SOURCE: Sterling Bancorp

Sterling Bancorp

January 27, 2015 16:10 ET

Sterling Bancorp Announces Results for the Three Months Ended December 31, 2014

Strong Operating Momentum Continues Highlighted by Core Diluted Earnings per Share(1) of $0.23, GAAP Diluted Earnings per Share of $0.20, and Annualized Commercial Loan Growth of 9.6%

MONTEBELLO, NY--(Marketwired - January 27, 2015) -

Key Highlights for the Three Months ended December 31, 2014

  • Total revenuereached $74.2 million.
  • Core net income was $19.6 million, which represented growth of 8% over the linked quarter.
  • Tax equivalent net interest margin was 3.70%, compared to 3.77% in the linked quarter and 3.58% in the fourth calendar quarter of 2013.
  • Total non-interest income excluding securities gains was $14.0 million, which represented 18.9% of total revenue2.
  • Core total revenuegrew 3.2% versus an increase in core non-interest expense of 1.9% over the linked quarter.
  • Core operating efficiency ratiowas 54.0%.
  • Annualized commercial loan growth of 9.6% (end of period balances) and 19.9% (average balances) over the linked quarter.
  • Core return on average tangible assetswas 1.13%, compared to 1.06% in the linked quarter and 0.69% in the fourth calendar quarter of 2013.
  • Core return on average tangible equitywas 14.42%, compared to 13.81% in the linked quarter and 8.99% in the fourth calendar quarter of 2013.
  • Signed a definitive agreement to merge with Hudson Valley Holding Corp; Sterling Bancorp will be the surviving entity.
  • Fiscal year end to change from September 30 to December 31.

Sterling Bancorp (NYSE: STL), the parent company of Sterling National Bank, today announced results for the three months ended December 31, 2014. Net income for the quarter was $17.0 million, or $0.20 per diluted share, compared to net income of $16.3 million, or $0.19 per diluted share, for the linked quarter ended September 30, 2014 and a net loss of $(14.0) million, or $(0.20) per diluted share, for the fourth calendar quarter of 2013. The net loss in the fourth calendar quarter of 2013 included merger-related expense and other charges incurred in connection with the merger with legacy Sterling Bancorp.

1 Core measures are defined in the non-GAAP tables beginning on page 10.
2 Total revenue is equal to net interest income plus non-interest income excluding securities gains and losses.

President's Comments
Jack Kopnisky, President and Chief Executive Officer, commented: "We continue to make progress towards our goal of building a high performance regional bank that delivers strong growth and profitability. Since December 31, 2013, our total loans have grown by $688.5 million to $4.8 billion, and total commercial loans have grown by $693.7 million to $4.1 billion. This represents growth of 16.7% and 20.5%, respectively. As of December 31, 2014, our total assets reached $7.4 billion compared to $6.7 billion a year ago.

"Core net income for the quarter was $19.6 million and core diluted earnings per share were $0.23. Our core return on average tangible assets was 1.13% and core return on average tangible equity was 14.42%. This compares to 0.69% and 8.99%, respectively, for the same quarter a year ago.

"Consistent with our strategy of expanding in the Greater New York metropolitan region, we announced our pending merger with Hudson Valley Holding Corp. on November 5, 2014. We anticipate closing the transaction in the second quarter of 2015. On a pro forma basis, the combined company will have approximately $10.5 billion in assets, $6.6 billion in loans and $8.1 billion in deposits. We anticipate the acquisition will allow us to realize significant cost savings and revenue enhancement opportunities.

"On a linked quarter basis, our core total revenue grew 3.2% while core non-interest expense increased by 1.9%. We continue to realize the anticipated revenue and expense benefits of the merger with legacy Sterling Bancorp and the consolidation of our financial centers and other locations. For the quarter, our core operating efficiency ratio was 54.0%, which compares to 54.7% in the linked quarter and 65.4% in the same quarter last year.

"We continue to experience strong loan growth across multiple asset classes. As of December 31, 2014, total loans were $4.8 billion, which represented annualized growth of 4.6% over the prior quarter end and growth of $712 million, or 17.3%, since the completion of the merger with legacy Sterling Bancorp. Total loan balances were impacted by the sale of approximately $43.0 million of residential mortgage loans in December 2014, which had been previously held for investment. During the quarter, our commercial loan balances grew $94.4 million, which represented annualized growth of 9.6% over the prior quarter end.

"As of December 31, 2014, our total deposits were $5.2 billion. Our retail, commercial and municipal transaction, money market and savings accounts were $4.7 billion, which represented 89.3% of our total deposit balances. Our total cost of deposits was 0.21% for the three months ended December 31, 2014.

"We continue to focus on diversifying and improving our revenue mix. Non-interest income excluding securities gains was $14.0 million for the quarter, which represented 18.9% of total revenue. We have a significant opportunity to grow our specialty lending and other fee-based businesses and anticipate completing the acquisition of a specialized payroll services provider by February 2015. We maintain our target of growing fee income and increasing the proportion of fee income to total revenue to greater than 20% over time.

"Net charge-offs against the allowance for loan losses for the three months ended December 31, 2014 were $1.2 million, compared to $1.1 million in the three months ended September 30, 2014. The allowance for loan losses to total loans was 0.88%. 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 the performance of these loans remains satisfactory. The ratio of allowance for loan losses to non-performing loans continues to strengthen and increased from 79.7% at September 30, 2014 to 90.8% at December 31, 2014.

"Our capital position remains strong. At December 31, 2014, our tangible equity to tangible assets ratio was 7.76% and our Tier 1 leverage ratio was 8.21%. At Sterling National Bank, our Tier 1 leverage ratio was 9.38%. We have ample capital and liquidity to support our organic growth and execute our strategy.

"We are changing our fiscal year end from September 30 to December 31 which will be effective for the fourth calendar quarter of 2014. This change will assist our shareholders in reviewing our financial results and evaluating our performance. 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 February 16, 2015 to our holders as of the record date of February 6, 2015."

Reconciliation of Core to GAAP Results
Results for the fourth calendar quarter of 2014 were impacted by pre-tax charges of $3.9 million, which are listed below. Excluding the impact of these items, net income was $19.6 million, or $0.23 per diluted share. The pre-tax charges were the following:

  • Costs associated with the banking systems conversion of $1.4 million. The charges were recognized as other non-interest expense.
  • A charge to exit certain facilities and financial center locations of $610 thousand, which was recognized in other non-interest expense.
  • A charge incurred in connection with the change in fiscal year end of $465 thousand, which was recognized in other non-interest expense.
  • Amortization of non-compete intangible assets of $859 thousand.
  • Merger-related expense of $502 thousand incurred in connection with the pending merger with Hudson Valley.

See the reconciliation of the Company's non-GAAP financial measures included in this press release beginning on page 10. Non-GAAP financial measures include references to the terms "core" or "excluding."

Change in Fiscal Year End
The Company is changing its fiscal year end from September 30 to December 31, which will be effective for the fourth calendar quarter of 2014. The Company will file a transition report on Form 10-K with the Securities and Exchange Commission for the three month period ended December 31, 2014. The Company expects to file the transition report on or about March 2, 2015.

Net Interest Income and Margin
Fourth calendar quarter 2014 compared with fourth calendar quarter 2013
Net interest income was $60.2 million, up $14.4 million compared to the fourth calendar quarter of 2013. This was mainly the result of higher average loans and investment securities balances due to the merger with legacy Sterling Bancorp and organic growth. The tax-equivalent yield on investment securities increased 16 basis points and the yield on loans decreased 14 basis points. Yield on loans included $1.2 million in accretion of the fair value discount associated with the loans acquired from Gotham Bank of New York and legacy Sterling Bancorp. The cost of total deposits was 21 basis points and the cost of borrowings was 2.21%. The net interest margin on a tax-equivalent basis was 3.70% compared to 3.58% for the same period a year ago.

Fourth calendar quarter 2014 compared with linked quarter ended September 30, 2014
Net interest income increased $604 thousand compared to the linked quarter ended September 30, 2014. The increase in net interest income was mainly due to a $175.8 million increase in the average balance of loans outstanding compared to the linked quarter. Partially offsetting this increase was a decline in the yield on loans, which was 4.74% for the quarter compared to 4.83% for the linked quarter. The decline was due mainly to a decrease in the accretion of the fair value discount associated with loans acquired from Gotham Bank of New York and legacy Sterling Bancorp of $448 thousand. The tax-equivalent yield on interest earning assets was 4.17% compared to 4.24% in the linked quarter. Tax-equivalent net interest margin was 3.70% compared to 3.77% in the linked quarter.

Non-interest Income
Fourth calendar quarter 2014 compared with fourth calendar quarter 2013
Excluding net (loss) gains on sale of securities, non-interest income increased $4.2 million to $14.0 million in the fourth calendar quarter of 2014 compared to the same quarter last year. The increase was mainly due to an increase in fees associated with service charges on deposits, fees generated in the factoring and payroll finance businesses and gain on sale income in mortgage banking. The Company realized a net loss on sale of securities of $43 thousand in the fourth calendar quarter of 2014 compared to a net loss on sale of securities of $645 thousand in the same quarter last year.

Fourth calendar quarter 2014 compared with linked quarter ended September 30, 2014
Excluding net (loss) gains on sale of securities, non-interest income increased $1.7 million to $14.0 million during the fourth calendar quarter of 2014. The increase was mainly due to an increase in mortgage banking income of $698 thousand, an increase of $320 thousand in factoring and payroll finance fees, a $353 thousand increase in title insurance income and a $233 thousand increase in bank owned life insurance income. The Company realized a net gain on sale of securities of $33 thousand in the linked quarter ended September 30, 2014.

Non-interest Expense
Fourth calendar quarter 2014 compared with fourth calendar quarter 2013
Non-interest expense declined $27.2 million relative to the fourth calendar quarter of 2013 to $45.8 million, principally the result of an $8.6 million decrease in direct merger-related expense and an $18.5 million decrease in other non-interest expense, which were mainly incurred in connection with the legacy Sterling Bancorp merger.

Fourth calendar quarter 2014 compared with linked quarter ended September 30, 2014
Non-interest expense increased $2.0 million compared to the linked quarter, mainly due to a $2.0 million increase in other non-interest expense, which included a charge of $1.4 million associated with the banking systems conversion, a charge of $465 thousand associated with the change in our fiscal year end and a $610 thousand charge related to the closing of certain facilities and financial centers. In the fourth calendar quarter of 2014 we also incurred costs of $502 thousand related to our pending merger with Hudson Valley Holding Corp. During the quarter, the amortization of intangible assets declined $638 thousand to $1.9 million as several non-compete agreements associated with the legacy Sterling Bancorp merger expired in October 2014.

Income Taxes
In the fourth calendar quarter of 2014, the Company recorded income taxes at a rate of 33.0%, compared to an effective tax rate of 28.3% in the linked quarter and 33.2% for the same quarter last year.

Key Balance Sheet Highlights at December 31, 2014

  • Total assets were $7.4 billion.
  • Total loans, including loans held for sale, were $4.9 billion.
  • Commercial and industrial loans (which include traditional C&I, asset-based lending, payroll finance, factoring and warehouse lending) represented 44.6%, commercial real estate loans represented 38.3%, consumer and residential mortgage loans represented 15.2%, and acquisition, development and construction loans represented 2.0% of the total loan portfolio.
  • Commercial loan growth, which includes commercial and industrial loans, commercial real estate loans and specialty lending businesses, was $94.4 million for the quarter ended December 31, 2014, and represented annualized growth of 9.6% over the prior quarter.
  • Securities, excluding FHLB and FRB stock, were $1.7 billion and represented 23.1% of total assets.
  • Total deposits were $5.2 billion.
  • Retail, commercial and municipal transaction, money market and savings deposits were $4.7 billion and represented 89.3% of total deposits.
  • The allowance for loan losses was $42.4 million and represented 0.88% of total loans. Loans acquired in prior merger transactions 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 $6.47.

Credit Quality
Non-performing loans decreased $4.3 million to $46.6 million, or 0.97% of total loans at December 31, 2014 compared to $51.0 million, or 1.07% of total loans at September 30, 2014. Net charge-offs for the fourth calendar quarter of 2014 that were charged to the allowance for loan losses were $1.2 million, compared to $1.1 million in the linked quarter. The allowance for loan losses at December 31, 2014 was $42.4 million, which represented 90.8% of non-performing loans and 0.88% of our total loan portfolio compared to $40.6 million, 79.7% and 0.85%, respectively, as of September 30, 2014. The increase in the balance of the allowance for loan losses was mainly related to the higher balance of loans outstanding at December 31, 2014.

Capital
The Company's stockholders' equity was $975.2 million at December 31, 2014, an increase of $14.1 million relative to September 30, 2014. The increase in stockholders' equity was mainly the result of net income of $17.0 million, an increase in other comprehensive income of $1.2 million and stock option exercises and stock-based compensation which totaled $1.7 million. These increases were partially offset by dividends declared of $5.8 million.

Tangible book value per share increased to $6.47 at December 31, 2014 from $6.30 at September 30, 2014. Total goodwill and other intangible assets were $432.3 million at December 31, 2014, a decrease of $1.9 million compared to September 30, 2014. For the quarter ended December 31, 2014, basic and diluted weighted average common shares outstanding increased to 83.8 million and 84.2 million, respectively, compared to 83.6 million basic shares and 83.9 million diluted shares, respectively, for the quarter ended September 30, 2014. Total shares outstanding at December 31, 2014 were approximately 83.9 million.

Consolidated tangible equity to tangible assets was 7.76% at December 31, 2014 and the Company's Tier 1 leverage ratio was 8.21%. Sterling National Bank remained well capitalized at December 31, 2014 with a Tier 1 leverage ratio of 9.38%.

Sterling Bancorp will host a teleconference and webcast on Wednesday, January 28, 2015 at 10:30 AM eastern 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 #61855975. A replay of the teleconference will be available beginning January 28, 2015 and 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: the ability to obtain regulatory approvals and meet other closing conditions in connection with the Hudson Valley Holding Corp. merger, including approval by Sterling Bancorp and Hudson Valley Holding Corp. stockholders, on the expected terms and schedule; delay in closing the merger; difficulties and 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 Transition Report on Form 10-K for the period October 1, 2014 through December 31, 2014. While the Company is not aware of any need to revise the results disclosed in this release, accounting literature may require information received by management between the date of this release and the filing of the Transition Report on Form 10-K to be reflected in the results of the fiscal period, even though the new information was received by management subsequent to the date of this release.

             
             
Sterling Bancorp and Subsidiaries          
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION         
(unaudited, in thousands, except share and per share data)          
   
     12/31/2014     9/30/2014     9/30/2013  
Assets:                   
Cash and due from banks  $ 121,520   $ 177,619   $ 113,090  
Investment securities    1,713,183     1,689,888     1,208,392  
Loans held for sale    46,599     17,846     1,011  
Loans:                   
 Residential mortgage    529,766     570,431     400,009  
 Commercial real estate    1,842,821     1,817,576     1,277,037  
 Commercial and industrial    2,145,644     2,076,474     439,787  
 Acquisition, development and construction    96,995     92,149     102,494  
 Consumer    200,415     203,808     193,571  
  Total loans, gross    4,815,641     4,760,438     2,412,898  
 Allowance for loan losses    (42,374 )   (40,612 )   (28,877 )
  Total loans, net    4,773,267     4,719,826     2,384,021  
Federal Home Loan Bank ("FHLB") and Federal Reserve Bank Stock, at cost    75,437     66,085     24,312  
Accrued interest receivable    19,301     19,667     11,698  
Premises and equipment, net    46,156     43,286     36,520  
Goodwill    388,926     388,926     163,117  
Other intangibles    43,332     45,278     5,891  
Bank owned life insurance    150,522     119,486     60,914  
Other real estate owned    5,867     7,580     6,022  
Other assets    40,712     41,900     34,184  
  Total assets  $ 7,424,822   $ 7,337,387   $ 4,049,172  
Liabilities:                   
Deposits  $ 5,212,325   $ 5,298,654   $ 2,962,294  
FHLB borrowings    1,003,209     795,028     462,953  
Other borrowings    9,846     45,639     -  
Senior notes    98,498     98,402     98,033  
Mortgage escrow funds    4,167     4,494     12,646  
Other liabilities    121,577     134,032     30,380  
  Total liabilities    6,449,622     6,376,249     3,566,306  
Stockholders' equity    975,200     961,138     482,866  
  Total liabilities and stockholders' equity  $ 7,424,822   $ 7,337,387   $ 4,049,172  
   
Shares of common stock outstanding at period end    83,927,572     83,628,267     44,351,046  
Book value per share  $ 11.62   $ 11.49   $ 10.89  
Tangible book value per share    6.47     6.30     7.08  
             
             
            
            
Sterling Bancorp and Subsidiaries          
CONSOLIDATED CONDENSED INCOME STATEMENTS          
(unaudited, in thousands, except share and per share data)          
   
     For the Quarter Ended  
     12/31/2014      9/30/2014    12/31/2013  
Interest and dividend income:                   
 Loans and loan fees  $ 56,869  $ 55,793  $ 43,288  
 Securities taxable    7,413      7,587    6,903  
 Securities non-taxable    2,865      2,866    2,161  
 Other earning assets    940      863    359  
 Total interest income    68,087      67,109    52,711  
Interest expense:                   
 Deposits    2,818      2,421    1,834  
 Borrowings    5,032      5,055    5,001  
Total interest expense    7,850      7,476    6,835  
Net interest income    60,237      59,633    45,876  
Provision for loan losses    3,000      5,350    3,000  
   
Net interest income after provision for loan losses    57,237      54,283    42,876  
Non-interest income:                   
 Accounts receivable / factoring commissions and other fees    4,134      3,814    2,226  
 Mortgage banking income    2,858      2,160    1,616  
 Deposit fees and service charges    4,221      3,850    3,942  
 Net (loss) gain on sale of securities    (43 )    33    (645 )
 Bank owned life insurance    1,024      791    740  
 Investment management fees    403      446    540  
 Other    1,360      1,192    729  
Total non-interest income    13,957      12,286    9,148  
Non-interest expense:                   
 Compensation and benefits    22,410      22,110    23,554  
 Stock-based compensation plans    1,146      1,006    991  
 Occupancy and office operations    7,245      7,148    6,333  
 Amortization of intangible assets    1,873      2,511    1,875  
 FDIC insurance and regulatory assessments    1,568      1,619    1,164  
 Other real estate owned, net (income) expense    (81 )    214    368  
 Merger-related expenses    502      -    9,068  
 Other    11,151      9,172    29,621  
Total non-interest expense    45,814      43,780    72,974  
Income (loss) before income tax expense    25,380      22,789    (20,950 )
Income tax expense (benefit)    8,376      6,452    (6,948 )
Net income (loss)  $ 17,004    $ 16,337  $ (14,002 )
Weighted average common shares:                   
 Basic    83,831,380      83,610,943    70,493,305  
 Diluted    84,194,916      83,883,461    70,493,305  
Earnings per common share:                   
 Basic earnings per share  $ 0.20  $ 0.20  $ (0.20 )
 Diluted earnings per share    0.20      0.19    (0.20 )
 Dividends declared per share    0.07      0.07    -  
             
             
 
 
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  12/31/2014     9/30/2014     6/30/2014     3/31/2014   12/31/2013  
Total assets  $ 7,424,822 $ 7,337,387   $ 7,250,729 $ 6,924,419 $ 6,667,437  
Securities available for sale    1,140,846     1,110,813     1,160,510     1,233,310     1,153,313  
Securities held to maturity    572,337     579,075     570,470     527,265     508,337  
Loans, gross 1    4,815,641     4,760,438     4,558,624     4,244,354     4,127,141  
Goodwill    388,926     388,926     387,325     387,286     387,517  
Other intangibles    43,332     45,278     47,860     50,441     53,020  
Deposits    5,212,325     5,298,654     5,102,457     5,211,724     4,920,564  
Municipal deposits (included above)    883,350     992,761     824,522     926,618     673,656  
Borrowings    1,111,553     939,069     1,061,777     634,516     696,270  
Stockholders' equity    975,200     961,138     953,433     936,466     925,109  
Tangible equity    542,942     526,934     518,248     498,739     484,572  
Average Balances                               
Total assets  $ 7,340,332 $ 7,217,649   $ 7,048,328 $ 6,747,546 $ 6,013,816  
Loans, gross:                               
 Residential mortgage    566,705     548,146     536,038     520,887     491,231  
 Commercial real estate    1,850,168     1,736,441     1,680,242     1,580,454     1,466,986  
 Commercial and industrial    2,038,784     1,966,359     1,805,048     1,625,720     1,268,492  
 Acquisition, development and construction    95,727     97,863     94,804     93,531     98,691  
 Consumer    204,631     202,940     199,626     199,834     200,637  
Loans, total 1    4,756,015     4,580,178     4,315,758     4,042,702     3,526,037  
Securities (taxable)    1,355,104     1,349,126     1,444,507     1,386,538     1,330,646  
Securities (non-taxable)    366,017     361,766     339,417     324,470     250,520  
Total earning assets    6,598,178     6,430,467     6,265,883     5,985,054     5,207,436  
Deposits:                               
 Non-interest bearing demand    1,626,341     1,636,583     1,681,169     1,640,125     1,361,622  
 Interest bearing demand    756,217     732,699     712,051     761,409     619,746  
 Savings (including mortgage escrow funds)    685,142     647,103     606,518     613,131     622,530  
 Money market    1,817,091     1,566,669     1,625,335     1,461,774     1,182,858  
 Certificates of deposit    457,996     520,899     549,201     582,580     565,462  
Total deposits and mortgage escrow    5,342,787     5,103,953     5,174,274     5,059,019     4,352,218  
Borrowings    902,299     1,064,137     820,607     660,486     709,125  
Equity    973,089     956,166     944,476     934,304     780,241  
Tangible equity    539,693     522,025     507,671     494,691     432,703  
Condensed Tax Equivalent Income Statement                               
Interest and dividend income  $ 68,087 $ 67,109   $ 65,761 $ 61,325 $ 52,711  
Tax equivalent adjustment*    1,546     1,543     1,481     1,440     1,164  
Interest expense    7,850     7,476     7,310     7,297     6,835  
Net interest income (tax equivalent)    61,783     61,176     59,932     55,468     47,040  
Provision for loan losses    3,000     5,350     5,950     4,800     3,000  
Net interest income after provision for loan losses    58,783     55,826     53,982     50,668     44,040  
Non-interest income    13,957     12,286     13,471     12,415     9,148  
Non-interest expense    45,814     43,780     44,904     46,723     72,974  
Income (loss) before income tax expense    26,926     24,332     22,549     16,360     (19,786 )
Income tax expense (benefit) (tax equivalent)*    9,922     7,995     7,538     6,028     (5,784 )
Net income (loss)  $ 17,004   $ 16,337   $ 15,011   $ 10,332   $ (14,002 )
                 

Does not reflect allowance for loan losses of $42,374, $40,612, $36,350, $32,015 and $30,612.
*Tax exempt income assumed at a statutory 35% federal tax rate.

 
 
Sterling Bancorp and Subsidiaries
SELECTED FINANCIAL RATIOS
(unaudited, in thousands, except share and per share data)
 
   For the Quarter Ended
Per Share Data    12/31/2014     9/30/2014     6/30/2014     3/31/2014     12/31/2013  
Basic earnings per share  $ 0.20   $ 0.20   $ 0.18   $ 0.12   $ (0.20 )
Diluted earnings per share    0.20     0.19     0.18     0.12     (0.20 )
Dividends declared per share    0.07     0.07     0.07     0.07     -  
Tangible book value per share    6.47     6.30     6.20     5.97     5.77  
Shares of common stock outstanding    83,927,572     83,628,267     83,600,529     83,544,307     83,955,647  
Basic weighted average common shares outstanding    83,831,380     83,610,943     83,580,050     83,497,765     70,493,305  
Diluted weighted average common shares outstanding    84,194,916     83,883,461     83,806,135     83,794,107     70,493,305  
Performance Ratios (annualized)                               
Return on average assets    0.92 %   0.90 %   0.85 %   0.62 %   (0.92 )%
Return on average equity    6.93 %   6.78 %   6.37 %   4.48 %   (7.12 )%
Return on average tangible equity 1    12.50 %   12.42 %   11.86 %   8.47 %   (12.84 )%
Core operating efficiency 1    54.0 %   54.7 %   57.8 %   61.4 %   65.4 %
Analysis of Net Interest Income                               
Yield on loans    4.74 %   4.83 %   5.04 %   5.05 %   4.88 %
Yield on investment securities - tax equivalent2    2.73 %   2.78 %   2.75 %   2.77 %   2.57 %
Yield on earning assets - tax equivalent2    4.17 %   4.24 %   4.30 %   4.25 %   4.10 %
Cost of deposits    0.21 %   0.19 %   0.18 %   0.19 %   0.17 %
Cost of borrowings    2.21 %   1.88 %   2.44 %   3.01 %   2.80 %
Cost of interest bearing liabilities    0.67 %   0.65 %   0.68 %   0.73 %   0.73 %
Net interest rate spread - tax equivalent basis2    3.50 %   3.59 %   3.62 %   3.52 %   3.37 %
Net interest margin - tax equivalent basis2    3.70 %   3.77 %   3.84 %   3.76 %   3.58 %
Capital                               
Tier 1 leverage ratio - Bank only    9.38 %   9.34 %   9.42 %   9.83 %   10.58 %
Tier 1 risk-based capital - Bank only  $ 651,204   $ 636,327   $ 624,599   $ 622,878   $ 593,462  
Total risk-based capital - Bank only    693,973     676,939     661,344     655,288     624,469  
Tangible equity as a % of tangible assets - consolidated 1    7.76 %   7.63 %   7.60 %   7.69 %   7.78 %
Asset Quality                               
Non-performing loans (NPLs) non-accrual  $ 45,859   $ 49,562   $ 53,153   $ 54,877   $ 35,597  
Non-performing loans (NPLs) still accruing    783     1,401     3,645     5,394     2,845  
Other real estate owned    5,867     7,580     5,017     9,275     11,751  
Non-performing assets (NPAs)    52,509     58,543     61,815     69,546     50,193  
Net charge-offs    1,238     1,088     1,615     3,397     1,265  
Net charge-offs as a % of average loans (annualized)    0.10 %   0.09 %   0.15 %   0.34 %   0.14 %
NPLs as a % of total loans    0.97 %   1.07 %   1.25 %   1.42 %   0.93 %
NPAs as a % of total assets    0.71 %   0.80 %   0.85 %   1.00 %   0.75 %
Allowance for loan losses as a % of NPLs    90.8 %   79.7 %   64.0 %   53.1 %   79.6 %
Allowance for loan losses as a % of total loans    0.88 %   0.85 %   0.80 %   0.75 %   0.74 %
Special mention loans  $ 31,318   $ 39,553   $ 41,829   $ 39,964   $ 38,834  
Substandard / doubtful loans    74,901     73,093     79,110     82,673     77,337  

1 See reconciliation of non-GAAP measure on following page.
2 Tax equivalent adjustment represents interest income earned on municipal securities divided by the applicable Federal tax rate of 35% for all periods presented.

 
 
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
   
   As of and for the Quarter Ended
   12/31/2014   9/30/2014   6/30/2014   3/31/2014   12/31/2013 
The Company provides supplemental reporting of non-GAAP measures as management believes this information is useful to investors. 
 
The following table shows the reconciliation of stockholders' equity to tangible equity and the tangible equity ratio:      
Total assets  $ 7,424,822   $ 7,337,387   $ 7,250,729   $ 6,924,419   $ 6,667,437  
Goodwill and
other intangibles
   (432,258 )   (434,204 )   (435,185 )   (437,727 )   (440,537 )
Tangible assets    6,992,564     6,903,183     6,815,544     6,486,692     6,226,900  
Stock-
holders' equity
   975,200     961,138     953,433     936,466     925,109  
Goodwill
and other intangibles
   (432,258 )   (434,204 )   (435,185 )   (437,727 )   (440,537 )
Tangible stock-
holders' equity
   542,942     526,934     518,248     498,739     484,572  
   
Common stock
outstanding at period end
   83,927,572     83,628,267     83,600,529     83,544,307     83,955,647  
Tangible equity
as a % of tangible assets
   7.76 %   7.63 %   7.60 %   7.69 %   7.78 %
Tangible book value
per share
 $ 6.47   $ 6.30   $ 6.20   $ 5.97   $ 5.77  
 
The Company believes that tangible equity is useful as a tool to help assess a company's capital position.         
 
The following table shows the reconciliation of return on average tangible equity and core return on average tangible equity:
Average stockholders' equity  $ 973,089   $ 956,166   $ 944,476   $ 934,304   $ 780,241  
Average goodwill and other intangibles    (433,396 )   (434,141 )   (436,805 )   (439,613 )   (347,538 )
Average tangible stockholders' equity    539,693     522,025     507,671     494,691     432,703  
Net income (loss)    17,004     16,337     15,011     10,332     (14,002 )
Net income (loss), if annualized    67,462     64,815     60,209     41,902     (55,551 )
Return on average tangible equity    12.50 %   12.42 %   11.86 %   8.47 %   (12.84 )%
Core net income (see reconciliation on page 11)  $ 19,615   $ 18,166   $ 15,715   $ 13,094   $ 9,805  
Annualized core net income    77,820     72,072     63,033     53,103     38,900  
Core return on average tangible equity    14.42 %   13.81 %   12.42 %   10.73 %   8.99 %
The Company believes that the return on average tangible stockholders' equity is useful as a tool to help assess a company's use of tangible equity.
 
The following table shows the reconciliation of return on tangible assets and core return on tangible assets:
Average assets  $ 7,340,332   $ 7,217,649   $ 7,048,328   $ 6,747,546   $ 6,013,816  
Average goodwill and other intangibles    (433,396 )   (434,141 )   (436,805 )   (439,613 )   (347,538 )
Average tangible assets    6,906,936     6,783,508     6,611,523     6,307,933     5,666,278  
Net income (loss)    17,004     16,337     15,011     10,332     (14,002 )
Net income (loss), if annualized    67,462     64,815     60,209     41,902     (55,551 )
Return on average tangible assets    0.98 %   0.96 %   0.91 %   0.66 %   (0.98 )%
Core net income (see reconciliation on page 11)  $ 19,615   $ 18,166   $ 15,715   $ 13,094   $ 9,805  
Annualized core net income    77,820     72,072     63,033     53,103     38,900  
Core return on average tangible assets    1.13 %   1.06 %   0.95 %   0.84 %   0.69 %
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       
     12/31/2014    9/30/2014    6/30/2014    3/31/2014    12/31/2013  
The following table shows the reconciliation of the core operating efficiency ratio:
Net interest income  $ 60,237  $ 59,633  $ 58,451  $ 54,028  $ 45,876  
Non-interest income    13,957    12,286    13,471    12,415    9,148  
Total net revenue    74,194    71,919    71,922    66,443    55,024  
Tax equivalent adjustment on securities interest                           
income    1,546    1,543    1,481    1,440    1,164  
Net loss (gain) on sale of securities    43    (33 )  (1,193 )  (60 )  645  
Other (other gains and fair value loss on interest                           
rate caps)    -    -    -    -    (93 )
Core total revenue    75,783    73,429    72,210    67,823    56,740  
Non-interest expense    45,814    43,780    44,904    46,723    72,974  
Merger-related expense    (502 )  -    -    (388 )  (9,068 )
Charge for asset write-downs, banking systems                           
conversion, retention and severance    (2,493 )  (1,103 )  (2,321 )  (678 )  (22,167 )
Gain on sale of financial center and redemption of Trust Preferred Securities    -    -    1,637    -    -  
Charge on benefit plan settlement    -    -    -    (1,486 )  (2,743 )
Amortization of intangible assets    (1,873 )  (2,511 )  (2,511 )  (2,511 )  (1,875 )
Core non-interest expense    40,946    40,166    41,709    41,660    37,121  
Core operating efficiency ratio    54.0 %  54.7 %  57.8 %  61.4 %  65.4 %
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  $ 25,380  $ 22,789  $ 21,068  $ 14,920  $ (20,950 )
Income tax expense (benefit)    8,376    6,452    6,057    4,588    (6,948 )
Net income (loss)    17,004    16,337    15,011    10,332    (14,002 )
   
Net loss (gain) on sale of securities    43    (33 )  (1,193 )  (60 )  645  
Merger-related expense    502    -    -    388    9,068  
Charge for asset write-downs, banking systems                           
conversion, retention and severance    2,493    1,103    2,321    678    22,167  
Gain on sale of financial center and redemption of Trust Preferred Securities    -    -    (1,637 )  -    -  
Charge on benefit plan settlement    -    -    -    1,486    2,743  
Amortization of non-compete agreements    859    1,497    1,497    1,497    998  
Total charges    3,897    2,567    988    3,989    35,621  
Income tax (benefit)    (1,286 )  (738 )  (284 )  (1,227 )  (11,814 )
Total non-core charges net of taxes    2,611    1,829    704    2,762    23,807  
Core net income  $ 19,615  $ 18,166  $ 15,715  $ 13,094  $ 9,805  
Weighted average diluted shares1    84,194,916    83,883,461    83,806,135    83,794,107    70,493,305  
Diluted EPS as reported  $ 0.20  $ 0.19  $ 0.18  $ 0.12  $ (0.20 )
Core diluted EPS (excluding total charges)    0.23    0.22    0.19    0.16    0.14  
The Company believes the presentation of its net income excluding total charges provides a useful tool to help assess the Company's profitability.
 
1 For the quarter ended December 31, 2013, represents diluted share calculation to compute diluted EPS assuming net income.
 
 

Contact Information

  • 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