128  $77,907 
Asset Quality Data and Ratios         
Non-performing loans (“NPLs”) non-accrual$77,163  $72,136  $70,416  $69,060  $186,357 
NPLs still accruing1,690  788  935  392  856 
Total NPLs78,853  72,924  71,351  69,452  187,213 
Other real estate owned13,619  9,632  10,198  11,697  27,095 
Non-performing assets (“NPAs”)$92,472  $82,556  $81,549  $81,149  $214,308 
Loans 30 to 89 days past due$15,100  $15,611  $15,070  $21,491  $53,533 
Net charge-offs as a % of average loans (annualized)0.06% 0.05% 0.05% 0.12% 0.13%
NPLs as a % of total loans0.83  0.75  0.70  0.66  0.94 
NPAs as a % of total assets0.65  0.56  0.53  0.48  0.71 
Allowance for loan losses as a % of NPLs80.7  91.8  98.3  103.9  41.6 
Allowance for loan losses as a % of total loans0.67  0.69  0.69  0.69  0.39 
Special mention loans$104,569  $110,832  $102,996  $117,984  $136,558 
Substandard loans95,152  101,496  97,476  104,205  232,491 
Doubtful loans442  902  895  795  764 
          
1 There were no charge-offs or recoveries on warehouse lending, public sector finance or multi-family loans during the periods presented.
 

14

 
Sterling Bancorp and Subsidiaries
QUARTERLY YIELD TABLE
(unaudited, in thousands, except share and per share data)
  
 For the Quarter Ended
 September 30, 2017 December 31, 2017
 Average
balance
 Interest Yield/
Rate
 Average
balance
 Interest Yield/
Rate
 (Dollars in thousands)
Interest earning assets:           
Traditional C&I and commercial finance loans$4,564,517  $58,395  5.08% $4,891,485  $60,452  4.90%
Commercial real estate (includes multi-family)4,443,142  47,336  4.23  8,839,256  102,789  4.61 
Acquisition, development and construction229,242  4,197  7.26  246,141  3,727  6.01 
Commercial loans9,236,901  109,928  4.72  13,976,882  166,968  4.74 
Consumer loans262,693  2,891  4.37  372,981  5,103  5.43 
Residential mortgage loans686,820  7,079  4.12  5,168,622  62,381  4.83 
Total gross loans 110,186,414  119,898  4.67  19,518,485  234,452  4.77 
Securities taxable2,483,718  15,141  2.42  3,840,147  24,743  2.56 
Securities non-taxable1,432,358  13,141  3.67  2,086,677  20,453  3.92 
Interest earning deposits202,650  462  0.90  361,825  873  0.96 
FHLB and Federal Reserve Bank Stock165,980  1,649  3.94  236,614  3,132  5.25 
Total securities and other earning assets4,284,706  30,393  2.81  6,525,263  49,201  2.99 
Total interest earning assets14,471,120  150,291  4.12  26,043,748  283,653  4.32 
Non-interest earning assets1,190,394      3,233,754     
Total assets$15,661,514      $29,277,502     
Interest bearing liabilities:           
Demand and savings2 deposits$3,124,265  $4,626  0.59% $6,734,346  $5,904  0.35%
Money market deposits3,889,780  6,897  0.70  7,324,196  10,790  0.58 
Certificates of deposit634,569  1,869  1.17  2,382,102  5,611  0.93 
Total interest bearing deposits7,648,614  13,392  0.69  16,440,644  22,305  0.54 
Senior notes76,664  1,143  5.92  276,051  2,759  3.97 
Other borrowings2,529,854  8,733  1.37  3,672,874  15,055  1.63 
Subordinated notes172,625  2,351  5.45  172,680  2,352  5.45 
Total borrowings2,779,143  12,227  1.75  4,121,605  20,166  1.94 
Total interest bearing liabilities10,427,757  25,619  0.97  20,562,249  42,471  0.82 
Non-interest bearing deposits3,042,392      4,043,213     
Other non-interest bearing liabilities236,113      436,301     
Total liabilities13,706,262      25,041,763     
Stockholders’ equity1,955,252      4,235,739     
Total liabilities and stockholders’ equity$15,661,514      $29,277,502     
Net interest rate spread 3    3.15%     3.50%
Net interest earning assets 4$4,043,363      $5,481,499     
Net interest margin - tax equivalent  124,672  3.42%   241,182  3.67%
Less tax equivalent adjustment  (4,599)     (7,158)  
Net interest income  $120,073      $234,024   
Ratio of interest earning assets to interest bearing liabilities138.8%     126.7%    
1 Average balances include loans held for sale and non-accrual loans.  Interest includes prepayment fees and late charges.
2 Includes club accounts and interest bearing mortgage escrow balances.
3 Net interest rate spread represents the difference between the tax equivalent yield on average interest earning assets and the cost of average interest bearing liabilities.
4 Net interest earning assets represents total interest earning assets less total interest bearing liabilities.
 

15

 
Sterling Bancorp and Subsidiaries
QUARTERLY YIELD TABLE
(unaudited, in thousands, except share and per share data)
  
 For the Quarter Ended
 December 31, 2016 December 31, 2017
 Average
balance
 Interest Yield/
Rate
 Average
balance
 Interest Yield/
Rate
 (Dollars in thousands)
Interest earning assets:           
Traditional C&I and commercial finance loans$4,032,380  $49,261  4.86% $4,891,485  $60,452  4.90%
Commercial real estate (includes multi-family)3,963,216  42,147  4.23  8,839,256  102,789  4.61 
Acquisition, development and construction224,735  2,635  4.66  246,141  3,727  6.01 
Commercial loans8,220,331  94,043  4.55  13,976,882  166,968  4.74 
Consumer loans287,267  3,187  4.41  372,981  5,103  5.43 
Residential mortgage loans759,692  7,422  3.91  5,168,622  62,381  4.83 
Total gross loans 19,267,290  104,652  4.49  19,518,485  234,452  4.77 
Securities taxable1,789,553  9,993  2.22  3,840,147  24,743  2.56 
Securities non-taxable1,183,857  11,027  3.73  2,086,677  20,453  3.92 
Interest earning deposits215,120  200  0.37  361,825  873  0.96 
FHLB and Federal Reserve Bank stock110,461  1,063  3.83  236,614  3,132  5.25 
Total securities and other earning assets3,298,991  22,283  2.69  6,525,263  49,201  2.99 
Total interest earning assets12,566,281  126,935  4.02  26,043,748  283,653  4.32 
Non-interest earning assets1,105,395      3,233,754     
Total assets$13,671,676      $29,277,502     
Interest bearing liabilities:           
Demand and savings2 deposits$2,914,798  $3,048  0.42  $6,734,346  $5,904  0.35 
Money market deposits3,395,542  4,693  0.55  7,324,196  10,790  0.58 
Certificates of deposit633,526  1,511  0.95  2,382,102  5,611  0.93 
Total interest bearing deposits6,943,866  9,252  0.53  16,440,644  22,305  0.54 
Senior notes76,415  1,113  5.84  276,051  2,759  4.00 
Other borrowings1,268,591  3,113  0.98  3,672,874  15,055  1.63 
Subordinated notes172,476  2,349  5.51  172,680  2,352  5.45 
Total borrowings1,517,482  6,575  1.72  4,121,605  20,166  1.94 
Total interest bearing liabilities8,461,348  15,827  0.74  20,562,249  42,471  0.82 
Non-interest bearing deposits3,217,156      4,043,213     
Other non-interest bearing liabilities187,382      436,301     
Total liabilities11,865,886      25,041,763