Sterling Bancorp Announces Results for the Three Months and Nine Months Ended September 30, 2015
Strong Quarterly Performance Highlighted by Core Diluted Earnings per Share of $0.25(1), Annualized Commercial Loan Growth of 19.1% and Core Operating Efficiency Ratio of 49.0%(1)
/EINPresswire.com/ -- MONTEBELLO, NY--(Marketwired - October 26, 2015) -
Key Highlights for the Three Months Ended September 30, 2015
- Total revenue
2 was $109.4 million. - Core net income
1 was $32.0 million and core diluted earnings per share1 were $0.25, which represented growth of 76.3% and 13.6% over the same quarter a year ago. - Tax equivalent net interest margin was 3.76%.
- Total non-interest income excluding securities gains was $16.1 million, which represented 14.7% of total revenue
2 . - Core operating efficiency ratio
1 was 49.0%. - Commercial loan growth was $290.7 million, representing an annualized growth rate of 19.1% over the linked quarter.
- Loans to deposits ratio of 85.5%; total deposits were $8.8 billion with over 92.7% core deposits and a weighted average cost of deposits of 0.24%.
- Core return on average tangible assets
1 was 1.21%, compared to 1.06% in the third quarter of 2014. - Core return on average tangible equity
1 was 14.33%, compared to 13.81% in the third quarter of 2014. - Established middle market loan syndication team and expanded health care asset-based lending platform through new hires.
- Completed termination of legacy Provident Bank and legacy Sterling National Bank defined benefit pension plans.
Sterling Bancorp (NYSE: STL), the parent company (the "Company") of Sterling National Bank, today announced results for the quarter and nine months ended September 30, 2015. Net income for the quarter was $24.2 million, or $0.19 per diluted share, compared to net income of $16.3 million, or $0.19 per diluted share, for the same quarter last year and a net loss of $7.6 million, or $0.08 per share, for the linked quarter ended June 30, 2015. For the nine months ended September 30, 2015, net income was $33.3 million, or $0.32 per diluted share, compared to net income of $41.7 million, or $0.50 per diluted share, for the nine months ended September 30, 2014.
Results for the third quarter of 2015 included a pre-tax charge of $13.4 million related to the termination of the Company's defined benefit pension plans. Results in the linked quarter included pre-tax merger-related expenses and other restructuring charges of $42.7 million that were incurred in connection with the Company's merger with Hudson Valley Holding Corp. (the "HVB Merger"). The Company's operating results are detailed beginning on page 2.
1. Core measures are defined in the non-GAAP tables beginning on page 11.
2. Total revenue is equal to net interest income plus non-interest income and excluding securities gains and losses. Total revenue is a non-GAAP measure. See the table on page 12 for a reconciliation of this non-GAAP measure.
President's Comments
Jack Kopnisky, President and Chief Executive Officer, commented: "We continue to successfully execute our strategy of building a high performance regional bank that delivers superior service to our small and middle market commercial clients and consumers. This was our first full quarter of operations on a combined basis after the HVB Merger. Our strong operating results demonstrate the significant progress we have made on the integration of Hudson Valley, as evidenced by our growth in revenues, higher profitability and continued improvement across all core operating metrics. As of September 30, 2015, our total assets were $11.6 billion; total portfolio loans were $7.5 billion and total deposits were $8.8 billion.
"Core net income for the quarter was $32.0 million and core diluted earnings per share were $0.25. This represents growth of 76.3% and 13.6%, respectively, over the same period a year ago. Our core return on average tangible assets was 1.21% and core return on average tangible equity was 14.33%. This compares to 1.06% and 13.81%, respectively, for the quarter ended September 30, 2014.
"Our primary focus continues to be delivering positive operating leverage with growth in revenues that significantly outpaces growth in expenses. For the quarter, our core operating efficiency ratio was 49.0%, which compares to 52.6% in the linked quarter and 54.7% in the same quarter last year. We are confident we will realize the cost savings targets we have previously announced in connection with the HVB Merger.
"We continue to deliver strong organic loan growth across multiple asset classes. As of September 30, 2015, total portfolio loans were $7.5 billion, which represented growth of $290.0 million over the linked quarter, an annualized growth rate of 15.9%. As of September 30, 2015, our total commercial loans, which include our commercial and industrial loans, commercial real estate loans and specialty lending
"Our strong core deposit base continues to provide us with an efficient platform to fund loan growth. As of September 30, 2015, our total deposits were $8.8 billion, of which 92.7% consisted of core deposits. In addition, we had a total cost of deposits of 24 basis points in the quarter. As of September 30, 2015, our loans to deposits ratio was 85.5% and we expect to maintain our target of a 90% to 95% loans to deposits ratio upon full deployment of the excess liquidity we acquired in the HVB Merger.
"Our non-interest income excluding securities gains was $16.1 million for the quarter, which represented 14.7% of total revenue. Our acquisitions of Damian Services Corporation ("Damian") and the factoring assets of First Capital Corporation ("First Capital") are on-track to deliver the results we anticipated. Our public finance sector team, which we acquired from Green Campus Partners, is also delivering strong loan origination volumes and will begin generating fee income going forward. We will continue growing our diversified commercial lending businesses, which are strong fee income generators, and we are actively evaluating opportunistic acquisitions, as previously indicated. To that end, we announced new team hires that will expand our health care asset-based lending business and create a middle market loan syndication business.
"Net charge-offs against the allowance for loan losses for the three months ended September 30, 2015 were $1.7 million. The allowance for loan losses as a percentage of total loans was 0.63% at September 30, 2015. As a result of purchase accounting, a substantial portion of the loans acquired in prior merger transactions are not subject to the allowance for loan losses as these loans were recorded at fair value. The performance of these loans remains satisfactory. The ratio of allowance for loan losses to non-performing loans was 70.4% at September 30, 2015.
"Our capital position remains strong. At September 30, 2015, our tangible equity to tangible assets ratio was 8.30% and our estimated Tier 1 leverage ratio was 9.13%. At Sterling National Bank, our estimated Tier 1 leverage ratio was 9.80%. We have ample capital to support our organic growth and execute our strategy.
"Lastly, I am pleased to announce our Board of Directors has declared a dividend on our common stock of $0.07 per share payable on November 16, 2015 to our holders as of the record date of November 5, 2015."
Reconciliation of GAAP to Core Results for the Three Months Ended September 30, 2015
Net income of $24.2 million, or $0.19 per diluted share, for the third quarter of 2015 was impacted by net gain on sale of securities of $2.7 million, a pre-tax charge of $13.4 million related to the termination of the defined benefit pension plans and amortization of non-compete agreements and acquired customer list intangibles of $961 thousand. Excluding the impact of these items, core net income for the quarter was $32.0 million, or $0.25 per diluted share.
3. Specialty lending businesses includes: asset-based lending, payroll finance, factoring, warehouse lending, and equipment finance loans.
The termination of the defined benefit pension plans also resulted in the elimination of $5.4 million in accumulated other comprehensive loss related to pension expense that had not yet been recognized in earnings. Therefore, the net impact of the termination of the pension plans on the Company's tangible book value and tangible book value per share was a reduction of $3.7 million and $0.03 per share, respectively.
See the reconciliation of these non-GAAP measures beginning on page 12. Non-GAAP financial measures include references to the terms "core" or "excluding."
Net Interest Income and Margin
Third quarter 2015 compared with third quarter 2014
Net interest income was $93.4 million, an increase of $33.7 million compared to the third quarter of 2014. This was due to the HVB Merger and organic growth as average loans increased $2.8 billion or 60.1% between the periods. The tax-equivalent yield on investment securities decreased 15 basis points and the yield on loans decreased 8 basis points. The tax-equivalent yield on interest earning assets was 4.15% for the third quarter of 2015 compared to 4.24% in third quarter of 2014. Yield on loans included $5.8 million in accretion of the fair value discount associated with loans acquired in prior merger transactions. The cost of total deposits was 24 basis points and the cost of borrowings was 2.38%, which compares to 19 basis points and 1.88% in the third quarter of 2014. The increase in the cost of borrowings was mainly the result of a decrease in the amount of lower cost FHLB overnight advances as a percentage of total borrowings. Tax-equivalent net interest margin was 3.76% compared to 3.77% for the same period a year ago.
Third quarter 2015 compared with linked quarter ended June 30, 2015
Net interest income increased $29.8 million compared to the linked quarter ended June 30, 2015. This was mainly due to the HVB Merger, which closed on June 30, 2015 and resulted in an increase in average loans of $2.1 billion or 40.8% between the periods. The yield on loans increased 15 basis points and the tax-equivalent yield on investment securities decreased 8 basis points. The tax-equivalent yield on interest earning assets was 4.15% compared to 4.03% in the linked quarter. The cost of total deposits was 24 basis points and was unchanged relative to the linked quarter. The cost of borrowings was 2.38% compared to 1.63% in the linked quarter for the same reasons as discussed above. Tax-equivalent net interest margin was 3.76% compared to 3.57% in the linked quarter.
Non-interest Income
Third quarter 2015 compared with third quarter 2014
Excluding net gain on sale of securities, non-interest income increased $3.8 million to $16.1 million in the third quarter of 2015 compared to the same quarter last year. The increase was mainly due to the HVB Merger and an increase in accounts receivable and factoring commissions of $947 thousand, which was the result of organic growth and the acquisitions of Damian Services Corporation and First Capital's factoring assets. Gain on sale income in mortgage banking increased by $796 thousand and was $3.0 million. The Company realized a net gain on sale of securities of $2.7 million in the third quarter of 2015 compared to a net gain on sale of securities of $33 thousand in the same quarter last year.
Third quarter 2015 compared with linked quarter ended June 30, 2015
Excluding net gain on sale of securities, non-interest income increased $2.9 million to $16.1 million during the third quarter of 2015 mainly due to the HVB Merger. Accounts receivable and factoring commissions increased $326 thousand, mainly due to seasonal factors and the acquisition of First Capital's factoring assets, which occurred in May 2015. Mortgage banking income increased $426 thousand mainly due to the continued low interest rate environment and strong volumes in mortgage refinance activity. Other fees, which includes other loan fees, safe deposit box rental fees and miscellaneous income increased by $606 thousand. The Company realized a net gain on sale of securities of $697 thousand in the linked quarter.
Non-interest Expense
Third quarter 2015 compared with third quarter 2014
Non-interest expense increased $27.5 million relative to the third quarter of 2014 and was $71.3 million. The increase was mainly due to higher compensation and benefits expense and occupancy and office operations expense as a result of the HVB Merger. Amortization expense increased $920 thousand due to core deposit intangible amortization associated with the HVB Merger, partially offset by lower amortization expense associated with prior acquisitions. Expenses in the third quarter of 2015 included a charge associated with the termination of the defined benefit pension plans of $13.4 million.
Third quarter 2015 compared with linked quarter ended June 30, 2015
Non-interest expense declined $14.3 million compared to the linked quarter. In the quarter ended June 30, 2015, non-interest expense included merger-related expense of $14.6 million and other restructuring charges of $28.1 million that were incurred in connection with the HVB Merger. These charges were partially offset by higher compensation and benefits expense and occupancy and office operations expense, also as a result of the HVB Merger.
Income Taxes
In the third quarter of 2015, the Company recorded income taxes at a rate of 32.5%, which is unchanged relative to the linked quarter, and recorded income taxes at a rate of 28.3% for the same quarter last year.
Key Balance Sheet Highlights at September 30, 2015
- Total assets were $11.6 billion.
- Total portfolio loans were $7.5 billion.
- Commercial real estate loans represented 44.0%; commercial and industrial loans (which includes traditional C&I, asset-based lending, payroll finance, factoring, warehouse lending and equipment finance) represented 40.1%; consumer and residential mortgage loans represented 13.5%; and acquisition, development and construction loans represented 2.4% of total portfolio loans.
- Commercial loan growth, which includes commercial and industrial loans, commercial real estate loans and specialty lending businesses was $290.7 million for the quarter ended September 30, 2015, and represented annualized growth of 19.1% over the prior quarter.
- Securities were $2.5 billion and represented 21.8% of total assets.
- Total deposits were $8.8 billion.
- Retail, commercial and municipal transaction, money market and savings deposits were $8.2 billion and represented 92.7% of total deposits.
- The allowance for loan losses was $47.6 million and represented 0.63% of total portfolio loans. The balance of fair value adjustments on acquired loans was a discount of $48.5 million at September 30, 2015. As these loans were recorded at fair value at the acquisition date; a substantial portion of these loans continue to carry no allowance for loan losses.
- Tangible book value per share was $6.94.
Credit Quality
Non-performing loans declined $1.4 million to $67.7 million, or 0.90% of total loans at September 30, 2015, compared to $69.0 million, or 0.95% of total loans in the linked quarter. The decrease was mainly due to the resolution of certain troubled loans and properties that were transfered to other real estate owned. Net charge-offs increased $39 thousand and were $1.7 million for the third quarter of 2015. The allowance for loan losses at September 30, 2015 was $47.6 million, which represented 70.4% of non-performing loans and 0.63% of our total loan portfolio, compared to $44.3 million, 64.2% and 0.61% respectively, as of June 30, 2015. The increase in the balance of the allowance for loan losses was mainly related to the higher balance of loans outstanding at September 30, 2015 as a substantial portion of loans acquired in prior merger transactions continue to carry no allowance for loan losses.
Capital
The Company's stockholders' equity was $1.7 billion at September 30, 2015, an increase of $29.1 million relative to June 30, 2015. The increase was mainly due to net income of $24.2 million, an increase in other comprehensive income of $12.4 million (which was mainly the result of an increase in the fair value of available for sale securities and the termination of the defined benefit pension plans), which were offset by dividends declared of $9.1 million. The increase in equity from exercise of stock options and stock-based compensation was $1.6 million.
Tangible book value per share increased to $6.94 at September 30, 2015 from $6.70 at June 30, 2015. Total goodwill and other intangible assets were $751.5 million at September 30, 2015, a decrease of $2.4 million compared to June 30, 2015, mainly due amortization of intangible assets. For the quarter ended September 30, 2015, basic and diluted weighted average common shares outstanding increased to 129.7 million and 130.2 million, respectively, compared to 91.6 million basic shares and 92.0 million diluted shares, for the quarter ended June 30, 2015. The increase was mainly due to shares issued on June 30, 2015 in the HVB Merger. Total shares outstanding at September 30, 2015 were 129.8 million.
Consolidated tangible equity to tangible assets was 8.30% at September 30, 2015 and the Company's estimated Tier 1 leverage ratio was 9.13%. Sterling National Bank remained well capitalized at September 30, 2015 with an estimated Tier 1 leverage ratio of 9.80%.
Sterling Bancorp will host a teleconference and webcast on Tuesday, October 27, 2015 at 10:30 AM eastern daylight savings time to discuss the Company's results. Interested parties are invited to listen to the webcast and view accompanying slides on the Company's website at www.sterlingbancorp.com. Analysts are invited to listen by dialing (855) 877-0343, Conference ID #49976607. A replay of the teleconference can be accessed through the Company's website.
About Sterling Bancorp
Sterling Bancorp, with its principal subsidiary Sterling National Bank, specializes in the delivery of service and solutions to business owners, their families and consumers within the communities we serve through teams of dedicated and experienced relationship managers. Sterling National Bank offers a complete line of commercial, business, and consumer banking products and services. For more information, visit the Sterling Bancorp website at www.sterlingbancorp.com.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This release may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may concern Sterling Bancorp's current expectations about its future results, plans, operations and prospects and involve certain risks, including the following: delays in integrating the Sterling Bancorp and Hudson Valley Holding Corp. business or fully realizing cost savings and other benefits; inflation; the effects of, and changes in, trade; changes in asset quality and credit risk; introduction, withdrawal, success and timing of business initiatives; capital management activities; customer disintermediation; and the success of Sterling Bancorp in managing those risks. Other factors that could cause Sterling Bancorp's actual results to differ from those indicated in forward-looking statements are included in the "Risk Factors" section of Sterling Bancorp's filings with the Securities and Exchange Commission. The forward-looking statements speak only as of the date they are made and we undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.
Financial information contained in this release should be considered to be an estimate pending the filing with the Securities and Exchange Commission of the Company's Quarterly Report on Form 10-Q for the three months ended September 30, 2015. 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 period, even though the new information was received by management subsequent to the date of this release.
Sterling Bancorp and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(unaudited, in thousands, except share and per share data)
9/30/2014 12/31/2014 9/30/2015
------------ ------------ ------------
Assets:
Cash and cash equivalents $ 177,619 $ 121,520 $ 318,139
Investment securities 1,689,888 1,713,183 2,527,992
Loans held for sale 17,846 46,599 66,506
Portfolio loans:
Residential mortgage 570,431 529,766 721,606
Commercial real estate 1,817,576 1,842,821 3,320,693
Commercial and industrial 2,076,474 2,145,644 3,015,043
Acquisition, development and
construction 92,149 96,995 177,062
Consumer 203,808 200,415 291,228
------------ ------------ ------------
Total portfolio loans 4,760,438 4,815,641 7,525,632
Allowance for loan losses (40,612) (42,374) (47,611)
------------ ------------ ------------
Portfolio loans, net 4,719,826 4,773,267 7,478,021
Federal Home Loan Bank ("FHLB")
and Federal Reserve Bank Stock,
at cost 66,085 75,437 89,626
Accrued interest receivable 19,667 19,301 31,092
Premises and equipment, net 43,286 46,156 63,508
Goodwill 388,926 388,926 670,699
Other intangibles 45,278 43,332 80,830
Bank owned life insurance 119,486 150,522 195,741
Other real estate owned 7,580 5,867 11,831
Other assets 41,900 40,712 63,408
------------ ------------ ------------
Total assets $ 7,337,387 $ 7,424,822 $ 11,597,393
============ ============ ============
Liabilities:
Deposits $ 5,298,654 $ 5,212,325 $ 8,805,411
FHLB borrowings 795,028 1,003,209 806,970
Other borrowings 45,639 9,846 42,286
Senior notes 98,402 98,498 98,792
Mortgage escrow funds 4,494 4,167 13,865
Other liabilities 134,032 121,577 177,865
------------ ------------ ------------
Total liabilities 6,376,249 6,449,622 9,945,189
Stockholders' equity 961,138 975,200 1,652,204
------------ ------------ ------------
Total liabilities and
stockholders' equity $ 7,337,387 $ 7,424,822 $ 11,597,393
============ ============ ============
Shares of common stock outstanding
at period end 83,628,267 83,927,572 129,769,569
Book value per share $ 11.49 $ 11.62 $ 12.73
Tangible book value per share 6.30 6.47 6.94
Sterling Bancorp and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share data)
For the nine months
For the three months ended ended
------------------------------------- ------------------------
9/30/2014 6/30/2015 9/30/2015 9/30/2014 9/30/2015
----------- ----------- ------------ ----------- ------------
Interest and
dividend
income:
Loans and
loan fees $ 55,793 $ 59,744 $ 87,774 $ 160,294 $ 202,789
Securities
taxable 7,587 8,423 11,114 23,166 27,168
Securities
non-taxable 2,866 2,900 3,169 8,291 8,936
Other
earning
assets 863 880 1,241 2,445 3,023
----------- ----------- ------------ ----------- ------------
Total
interest
income 67,109 71,947 103,298 194,196 241,916
Interest
expense:
Deposits 2,421 3,359 5,299 7,135 11,749
Borrowings 5,055 5,014 4,645 14,949 14,372
----------- ----------- ------------ ----------- ------------
Total
interest
expense 7,476 8,373 9,944 22,084 26,121
----------- ----------- ------------ ----------- ------------
Net interest
income 59,633 63,574 93,354 172,112 215,795
Provision for
loan losses 5,350 3,100 5,000 16,100 10,200
----------- ----------- ------------ ----------- ------------
Net interest
income after
provision
for loan
losses 54,283 60,474 88,354 156,012 205,595
Non-interest
income:
Accounts
receivable
/ factoring
commissions
and other
fees 3,814 4,435 4,761 10,927 12,698
Mortgage
banking
income 2,160 2,530 2,956 6,470 8,643
Deposit fees
and service
charges 3,850 3,639 4,450 11,651 11,628
Net gain on
sale of
securities 33 697 2,726 1,287 4,958
Bank owned
life
insurance 791 1,074 1,293 1,469 3,443
Investment
management
fees 446 316 844 2,540 1,520
Other 1,192 1,166 1,772 3,828 3,778
----------- ----------- ------------ ----------- ------------
Total non-
interest
income 12,286 13,857 18,802 38,172 46,668
Non-interest
expense:
Compensation
and
benefits 22,110 22,667 29,238 70,755 75,070
Stock-based
compensation
plans 1,006 1,128 1,064 2,712 3,300
Occupancy
and office
operations 7,148 7,453 9,576 21,393 23,610
Amortization
of
intangible
assets 2,511 1,780 3,431 7,533 6,611
FDIC
insurance
and
regulatory
assessments 1,619 1,384 2,281 4,981 5,093
Other real
estate
owned, net
(income)
expense 214 40 183 (605) 187
Merger-
related
expense - 14,625 - 388 17,079
Defined
benefit
plan
termination
charge - - 13,384 1,486 13,384
Other 9,172 36,582 12,158 26,765 58,564
----------- ----------- ------------ ----------- ------------
Total non-
interest
expense 43,780 85,659 71,315 135,408 202,898
----------- ----------- ------------ ----------- ------------
Income (loss)
before
income tax
expense 22,789 (11,328) 35,841 58,776 49,365
Income tax
expense
(benefit) 6,452 (3,682) 11,648 17,096 16,043
----------- ----------- ------------ ----------- ------------
Net income
(loss) $ 16,337 $ (7,646) $ 24,193 $ 41,680 $ 33,322
=========== =========== ============ =========== ============
Weighted
average
common
shares:
Basic 83,610,943 91,565,972 129,733,911 83,051,192 102,655,566
Diluted 83,883,461 91,950,776 130,192,937 83,316,086 103,069,057
Earnings per
common
share:
Basic
earnings
per share $ 0.20 $ (0.08) $ 0.19 $ 0.50 $ 0.32
Diluted
earnings
per share 0.19 (0.08) 0.19 0.50 0.32
Dividends
declared
per share 0.07 0.07 0.07 0.21 0.21
Sterling Bancorp and Subsidiaries
SELECTED FINANCIAL DATA
(unaudited, in thousands, except share and per share data)
As of and for the Quarter Ended
---------------------------------------------------------
End of Period 9/30/2014 12/31/2014 3/31/2015 6/30/2015 9/30/2015
---------- ---------- ---------- ----------- -----------
Total assets $7,337,387 $7,424,822 $7,727,515 $11,566,382 $11,597,393
Securities
available for
sale 1,110,813 1,140,846 1,214,404 2,081,414 1,854,862
Securities held to
maturity 579,075 572,337 585,633 585,196 673,130
Total portfolio
loans 4,760,438 4,815,641 4,938,906 7,235,587 7,525,632
Goodwill 388,926 388,926 400,941 669,590 670,699
Other intangibles 45,278 43,332 51,757 84,309 80,830
Deposits 5,298,654 5,212,325 5,555,946 8,836,161 8,805,411
Municipal deposits
(included above) 992,761 883,350 1,013,835 1,212,624 1,352,846
Borrowings 939,069 1,111,553 980,978 914,921 948,048
Stockholders'
equity 961,138 975,200 1,080,543 1,623,110 1,652,204
Tangible equity 526,934 542,942 627,845 869,211 900,675
Average Balances
Total assets $7,217,649 $7,340,332 $7,438,314 $ 8,049,220 $11,242,870
Loans, gross:
Residential
mortgage 548,146 566,705 531,421 539,569 780,373
Commercial real
estate 1,736,441 1,850,168 1,908,582 2,040,094 3,253,183
Commercial and
industrial 1,966,359 2,038,784 2,068,394 2,326,902 2,831,253
Acquisition,
development and
construction 97,863 95,727 97,865 97,197 173,898
Consumer 202,940 204,631 200,504 202,044 292,852
Loans, total (1) 4,580,178 4,756,015 4,806,766 5,205,806 7,331,559
Securities
(taxable) 1,349,126 1,355,104 1,379,861 1,527,872 1,967,600
Securities (non-
taxable) 361,766 366,017 386,326 380,544 446,875
Total earning
assets 6,430,467 6,629,115 6,736,422 7,309,667 10,038,831
Deposits:
Non-interest
bearing demand 1,636,583 1,626,341 1,503,692 1,548,844 3,234,450
Interest bearing
demand 732,699 756,217 775,714 823,471 1,418,803
Savings
(including
mortgage escrow
funds) 647,103 685,142 766,448 802,956 950,709
Money market 1,566,669 1,817,091 1,851,839 1,922,805 2,548,181
Certificates of
deposit 520,899 457,996 452,594 536,394 539,765
Total deposits and
mortgage escrow 5,103,953 5,342,787 5,350,287 5,634,470 8,691,908
Borrowings 1,064,137 902,299 955,677 1,234,958 772,777
Equity 956,166 973,089 1,031,809 1,100,897 1,639,458
Tangible equity 522,025 539,693 592,839 645,577 886,757
Condensed Tax
Equivalent Income
Statement
Interest and
dividend income $ 67,109 $ 68,087 $ 66,672 $ 71,947 $ 103,298
Tax equivalent
adjustment(2) 1,543 1,546 1,544 1,562 1,707
Interest expense 7,476 7,850 7,805 8,373 9,944
---------- ---------- ---------- ----------- -----------
Net interest
income (tax
equivalent) 61,176 61,783 60,411 65,136 95,061
Provision for loan
losses 5,350 3,000 2,100 3,100 5,000
---------- ---------- ---------- ----------- -----------
Net interest
income after
provision for
loan losses 55,826 58,783 58,311 62,036 90,061
Non-interest
income 12,286 13,957 14,010 13,857 18,802
Non-interest
expense 43,780 45,814 45,921 85,659 71,315
---------- ---------- ---------- ----------- -----------
Income (loss)
before income tax
expense 24,332 26,926 26,400 (9,766) 37,548
Income tax expense
(benefit) (tax
equivalent) 7,995 9,922 9,622 (2,120) 13,355
---------- ---------- ---------- ----------- -----------
Net income (loss) $ 16,337 $ 17,004 $ 16,778 $ (7,646) $ 24,193
========== ========== ========== =========== ===========
(1) Includes loans held for sale, excludes allowance for loan losses.
(2) Tax exempt income assumed at a statutory 35% federal tax rate.
Sterling Bancorp and Subsidiaries
SELECTED FINANCIAL DATA
(unaudited, in thousands, except share and per share data)
For the Quarter Ended
---------------------------------------------------------------
Per Share
Data 9/30/2014 12/31/2014 3/31/2015 6/30/15 9/30/2015
----------- ----------- ----------- ------------ ------------
Basic
earnings
per share $ 0.20 $ 0.20 $ 0.19 $ (0.08) $ 0.19
Diluted
earnings
per share 0.19 0.20 0.19 (0.08) 0.19
Dividends
declared
per share 0.07 0.07 0.07 0.07 0.07
Tangible
book value
per share 6.30 6.47 6.89 6.70 6.94
Shares of
common
stock
outstanding 83,628,267 83,927,572 91,121,531 129,709,834 129,769,569
Basic
weighted
average
common
shares
outstanding 83,610,943 83,831,380 87,839,029 91,565,972 129,733,911
Diluted
weighted
average
common
shares
outstanding 83,883,461 84,194,916 88,252,768 91,950,776 130,192,937
Performance
Ratios
(annualized)
Return on
average
assets 0.90% 0.92% 0.91% (0.38)% 0.85%
Return on
average
equity 6.78% 6.93% 6.59% (2.79)% 5.85%
Return on
average
tangible
equity (1) 12.42% 12.50% 11.48% (4.75)% 10.82%
Core
operating
efficiency
(1) 54.7% 54.0% 56.4% 52.6% 49.0%
Analysis of
Net
Interest
Income
Yield on
loans 4.83% 4.74% 4.66% 4.60% 4.75%
Yield on
investment
securities
- tax
equivalent
(2) 2.78% 2.73% 2.79% 2.71% 2.63%
Yield on
earning
assets -
tax
equivalent
(2) 4.24% 4.17% 4.11% 4.03% 4.15%
Cost of
deposits 0.19% 0.21% 0.23% 0.24% 0.24%
Cost of
borrowings 1.88% 2.21% 2.00% 1.63% 2.38%
Cost of
interest
bearing
liabilities 0.65% 0.67% 0.66% 0.63% 0.63%
Net
interest
rate
spread -
tax
equivalent
basis(2) 3.59% 3.50% 3.45% 3.40% 3.52%
Net
interest
margin -
tax
equivalent
basis(2) 3.77% 3.70% 3.64% 3.57% 3.76%
Capital
Tier 1
leverage
ratio -
Company
(estimated) 8.12% 8.21% 9.46% 12.86% 9.13%
Tier 1
leverage
ratio -
Bank only
(estimated) 9.34% 9.38% 10.53% 13.81% 9.80%
Tier 1
risk-based
capital -
Bank only
(estimated) $ 636,327 $ 651,204 $ 739,580 $ 1,015,470 $ 1,032,930
Total risk-
based
capital -
Bank only
(estimated) 676,939 693,973 782,859 1,060,333 1,081,086
Tangible
equity as
a % of
tangible
assets -
consolidated
(1) 7.63% 7.76% 8.63% 8.04% 8.30%
Asset
Quality
Non-
performing
loans
(NPLs)
non-
accrual $ 49,562 $ 45,859 $ 45,476 $ 68,419 $ 67,390
Non-
performing
loans
(NPLs)
still
accruing 1,401 783 972 611 282
Other real
estate
owned 7,580 5,867 8,231 9,575 11,831
Non-
performing
assets
(NPAs) 58,543 52,509 54,679 78,605 79,503
Net charge-
offs 1,088 1,238 1,590 1,667 1,706
Net charge-
offs as a
% of
average
loans
(annualized) 0.09% 0.10% 0.13% 0.13% 0.09%
NPLs as a %
of total
loans 1.07% 0.97% 0.94% 0.95% 0.90%
NPAs as a %
of total
assets 0.80% 0.71% 0.71% 0.68% 0.69%
Allowance
for loan
losses as
a % of
NPLs 79.7% 90.8% 92.3% 64.2% 70.4%
Allowance
for loan
losses as
a % of
total
loans 0.85% 0.88% 0.87% 0.61% 0.63%
Special
mention
loans $ 39,553 $ 31,318 $ 26,057 $ 65,421 $ 91,076
Substandard
/ doubtful
loans 73,093 74,901 74,252 125,994 120,836
----------------------------------------------------------------------------
(1) See reconciliation of non-GAAP measure on following page.
(2) Tax exempt income assumed at a statutory 35% federal tax rate.
Sterling Bancorp and Subsidiaries
QUARTERLY YIELD TABLE
(unaudited, in thousands, except share and per share data)
For the three months ended
-----------------------------------------------------
9/30/2015 6/30/2015
-------------------------- -------------------------
Average Yield Average Yield
balance Interest /Rate balance Interest /Rate
----------- -------- ----- ---------- -------- -----
(Dollars in thousands)
Interest earning
assets:
Commercial loans $ 6,258,334 $ 77,150 4.89% $4,464,193 $ 51,805 4.65%
Consumer loans 292,852 3,294 4.46% 202,044 1,975 3.92%
Residential
mortgage loans 780,373 7,330 3.76% 539,569 5,964 4.43%
----------- -------- ---------- --------
Total net loans (1) 7,331,559 87,774 4.75% 5,205,806 59,744 4.60%
----------- -------- ---------- --------
Securities taxable 1,967,600 11,114 2.24% 1,527,872 8,423 2.21%
Securities non-
taxable 446,875 4,876 4.33% 380,544 4,462 4.70%
Interest earning
deposits 211,723 131 0.25% 114,128 48 0.17%
FRB and FHLB stock 81,074 1,110 5.43% 81,317 832 4.10%
----------- -------- ---------- --------
Total securities
and other earning
assets 2,707,272 17,231 2.53% 2,103,861 13,765 2.62%
----------- -------- ---------- --------
Total interest
earning assets 10,038,831 105,005 4.15% 7,309,667 73,509 4.03%
Non-interest earning
assets 1,204,039 739,553
----------- ----------
Total assets $11,242,870 $8,049,220
=========== ==========
Interest bearing
liabilities:
Demand deposits $ 1,418,803 $ 923 0.26% $ 823,471 $ 207 0.10%
Savings deposits
(2) 950,709 564 0.24% 802,956 482 0.24%
Money market
deposits 2,548,181 2,961 0.46% 1,922,805 1,931 0.40%
Certificates of
deposit 539,765 851 0.63% 536,394 739 0.55%
----------- -------- ---------- --------
Total interest
bearing deposits 5,457,458 5,299 0.39% 4,085,626 3,359 0.33%
Senior notes 98,727 1,474 5.97% 98,629 1,473 5.99%
Other borrowings 674,050 3,171 1.87% 1,136,329 3,541 1.25%
----------- -------- ---------- --------
Total interest
bearing
liabilities 6,230,235 9,944 0.63% 5,320,584 8,373 0.63%
Non-interest bearing
deposits 3,234,450 1,548,844
Other non-interest
bearing liabilities 138,727 78,895
----------- ----------
Total liabilities 9,603,412 6,948,323
Stockholders'
equity 1,639,458 1,100,897
----------- ----------
Total liabilities and
stockholders' equity $11,242,870 $8,049,220
=========== ==========
Net interest rate
spread (3) 3.52% 3.40%
Net interest earning
assets (4) $ 3,808,596
===========
Net interest margin 95,061 3.76% 65,136 3.57%
Less tax equivalent
adjustment (1,707) (1,562)
-------- --------
Net interest income $ 93,354 $ 63,574
======== ========
Ratio of interest
earning assets to
interest bearing
liabilities 161.1% 137.4%
=========== ==========
(1) Includes the effect of net deferred loan origination fees and costs,
allowance for loan losses and non-accrual loans. Includes prepayment fees
and late charges.
(2) Includes 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.
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
As of and for the Quarter Ended
--------------------------------------------------------------
9/30/2014 12/31/2014 3/31/2015 6/30/2015 9/30/2015
----------- ----------- ----------- ------------ ------------
The Company provides supplemental reporting of non-GAAP measures as
management believes this information is useful to investors.
The following table shows the reconciliation of stockholders' equity to
tangible equity and the tangible equity ratio:
Total assets $ 7,337,387 $ 7,424,822 $ 7,727,515 $ 11,566,382 $ 11,597,393
Goodwill and
other
intangibles (434,204) (432,258) (452,698) (753,899) (751,529)
----------- ----------- ----------- ------------ ------------
Tangible
assets 6,903,183 6,992,564 7,274,817 10,812,483 10,845,864
----------- ----------- ----------- ------------ ------------
Stockholders'
equity 961,138 975,200 1,080,543 1,623,110 1,652,204
Goodwill and
other
intangibles (434,204) (432,258) (452,698) (753,899) (751,529)
----------- ----------- ----------- ------------ ------------
Tangible
stockholders'
equity 526,934 542,942 627,845 869,211 900,675
Common stock
outstanding
at period
end 83,628,267 83,927,572 91,121,531 129,709,834 129,769,569
Tangible
equity as a
% of
tangible
assets 7.63% 7.76% 8.63% 8.04% 8.30%
Tangible
book value
per share $ 6.30 $ 6.47 $ 6.89 $ 6.70 $ 6.94
The Company believes that tangible equity is useful as a tool to help
assess the Company's capital position.
The following table shows the reconciliation of return on average tangible
equity and core return on average tangible equity:
Average
stockholders'
equity $ 956,166 $ 973,089 $ 1,031,809 $ 1,100,897 $ 1,639,458
Average
goodwill
and other
intangibles (434,141) (433,396) (438,970) (455,320) (752,701)
----------- ----------- ----------- ------------ ------------
Average
tangible
stockholders'
equity 522,025 539,693 592,839 645,577 886,757
Net income
(loss) 16,337 17,004 16,778 (7,646) 24,193
Net income
(loss), if
annualized 64,815 67,462 68,044 (30,668) 95,983
Return on
average
tangible
equity 12.42% 12.50% 11.48% (4.75)% 10.82%
Core net
income
(see
reconcili-
ation on
page 12) $ 18,166 $ 19,615 $ 18,501 $ 21,361 $ 32,035
Annualized
core net
income 72,072 77,820 75,032 85,679 127,095
Core return
on average
tangible
equity 13.81% 14.42% 12.66% 13.27% 14.33%
The Company believes that the return on average tangible stockholders'
equity is useful as a tool to help assess the Company's use of tangible
equity.
The following table shows the reconciliation of return on tangible assets
and core return on tangible assets:
Average
assets $ 7,217,649 $ 7,340,332 $ 7,438,314 $ 8,049,220 $ 11,242,870
Average
goodwill
and other
intangibles (434,141) (433,396) (438,970) (455,320) (752,701)
----------- ----------- ----------- ------------ ------------
Average
tangible
assets 6,783,508 6,906,936 6,999,344 7,593,900 10,490,169
Net income
(loss) 16,337 17,004 16,778 (7,646) 24,193
Annualized
net income
(loss) 64,815 67,462 68,044 (30,668) 95,983
Return on
average
tangible
assets 0.96% 0.98% 0.97% (0.40)% 0.91%
Core net
income (see
reconcilia-
tion on page
12) $ 18,166 $ 19,615 $ 18,501 $ 21,361 $ 32,035
Annualized
core net
income 72,072 77,820 75,032 85,679 127,095
Core return
on average
tangible
assets 1.06% 1.13% 1.07% 1.13% 1.21%
The Company believes that the core return on average tangible assets is a
useful tool to help assess the Company's profitability.
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
As of and for the Quarter Ended
-------------------------------------------------------------
9/30/2014 12/31/2014 3/31/2015 6/30/2015 9/30/2015
----------- ----------- ----------- ----------- ------------
The following table shows the reconciliation of the core operating
efficiency ratio:
Net interest
income $ 59,633 $ 60,237 $ 58,867 $ 63,574 $ 93,354
Non-interest
income 12,286 13,957 14,010 13,857 18,802
----------- ----------- ----------- ----------- ------------
Total net
revenue 71,919 74,194 72,877 77,431 112,156
Tax
equivalent
adjustment
on
securities
interest
income 1,543 1,546 1,544 1,562 1,707
Net (gain)
loss on sale
of
securities (33) 43 (1,534) (697) (2,726)
----------- ----------- ----------- ----------- ------------
Core total
revenue 73,429 75,783 72,887 78,296 111,137
----------- ----------- ----------- ----------- ------------
Non-interest
expense 43,780 45,814 45,921 85,659 71,315
Merger-
related
expense - (502) (2,455) (14,625) -
Charge for
asset write-
downs,
banking
systems
conversion,
retention
and
severance (1,103) (2,493) (971) (28,055) -
Defined
benefit plan
termination
charge - - - - (13,384)
Amortization
of
intangible
assets (2,511) (1,873) (1,399) (1,780) (3,431)
----------- ----------- ----------- ----------- ------------
Core non-
interest
expense 40,166 40,946 41,096 41,199 54,500
Core
operating
efficiency
ratio 54.7% 54.0% 56.4% 52.6% 49.0%
The Company believes the core operating efficiency ratio is a useful tool
to help assess the Company's core operating performance.
The following table shows the reconciliation of core net income and core
earnings per share:
Income (loss)
before
income tax
expense $ 22,789 $ 25,380 $ 24,856 $ (11,328) $ 35,841
Income tax
expense
(benefit) 6,452 8,376 8,078 (3,682) 11,648
----------- ----------- ----------- ----------- ------------
Net income
(loss) 16,337 17,004 16,778 (7,646) 24,193
Net (gain)
loss on sale
of
securities (33) 43 (1,534) (697) (2,726)
Merger-
related
expense - 502 2,455 14,625 -
Charge for
asset write-
downs,
banking
systems
conversion,
retention
and
severance 1,103 2,493 971 28,055 -
Defined
benefit plan
termination
charge - - - - 13,384
Amortization
of non-
compete
agreements
and acquired
customer
lists 1,497 859 660 991 961
----------- ----------- ----------- ----------- ------------
Total charges 2,567 3,897 2,552 42,974 11,619
Income tax
(benefit) (738) (1,286) (829) (13,967) (3,777)
----------- ----------- ----------- ----------- ------------
Total non-
core charges
net of taxes 1,829 2,611 1,723 29,007 7,842
----------- ----------- ----------- ----------- ------------
Core net
income $ 18,166 $ 19,615 $ 18,501 $ 21,361 $ 32,035
=========== =========== =========== =========== ============
Weighted
average
diluted
shares 83,883,461 84,194,916 88,252,768 91,950,776 130,192,937
Diluted EPS
as reported $ 0.19 $ 0.20 $ 0.19 $ (0.08) $ 0.19
Core diluted
EPS
(excluding
total
charges) 0.22 0.23 0.21 0.23 0.25
The Company believes the presentation of its net income excluding total
charges provides a useful tool to help assess the Company's profitability.
STERLING BANCORP CONTACT:
Luis Massiani
SEVP & Chief Financial Officer
845.369.8040
Sterling Bancorp
400 Rella Boulevard
Montebello, NY 10901-4243
T 845.369.8040
F 845.369.8255
http://www.sterlingbancorp.com
Distribution channels: Banking, Finance & Investment Industry
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