Press Release

Sterling Bancorp announces record results for the second quarter of 2018 with earnings per share available to common stockholders of $0.50 (as reported) and $0.50 (as adjusted), representing growth of 61.3% and 51.5% over the same quarter a year ago

Company Release - 7/24/2018 4:10 PM ET

Key Performance Highlights for the Three Months ended June 30, 2018 vs. June 30, 2017

    
($ in thousands except per share amounts)GAAP / As Reported Non-GAAP / As Adjusted1
 6/30/2017 6/30/2018 Change 
% / bps
 6/30/2017 6/30/2018 Change 
% / bps
Total revenue2$126,876  $284,084  123.9% $131,301  $276,806  110.8%
Net income available to common42,400  112,245  164.7  44,393  112,868  154.2 
Diluted EPS available to common0.31  0.50  61.3  0.33  0.50  51.5 
Net interest margin33.35% 3.56% 21  3.47% 3.62% 15 
Return on average tangible common equity14.74  18.68  394  15.43  18.79  336 
Return on average tangible assets1.22  1.54  32  1.28  1.55  27 
Operating efficiency ratio447.0  44.0  (300) 42.0  38.3  (370)
                  
  • Record net income available to common stockholders of $112.2 million (as reported) and $112.9 million (as adjusted).
  • Total portfolio loans, gross were $20.7 billion and total deposits were $21.0 billion at June 30, 2018.
  • Completed acquisition of Advantage Funding Management Co., Inc., including $457.6 million loan portfolio.
  • Record low operating efficiency ratios of 44.0% (reported) and 38.3% (as adjusted).
  • Operating leverage ratio of 2.9x relative to the same quarter a year ago.
  • Tangible book value per common share1 of $10.91 at June 30, 2018; growth of 26.1% over the prior year.

Key Performance Highlights for the Three Months ended June 30, 2018 vs. March 31, 2018

    
($ in thousands except per share amounts)GAAP / As Reported Non-GAAP / As Adjusted1
 3/31/2018 6/30/2018 Change  % / bps 3/31/2018 6/30/2018 Change 
% / bps
Total revenue2$253,077  $284,084  12.3% $262,568  $276,806  5.4%
Net income available to common96,873  112,245  15.9  100,880  112,868  11.9 
Diluted EPS available to common0.43  0.50  16.3  0.45  0.50  11.1 
Net interest margin33.54% 3.56% 2  3.60% 3.62% 2 
Return on average tangible common equity16.55  18.68  213  17.24  18.79  155 
Return on average tangible assets1.39  1.54  15  1.45  1.55  10 
Operating efficiency ratio444.2  44.0  (20) 40.3  38.3  (200)
                  
  • Growth in adjusted diluted earnings per share available to common stockholders of 11.1% over the linked quarter.
  • Loan portfolio continues to transition; growth in average commercial loan balances of $897.2 million over linked quarter.
  • Merger integration is on-track; annualized run-rate operating expenses of $424.9 million1 in the second quarter.
  • Total deposit growth of $342.7 million; cost of total deposits increased eight basis points to 0.55%.
  • Consolidated six financial centers, one back-office location and completed sale of Lake Success headquarters.

1. Non-GAAP / as adjusted measures are defined in the non-GAAP tables beginning on page 17.
2. Total revenue is equal to net interest income plus non-interest income. Total revenue as adjusted is equal to tax equivalent net interest income
plus non-interest income excluding securities gains and losses.
3. Net interest margin is equal to net interest income divided by average interest earning assets. Net interest margin as adjusted, or tax equivalent
net interest margin, is equal to net interest income plus the tax equivalent adjustment for tax exempt securities divided by average interest
earning assets.
4. Operating efficiency ratio is a non-GAAP measure. See page 21 for an explanation of the operating efficiency ratio.

1

MONTEBELLO, N.Y., July 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 and six months ended June 30, 2018. Net income available to common stockholders for the quarter ended June 30, 2018 was $112.2 million, or $0.50 per diluted share, compared to net income available to common stockholders of $96.9 million, or $0.43 per diluted share, for the linked quarter ended March 31, 2018, and net income available to common stockholders of $42.4 million, or $0.31 per diluted share, for the three months ended June 30, 2017.

Net income available to common stockholders for the six months ended June 30, 2018 was $209.1 million, or $0.93 per diluted share, compared to net income available to common stockholders of $81.5 million, or $0.60 per diluted share, for the same period in 2017.

President’s Comments
Jack Kopnisky, President and Chief Executive Officer, commented: “We continued our strong operating performance in the second quarter of 2018 across all metrics with record adjusted net income available to common stockholders of $112.2 million and adjusted diluted earnings per share available to common stockholders of $0.50, which represents growth of 154.2% and 51.5%, respectively, over the second quarter of 2017. Our adjusted return on average tangible assets was 1.55% and our adjusted return on average tangible common equity was 18.79%. As of June 30, 2018, our total assets were $31.5 billion, gross portfolio loans were $20.7 billion and total deposits were $21.0 billion.

“We continued to execute our strategy of transitioning our earning assets and balance sheet to a more optimal mix. The average balance of commercial loans increased by $897.2 million in the second quarter, while the average balance of residential mortgage loans decreased by $175.6 million. We will continue to replace lower yielding assets that we acquired in the merger with Astoria Financial Corporation (“Astoria” and the “Astoria Merger”) with higher yielding, more diversified commercial loans that we originate through our teams or acquire in opportunistic situations, such as the acquisition of Advantage Funding Management Co., Inc. (“Advantage Funding”), which we completed in April 2018. We anticipate this strategy will benefit our tax equivalent net interest margin, which was 3.21% in the second quarter of 2018 (excluding the impact of accretion income on acquired loans), and represented an increase of six basis points over the linked quarter.

“We are ahead of plan on our integration of Astoria, and to date we have made significant progress merging the personnel, systems, facilities and all other areas of Astoria’s operations with our own. Excluding the amortization of intangibles, operating expenses were $105.9 million in the second quarter, which represented an annual run-rate of $424.9 million. Our adjusted operating efficiency ratio reached a record low of 38.3%. 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 2.9x. 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 8.28% and our estimated Tier 1 Leverage ratio was 9.32% at June 30, 2018; we have ample capital to support our strategy. Our tangible book value per common share was $10.91, which represented an increase of 26.1% over a year ago.

“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 August 20, 2018 to holders of record as of August 6, 2018.”

Reconciliation of GAAP Results to Adjusted Results (non-GAAP)
The Company’s GAAP net income available to common stockholders of $112.2 million, or $0.50 per diluted share, for the second quarter of 2018, included the following items:

  • a pre-tax gain of $11.8 million from the sale of Astoria’s Lake Success headquarters;
  • a pre-tax charge of $8.7 million to vacate a back-office location which included a data operations center and was consolidated as a result of the Astoria Merger.  This is the final anticipated charge associated with the Astoria Merger;
  • a pre-tax charge of $4.4 million related to the acquisition of Advantage Funding for professional fees, severance, retention, systems integration expense and facilities consolidation;
  • a pre-tax loss of $425.0 thousand on sale of available for sale securities; and
  • the pre-tax amortization of non-compete agreements and acquired customer list intangible assets of $295 thousand.

2

Excluding the impact of these items, adjusted net income available to common stockholders was $112.9 million, or $0.50 per diluted share, for the three months ended June 30, 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
 6/30/2017 3/31/2018 6/30/2018 Y-o-Y Linked Qtr
Interest and dividend income$134,263  $281,346  $304,906  127.1% 8.4%
Interest expense21,005  46,976  58,690  179.4  24.9 
Net interest income$113,258  $234,370  $246,216  117.4  5.1 
          
Accretion income on acquired loans$2,888  $30,340  $28,010  869.9% (7.7)%
Yield on loans4.58% 4.85% 5.01% 43  16 
Tax equivalent yield on investment securities2.93  2.85  2.88  (5) 3 
Tax equivalent yield on interest earning assets4.09  4.31  4.47  38  16 
Cost of total deposits0.43  0.47  0.55  12  8 
Cost of interest bearing deposits0.62  0.59  0.68  6  9 
Cost of borrowings1.75  2.01  2.23  48  22 
Cost of interest bearing liabilities0.89  0.89  1.06  17  17 
Tax equivalent net interest margin53.47  3.60  3.62  15  2 
          
Average loans, including loans held for sale$9,786,423  $19,635,900  $20,339,964  107.8% 3.6%
Average investment securities3,434,535  6,602,175  6,751,528  96.6  2.3 
Average total interest earning assets13,562,853  26,833,922  27,757,380  104.7  3.4 
Average deposits and mortgage escrow10,285,349  20,688,147  20,768,669  101.9  0.4 
               

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.

Second quarter 2018 compared with second quarter 2017
Net interest income was $246.2 million, an increase of $133.0 million compared to the second quarter of 2017.  This was mainly due to an increase in average loans outstanding between the periods as a result of the Astoria Merger, loans originated through our commercial banking teams and the Advantage Funding acquisition. Other key components of the changes in net interest income and net interest margin were the following:

  • The yield on loans was 5.01% compared to 4.58% for the three months ended June 30, 2017.  The increase in yield on loans was mainly due to an increase in accretion income on acquired loans, which was $28.0 million in the second quarter of 2018 compared to $2.9 million in the second quarter of 2017.
  • Average commercial loans6 were $15.2 billion compared to $8.8 billion in the second quarter of 2017, an increase of $6.4 billion or 72.3%.
  • The tax equivalent yield on investment securities decreased five basis points to 2.88%.  This was mainly due to the change in the federal income tax rate resulting from the Tax Cuts and Jobs Act of 2017 as the tax equivalent adjustment assumed a 35% federal tax rate in 2017 compared to 21% in 2018. Average tax exempt securities balances grew to $2.6 billion for the quarter ended June 30, 2018, compared to $1.3 billion in the second quarter of 2017. Average investment securities were $6.8 billion, or 24.3%, of average earning assets for the second quarter of 2018 compared to $3.4 billion, or 25.3%, of average earning assets for the second quarter of 2017.
  • The tax equivalent yield on interest earning assets increased 38 basis points between the periods to 4.47%, mainly due to higher accretion income on acquired loans, as described above.

6 Commercial loans include all C&I loans, commercial real estate (including multi-family) and acquisition development and construction loans.

3

  • The cost of total deposits was 55 basis points and the cost of borrowings was 2.23%, compared to 43 basis points and 1.75%, respectively, for the same period a year ago.
  • The total cost of interest bearing liabilities increased 17 basis points to 1.06% for the second quarter of 2018 compared to 0.89% for the second quarter of 2017.  The 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 3.62% for the second quarter of 2018 compared to 3.47% for the second 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 3.21% for the second quarter of 2018 compared to 3.39% in the second 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, the change in tax equivalent adjustment rate due to the decrease in the federal income tax rate, and the increase in the cost of interest bearing liabilities.

Second quarter 2018 compared with linked quarter ended March 31, 2018

Net interest income increased $11.8 million compared to the linked quarter. The increase in net interest income was mainly due to higher average balances of commercial loans and investment securities and higher prepayment penalties, which was partially offset by a $2.3 million decline in accretion income on acquired loans.  Key components of the changes in net interest income compared to the linked quarter were the following:

  • The yield on loans was 5.01% compared to 4.85% for the linked quarter, an increase of 16 basis points.  This was mainly due to the Advantage Funding acquisition; loan prepayment activity, which increased interest income on commercial loans by $2.5 million; and repricing of floating rate loans given increases in interest rates. Accretion income on acquired loans was $28.0 million in the second quarter of 2018 compared to $30.3 million in the linked quarter.
  • The average balance of portfolio loans increased $704.1 million and the average balance of commercial loans increased $897.2 million compared to the linked quarter. The average balance of residential mortgage loans declined $175.6 million compared to the linked quarter, mainly due to repayments.  The increase in the average balance of commercial loans was due to organic growth and the Advantage Funding acquisition, which represented $457.8 million of the increase in the average balance.
  • The tax equivalent yield on investment securities increased three basis points to 2.88% in the second quarter of 2018, mainly due to higher market interest rates on the acquisition of securities. The average balance of investment securities increased $149.4 million compared to the linked quarter.
  • The tax equivalent yield on interest earning assets increased 16 basis points in the second quarter of 2018 to 4.47% compared to 4.31% in the linked quarter.
  • The cost of total deposits increased eight basis points to 55 basis points in the quarter. The total cost of borrowings increased to 2.23% compared to 2.01% in the linked quarter, mainly due to higher rates paid on borrowings from the Federal Home Loan Bank of New York given increases in interest rates.
  • Average interest bearing deposits increased by $90.9 million and average borrowings increased $834.7 million relative to the linked quarter. Total interest expense increased by $11.7 million over the linked quarter.

The tax equivalent net interest margin was 3.62% compared to 3.60% in the linked quarter. Excluding accretion income on acquired loans, tax equivalent net interest margin was 3.15% in the linked quarter compared to 3.21% in the second quarter of 2018. The increase in tax equivalent net interest margin excluding accretion income was mainly due to the acquisition of Advantage Funding and the increase in loan prepayment activity. The composition of the Company’s earning assets continued to shift in the second quarter of 2018, as the average balance of residential mortgage loans decreased by $175.6 million and represented 22.5% of total portfolio loans compared to 24.5% at March 31, 2018. 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.

4

Non-interest Income

($ in thousands)For the three months ended Change %
 6/30/2017 3/31/2018 6/30/2018 Y-o-Y Linked Qtr
Total non-interest income$13,618  $18,707  $37,868  178.1% 102.4%
Net (loss) on sale of securities(230) (5,421) (425) 84.8  (92.2)
Net gain on sale of Lake Success facility    11,797  NM  NM 
Adjusted non-interest income$13,848  $24,128  $26,496  91.3  9.8 
                  

Second quarter 2018 compared with second quarter 2017
Excluding net (loss) on sale of securities and net gain on sale of the Lake Success facility, adjusted non-interest income increased $12.6 million in the second quarter of 2018 to $26.5 million, compared to $13.8 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 $2.6 million; investment management fees increased by $1.8 million; and safe deposit box rental income increased by $615 thousand, which is included in other non-interest income. In addition, fee income generated on payroll finance loans increased $1.0 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 $2.2 million over the year ago period.

The sale of the Lake Success facility was completed in April 2018. In connection with the sale, we leased back the facility for 12 months and realized a pre-tax gain of $11.8 million.

Second quarter 2018 compared with linked quarter ended March 31, 2018
Excluding net (loss) on sale of securities and net gain on sale of Lake Success facility, adjusted non-interest income increased approximately $2.4 million from $24.1 million in the linked quarter to $26.5 million in the second quarter of 2018. Increases in other loan fees, including letters of credit and loan swap fees, was the main contributor to the increase between the linked periods.

Non-interest Expense

($ in thousands)For the three months ended Change % / bps
 6/30/2017 3/31/2018 6/30/2018 Y-o-Y Linked Qtr
Compensation and benefits$31,394  $54,680  $56,159  78.9% 2.7%
Stock-based compensation plans1,897  2,854  3,336  75.9  16.9 
Occupancy and office operations8,833  17,460  17,939  103.1  2.7 
Information technology2,421  11,718  9,997  312.9  (14.7)
Amortization of intangible assets2,187  6,052  5,865  168.2  (3.1)
FDIC insurance and regulatory assessments2,034  5,347  5,495  170.2  2.8 
Other real estate owned, net (“OREO”)112  364  (226) (301.8) (162.1)
Merger-related expenses1,766      NM  NM 
Charge for asset write-downs, systems integration, retention and severance603    13,132  NM  NM 
Other expenses8,410  13,274  13,231  57.3  (0.3)
Total non-interest expense$59,657  $111,749  $124,928  109.4  11.8 
Full time equivalent employees (“FTEs”) at period end997  2,016  2,037  104.3  1.0 
Financial centers at period end40  127  121  202.5  (4.7)
Operating efficiency ratio, as reported47.0% 44.2% 44.0% 300  20 
Operating efficiency ratio, as adjusted642.0  40.3  38.3  370  200 

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

Second quarter 2018 compared with second quarter 2017
Total non-interest expense increased $65.3 million relative to the second quarter of 2017. Key components of the change in non-interest expense were the following:

5

  • Compensation and benefits increased $24.8 million between the periods.  Total FTEs increased to 2,037 from 997, which was mainly due to the Astoria Merger and the continued hiring of commercial bankers and risk management personnel.
  • Occupancy and office operations increased $9.1 million mainly due to the financial centers and other locations acquired in the Astoria Merger.
  • Information technology expense increased $7.6 million between the periods.  The increase is mainly due to the Astoria Merger.  We anticipate this expense will decrease upon completion of our full systems conversion, which is scheduled for the third quarter of 2018.
  • Amortization of intangible assets increased $3.7 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 $5.5 million in the second quarter of 2018, compared to $2.0 million for the second quarter of 2017.  This was mainly due to growth in our total assets.
  • OREO expense, net declined $338 thousand to $226 thousand of income in the second quarter of 2018, compared to $112 thousand of expense for the second quarter of 2017.  In the second quarter of 2018, gain on sale of OREO was $811 thousand, which substantially offset OREO write-downs and maintenance expense.
  • Charge for asset write-downs, systems integration, retention and severance was $13.1 million compared to $603 thousand in the second quarter of 2017.  The charge in the second quarter of 2018 included an $8.7 million charge related to the Astoria Merger. This impairment charge had been identified at the time of the closing of the Astoria Merger; however, our consolidation strategy had not met the cease use requirements to record the impairment charge until this period. This charge is the final anticipated Astoria Merger-related item.  Since the announcement of the Astoria Merger, total merger-related expense has been an aggregate of $152.5 million, which is below the Company’s initial merger announcement date estimate of $165.0 million. The balance of the charge which was recorded in the second quarter of 2018 of $4.4 million was related to the Advantage Funding acquisition.  The charge included, professional fees, retention and severance, systems integration costs, and an impairment of a real estate lease assumed in the transaction.
  • Other expenses increased $4.8 million, mainly due to the Astoria Merger, and included communications expense, professional fees, operational losses, advertising and other.

Second quarter 2018 compared with linked quarter ended March 31, 2018
Total non-interest expense increased $13.2 million from $111.7 million in the linked quarter to $124.9 million in the second quarter of 2018. Key components of the change in non-interest expense were the following:

  • Compensation and benefits increased $1.5 million and was $56.2 million in the second quarter of 2018 compared to $54.7 million in the linked quarter.  This was mainly due to the addition of Advantage Funding personnel.
  • Occupancy and office operations increased $479 thousand mainly due to real estate taxes paid during the second quarter of 2018.
  • Information technology expense declined $1.7 million in the second quarter of 2018 compared to the linked quarter, mainly as a result of consolidation and termination of duplicative systems.
  • OREO expense declined $590 thousand in the second quarter of 2018 compared to the linked quarter and resulted in a gain, as described above.

Taxes
For the three months ended June 30, 2018, the Company earned pre-tax income of $146.2 million. We recorded income tax expense at 21.8% for the three months ended June 30, 2018, which resulted in an estimated effective tax rate of 22.50% for the six months ended June 30, 2018. In addition, we recorded a tax benefit as a discrete item related to stock-based compensation that vested in the six months ended June 30, 2018 of $1.5 million.  For the three months ended June 30, 2017, we recorded income tax expense at 32.50% and had an effective tax rate of 31.8% for the six months ended June 30, 2017.  We recorded a tax benefit of $806 thousand as a discrete item related to stock-based compensation that vested in the six months ended June 30, 2017.

The Company’s effective tax rate for full year 2018 is currently estimated at 22.50%, which is also the effective tax rate used for purposes of calculating adjusted earnings per share available to common stockholders for the three months and six months ended June 30, 2018.

6

Key Balance Sheet Highlights as of June 30, 2018

($ in thousands)As of Change % / bps
 6/30/2017 3/31/2018 6/30/2018 Y-o-Y Linked Qtr
Total assets$15,376,676  $30,468,780  $31,463,077  104.6% 3.3%
Total portfolio loans, gross10,232,317  19,939,245  20,674,493  102.1  3.7 
Commercial & industrial (“C&I”) loans4,619,789  5,341,548  6,288,683  36.1  17.7 
Commercial real estate loans4,430,985  9,099,606  9,160,760  106.7  0.7 
Acquisition, development and construction loans223,713  262,591  236,915  5.9  (9.8)
Total commercial loans9,274,487  14,703,745  15,686,358  69.1  6.7 
Residential mortgage loans692,562  4,883,452  4,652,501  571.8  (4.7)
Total deposits10,502,710  20,623,233  20,965,889  99.6  1.7 
Core deposits 89,593,150  19,538,410  19,870,947  107.1  1.7 
Investment securities3,552,176  6,635,286  6,789,246  91.1  2.3 
Total borrowings2,661,838  4,927,594  5,537,537  108.0  12.4 
Loans to deposits97.4% 96.7% 98.6% 120  190 
Core deposits to total deposits87.9  94.7  94.8  690  10 
Investment securities to total assets23.1  21.8  21.6  (150) (20)

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

Highlights in balance sheet items as of June 30, 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 30.4%, commercial real estate loans (which include multi-family loans) represented 44.3%, consumer and residential mortgage loans combined represented 24.1%, and acquisition, development and construction loans represented 1.2% of the total loan portfolio.  Loan growth in the year-over-year period was mainly a result of the Astoria Merger, originations by our commercial banking teams and the Advantage Funding acquisition.  Linked quarter comparisons are discussed below.
  • C&I loans grew $947.1 million in the second quarter of 2018 compared to the linked quarter, which included $457.6 million of loans acquired in the Advantage Funding transaction.
  • Total commercial loans, which include all C&I loans, commercial real estate (including multi-family) and acquisition, development and construction loans, increased by $982.6 million in the linked quarter.  Excluding loans acquired in the Astoria Merger, commercial loans increased by $1.9 billion in the past twelve months.
  • Residential mortgage loans were $4.7 billion at June 30, 2018, compared to $4.9 billion at March 31, 2018.  The decline was mainly due to repayments of loans acquired in the Astoria Merger.
  • Total deposits at June 30, 2018 increased $342.7 million compared to March 31, 2018, and increased $10.5 billion over June 30, 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 June 30, 2018 increased $332.5 million compared to March 31, 2018. Core deposits increased $10.3 billion over June 30, 2017.
  • Municipal deposits at June 30, 2018 were $1.6 billion and experienced a seasonal decline of $122.7 million relative to March 31, 2018.
  • Investment securities increased by $154.0 million relative to March 31, 2018, and represented 21.6% of total assets at June 30, 2018.

7

Credit Quality

($ in thousands)For the three months ended Change % / bps
 6/30/2017 3/31/2018 6/30/2018 Y-o-Y Linked Qtr
Provision for loan losses$4,500  $13,000  $13,000  188.9% %
Net charge-offs1,288  8,815  9,066  603.9  2.8 
Allowance for loan losses70,151  82,092  86,026  22.6  4.8 
Non-performing loans71,351  182,046  190,975  167.7  4.9 
Loans 30 to 89 days past due15,070  59,818  73,441  387.3  22.8 
Annualized net charge-offs to average loans0.05% 0.18% 0.18% 13   
Allowance for loan losses to total loans0.69  0.41  0.42  (27) 1 
Allowance for loan losses to non-performing loans98.3  45.1  45.0  (5,330) (10)
               

Provision for loan losses was $13.0 million for the second quarter of 2018, unchanged from the linked quarter, and was $4.5 million in the same period a year ago. In the second quarter of 2018, provision for loan losses was $3.9 million in excess of net charge-offs of $9.1 million.  Allowance coverage ratios were 0.42% of total loans and 45.0% of non-performing loans at June 30, 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 increased by $8.9 million to $191.0 million at June 30, 2018 compared to the linked quarter.  The increase in non-performing loans was mainly due to the Advantage Funding acquisition and traditional C&I loans and commercial real estate loans that have matured and were over 90 days past due at June 30, 2018, which are in the process of being renewed and are expected to return to performing status.  Loans 30 to 89 days past due increased $13.6 million in the linked quarter; loans acquired from Advantage Funding represented $11.3 million of this increase.

Capital

($ in thousands, except share and per share data)As of Change % / bps
 6/30/2017 3/31/2018 6/30/2018 Y-o-Y Three
months
Total stockholders’ equity$1,931,383  $4,273,755  $4,352,735  125.4% 1.8%
Preferred stock  139,025  138,828  NM  (0.1)
Goodwill and intangible assets758,484  1,727,030  1,754,418  131.3  1.6 
Tangible common stockholders’ equity$1,172,899  $2,407,700  $2,459,489  109.7  2.2 
Common shares outstanding135,658,226  225,466,266  225,470,254  66.2   
Book value per common share$14.24  $18.34  $18.69  31.3  1.9 
Tangible book value per common share 98.65  10.68  10.91  26.1  2.2 
Tangible common equity to tangible assets 98.02% 8.38% 8.28% 26  (10)
Estimated Tier 1 leverage ratio - Company8.72  9.39  9.32  60  (7)
Estimated Tier 1 leverage ratio - Bank8.89  10.00  9.84  95  (16)

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

The increase in total stockholders’ equity of $79.0 million to $4.4 billion as of June 30, 2018 compared to March 31, 2018 was mainly due to earnings. The increase from net income available to common stockholders of $112.2 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 $20.5 million.

Total goodwill and other intangible assets were $1.8 billion at June 30, 2018, an increase of $27.4 million compared to March 31, 2018, which was due to the Advantage Funding acquisition partially offset by amortization of intangibles for the period.

For the quarter ended June 30, 2018, basic and diluted weighted average common shares outstanding increased to 225.1 million and 225.6 million, respectively, compared to 224.7 million and 225.3 million, respectively, for the quarter ended March 31, 2018.  The increase in the diluted weighted average shares was mainly due to stock-based compensation granted to new hires and the effect of grants issued during the first quarter of 2018. Total common shares outstanding at June 30, 2018 were approximately 225.5 million.

8

Tangible book value per share was $10.91 at June 30, 2018, which represented an increase of 26.1% over a year ago and an increase of 2.2% over March 31, 2018.

Conference Call Information
Sterling Bancorp will host a teleconference and webcast on Wednesday, July 25, 2018 at 1:00 PM 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 (866) 548-4713, Conference ID #1433450.  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, 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 and six months ended June 30, 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)
 
 6/30/2017 12/31/2017 6/30/2018
Assets:           
Cash and cash equivalents$282,167  $479,906  $445,189 
Investment securities3,552,176  6,474,561  6,789,246 
Loans held for sale  5,246  30,626 
Portfolio loans:     
Commercial and industrial (“C&I”)4,619,789  5,306,821  6,288,683 
Commercial real estate (including multi-family)4,430,985  8,998,419  9,160,760 
Acquisition, development and construction223,713  282,792  236,915 
Residential mortgage692,562  5,054,732  4,652,501 
Consumer265,268  366,219  335,634 
Total portfolio loans, gross10,232,317  20,008,983  20,674,493 
Allowance for loan losses(70,151) (77,907) (86,026)
Total portfolio loans, net10,162,166  19,931,076  20,588,467 
Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank Stock, at cost160,241  284,112  380,404 
Accrued interest receivable47,548  94,098  103,095 
Premises and equipment, net57,794  321,722  290,762 
Goodwill696,600  1,579,891  1,613,144 
Other intangibles61,884  153,191  141,274 
Bank owned life insurance202,911  651,638  657,637 
Other real estate owned10,198  27,095  20,264 
Other assets142,991  357,005  402,969 
Total assets$15,376,676  $30,359,541  $31,463,077 
Liabilities:     
Deposits$10,502,710  $20,538,204  $20,965,889 
FHLB borrowings2,290,000  4,510,123  5,067,492 
Other borrowings122,596  30,162  19,114 
Senior notes76,635  278,209  278,103 
Subordinated notes172,607  172,716  172,828 
Mortgage escrow funds16,431  122,641  130,629 
Other liabilities264,314  467,308  476,287 
Total liabilities13,445,293  26,119,363  27,110,342 
Stockholders’ equity:     
Preferred stock  139,220  138,828 
Common stock1,411  2,299  2,299 
Additional paid-in capital1,592,299  3,780,908  3,769,505 
Treasury stock(61,576) (58,039) (51,269)
Retained earnings415,617  401,956  592,953 
Accumulated other comprehensive (loss)(16,368) (26,166) (99,581)
Total stockholders’ equity1,931,383  4,240,178  4,352,735 
Total liabilities and stockholders’ equity$15,376,676  $30,359,541  $31,463,077 
      
Shares of common stock outstanding at period end135,658,226  224,782,694  225,470,254 
Book value per common share$14.24  $18.24  $18.69 
Tangible book value per common share18.65  10.53  10.91 
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 Six Months Ended
 6/30/2017 3/31/2018 6/30/2018 6/30/2017 6/30/2018
Interest and dividend income:                   
Loans and loan fees$111,840  $234,615  $254,253  $216,410  $488,868 
Securities taxable13,113  27,061  29,031  25,395  56,092 
Securities non-taxable7,791  15,312  15,403  15,409  30,715 
Other earning assets1,519  4,358  6,219  3,049  10,576 
Total interest and dividend income134,263  281,346  304,906  260,263  586,251 
Interest expense:         
Deposits10,905  24,206  28,464  20,413  52,671 
Borrowings10,100  22,770  30,226  17,802  52,996 
Total interest expense21,005  46,976  58,690  38,215  105,667 
Net interest income113,258  234,370  246,216  222,048  480,584 
Provision for loan losses4,500  13,000  13,000  9,000  26,000 
Net interest income after provision for loan losses108,758  221,370  233,216  213,048  454,584 
Non-interest income:         
Deposit fees and service charges3,249  7,003  6,985  6,584  13,988 
Accounts receivable management / factoring
 commissions and other related fees
4,137  5,360  5,337  7,906  10,696 
Bank owned life insurance1,652  3,614  4,243  3,022  7,857 
Loan commissions and fees2,836  3,406  4,566  5,823  7,973 
Investment management fees323  1,825  2,121  554  3,946 
Net (loss) on sale of securities(230) (5,421) (425) (253) (5,846)
Gain on sale of fixed assets  4  11,797    11,800 
Other1,651  2,916  3,244  2,818  6,161 
Total non-interest income13,618  18,707  37,868  26,454  56,575 
Non-interest expense:         
Compensation and benefits31,394  54,680  56,159  62,785  110,840 
Stock-based compensation plans1,897  2,854  3,336  3,633  6,190 
Occupancy and office operations8,833  17,460  17,939  16,967  35,399 
Information technology2,421  11,718  9,997  4,890  21,713 
Amortization of intangible assets2,187  6,052  5,865  4,416  11,917 
FDIC insurance and regulatory assessments2,034  5,347  5,495  3,922  10,841 
Other real estate owned, net112  364  (226) 1,788  138 
Merger-related expenses1,766      4,893   
Charge for asset write-downs, systems
 integration, retention and severance
603    13,132  603  13,132 
Other8,410  13,274  13,231  16,110  26,505 
Total non-interest expense59,657  111,749  124,928  120,007  236,675 
Income before income tax expense62,719  128,328  146,156  119,495  274,484 
Income tax expense20,319  29,456  31,915  38,028  61,371 
Net income42,400  98,872  114,241  81,467  213,113 
Preferred stock dividend  1,999  1,996    3,995 
Net income available to common stockholders$42,400  $96,873  $112,245  $81,467  $209,118 
Weighted average common shares:         
Basic135,317,866  224,730,686  225,084,232  135,241,034  224,908,436 
Diluted135,922,897  225,264,147  225,621,856  135,867,861  225,444,579 
Earnings per common share:         
Basic earnings per share$0.31  $0.43  $0.50  $0.60  $0.93 
Diluted earnings per share0.31  0.43  0.50  0.60  0.93 
Dividends declared per share0.07  0.07  0.07  0.14  0.14 
               
               

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 Period6/30/2017 9/30/2017 12/31/2017 3/31/2018 6/30/2018
Total assets$15,376,676  $16,780,097  $30,359,541  $30,468,780  $31,463,077 
Tangible assets 114,618,192  16,023,807  28,626,459  28,741,750  29,708,659 
Securities available for sale2,095,872  2,579,076  3,612,072  3,760,338  3,929,386 
Securities held to maturity1,456,304  1,936,574  2,862,489  2,874,948  2,859,860 
Portfolio loans10,232,317  10,493,535  20,008,983  19,939,245  20,674,493 
Goodwill696,600  696,600  1,579,891  1,579,891  1,613,144 
Other intangibles61,884  59,690  153,191  147,139  141,274 
Deposits10,502,710  11,043,438  20,538,204  20,623,233  20,965,889 
Municipal deposits (included above)1,297,244  1,751,012  1,585,076  1,775,472  1,652,733 
Borrowings2,661,838  3,453,783  4,991,210  4,927,594  5,537,537 
Stockholders’ equity1,931,383  1,971,480  4,240,178  4,273,755  4,352,735 
Tangible common equity 11,172,899  1,215,190  2,367,876  2,407,700  2,459,489 
Quarterly Average Balances         
Total assets14,704,793  15,661,514  29,277,502  30,018,289  30,994,904 
Tangible assets 113,944,946  14,904,016  27,567,351  28,287,337  29,237,608 
Loans, gross:         
Commercial real estate (includes multi-family)4,396,281  4,443,142  8,839,256  9,028,849  9,100,098 
Acquisition, development and construction251,404  229,242  246,141  267,638  247,500 
Commercial and industrial:         
Traditional commercial and industrial1,497,005  1,631,436  1,911,450  1,933,323  2,026,313 
Asset-based lending2737,039  740,037  781,732  781,392  778,708 
Payroll finance2225,080  229,522  250,673  229,920  219,545 
Warehouse lending2430,312  607,994  564,593  495,133  731,385 
Factored receivables2181,499  191,749  224,966  217,865  224,159 
Equipment financing2660,404  687,254  677,271  689,493  1,140,803 
Public sector finance2441,456  476,525  480,800  653,344  725,675 
  Total commercial and industrial4,172,795  4,564,517  4,891,485  5,000,470  5,846,588 
Residential mortgage697,441  686,820  5,168,622  4,977,191  4,801,595 
Consumer268,502  262,693  372,981  361,752  344,183 
Loans, total39,786,423  10,186,414  19,518,485  19,635,900  20,339,964 
Securities (taxable)2,142,168  2,483,718  3,840,147  3,997,542  4,130,949 
Securities (non-taxable)1,292,367  1,432,358  2,086,677  2,604,633  2,620,579 
Other interest earning assets341,895  368,630  598,439  595,847  665,888 
Total earning assets13,562,853  14,471,120  26,043,748  26,833,922  27,757,380 
Deposits:         
Non-interest bearing demand3,185,506  3,042,392  4,043,213  3,971,079  3,960,683 
Interest bearing demand1,973,498  2,298,645  3,862,461  3,941,749  4,024,972 
Savings (including mortgage escrow funds)816,092  825,620  2,871,885  2,917,624  2,916,755 
Money market3,725,257  3,889,780  7,324,196  7,393,335  7,337,904 
Certificates of deposit584,996  634,569  2,382,102  2,464,360  2,528,355 
Total deposits and mortgage escrow10,285,349  10,691,006  20,483,857  20,688,147  20,768,669 
Borrowings2,313,992  2,779,143  4,121,605  4,597,903  5,432,582 
Stockholders’ equity1,913,933  1,955,252  4,235,739  4,243,897  4,305,928 
Tangible common equity 11,154,086  1,197,754  2,386,245  2,373,794  2,409,674 
          
1 See a reconciliation of non-GAAP financial measures 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 DATAAND PERFORMANCE RATIOS
(unaudited, in thousands, except share and per share data)
 
 As of and for the Quarter Ended
Per Common Share Data6/30/2017 9/30/2017  12/31/2017  3/31/2018  6/30/2018 
Basic earnings (loss) per share$0.31  $0.33  $(0.16) $0.43  $0.50 
Diluted earnings (loss) per share0.31  0.33  (0.16) 0.43  0.50 
Adjusted diluted earnings per share, non-GAAP 10.33  0.35  0.39  0.45  0.50 
Dividends declared per common share0.07  0.07  0.07  0.07  0.07 
Book value per share14.24  14.52  18.24  18.34  18.69 
Tangible book value per share18.65  8.95  10.53  10.68  10.91 
Shares of common stock o/s135,658,226  135,807,544  224,782,694  225,466,266  225,470,254 
Basic weighted average common shares o/s135,317,866  135,346,791  223,501,073  224,730,686  225,084,232 
Diluted weighted average common shares o/s135,922,897  135,950,160  224,055,991  225,264,147  225,621,856 
Performance Ratios (annualized)         
Return on average assets1.16% 1.14% (0.48)% 1.31% 1.45%
Return on average equity8.89  9.10  (3.30) 9.26  10.46 
Return on average tangible assets1.22  1.19  (0.51) 1.39  1.54 
Return on avg tangible common equity14.74  14.86  (5.87) 16.55  18.68 
Return on average tangible assets, adjusted 11.28  1.27  1.25  1.45  1.55 
Return on avg tangible common equity, adjusted 115.43  15.85  14.49  17.24  18.79 
Operating efficiency ratio, as adjusted 142.0  40.6  41.4  40.3  38.3 
Analysis of Net Interest Income         
Accretion income on acquired loans$2,888  $3,397  $33,726  $30,340  $28,010 
Yield on loans4.58% 4.67% 4.77% 4.85% 5.01%
Yield on investment securities - tax equivalent 22.93  2.87  3.03  2.85  2.88 
Yield on interest earning assets - tax equivalent 24.09  4.12  4.32  4.31  4.47 
Cost of interest bearing deposits0.62  0.69  0.54  0.59  0.68 
Cost of total deposits0.43  0.50  0.43  0.47  0.55 
Cost of borrowings1.75  1.75  1.94  2.01  2.23 
Cost of interest bearing liabilities0.89  0.97  0.82  0.89  1.06 
Net interest rate spread - tax equivalent basis 23.20  3.15  3.50  3.42  3.41 
Net interest margin - GAAP basis3.35  3.29  3.57  3.54  3.56 
Net interest margin - tax equivalent basis 23.47  3.42  3.67  3.60  3.62 
Capital         
Tier 1 leverage ratio - Company 38.72% 8.42% 9.39% 9.39% 9.32%
Tier 1 leverage ratio - Bank only 38.89  8.54  10.10  10.00  9.84 
Tier 1 risk-based capital ratio - Bank only 310.64  10.42  12.10  14.23  13.93 
Total risk-based capital ratio - Bank only 312.73  12.42  13.20  15.51  15.18 
Tangible equity to tangible assets - Company 18.02  7.58  8.27  8.38  8.28 
Condensed Five Quarter Income Statement         
Interest and dividend income$134,263  $145,692  $276,495  $281,346  $304,906 
Interest expense21,005  25,619  42,471  46,976  58,690 
Net interest income113,258  120,073  234,024  234,370  246,216 
Provision for loan losses4,500  5,000  12,000  13,000  13,000 
Net interest income after provision for loan losses108,758  115,073  222,024  221,370  233,216 
Non-interest income13,618  13,988  23,762  18,707  37,868 
Non-interest expense59,657  62,617  250,746  111,749  124,928 
Income (loss) before income tax expense62,719  66,444  (4,960) 128,328  146,156 
Income tax expense20,319  21,592  28,319  29,456  31,915 
Net income (loss)$42,400  $44,852  $(33,279) $98,872  $114,241 
          
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 Forward6/30/2017 9/30/2017  12/31/2017  3/31/2018 6/30/2018
Balance, beginning of period$66,939  $70,151  $72,128  $77,907  $82,092 
Provision for loan losses4,500  5,000  12,000  13,000  13,000 
Loan charge-offs1:         
Traditional commercial & industrial(164) (68) (4,570) (3,572) (1,831)
Payroll finance  (188)     (314)
Factored receivables(12) (564) (110) (3) (160)
Equipment financing(610) (741) (1,343) (4,199) (2,477)
Commercial real estate(944) (1,345) (7) (1,353) (3,166)
Acquisition development & construction(22) (5)     (721)
Residential mortgage(120) (389) (193) (39) (544)
Consumer(417) (156) (408) (125) (491)
Total charge offs(2,289) (3,456) (6,631) (9,291) (9,704)
Recoveries of loans previously charged-off1:         
Traditional commercial & industrial523  316  164  214  225 
Asset-based lending1  1      9 
Payroll finance  1  5  22  7 
Factored receivables2  5    3  2 
Equipment financing146  45  56  72  190 
Commercial real estate98  17  46  16  74 
Acquisition development & construction133         
Residential mortgage10    2  15  34 
Consumer88  48  137  131  97 
Total recoveries1,001  433  410  476  638 
Net loan charge-offs(1,288) (3,023) (6,221) (8,815) (9,066)
Balance, end of period$70,151  $72,128  $77,907  $82,092  $86,026 
Asset Quality Data and Ratios         
Non-performing loans (“NPLs”) non-accrual$70,416  $69,060  $186,357  $181,745  $178,626 
NPLs still accruing935  392  856  301  12,349 
Total NPLs71,351  69,452  187,213  182,046  190,975 
Other real estate owned10,198  11,697  27,095  24,493  20,264 
Non-performing assets (“NPAs”)$81,549  $81,149  $214,308  $206,539  $211,239 
Loans 30 to 89 days past due$15,070  $21,491  $53,533  $59,818  $73,441 
Net charge-offs as a % of average loans (annualized)0.05% 0.12% 0.13% 0.18% 0.18%
NPLs as a % of total loans0.70  0.66  0.94  0.91  0.92 
NPAs as a % of total assets0.53  0.48  0.71  0.68  0.67 
Allowance for loan losses as a % of NPLs98.3  103.9  41.6  45.1  45.0 
Allowance for loan losses as a % of total loans0.69  0.69  0.39  0.41  0.42 
Special mention loans$102,996  $117,984  $136,558  $101,904  $119,718 
Substandard loans97,476  104,205  232,491  245,910  251,840 
Doubtful loans895  795  764  968  856 
          
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
 March 31, 2018 June 30, 2018
 Average
balance
 Interest Yield/
Rate
 Average
balance
 Interest Yield/
Rate
            
 (Dollars in thousands)
Interest earning assets:                     
Traditional C&I and commercial finance loans$5,000,470  $60,873  4.94% $5,846,588  $78,004  5.35%
Commercial real estate (includes multi-family)9,028,849  103,281  4.64  9,100,098  107,930  4.76 
Acquisition, development and construction267,638  3,671  5.56  247,500  3,430  5.56 
Commercial loans14,296,957  167,825  4.76  15,194,186  189,364  5.00 
Consumer loans361,752  4,411  4.95  344,183  5,114  5.96 
Residential mortgage loans4,977,191  62,379  5.01  4,801,595  59,775  4.98 
Total gross loans 119,635,900  234,615  4.85  20,339,964  254,253  5.01 
Securities taxable3,997,542  27,061  2.75  4,130,949  29,031  2.82 
Securities non-taxable2,604,633  19,382  2.98  2,620,579  19,497  2.98 
Interest earning deposits305,270  828  1.10  292,862  784  1.07 
FHLB and Federal Reserve Bank Stock290,577  3,530  4.93  373,026  5,435  5.84 
Total securities and other earning assets7,198,022  50,801  2.86  7,417,416  54,747  2.96 
Total interest earning assets26,833,922  285,416  4.31  27,757,380  309,000  4.47 
Non-interest earning assets3,184,367      3,237,524     
Total assets$30,018,289      $30,994,904     
Interest bearing liabilities:           
Demand and savings 2 deposits$6,859,373  $7,173  0.42% $6,941,727  $8,400  0.49%
Money market deposits7,393,335  10,912  0.60  7,337,904  12,869  0.70 
Certificates of deposit2,464,360  6,121  1.01  2,528,355  7,195  1.14 
Total interest bearing deposits16,717,068  24,206  0.59  16,807,986  28,464  0.68 
Senior notes278,181  2,740  3.94  278,128  2,787  4.01 
Other borrowings4,146,987  17,678  1.73  4,981,663  25,086  2.02 
Subordinated notes172,735  2,352  5.45  172,791  2,353  5.45 
Total borrowings4,597,903  22,770  2.01  5,432,582  30,226  2.23 
Total interest bearing liabilities21,314,971  46,976  0.89  22,240,568  58,690  1.06 
Non-interest bearing deposits3,971,079      3,960,683     
Other non-interest bearing liabilities488,342      487,725     
Total liabilities25,774,392      26,688,976     
Stockholders’ equity4,243,897      4,305,928     
Total liabilities and stockholders’ equity$30,018,289      $30,994,904     
Net interest rate spread 3    3.42%     3.41%
Net interest earning assets 4$5,518,951      $5,516,812     
Net interest margin - tax equivalent  238,440  3.60%   250,310  3.62%
Less tax equivalent adjustment  (4,070)     (4,094)  
Net interest income  $234,370      $246,216   
Ratio of interest earning assets to interest bearing liabilities125.9%     124.8%    
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
 June 30, 2017 June 30, 2018
 Average
balance
 Interest Yield/
Rate
 Average
balance
 Interest Yield/
Rate
                      
 (Dollars in thousands)
Interest earning assets:                     
Traditional C&I and commercial finance loans$4,172,795  $52,580  5.05% $5,846,588  $78,004  5.35%
Commercial real estate (includes multi-family)4,396,281  45,930  4.19  9,100,098  107,930  4.76 
Acquisition, development and construction251,404  3,317  5.29  247,500  3,430  5.56 
Commercial loans8,820,480  101,827  4.63  15,194,186  189,364  5.00 
Consumer loans268,502  3,073  4.59  344,183  5,114  5.96 
Residential mortgage loans697,441  6,940  3.98  4,801,595