Sterling Bancorp announces record results for the first quarter of 2018 with earnings per share available to common stockholders of $0.43 (as reported) and $0.45 (as adjusted), representing growth of 48.3% and 45.2% over the same quarter a year ago

Company Release - 4/24/2018 4:10 PM ET

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

    
($ in thousands except per share amounts)GAAP / As Reported Non-GAAP / As Adjusted1
 3/31/2017 3/31/2018 Change
% / bps
 3/31/2017 3/31/2018 Change
% / bps
Total revenue2$121,626  $253,077  108.1% $125,751  $262,568  108.8%
Net income available to common39,067  96,873  148.0  41,461  100,880  143.3 
Diluted EPS available to common0.29  0.43  48.3  0.31  0.45  45.2 
Net interest margin33.42% 3.54% 12  3.55% 3.60% 5 
Return on average tangible common equity14.31  16.55  224  15.19  17.24  205 
Return on average tangible assets1.20  1.39  19  1.27  1.45  18 
Operating efficiency ratio449.6  44.2  (540) 43.7  40.3  (340)
                  
  • Record net income available to common stockholders of $96.9 million (as reported) and $100.9 million (as adjusted).
  • Reported diluted earnings per share available to common stockholders of $0.43; growth of 48.3% over prior year.
  • Adjusted diluted earnings per share available to common stockholders of $0.45; growth of 45.2% over prior year.
  • Total portfolio loans, gross were $19.9 billion and total deposits were $20.6 billion at March 31, 2018.
  • Completed acquisition of Advantage Funding Management Co., Inc. in April 2018, including $457.0 million loan portfolio.
  • Tangible book value per common share1 of $10.68 at March 31, 2018; growth of 28.4% over the prior year.

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

    
($ in thousands except per share amounts)GAAP / As Reported Non-GAAP / As Adjusted1
 12/31/2017 3/31/2018 Change
% / bps
 12/31/2017 3/31/2018 Change
% / bps
Total revenue2$257,786  $253,077  (1.8)% $265,014  $262,568  (0.9)%
Net (loss) income available to common(35,281) 96,873  NM  87,171  100,880  15.7 
Diluted EPS available to common(0.16) 0.43  NM  0.39  0.45  15.4 
Net interest margin33.57% 3.54% (3) 3.67% 3.60% (7)
Return on average tangible common equity(5.87) 16.55  NM  14.49  17.24  275 
Return on average tangible assets(0.51) 1.39  NM  1.25  1.45  20 
Operating efficiency ratio497.3  44.2  (5,310) 41.4  40.3  (110)
                  
NM - represents not meaningful given the Company reported a net loss in fourth quarter of 2017.
                  
  • Growth in adjusted diluted earnings per share available to common stockholders of 15.4% over the linked quarter.
  • Integration of Astoria Financial Corporation is on-track; adjusted operating efficiency ratio at record low of 40.3%.
  • Growth in average commercial loan balances of $320.1 million over the linked quarter.
  • Real estate consolidation strategy is underway; consolidated one financial center in the first quarter and announced sale of Lake Success headquarters; six financial centers anticipated to close in the second quarter of 2018.

1. Non-GAAP / as adjusted measures are defined in the non-GAAP tables beginning on page 17.
2. Total revenue is equal to net interest income plus non-interest income. Total revenue as adjusted is equal to tax equivalent net interest income plus non-interest income excluding securities gains and losses.
3. Net interest margin is equal to net interest income divided by average interest earning assets. Net interest margin as adjusted, or tax equivalent net interest margin, is equal to net interest income plus the tax equivalent adjustment for tax exempt securities divided by average interest earning assets.
4. See page 18 and 19 for an explanation of the operating efficiency ratio.

1

MONTEBELLO, N.Y., April 24, 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 ended March 31, 2018. Net income available to common stockholders for the quarter ended March 31, 2018 was $96.9 million, or $0.43 per diluted share, compared to net loss available to common stockholders of $35.3 million, or $0.16 per diluted share, for the linked quarter ended December 31, 2017, and net income available to common stockholders of $39.1 million, or $0.29 per diluted share, for the three months ended March 31, 2017. 

Results for the first quarter of 2018 were impacted by a loss on sale of securities of $5.4 million as the Company continued its earning asset repositioning strategy and generated liquidity for the acquisition of Advantage Funding Management Co., Inc. (“Advantage Funding”), which closed on April 2, 2018. Please refer to the section below “Reconciliation of GAAP Results to Adjusted Results (non-GAAP)” for additional information.

President’s Comments
Jack Kopnisky, President and Chief Executive Officer, commented: “We had strong performance in the first quarter of 2018 across all key metrics with record adjusted net income available to common stockholders of over $100.0 million and adjusted diluted earnings per share available to common stockholders of $0.45, which represents growth of 143.3% and 45.2%, respectively, over the first quarter of 2017. Our adjusted return on average tangible assets was 1.45% and our adjusted return on average tangible common equity was 17.24%. As of March 31, 2018, our total assets were $30.5 billion, gross portfolio loans were $19.9 billion and total deposits were $20.6 billion. 

“The transition of our earning assets and balance sheet to a more optimal mix is well underway. The average balance of commercial loans increased by $320.1 million in the first quarter, while the average balance of residential mortgage loans decreased by $191.4 million. We will continue to replace lower yielding assets that we acquired in the merger with Astoria Financial Corporation (“Astoria”) with higher yielding, more diversified commercial loans that we originate through our teams or purchase in opportunistic situations, such as the acquisition of Advantage Funding. We anticipate this strategy will allow us to maintain and increase our tax equivalent net interest margin, which was 3.15% in the first quarter of 2018 excluding the impact of accretion income on acquired loans.

“We are ahead of plan on our acquisition of Astoria, and to date we have made significant progress on the integration of personnel, systems, facilities and all other areas of Astoria’s operations. Excluding the amortization of intangibles, operating expenses were $105.7 million in the first quarter, which represented a decrease of $3.9 million relative to the linked quarter and an annual run-rate of $428.7 million. Our adjusted operating efficiency ratio reached a record low of 40.3%. Comparing this quarter’s performance to the same quarter a year ago, our operating leverage ratio, which we define as growth in operating revenues divided by growth in operating expenses, was 2.7x. We still have much work to do to fully capture the benefits of our acquisition of Astoria, but we are confident in our ability to continue building a larger, more diversified and more profitable company.

“Our tangible common equity ratio was 8.38% and our estimated Tier 1 Leverage ratio was 9.39% at March 31, 2018; we have ample capital to support our strategy. Our tangible book value per common share was $10.68, which represented an increase of 28.4% over a year ago.

“We welcome all of our new colleagues that have joined upon the completion of the Advantage Funding acquisition. Advantage Funding is a leading provider of commercial vehicle and transportation financing services based in Lake Success, NY. Advantage Funding will be integrated into our equipment finance business, which when combined with our existing business, will have over $1.0 billion in loans and leases outstanding.  We anticipate the acquisition should add approximately five basis points to tax equivalent net interest margin in 2018 and will accelerate the transition of our loan portfolio to a more diversified loan mix.

“We would like to thank our clients, colleagues and shareholders for your support and look forward to working with all of our partners as we continue to build a great company.

“Lastly, we have declared a dividend on our common stock of $0.07 per share payable on May 21, 2018 to holders of record as of May 7, 2018.”

Reconciliation of GAAP Results to Adjusted Results (non-GAAP)
The Company’s GAAP net income available to common stockholders of $96.9 million, or $0.43 per diluted share, for the first quarter of 2018, included the following items:

  • a pre-tax net loss on sale of securities of $5.4 million; and

2

  • the pre-tax amortization of non-compete agreements and acquired customer list intangible assets of $295 thousand.

Excluding the impact of these items, adjusted net income available to common stockholders was $100.9 million, or $0.45 per diluted share, for the three months ended March 31, 2018.

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

Net Interest Income and Margin

    
($ in thousands)For the three months ended Change % / bps
 3/31/2017 12/31/2017 3/31/2018 Y-o-Y Linked Qtr
Interest and dividend income$126,000  $276,495  $281,346  123.3% 1.8%
Interest expense17,210  42,471  46,976  173.0  10.6 
Net interest income$108,790  $234,024  $234,370  115.4  0.1 
          
Accretion income on acquired loans$3,482  $33,726  $30,340  771.3% (10.0)%
Yield on loans4.57% 4.77% 4.85% 28  8 
Tax equivalent yield on investment securities2.97  3.03  2.85  (12) (18)
Tax equivalent yield on interest earning assets4.09  4.32  4.31  22  (1)
Cost of total deposits0.38  0.43  0.47  9  4 
Cost of interest bearing deposits0.55  0.54  0.59  4  5 
Cost of borrowings1.74  1.94  2.01  27  7 
Tax equivalent net interest margin53.55  3.67  3.60  5  (7)
          
Average loans, including loans held for sale$9,281,516  $19,518,485  $19,635,900  111.6% 0.6%
Average investment securities3,273,658  5,926,824  6,602,175  101.7  11.4 
Average total interest earning assets12,889,578  26,043,748  26,833,922  108.2  3.0 
Average deposits and mortgage escrow10,186,615  20,483,857  20,688,147  103.1  1.0 

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

First quarter 2018 compared with first quarter 2017
Net interest income was $234.4 million, an increase of $125.6 million compared to the first quarter of 2017.  This was mainly due to an increase in average loans outstanding between the periods as a result of the merger with Astoria (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 4.85% compared to 4.57% for the three months ended March 31, 2017.  The increase in yield on loans was mainly due to an increase in accretion income on acquired loans, which was $30.3 million in the first quarter of 2018 compared to $3.5 million in the first quarter of 2017.
  • Average commercial loans were $14.3 billion compared to $8.3 billion in the first quarter of 2017, an increase of $6.0 billion or 72.3%.
  • The tax equivalent yield on investment securities decreased 12 basis points to 2.85%.  This was mainly due to the change in the federal income tax rate as the tax equivalent adjustment assumed a 35% federal tax rate in 2017 compared to a 21% federal tax rate in 2018, resulting from the Tax Cuts and Jobs Act of 2017. Average tax exempt securities balances grew to $2.6 billion for the quarter ended March 31, 2018, compared to $1.3 billion in the first quarter of 2017. Average investment securities were $6.6 billion, or 24.6%, of average earning assets for the first quarter of 2018 compared to $3.3 billion, or 25.4%, of average earning assets for the first quarter of 2017.
  • The tax equivalent yield on interest earning assets increased 22 basis points between the periods to 4.31%, mainly due to higher accretion income on acquired loans, as described above.
  • The cost of total deposits was 47 basis points and the cost of borrowings was 2.01%, compared to 38 basis points and 1.74%, respectively, for the same period a year ago.

3

  • The total cost of interest bearing liabilities increased 10 basis points to 0.89% for the first quarter of 2018 compared to 0.79% for first quarter of 2017.  This increase was mainly 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 3.60% for the first quarter of 2018 compared to 3.55% for the first quarter of 2017. The increase in tax equivalent net interest margin was mainly due to the increase in accretion income on acquired loans.  Excluding accretion income, tax equivalent net interest margin was 3.15% for the first quarter of 2018 compared to 3.44% in the first quarter of 2017. The decline in tax equivalent net interest margin excluding accretion income is mainly due to multi-family and residential mortgage loans acquired in the Astoria Merger, which generally have lower yields than the Company’s other loan assets, and to the change in tax equivalent adjustment rate due to the decrease in the federal income tax rate.

First quarter 2018 compared with linked quarter ended December 31, 2017
Net interest income increased $346 thousand compared to the linked quarter ended December 31, 2017.  The increase in net interest income was mainly due to higher average balances of commercial loans and investment securities outstanding, which was substantially offset by a $3.4 million decline in accretion income on acquired loans and two fewer days in first quarter of 2018.  Key components of the changes in net interest income in the linked quarter were the following:

  • The yield on loans was 4.85% compared to 4.77% for the linked quarter, an increase of eight basis points, which was mainly due to the increase in market rates of interest. Accretion income on acquired loans was $30.3 million in the first quarter of 2018 compared to $33.7 million in the linked quarter.
  • The average balance of portfolio loans increased $117.4 million and the average balance of commercial loans increased $320.1 million compared to the linked quarter.
  • The tax equivalent yield on investment securities decreased 18 basis points to 2.85% in the first quarter of 2018, which was due to the change in the federal income tax rate.  The average balance of investment securities increased $675.4 million compared to the linked quarter.
  • The tax equivalent yield on interest earning assets decreased one basis point in the first quarter of 2018 to 4.31% compared to 4.32% in the linked quarter.  This was mainly due to $3.4 million of lower accretion income on acquired loans, and a $3.1 million decrease in the tax equivalent adjustment due to the change in the tax rates.
  • The cost of total deposits increased four basis points to 47 basis points in the quarter. The total cost of borrowings increased to 2.01% compared to 1.94% in the linked quarter.
  • Average interest bearing deposits increased by $276.4 million and average borrowings increased $476.3 million relative to the linked quarter. Total interest expense increased by $4.5 million over the linked quarter.

The tax equivalent net interest margin was 3.60% compared to 3.67% in the linked quarter. Excluding accretion income on acquired loans, tax equivalent net interest margin was 3.16% in the linked quarter compared to 3.15% in the first quarter of 2018. The decline in tax equivalent net interest margin excluding accretion income between the current quarter and the linked quarter was mainly due to the change in the federal income tax rate. The composition of the Company’s earning assets continued to shift in the first quarter of 2018, as the average balance of residential mortgage loans decreased by $191.4 million and represented 24.5% of total portfolio loans compared to 25.3% at December 31, 2017. We anticipate that over time we will continue to replace the run-off of residential mortgages and other loans acquired in the Astoria Merger with higher yielding commercial loans.

Non-interest Income

    
($ in thousands)For the three months ended Change %
 3/31/2017 12/31/2017 3/31/2018 Y-o-Y Linked Qtr
Total non-interest income$12,836  $23,762  $18,707  45.7% (21.3)%
Net (loss) on sale of securities(23) (70) (5,421) NM  NM 
Adjusted non-interest income$12,859  $23,832  $24,128  87.6  1.2 
                  

First quarter 2018 compared with first quarter 2017
Excluding net (loss) on sale of securities, adjusted non-interest income increased $11.3 million in the first quarter of 2018 to $24.1 million compared to $12.9 million in the same quarter last year.  The change was mainly due to the Astoria Merger as deposit fees and service charges increased by $3.7 million; bank owned life insurance income increased by $2.2 million; investment management fees increased by $1.6 million; and safe deposit box rental income increased $602 thousand, which is included in other non-interest income. In addition, fee income generated on payroll finance loans increased $1.2 million (which represents the majority of the increase in accounts receivable management / factoring commissions and other related fees) and other loan fees including letters of credit and loan swaps increased $433 thousand over the year ago period.

4

First quarter 2018 compared with linked quarter ended December 31, 2017
Excluding net (loss) on sale of securities, adjusted non-interest income increased approximately $296 thousand from $23.8 million in the linked quarter to $24.1 million in the first quarter of 2018. Increases in accounts receivables commissions / factoring commissions and other related fees and other commissions and loan fees were substantially offset by decreases in deposit fees and service charges and wealth management fees.

Non-interest Expense

    
($ in thousands)For the three months ended Change % / bps
 3/31/2017 12/31/2017 3/31/2018 Y-o-Y Linked Qtr
Compensation and benefits7$31,187  $56,086  $54,680  75.3% (2.5)%
Stock-based compensation plans1,736  2,508  2,854  64.4  13.8 
Occupancy and office operations8,134  18,100  17,460  114.7  (3.5)
Information technology2,469  11,984  11,718  374.6  (2.2)
Amortization of intangible assets2,229  6,426  6,052  171.5  (5.8)
FDIC insurance and regulatory assessments1,888  5,737  5,347  183.2  (6.8)
Other real estate owned, net (“OREO”)1,676  742  364  (78.3) (50.9)
Merger-related expenses3,127  30,230    NM  NM 
Charge for asset write-downs, systems integration, retention and severance  104,506    NM  NM 
Other expenses7,904  14,427  13,274  67.9  (8.0)
Total non-interest expense$60,350  $250,746  $111,749  85.2  (55.4)
Full time equivalent employees (“FTEs”) at period end978  2,076  2,016  106.1  (2.9)
Financial centers at period end42  128  127  202.4  (0.8)
Operating efficiency ratio, as reported49.6% 97.3% 44.2% 540  5,310 
Operating efficiency ratio, as adjusted643.7  41.4  40.3  340  110 

6 See a reconciliation of this non-GAAP financial measure beginning on page 17.
7 In the first quarter of 2018, the Company adopted a new retirement plan accounting standard. To conform to the current presentation, the Company reclassified $99 and $416 in the three months ended March 31, 2017 and December 31, 2017, respectively, from compensation and benefits expense to other non-interest expense. The adoption of this new standard did not impact the aggregate amount of total non-interest expense or net income.

First quarter 2018 compared with first quarter 2017
Total non-interest expense increased $51.4 million relative to the first quarter of 2017. Key components of the change in non-interest expense were the following:

  • Compensation and benefits increased $23.5 million between the periods.  Total FTEs increased to 2,016 from 978, which was mainly due to the Astoria Merger.  In addition, we continued to execute our growth strategy and hired commercial bankers and risk management personnel.
  • Occupancy and office operations increased $9.3 million mainly due to the financial centers and other locations acquired in the Astoria Merger.
  • Information technology expense increased $9.2 million between the periods.  The increase is mainly due to the Astoria Merger.  We anticipate this expense will decrease upon completion of the full systems conversion.
  • Amortization of intangible assets increased $3.8 million. The increase is mainly due to the amortization of the core deposit intangible asset that was recorded in the Astoria Merger.
  • FDIC insurance and regulatory assessments increased $3.5 million to $5.3 million in the first quarter of 2018, compared to $1.9 million for the first quarter of 2017.  This was mainly due to growth in our total assets.
  • OREO expense declined $1.3 million to $364 thousand in the first quarter of 2018, compared to $1.7 million for the fourth quarter of 2017.  This was mainly due to write-downs on the value of properties based on updated appraisals in the first quarter of 2017.  In the first quarter of 2018, gain on sale of OREO was $472 thousand, which substantially offset OREO write-downs and maintenance expense.

5

  • Other expenses increased $13.3 million mainly due to the Astoria Merger and included a $1.3 million increase in professional fees, $979 thousand increase in communications expense, $992 thousand increase in advertising and promotion expense and a $739 thousand increase in operational losses.

First quarter 2018 compared with linked quarter ended December 31, 2017
Total non-interest expense decreased $139.0 million from $250.7 million in the linked quarter to $111.7 million in the first quarter of 2018. Key components of the change in non-interest expense were the following:

  • Compensation and benefits declined $1.4 million and was $54.7 million in the first quarter of 2018 compared to $56.1 million in the linked quarter.  This was mainly due to the continued integration of Astoria’s operations, which has been partially offset by the hiring of additional relationship managers and risk management personnel.
  • Occupancy and office operations declined $640 thousand mainly as we continue to execute our strategy of reducing our real estate footprint.
  • OREO expense declined $378 thousand in the first quarter of 2018 compared to the linked quarter.
  • There was no merger-related expense in the first quarter of 2018 compared to $30.2 million in the linked quarter.
  • There were no charges for asset write-downs, systems integration, retention and severance in the first quarter of 2018 compared to $104.5 million in the linked quarter.
  • Other expense decreased $1.2 million in the first quarter of 2018 and was $13.3 million compared to $14.4 million in the linked quarter.

Taxes
For the three months ended March 31, 2018, the Company earned pre-tax income of $128.3 million. We recorded income tax expense at an estimated effective tax rate of 23.25%. In addition, we recorded a tax benefit of $379 thousand as a discrete item related to stock-based compensation that vested in the first quarter of 2018.  In the year ago period, we recorded income tax expense at 32.50% of pre-tax income, and recorded a tax benefit of $742 thousand as a discrete item related to stock-based compensation that vested in the first quarter of 2017.  In the linked quarter, we incurred a pre-tax loss mainly due to charges incurred in connection with the Astoria Merger; 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.

Key Balance Sheet Highlights as of March 31, 2018

    
($ in thousands)As of Change % / bps
 3/31/2017 12/31/2017 3/31/2018 Y-o-Y Linked Qtr
Total assets$14,659,337  $30,359,541  $30,468,780  107.8% 0.4%
Total portfolio loans, gross9,763,967  20,008,983  19,939,245  104.2  (0.3)
Commercial & industrial (“C&I”) loans4,181,818  5,306,821  5,341,548  27.7  0.7 
Commercial real estate loans4,376,645  8,998,419  9,099,606  107.9  1.1 
Acquisition, development and construction loans238,966  282,792  262,591  9.9  (7.1)
Total commercial loans8,797,429  14,588,032  14,703,745  67.1  0.8 
Residential mortgage loans695,398  5,054,732  4,883,452  602.3  (3.4)
Total deposits10,251,725  20,538,204  20,623,233  101.2  0.4 
Core deposits 89,426,612  19,388,254  19,538,410  107.3  0.8 
Investment securities3,416,395  6,474,561  6,635,286  94.2  2.5 
Total borrowings2,328,576  4,991,210  4,927,594  111.6  (1.3)
Loans to deposits95.2% 97.4% 96.7% 150  (70)
Core deposits to total deposits92.0  94.4  94.7  270  30 
Investment securities to total assets23.3  21.3  21.8  (150) 50 

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

6

Highlights in balance sheet items as of March 31, 2018 were the following:

  • C&I loans (which include traditional C&I, asset-based lending, payroll finance, warehouse lending, factored receivables, equipment financing and public sector finance loans) represented 26.8%, commercial real estate loans (which include multi-family loans) represented 45.6%, consumer and residential mortgage loans combined represented 26.3%, and acquisition, development and construction loans represented 1.3% of the total loan portfolio.  Loan growth in the year-over-year period was mainly a result of the Astoria Merger and originations by our commercial banking teams.  Linked quarter comparisons are discussed below.
  • C&I loans grew $34.7 million in the first quarter of 2018 compared to the linked quarter.  Excluding loans acquired in the Astoria Merger, C&I loans increased $1.1 billion in the past twelve months.
  • Total commercial loans, which include all C&I loans, commercial real estate (including multi-family) and acquisition, development and construction loans, increased by $115.7 million in the linked quarter.  Excluding loans acquired in the Astoria Merger, in the past twelve months commercial loans increased by $1.4 billion.
  • Residential mortgage loans were $4.9 billion at March 31, 2018, compared to $5.1 billion at December 31, 2017.  The decline was mainly due to repayments of loans acquired from Astoria.
  • Aggregate exposure to taxi medallion relationships was $43.6 million, which represented 0.22% of total loans as of March 31, 2018, a decline of $2.4 million from $46.0 million as of December 31, 2017.  The decline was mainly due to a charge-off of $2.1 million and repayments.
  • Total deposits at March 31, 2018 increased $85.0 million compared to December 31, 2017, and increased $10.4 billion over March 31, 2017.  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 March 31, 2018 increased $150.2 million compared to December 31, 2017. Core deposits increased $10.1 billion over March 31, 2017.
  • Municipal deposits at March 31, 2018 were $1.8 billion and increased by $190.4 million relative to the linked quarter. Municipal deposits typically experience seasonal inflows in the first quarter.
  • Investment securities increased by $160.7 million relative to the linked quarter, and represented 21.8% of total assets at March 31, 2018.

Credit Quality

    
($ in thousands)For the three months ended Change % / bps
 3/31/2017 12/31/2017 3/31/2018 Y-o-Y Linked Qtr
Provision for loan losses$4,500  $12,000  $13,000  188.9% 8.3%
Net charge-offs1,183  6,221  8,815  645.1  41.7 
Allowance for loan losses66,939  77,907  82,092  22.6  5.4 
Non-performing loans72,924  187,213  182,046  149.6  (2.8)
Annualized net charge-offs to average loans0.05% 0.13% 0.18% 13  5 
Allowance for loan losses to total loans0.69  0.39  0.41  (28) 2 
Allowance for loan losses to non-performing loans91.8  41.6  45.1  (4,670) 350 
               

Provision for loan losses was $13.0 million for the first quarter of 2018 compared to $12.0 million in the linked quarter and $4.5 million in the same period a year ago. In the first quarter of 2018, provision for loan losses was $4.2 million in excess of net charge-offs of $8.8 million.  Allowance coverage ratios were 0.41% of total loans and 45.1% of non-performing loans at March 31, 2018.  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 declined by $5.2 million to $182.0 million at March 31, 2018 compared to the linked quarter.  The decline in non-performing loans was mainly due to net charge-offs and repayments, partially offset by loans that became non-performing during quarter.

7

Capital

    
($ in thousands, except share and per share data)As of Change % / bps
 3/31/2017 12/31/2017 3/31/2018 Y-o-Y Three
months
Total stockholders’ equity$1,888,613  $4,240,178  $4,273,755  126.3% 0.8%
Preferred stock  139,220  139,025  NM  NM 
Goodwill and intangible assets760,698  1,733,082  1,727,030  127.0  (0.3)
Tangible common stockholders’ equity$1,127,915  $2,367,876  $2,407,700  113.5  1.7 
Common shares outstanding135,604,435  224,782,694  225,466,266  66.3  0.3 
Book value per common share$13.93  $18.24  $18.34  31.7  0.5 
Tangible book value per common share 98.32  10.53  10.68  28.4  1.4 
Tangible common equity to tangible assets 98.12% 8.27% 8.38% 26  11 
Estimated Tier 1 leverage ratio - Company8.89  9.39  9.39  50   
Estimated Tier 1 leverage ratio - Bank8.99  10.10  10.01  102  (9)

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

The increase in total stockholders’ equity of $33.6 million to $4.3 billion as of March 31, 2018 compared to December 31, 2017 was mainly due to earnings. The increase from net income available to common stockholders of $96.9 million was partially offset by common dividends of $15.7 million, preferred dividends of $2.2 million and a decrease in the fair value of our available for sale investment securities of $52.9 million.

Total goodwill and other intangible assets were $1.7 billion at March 31, 2018, a decrease of $6.1 million compared to December 31, 2017, which was due to amortization of intangibles for the period.

For the quarter ended March 31, 2018, basic and diluted weighted average common shares outstanding increased to 224.7 million and 225.3 million, respectively, compared to 223.5 million and 224.1 million, respectively, for the quarter ended December 31, 2017.  The increase in the diluted weighted average shares was mainly due to stock-based compensation granted in connection with our performance for 2017. Total common shares outstanding at March 31, 2018 were approximately 225.5 million.

Tangible book value per share was $10.68 at March 31, 2018, which represented an increase of 28.4% over a year ago and an increase of 1.4% over December 31, 2017.

Conference Call Information
Sterling Bancorp will host a teleconference and webcast on Wednesday, April 25, 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 (888) 394-8218, Conference ID #5834389.  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.

8

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, Advantage Funding’s business, or fully realizing cost savings and other benefits; business disruption; a failure to grow revenues faster than we grow expenses, a deterioration in general economic conditions, either nationally, internationally, or in our market areas, including extended declines in the real estate market and constrained financial markets; inflation; the effects of, and changes in, trade; changes in asset quality and credit risk; introduction, withdrawal, success and timing of business initiatives; capital management activities; customer disintermediation; and the success of Sterling Bancorp in managing those risks.  Other factors that could cause Sterling Bancorp’s actual results to differ from those indicated in forward-looking statements are included in the “Risk Factors” section of Sterling Bancorp’s filings with the Securities and Exchange Commission.  The forward-looking statements speak only as of the date they are made and we undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.

Financial information contained in this release should be considered to be an estimate pending the filing with the Securities and Exchange Commission of the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2018. While the Company is not aware of any need to revise the results disclosed in this release, accounting literature may require information received by management between the date of this release and the filing of the Quarterly Report on Form 10-Q to be reflected in the results of the fiscal period, even though the new information was received by management subsequent to the date of this release.

9

      
Sterling Bancorp and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(unaudited, in thousands, except share and per share data)
      
 3/31/2017 12/31/2017 3/31/2018
Assets:
     
Cash and cash equivalents$253,703  $479,906  $364,331 
Investment securities3,416,395  6,474,561  6,635,286 
Loans held for sale2,559  5,246  44,440 
Portfolio loans:     
Commercial and industrial (“C&I”)4,181,818  5,306,821  5,341,548 
Commercial real estate (including multi-family)4,376,645  8,998,419  9,099,606 
Acquisition, development and construction238,966  282,792  262,591 
Residential mortgage695,398  5,054,732  4,883,452 
Consumer271,140  366,219  352,048 
Total portfolio loans, gross9,763,967  20,008,983  19,939,245 
Allowance for loan losses(66,939) (77,907) (82,092)
Total portfolio loans, net9,697,028  19,931,076  19,857,153 
Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank Stock, at cost148,030  284,112  354,832 
Accrued interest receivable48,974  94,098  102,129 
Premises and equipment, net57,567  321,722  318,267 
Goodwill696,600  1,579,891  1,579,891 
Other intangibles64,098  153,191  147,139 
Bank owned life insurance201,259  651,638  655,278 
Other real estate owned9,632  27,095  24,493 
Other assets63,492  357,005  385,541 
Total assets$14,659,337  $30,359,541  $30,468,780 
Liabilities:     
Deposits$10,251,725  $20,538,204  $20,623,233 
FHLB borrowings2,035,000  4,510,123  4,449,829 
Other borrowings44,472  30,162  26,850 
Senior notes76,551  278,209  278,144 
Subordinated notes172,553  172,716  172,771 
Mortgage escrow funds13,153  122,641  161,724 
Other liabilities177,270  467,308  482,474 
Total liabilities12,770,724  26,119,363  26,195,025 
Stockholders’ equity:     
Preferred stock  139,220  139,025 
Common stock1,411  2,299  2,299 
Additional paid-in capital1,590,293  3,780,908  3,766,280 
Treasury stock(62,046) (58,039) (51,102)
Retained earnings382,676  401,956  496,297 
Accumulated other comprehensive (loss)(23,721) (26,166) (79,044)
Total stockholders’ equity1,888,613  4,240,178  4,273,755 
Total liabilities and stockholders’ equity$14,659,337  $30,359,541  $30,468,780 
      
Shares of common stock outstanding at period end135,604,435  224,782,694  225,466,266 
Book value per common share$13.93  $18.24  $18.34 
Tangible book value per common share18.32  10.53  10.68 
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
 3/31/2017 12/31/2017 3/31/2018
Interest and dividend income:
Loans and loan fees$104,570  $234,452  $234,615 
Securities taxable12,282  24,743  27,061 
Securities non-taxable7,618  13,295  15,312 
Other earning assets1,530  4,005  4,358 
Total interest and dividend income126,000  276,495  281,346 
Interest expense:     
Deposits9,508  22,305  24,206 
Borrowings7,702  20,166  22,770 
Total interest expense17,210  42,471  46,976 
Net interest income108,790  234,024  234,370 
Provision for loan losses4,500  12,000  13,000 
Net interest income after provision for loan losses104,290  222,024  221,370 
Non-interest income:     
Accounts receivable management / factoring commissions and other related fees3,769  5,133  5,360 
Deposit fees and service charges3,335  7,236  7,003 
Loan commissions and fees2,987  2,995  3,406 
Bank owned life insurance1,370  3,474  3,614 
Investment management fees231  2,103  1,825 
Net (loss) gain on sale of securities(23) (70) (5,421)
Other1,167  2,891  2,920 
Total non-interest income12,836  23,762  18,707 
Non-interest expense:     
Compensation and benefits31,187  56,086  54,680 
Stock-based compensation plans1,736  2,508  2,854 
Occupancy and office operations8,134  18,100  17,460 
Information Technology2,469  11,984  11,718 
Amortization of intangible assets2,229  6,426  6,052 
FDIC insurance and regulatory assessments1,888  5,737  5,347 
Other real estate owned, net1,676  742  364 
Merger-related expenses3,127  30,230   
Charge for asset write-downs, systems integration, retention and severance  104,506   
Other7,904  14,427  13,274 
Total non-interest expense60,350  250,746  111,749 
Income before income tax expense56,776  (4,960) 128,328 
Income tax expense17,709  28,319  29,456 
Net income (loss)39,067  (33,279) 98,872 
Preferred stock dividend  2,002  1,999 
Net income (loss) available to common stockholders$39,067  $(35,281) $96,873 
Weighted average common shares:     
Basic135,163,347  223,501,073  224,730,686 
Diluted135,811,721  224,055,991  225,264,147 
Earnings per common share:     
Basic earnings per share$0.29  $(0.16) $0.43 
Diluted earnings per share0.29  (0.16) 0.43 
Dividends declared per share0.07  0.07  0.07 
         

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 Period3/31/2017 6/30/2017 9/30/2017 12/31/2017 3/31/2018
Total assets$14,659,337  $15,376,676  $16,780,097  $30,359,541  $30,468,780 
Tangible assets 113,898,639  14,618,192  16,023,807  28,626,459  28,741,750 
Securities available for sale1,941,671  2,095,872  2,579,076  3,612,072  3,760,338 
Securities held to maturity1,474,724  1,456,304  1,936,574  2,862,489  2,874,948 
Portfolio loans9,763,967  10,232,317  10,493,535  20,008,983  19,939,245 
Goodwill696,600  696,600  696,600  1,579,891  1,579,891 
Other intangibles64,098  61,884  59,690  153,191  147,139 
Deposits10,251,725  10,502,710  11,043,438  20,538,204  20,623,233 
Municipal deposits (included above)1,391,221  1,297,244  1,751,012  1,585,076  1,775,472 
Borrowings2,328,576  2,661,838  3,453,783  4,991,210  4,927,594 
Stockholders’ equity1,888,613  1,931,383  1,971,480  4,240,178  4,273,755 
Tangible common equity 11,127,915  1,172,899  1,215,190  2,367,876  2,407,700 
Quarterly Average Balances         
Total assets14,015,953  14,704,793  15,661,514  29,277,502  30,018,289 
Tangible assets 113,253,877  13,944,946  14,904,016  27,567,351  28,287,337 
Loans, gross:         
Commercial real estate (includes multi-family)4,190,817  4,396,281  4,443,142  8,839,256  9,028,849 
Acquisition, development and construction237,451  251,404  229,242  246,141  267,638 
Commercial and industrial:         
Traditional commercial and industrial1,410,354  1,497,005  1,631,436  1,911,450  1,933,323 
Asset-based lending2713,438  737,039  740,037  781,732  781,392 
Payroll finance2217,031  225,080  229,522  250,673  229,920 
Warehouse lending2379,978  430,312  607,994  564,593  495,133 
Factored receivables2184,859  181,499  191,749  224,966  217,865 
Equipment financing2595,751  660,404  687,254  677,271  689,493 
Public sector finance2370,253  441,456  476,525  480,800  653,344 
Total commercial and industrial3,871,664  4,172,795  4,564,517  4,891,485  5,000,470 
Residential mortgage700,934  697,441  686,820  5,168,622  4,977,191 
Consumer280,650  268,502  262,693  372,981  361,752 
Loans, total39,281,516  9,786,423  10,186,414  19,518,485  19,635,900 
Securities (taxable)2,016,752  2,142,168  2,483,718  3,840,147  3,997,542 
Securities (non-taxable)1,256,906  1,292,367  1,432,358  2,086,677  2,604,633 
Other interest earning assets334,404  341,895  368,630  598,439  595,847 
Total earning assets12,889,578  13,562,853  14,471,120  26,043,748  26,833,922 
Deposits:         
Non-interest bearing demand3,177,448  3,185,506  3,042,392  4,043,213  3,971,079 
Interest bearing demand1,950,332  1,973,498  2,298,645  3,862,461  3,941,749 
Savings (including mortgage escrow funds)797,386  816,092  825,620  2,871,885  2,917,624 
Money market3,681,962  3,725,257  3,889,780  7,324,196  7,393,335 
Certificates of deposit579,487  584,996  634,569  2,382,102  2,464,360 
Total deposits and mortgage escrow10,186,615  10,285,349  10,691,006  20,483,857  20,688,147 
Borrowings1,799,204  2,313,992  2,779,143  4,121,605  4,597,903 
Stockholders’ equity1,869,085  1,913,933  1,955,252  4,235,739  4,243,897 
Tangible common equity 11,107,009  1,154,086  1,197,754  2,386,245  2,373,794 
          
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 Data3/31/2017 6/30/2017 9/30/2017 12/31/2017 3/31/2018
Basic earnings (loss) per share$0.29  $0.31  $0.33  $(0.16) $0.43 
Diluted earnings (loss) per share0.29  0.31  0.33  (0.16) 0.43 
Adjusted diluted earnings per share, non-GAAP 10.31  0.33  0.35  0.39  0.45 
Dividends declared per common share0.07  0.07  0.07  0.07  0.07 
Book value per share13.93  14.24  14.52  18.24  18.34 
Tangible book value per share18.32  8.65  8.95  10.53  10.68 
Shares of common stock o/s135,604,435  135,658,226  135,807,544  224,782,694  225,466,266 
Basic weighted average common shares o/s135,163,347  135,317,866  135,346,791  223,501,073  224,730,686 
Diluted weighted average common shares o/s135,811,721  135,922,897  135,950,160  224,055,991  225,264,147 
Performance Ratios (annualized)         
Return on average assets1.13% 1.16% 1.14% (0.48)% 1.31%
Return on average equity8.48  8.89  9.10  (3.30) 9.26 
Return on average tangible assets1.20  1.22  1.19  (0.51) 1.39 
Return on avg tangible common equity14.31  14.74  14.86  (5.87) 16.55 
Return on average tangible assets, adjusted 11.27  1.28  1.27  1.25  1.45 
Return on avg tangible common equity, adjusted 115.19  15.43  15.85  14.49  17.24 
Operating efficiency ratio, as adjusted 143.7  42.0  40.6  41.4  40.3 
Analysis of Net Interest Income         
Accretion income on acquired loans$3,482  $2,888  $3,397  $33,726  $30,340 
Yield on loans4.57% 4.58% 4.67% 4.77% 4.85%
Yield on investment securities - tax equivalent 22.97  2.93  2.87  3.03  2.85 
Yield on interest earning assets - tax equivalent 24.09  4.09  4.12  4.32  4.31 
Cost of interest bearing deposits0.55  0.62  0.69  0.54  0.59 
Cost of total deposits0.38  0.43  0.50  0.43  0.47 
Cost of borrowings1.74  1.75  1.75  1.94  2.01 
Cost of interest bearing liabilities0.79  0.89  0.97  0.82  0.89 
Net interest rate spread - tax equivalent basis 23.30  3.20  3.15  3.50  3.42 
Net interest margin - GAAP basis3.42  3.35  3.29  3.57  3.54 
Net interest margin - tax equivalent basis 23.55  3.47  3.42  3.67  3.60 
Capital         
Tier 1 leverage ratio - Company 38.89% 8.72% 8.42% 9.39% 9.39%
Tier 1 leverage ratio - Bank only 38.99  8.89  8.49  10.10  10.01 
Tier 1 risk-based capital ratio - Bank only 310.79  10.67  10.19  13.95  14.30 
Total risk-based capital ratio - Bank only 312.95  12.76  12.16  15.21  15.59 
Tangible equity to tangible assets - Company 18.12  8.02  7.58  8.27  8.38 
Condensed Five Quarter Income Statement         
Interest and dividend income$126,000  $134,263  $145,692  $276,495  $281,346 
Interest expense17,210  21,005  25,619  42,471  46,976 
Net interest income108,790  113,258  120,073  234,024  234,370 
Provision for loan losses4,500  4,500  5,000  12,000  13,000 
Net interest income after provision for loan losses104,290  108,758  115,073  222,024  221,370 
Non-interest income12,836  13,618  13,988  23,762  18,707 
Non-interest expense60,350  59,657  62,617  250,746  111,749 
Income (loss) before income tax expense56,776  62,719  66,444  (4,960) 128,328 
Income tax expense17,709  20,319  21,592  28,319  29,456 
Net income (loss)$39,067  $42,400  $44,852  $(33,279) $98,872 
          
1 See a reconciliation of non-GAAP financial measures beginning on page 17.
2 Tax equivalent basis represents interest income earned on tax exempt securities divided by the applicable Federal tax rate of 35% in 2017 and 21% in 2018.
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 Forward3/31/2017 6/30/2017 9/30/2017 12/31/2017 3/31/2018
Balance, beginning of period$63,622  $66,939  $70,151  $72,128  $77,907 
Provision for loan losses4,500  4,500  5,000  12,000  13,000 
Loan charge-offs1:         
Traditional commercial & industrial(687) (164) (68) (4,570) (3,572)
Asset based lending         
Payroll finance    (188)    
Factored receivables(296) (12) (564) (110) (3)
Equipment financing(471) (610) (741) (1,343) (4,199)
Commercial real estate(83) (944) (1,345) (7) (1,353)
Acquisition development & construction  (22) (5)    
Residential mortgage(158) (120) (389) (193) (39)
Consumer(114) (417) (156) (408) (125)
Total charge offs(1,809) (2,289) (3,456) (6,631) (9,291)
Recoveries of loans previously charged-off1:         
Traditional commercial & industrial139  523  316  164  214 
Asset-based lending3  1  1     
Payroll finance    1  5  22 
Factored receivables16  2  5    3 
Equipment financing140  146  45  56  72 
Commercial real estate2  98  17  46  16 
Acquisition development & construction136  133       
Residential mortgage149  10    2  15 
Consumer41  88  48  137  131 
Total recoveries626  1,001  433  410  476 
Net loan charge-offs(1,183) (1,288) (3,023) (6,221) (8,815)
Balance, end of period$66,939  $70,151  $72,128  $77,907  $82,092 
Asset Quality Data and Ratios         
Non-performing loans (“NPLs”) non-accrual$72,136  $70,416  $69,060  $186,357  $181,745 
NPLs still accruing788  935  392  856  301 
Total NPLs72,924  71,351  69,452  187,213  182,046 
Other real estate owned9,632  10,198  11,697  27,095  24,493 
Non-performing assets (“NPAs”)$82,556  $81,549  $81,149  $214,308  $206,539 
Loans 30 to 89 days past due$15,611  $15,070  $21,491  $53,533  $59,818 
Net charge-offs as a % of average loans (annualized)0.05% 0.05% 0.12% 0.13% 0.18%
NPLs as a % of total loans0.75  0.70  0.66  0.94  0.91 
NPAs as a % of total assets0.56  0.53  0.48  0.71  0.68 
Allowance for loan losses as a % of NPLs91.8  98.3  103.9  41.6  45.1 
Allowance for loan losses as a % of total loans0.69  0.69  0.69  0.39  0.41 
Special mention loans$110,832  $102,996  $117,984  $136,558  $101,904 
Substandard loans101,496  97,476  104,205  232,491  245,910 
Doubtful loans902  895  795  764  968 
          
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
 December 31, 2017 March 31, 2018
 Average Interest Yield/
Rate
 Average Interest Yield/
Rate
balancebalance
 (Dollars in thousands)
Interest earning assets:           
Traditional C&I and commercial finance loans$4,891,485  $60,452  4.9% $5,000,470  $60,873  4.94%
Commercial real estate (includes multi-family)8,839,256  102,789  4.61  9,028,849  103,281  4.64 
Acquisition, development and construction246,141  3,727  6.01  267,638  3,671  5.56 
Commercial loans13,976,882  166,968  4.74  14,296,957  167,825  4.76 
Consumer loans372,981  5,103  5.43  361,752  4,411  4.95 
Residential mortgage loans5,168,622  62,381  4.83  4,977,191  62,379  5.01 
Total gross loans 119,518,485  234,452  4.77  19,635,900  234,615  4.85 
Securities taxable3,840,147  24,743  2.56  3,997,542  27,061  2.75 
Securities non-taxable2,086,677  20,453  3.92  2,604,633  19,382  2.98 
Interest earning deposits361,825  873  0.96  305,270  828  1.10 
FHLB and Federal Reserve Bank Stock236,614  3,132  5.25  290,577  3,530  4.93 
Total securities and other earning assets6,525,263  49,201  2.99  7,198,022  50,801  2.86 
Total interest earning assets26,043,748  283,653  4.32  26,833,922  285,416  4.31 
Non-interest earning assets3,233,754      3,184,367     
Total assets$29,277,502      $30,018,289     
Interest bearing liabilities:           
Demand and savings 2 deposits$6,734,346  $5,904  0.35% $6,859,373  $7,173  0.42%
Money market deposits7,324,196  10,790  0.58  7,393,335  10,912  0.60 
Certificates of deposit2,382,102  5,611  0.93  2,464,360  6,121  1.01 
Total interest bearing deposits16,440,644  22,305  0.54  16,717,068  24,206  0.59 
Senior notes276,051  2,759  3.97  278,181  2,740  3.94 
Other borrowings3,672,874  15,055  1.63  4,146,987  17,678  1.73 
Subordinated notes172,680  2,352  5.45  172,735  2,352  5.45 
Total borrowings4,121,605  20,166  1.94  4,597,903  22,770  2.01 
Total interest bearing liabilities20,562,249  42,471  0.82  21,314,971  46,976  0.89 
Non-interest bearing deposits4,043,213      3,971,079     
Other non-interest bearing liabilities436,301      488,342     
Total liabilities25,041,763      25,774,392     
Stockholders’ equity4,235,739      4,243,897     
Total liabilities and stockholders’ equity$29,277,502      $30,018,289     
Net interest rate spread 3    3.50%     3.42%
Net interest earning assets 4$5,481,499      $5,518,951     
Net interest margin - tax equivalent  241,182  3.67%   238,440  3.60%
Less tax equivalent adjustment  (7,158)     (4,070)  
Net interest income  $234,024      $234,370   
Ratio of interest earning assets to interest bearing liabilities126.7%     125.9%    
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
 March 31, 2017 March 31, 2018
 Average Interest Yield/
Rate
 Average Interest Yield/
Rate
balancebalance
 (Dollars in thousands)
Interest earning assets:           
Traditional C&I and commercial finance loans$3,871,664  $48,237  5.05% $5,000,470  $60,873  4.94%
Commercial real estate (includes multi-family)4,190,817  43,186  4.18  9,028,849  103,281  4.64 
Acquisition, development and construction237,451  3,125  5.34  267,638  3,671  5.56 
Commercial loans8,299,932  94,548  4.62  14,296,957  167,825  4.76 
Consumer loans280,650  3,132  4.53  361,752  4,411  4.95 
Residential mortgage loans700,934  6,890  3.93  4,977,191  62,379  5.01 
Total gross loans 19,281,516  104,570  4.57  19,635,900  234,615  4.85 
Securities taxable2,016,752  12,282  2.47  3,997,542  27,061  2.75 
Securities non-taxable1,256,906  11,720  3.73  2,604,633  19,382  2.98 
Interest earning deposits210,800  254  0.49  305,270  828  1.10 
FHLB and Federal Reserve Bank stock123,604  1,276  4.19  290,577  3,530  4.93 
Total securities and other earning assets3,608,062  25,532  2.87  7,198,022  50,801  2.86 
Total interest earning assets12,889,578  130,102  4.09  26,833,922  285,416  4.31 
Non-interest earning assets1,126,375      3,184,367     
Total assets$14,015,953      $30,018,289     
Interest bearing liabilities:           
Demand and savings 2 deposits$2,747,718  $3,186  0.47  $6,859,373  $7,173  0.42 
Money market deposits3,681,962  4,944  0.54  7,393,335  10,912  0.60 
Certificates of deposit579,487  1,378  0.96  2,464,360  6,121  1.01 
Total interest bearing deposits7,009,167  9,508  0.55  16,717,068  24,206  0.59 
Senior notes76,497  1,141  6.05  278,181  2,740  3.94 
Other borrowings1,550,183  4,212  1.10  4,146,987  17,678  1.73 
Subordinated notes172,524  2,349  5.45  172,735  2,352  5.45 
Total borrowings1,799,204  7,702  1.74  4,597,903  22,770  2.01 
Total interest bearing liabilities8,808,371  17,210  0.79  21,314,971  46,976  0.89 
Non-interest bearing deposits3,177,448      3,971,079     
Other non-interest bearing liabilities161,049      488,342     
Total liabilities12,146,868      25,774,392     
Stockholders’ equity1,869,085      4,243,897     
Total liabilities and stockholders’ equity$14,015,953      $30,018,289     
Net interest rate spread 3    3.30%     3.42%
Net interest earning assets 4$4,081,207      $5,518,951     
Net interest margin - tax equivalent  112,892  3.55%   238,440  3.60%
Less tax equivalent adjustment  (4,102)     (4,070)  
Net interest income  $108,790      $234,370   
Ratio of interest earning assets to interest bearing liabilities146.3%     125.9%    
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.
  

16

 
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data) 
 
The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors.  See legend beginning on page 19.
 
 As of or for the Quarter Ended
 3/31/2017 6/30/2017 9/30/2017 12/31/2017 3/31/2018
 
The following table shows the reconciliation of stockholders’ equity to tangible common equity and the tangible common equity ratio1:
          
Total assets$14,659,337  $15,376,676  $16,780,097  $30,359,541  $30,468,780 
Goodwill and other intangibles(760,698) (758,484) (756,290) (1,733,082) (1,727,030)
Tangible assets13,898,639  14,618,192  16,023,807  28,626,459  28,741,750 
Stockholders’ equity1,888,613  1,931,383  1,971,480  4,240,178  4,273,755 
Preferred stock      (139,220) (139,025)
Goodwill and other intangibles(760,698) (758,484) (756,290) (1,733,082) (1,727,030)
Tangible common stockholders’ equity1,127,915  1,172,899  1,215,190  2,367,876  2,407,700 
Common stock outstanding at period end135,604,435  135,658,226  135,807,544  224,782,694  225,466,266 
Common stockholders’ equity as a % of total assets12.88% 12.56% 11.75% 13.51% 13.57%
Book value per common share$13.93  $14.24  $14.52  $18.24  $18.34 
Tangible common equity as a % of tangible assets8.12% 8.02% 7.58% 8.27% 8.38%
Tangible book value per common share$8.32  $8.65  $8.95  $10.53  $10.68 
 
The following table shows the reconciliation of reported return on average tangible common equity and adjusted return on average tangible common equity2:
          
Average stockholders’ equity$1,869,085  $1,913,933  $1,955,252  $4,235,739  $4,243,897 
Average preferred stock      (139,343) (139,151)
Average goodwill and other intangibles(762,076) (759,847) (757,498) (1,710,151) (1,730,952)
Average tangible common stockholders’ equity1,107,009  1,154,086  1,197,754  2,386,245  2,373,794 
Net income (loss) available to common39,067  42,400  44,852  (35,281) 96,873 
Net income (loss), if annualized158,438  170,066  177,945  (139,974) 392,874 
Reported return on avg tangible common equity14.31% 14.74% 14.86% (5.87)% 16.55%
Adjusted net income (see reconciliation on page 18)$41,461  $44,393  $47,865  $87,171  $100,880 
Annualized adjusted net income168,147  178,060  189,899  345,841  409,124 
Adjusted return on average tangible common equity15.19% 15.43% 15.85% 14.49% 17.24%
          
The following table shows the reconciliation of reported return on average tangible assets and adjusted return on average tangible assets3:
          
Average assets$14,015,953  $14,704,793  $15,661,514  $29,277,502  $30,018,289 
Average goodwill and other intangibles(762,076) (759,847) (757,498) (1,710,151) (1,730,952)
Average tangible assets13,253,877  13,944,946  14,904,016  27,567,351  28,287,337 
Net income (loss)39,067  42,400  44,852  (35,281) 96,873 
Net income (loss), if annualized158,438  170,066  177,945  (139,974) 392,874 
Reported return on average tangible assets1.20% 1.22% 1.19% (0.51)% 1.39%
Adjusted net income (see reconciliation on page 18)$41,461  $44,393  $47,865  $87,171  $100,880 
Annualized adjusted net income168,147  178,060  189,899  345,841  409,124 
Adjusted return on average tangible assets1.27% 1.28% 1.27% 1.25% 1.45%
               
               

17

 
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
 
The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors.  See legend beginning on page 19.
 
 As of and for the Quarter Ended
 3/31/2017 6/30/2017 9/30/2017 12/31/2017 3/31/2018
 
The following table shows the reconciliation of the reported operating efficiency ratio and adjusted operating efficiency ratio4:
          
Net interest income$108,790  $113,258  $120,073  $234,024  $234,370 
Non-interest income12,836  13,618  13,988  23,762  18,707 
Total net revenue121,626  126,876  134,061  257,786  253,077 
Tax equivalent adjustment on securities4,102  4,195  4,599  7,158  4,070 
Net loss on sale of securities