SOURCE: Sterling Bancorp

Sterling Bancorp

April 30, 2014 17:47 ET

Sterling Bancorp Announces Results for the Second Fiscal Quarter and Six Months Ended March 31, 2014

Strong Quarter Performance Highlighted by Core Diluted Earnings per Share of $0.16, GAAP Diluted Earnings per Share of $0.12, and Annualized Commercial Loan Growth of 17.7%

MONTEBELLO, NY--(Marketwired - Apr 30, 2014) - Sterling Bancorp (NYSE: STL)

Key Highlights for the Second Fiscal Quarter 2014

  • First full fiscal quarter as the combined Sterling Bancorp (merger of legacy Provident New York Bancorp and legacy Sterling Bancorp).
  • Total revenue excluding securities gains was $66.4 million. 
  • Tax equivalent net interest margin was 3.76%, compared to 3.58% in the linked quarter and 3.41% in the second quarter of fiscal 2013.
  • Total non-interest income was $12.4 million, which represented 18.6% of total revenue.
  • Core operating efficiency ratio was 62.0%.
  • Annualized commercial loan growth of 17.7% over prior quarter.
  • Annualized deposit growth (including municipal deposits) of 23.7% over prior quarter.
  • Core return on average tangible assets was 0.85%, compared to 0.66% in the linked quarter and 0.77% in the second quarter of fiscal 2013.
  • Core return on average tangible equity was 10.8%, compared to 8.6% in the linked quarter and 8.7% in the second quarter of fiscal 2013.

Sterling Bancorp (NYSE: STL), the parent company of Sterling National Bank, today announced results for the quarter and six months ended March 31, 2014. Net income for the quarter was $10.3 million, or $0.12 per diluted share, compared to net income of $6.5 million, or $0.15 per diluted share for the same quarter last year and net loss of $(14.0) million, or $(0.20) per diluted share, which included a number of merger-related expenses and other charges, for the linked quarter ended December 31, 2013. For the six months ended March 31, 2014, net loss was $(3.7) million, or $(0.05) per diluted share, compared to net income of $13.5 million, or $0.31 per diluted share for the six months ended March 31, 2013.

Results for the quarter and six months ended March 31, 2014 were impacted by pre-tax merger-related expenses associated with the legacy Sterling Bancorp merger transaction and pre-tax charges for asset write-downs and the settlement of benefit plan obligations. In total, merger-related expenses and other charges were $4.0 million in the second fiscal quarter of 2014 and $39.0 million in the six months ended March 31, 2014. Excluding the impact of these items, net income for the second fiscal quarter of 2014 was $13.2 million, or $0.16 per diluted share and net income for the six months ended March 31, 2014 was $22.7 million, or $0.29 per diluted share. 

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".

President's Comments
Jack Kopnisky, President and CEO, commented: "During the quarter we continued 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. We have made significant progress in the integration of legacy Sterling Bancorp, as evidenced by our strong results in the quarter which included higher profitability, double-digit loan growth and a significant improvement in operating efficiency.

"Core earnings for the quarter were $13.2 million and core earnings per diluted share were $0.16. Our profitability ratios continued to improve; for the quarter, our core return on average tangible assets was 0.85% and core return on average tangible equity was 10.8%. This compares to 0.77% and 8.7%, respectively for the same quarter a year ago. 

"We experienced strong loan growth across multiple asset classes. As of March 31, 2014, total loans including loans held for sale were $4.3 billion, which represented annualized growth of 11.4% over the prior quarter end. Focusing on our commercial portfolio, which includes commercial and industrial loans, commercial real estate loans and specialty lending businesses, commercial loan balances grew by $145.4 million to $3.4 billion, which represented annualized growth of 17.7% over the prior quarter end. 

"Our funding and liquidity position remains strong and the increase in our deposit balances also highlights the success of the merger integration. As of March 31, 2014, our retail and commercial transaction, money market and savings accounts were $3.7 billion, which represented annual growth of 7.2% over balances at December 31, 2013. We have re-started our recruiting efforts and hired 11 new relationship bankers during the second quarter. We anticipate that our existing and new commercial relationship teams will continue to drive significant loan and deposit growth. 

"We continue to focus on diversifying and improving our revenue mix. Non-interest income was $12.4 million for the quarter, which represented approximately 18.6% of total revenue. We continue to see significant opportunities to grow our specialty lending businesses, which we anticipate will allow us to grow fee income and increase the proportion of fee income to total revenue to approximately 20% - 25% over time. 

"We have also begun to realize the anticipated cost savings from the merger. For the quarter, our core operating efficiency ratio was 62.0%, which compares to 65.4% in the linked quarter and 67.4% in the same quarter a year ago. We anticipate we will continue to improve operating efficiency as we realize the benefits of becoming a larger, more diversified company.

"Net charge-offs against the allowance for loan losses for the quarter ended March 31, 2014 were $3.4 million, compared to $1.3 million in the prior quarter. A significant portion of these charge-offs were associated with three acquisition, development and construction relationships, a portfolio we are in the process of liquidating. The allowance for loan losses to total loans, excluding loans acquired in the Gotham and legacy Sterling Bancorp transactions that were recorded at fair value at their acquisition dates and continue to carry no allowance, was 1.12%.

"Today we also announced plans to redeem all of the issued and outstanding 8.375% Cumulative Trust Preferred Securities of Sterling Bancorp Trust I on June 1, 2014, which will generate significant interest expense savings.

"Our capital position remains strong. At March 31, 2014, our tangible equity to tangible assets ratio was 7.69% and our Tier 1 leverage ratio at Sterling National Bank was 9.83%. We have ample capital and liquidity to support our 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 May 22, 2014 to our holders on the record date of May 12, 2014."

Net Interest Income and Margin 
Second quarter fiscal 2014 compared to the second quarter fiscal 2013
Net interest income was $54.0 million, up $26.2 million compared to the second quarter of fiscal 2013. This was mainly the result of higher average loans and investment securities balances and an increase in net interest margin due to the merger transaction with legacy Sterling Bancorp. The tax-equivalent yield on investments increased 45 basis points and yield on loans increased 12 basis points. Yield on loans included $2.6 million in accretion of the fair value discount associated with the loans acquired from Gotham and legacy Sterling Bancorp. The cost of total deposits was 19 basis points and the cost of borrowings was 3.01%. The net interest margin on a tax-equivalent basis was 3.76% compared to 3.41% for the same period a year ago. 

Second quarter fiscal 2014 compared with linked quarter ended December 31, 2013
Net interest income increased $8.2 million compared to the linked quarter ended December 31, 2013. The increase in net interest income for the second quarter was due to higher average loans and investment securities balances and an increase in net interest margin due to the legacy Sterling Bancorp merger transaction. Average earning assets for the quarter were $6.0 billion, the yield on loans increased to 5.05% and tax-equivalent yield on interest earning assets was 4.25%. Tax-equivalent net interest margin increased to 3.76% from 3.58% in the linked quarter.

Non-interest Income
Second quarter fiscal 2014 compared with second quarter fiscal 2013
Excluding net gains and losses on sale of securities, non-interest income increased $7.7 million to $12.4 million during the second quarter of fiscal 2014. 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 gain on sale of securities of $60 thousand for the second quarter of fiscal 2014 compared to net gain on sale of securities of $2.2 million in the year ago quarter.

Second quarter fiscal 2014 compared with linked quarter ended December 31, 2013
Excluding net gains and losses on sale of securities, non-interest income increased $2.6 million to $12.4 million during the second fiscal quarter of 2014. The increase was mainly due to the factors discussed above. The Company realized a net loss on sale of securities of $645 thousand in the linked quarter ended December 31, 2013.

Non-interest Expense
Second quarter fiscal 2014 compared with second quarter fiscal 2013
Non-interest expense increased $23.4 million relative to the second quarter of fiscal 2013 to $46.7 million, principally the result of increased compensation and benefits expense, occupancy and office operations expense, and other expenses due to the legacy Sterling Bancorp merger transaction. Other expenses for the quarter included merger-related expenses of $388 thousand, a charge related to the core banking systems conversion of $423 thousand, severance compensation of $255 thousand, a charge on the settlement of the legacy Provident employee stock ownership plan and a portion of the legacy Sterling Bancorp defined benefit pension plan obligations of $1.5 million, and the amortization of non-compete agreements of approximately $1.5 million. The charge related to the core systems conversion mainly represented consulting fees and personnel training costs incurred in connection with the integration of the legacy Provident Bank and legacy Sterling National Bank technology systems. The merger-related charges incurred in the second fiscal quarter of 2014 represented final expenses related to client communications, branding, relocation of personnel and professional fees. 

Second quarter fiscal 2014 compared with the linked quarter ended December 31, 2013
Non-interest expense decreased $26.3 million compared to the linked quarter. The Company incurred merger-related expenses of $9.1 million and a charge for asset write-downs, retention and severance compensation of $22.2 million in the quarter ended December 31, 2013. The decrease in these expenses between the two periods was partially offset by higher expenses given legacy Sterling Bancorp's operations were fully incorporated in the Company's results in the second fiscal quarter of 2014.

Income Taxes
In the second quarter of fiscal 2014 the Company recorded income taxes at a rate of 30.8% compared to an effective tax benefit rate of 33.2% in the linked quarter and 25.2% for the same period in fiscal 2013. Income tax expense for the period was principally impacted by higher pre-tax income, a lower proportion of interest earned on municipal securities and income on bank owned life insurance, and an investment in low income housing tax credits. We have reviewed the changes to the New York State tax laws enacted March 31, 2014 and determined the impact to our financial statements will be immaterial.

Key Balance Sheet Highlights Year-to-Date at March 31, 2014

  • Total assets were $6.9 billion. 
  • Total loans including loans held for sale were $4.3 billion.
  • Commercial and industrial loans represented 43.1%, commercial real estate loans represented 38.0%, consumer and residential mortgage loans represented 16.8%, and acquisition, development and construction loans represented 2.1% of the total loan portfolio.
  • Commercial loan growth, which includes commercial and industrial loans, commercial real estate loans and specialty lending businesses was $145.4 million for the quarter ended March 31, 2014, and represented annualized growth of 17.7% over the prior quarter.
  • Securities, excluding FHLB and FRB Stock, were $1.8 billion and represented 25.4% of total assets.
  • Total deposits were $5.2 billion.
  • Transaction, money market and savings deposits (including municipal deposits) were $4.7 billion and represented 89.8% of total deposits.
  • The allowance for loan losses was $32.0 million and represented 1.12% of total loans excluding the impact of loans acquired in the Gotham transaction and the legacy Sterling Bancorp merger transactions that were recorded at fair value at the acquisition date and continue to carry no allowance for loan losses. 
  • Tangible book value per share was $5.97.

Credit Quality
Non-performing loans increased $16.8 million to $55.2 million at March 31, 2014 compared to $38.4 million at December 31, 2013. This increase was mainly due to three acquisition, development and construction relationships that were reclassified as non-performing loans during the quarter. Net charge-offs for the second quarter that were charged to the allowance for loan losses were $3.4 million compared to $1.3 million in the linked quarter. The allowance for loan losses at March 31, 2014 was $32.0 million, which represented 58.0% of non-performing loans and 0.75% of our total loan portfolio. The increase in the balance of the allowance for loan losses was mainly related to the higher balance of loans outstanding at March 31, 2014. The allowance for loan losses to total loans, excluding loans acquired in the Gotham and legacy Sterling Bancorp merger transactions that were recorded at fair value at the acquisition dates and continue to carry no allowance, was 1.12% at March 31, 2014. Please refer to the Company's reconciliation of this non-GAAP measure on page 10.

Capital
The Company's stockholders' equity was $936.5 million at March 31, 2014, an increase of $453.6 million relative to September 30, 2013. The increase in stockholders' equity was mainly the result of the legacy Sterling Bancorp merger transaction, which increased capital by $457.8 million. Other contributors to the change in capital included an increase in other comprehensive income of $1.0 million and items related to stock-based compensation of $4.3 million. These increases were partially offset by the net loss of ($3.7 million) and dividends of $5.9 million declared during the first six months of fiscal 2014. 

Tangible book value per share decreased from $7.08 at September 30, 2013 to $5.97 at March 31, 2014. Total goodwill and other intangible assets were $437.7 million at March 31, 2014, an increase of $268.7 million over September 30, 2013. For the quarter ended March 31, 2014, basic and diluted weighted average common shares outstanding increased to 83.5 million and 83.8 million, compared to 43.7 million basic shares and 43.9 million diluted shares, respectively, for the quarter ended September 30, 2013. The increase in basic and diluted shares is mainly the result of the issuance of 39.1 million shares of common stock in October 2013 in connection with the legacy Sterling Bancorp merger transaction. Total shares outstanding at March 31, 2014 were approximately 83.5 million.

Consolidated tangible equity to tangible assets was 7.69% at March 31, 2014 and Sterling National Bank remained well capitalized with a Tier 1 leverage ratio of 9.83%. 

Sterling Bancorp will host a teleconference and webcast on Thursday, May 1, 2014 at 10:30 AM EDT to discuss the Company's results. Interested parties are invited to listen to the webcast and view accompanying slides on the Company's website www.sterlingbancorp.com. Analysts are invited to listen by dialing (855) 877-0343, Conference ID #27833566. A replay of the teleconference can be accessed through the Company's website.

About Sterling Bancorp
Headquartered in Montebello, N.Y., Sterling Bancorp is the holding company for Sterling National Bank, a growing full service commercial bank with $6.9 billion in assets that specializes in the delivery of service and solutions to business owners, their families, and consumers in communities within the greater New York City metropolitan region 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 web site 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 the combined businesses of Provident New York Bancorp and legacy Sterling Bancorp 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 fiscal quarter ended March 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 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.

 
Sterling Bancorp and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(unaudited, in thousands, except share and per share data)
             
    3/31/2014   9/30/2013   3/31/2013
Assets:                        
Cash and due from banks   $ 164,645     $ 113,090     $ 73,396  
Investment securities     1,760,575       1,208,392       1,129,213  
Loans held for sale     21,348       1,011       1,040  
Loans:                        
  Residential mortgage     512,875       400,009       365,485  
  Commercial real estate     1,614,002       1,277,037       1,149,463  
  Commercial and industrial     1,827,374       439,787       370,246  
  Acquisition, development and construction     90,905       102,494       118,115  
  Consumer     199,198       193,571       201,246  
    Total loans, gross     4,244,354       2,412,898       2,204,555  
  Allowance for loan losses     (32,015 )     (28,877 )     (27,544 )
    Total loans, net     4,212,339       2,384,021       2,177,011  
Federal Home Loan Bank ("FHLB") and Federal Reserve Bank Stock, at cost     53,346       24,312       20,251  
Accrued interest receivable     18,154       11,698       11,819  
Premises and equipment, net     49,041       36,520       37,617  
Goodwill     387,286       163,117       163,117  
Other intangibles     50,441       5,891       6,538  
Bank owned life insurance     117,572       60,914       59,916  
Other real estate owned     9,275       6,022       5,486  
Other assets     80,397       34,184       25,036  
    Total assets   $ 6,924,419     $ 4,049,172     $ 3,710,440  
Liabilities:                        
Deposits   $ 5,211,724     $ 2,962,294     $ 2,799,658  
FHLB borrowings     489,801       442,602       347,450  
Other borrowings     19,991       20,351       20,526  
Senior notes     98,215       98,033       -  
Subordinated debentures     26,509       -       -  
Mortgage escrow funds     8,711       12,646       17,582  
Other liabilities     133,002       30,380       30,513  
    Total liabilities     5,987,953       3,566,306       3,215,729  
Stockholders' equity     936,466       482,866       494,711  
    Total liabilities and stockholders' equity   $ 6,924,419     $ 4,049,172     $ 3,710,440  
                         
Shares of common stock outstanding at period end     83,544,307       44,351,046       44,353,276  
Book value per share   $ 11.21     $ 10.89     $ 11.15  
Tangible book value per share     5.97       7.08       7.33  
                         
         
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
    3/31/2014   12/31/2013   3/31/2013   3/31/2014   3/31/2013
Interest and dividend income:                                  
  Loans and loan fees   $ 50,312   $ 43,288     $ 26,378   $ 93,600     $ 53,449
  Securities taxable     7,573     6,903       4,288     14,475       8,572
  Securities non-taxable     2,674     2,161       1,490     4,835       2,947
  Other earning assets     766     359       264     1,125       597
  Total interest income     61,325     52,711       32,420     114,035       65,565
Interest expense:                                  
  Deposits     2,394     1,834       1,624     4,135       3,721
  Borrowings     4,903     5,001       2,977     9,997       6,102
Total interest expense     7,297     6,835       4,601     14,132       9,823
Net interest income     54,028     45,876       27,819     99,903       55,742
Provision for loan losses     4,800     3,000       2,600     7,800       5,550
Net interest income after provision for loan losses     49,228     42,876       25,219     92,103       50,192
Non-interest income:                                  
  Accounts receivable / factoring commissions and other fees     3,500     2,226       -     5,720       -
  Mortgage banking income     2,383     1,616       507     3,999       1,253
  Deposit fees and service charges     3,904     3,942       2,736     7,846       5,514
  Net gain (loss) on sale of securities     60     (645 )     2,229     (585 )     3,645
  Investment management fees     542     540       422     1,083       1,127
  Bank owned life insurance     729     740       491     1,469       1,000
  Other     1,297     729       467     2,032       1,972
Total non-interest income     12,415     9,148       6,852     21,564       14,511
Non-interest expense:                                  
  Compensation and benefits     25,263     23,554       11,805     48,819       24,104
  Stock-based compensation plans     927     991       679     1,918       1,179
  Occupancy and office operations     7,254     6,333       3,954     13,587       7,764
  Merger-related expenses     388     9,068       542     9,456       542
  Advertising and promotion     422     309       535     731       779
  Professional fees     1,500     1,818       912     3,319       2,127
  Data and check processing     663     595       823     1,258       1,472
  Amortization of intangible assets     2,511     1,875       388     4,386       649
  FDIC insurance and regulatory assessments     1,567     1,164       753     2,731       1,471
  Other real estate owned expense     61     368       915     429       1,200
  Other     6,167     26,899       2,033     33,065       4,598
Total non-interest expense     46,723     72,974       23,339     119,699       45,885
Income (loss) before income tax expense     14,920     (20,950 )     8,732     (6,032 )     18,818
Income tax expense (benefit)     4,588     (6,948 )     2,203     (2,361 )     5,269
Net income (loss)   $ 10,332   $ (14,002 )   $ 6,529   $ (3,671 )   $ 13,549
  Basic earnings per share   $ 0.12   $ (0.20 )   $ 0.15   $ (0.05 )   $ 0.31
  Diluted earnings per share     0.12     (0.20 )     0.15     (0.05 )     0.31
  Dividends declared per share     0.07     -       0.06     0.07       0.12
Weighted average common shares:                                  
  Basic     83,497,765     70,493,305       43,743,640     76,924,082       43,704,163
  Diluted     83,794,107     70,493,305       43,848,486     76,924,082       43,790,915
                                   
                                   
     
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   3/31/2014   12/31/2013   9/30/2013   6/30/2013   3/31/2013
Total assets   $ 6,924,419   $ 6,667,437     $ 4,049,172   $ 3,824,429   $ 3,710,440
Securities available for sale     1,233,310     1,153,313       954,393     889,747     945,678
Securities held to maturity     527,265     508,337       253,999     175,977     183,535
Loans, gross 1     4,244,354     4,127,141       2,412,898     2,336,534     2,204,555
Goodwill     387,286     387,517       163,117     163,117     163,117
Other intangibles     50,441     53,020       5,891     6,201     6,538
Deposits     5,211,724     4,920,564       2,962,294     2,739,214     2,799,658
Municipal deposits (included above)     926,618     673,656       757,066     465,566     537,070
Borrowings     634,516     696,270       560,986     552,805     367,976
Stockholders' equity     936,466     925,109       482,866     480,165     494,711
Tangible equity     498,739     484,572       313,858     310,847     325,056
                                 
Average Balances                                
Total assets   $ 6,747,546   $ 6,013,816     $ 3,907,960   $ 3,745,356   $ 3,804,660
Loans, gross:                                
  Residential mortgage     520,887     491,231       379,640     366,823     360,840
  Commercial real estate     1,580,454     1,466,986       1,247,055     1,175,094     1,138,333
  Commercial and industrial     1,625,720     1,268,492       443,349     398,622     368,896
  Acquisition, development and construction     93,531     98,691       104,856     114,286     122,937
  Consumer     199,834     200,637       194,718     199,861     203,492
Loans, total 1     4,020,426     3,526,037       2,369,618     2,254,686     2,194,498
Securities (taxable)     1,386,538     1,330,646       963,949     909,312     967,889
Securities (non-taxable)     324,470     250,520       157,480     184,325     181,803
Total earning assets     5,985,054     5,207,436       3,529,321     3,378,655     3,403,209
Deposits:                                
  Non-interest bearing demand     1,640,125     1,361,622       669,067     625,684     641,194
  Interest bearing demand     761,409     619,746       426,602     461,390     508,129
  Savings (including mortgage escrow funds)     613,131     622,530       601,272     581,106     575,380
  Money market     1,461,774     1,182,858       715,351     777,857     877,101
  Certificates of deposit     582,580     565,462       335,616     338,017     355,917
Total deposits and mortgage escrow     5,059,019     4,352,218       2,747,908     2,784,054     2,957,721
Borrowings     660,486     709,125       653,147     440,579     345,717
Equity     934,304     780,241       478,491     494,049     492,725
Tangible equity     494,697     432,703       309,327     324,540     322,683
                                 
Condensed Tax Equivalent Income Statement                                
Interest and dividend income   $ 61,325   $ 52,711     $ 33,903   $ 32,593   $ 32,420
Tax equivalent adjustment*     1,440     1,164       666     808     802
Interest expense     7,297     6,835       5,795     4,276     4,601
Net interest income (tax equivalent)     55,468     47,040       28,774     29,125     28,621
Provision for loan losses     4,800     3,000       2,700     3,900     2,600
Net interest income after provision for loan losses     50,668     44,040       26,074     25,225     26,021
Non-interest income     12,415     9,148       6,600     6,581     6,852
Non-interest expense     46,723     72,974       23,367     21,789     23,339
Income (loss) before income tax expense     16,360     (19,786 )     9,307     10,017     9,534
Income tax expense (benefit) (tax equivalent)*     6,028     (5,784 )     3,978     3,641     3,005
Net income (loss)   $ 10,332   $ (14,002 )   $ 5,329   $ 6,376   $ 6,529
                                 
1 Does not reflect allowance for loan losses of $32,015, $30,612, $28,877, $28,374 and $27,544.
*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   3/31/2014   12/31/2013   9/30/2013   6/30/2013   3/31/2013
Basic earnings per share   $ 0.12     $ (0.20 )   $ 0.12     $ 0.15     $ 0.15  
Diluted earnings per share     0.12       (0.20 )     0.12       0.15       0.15  
Dividends declared per share     0.07       -       0.12       0.06       0.06  
Tangible book value per share     5.97       5.77       7.08       7.01       7.33  
Shares of common stock outstanding     83,544,307       83,955,647       44,351,046       44,353,276       44,353,276  
Basic weighted average common shares outstanding     83,497,765       70,493,305       43,742,903       43,801,867       43,743,640  
Diluted weighted average common shares outstanding     83,794,107       70,493,305       43,859,834       43,906,158       43,848,486  
                                         
Performance Ratios (annualized)                                        
Return on average assets     0.62 %     (0.92 )%     0.54 %     0.68 %     0.70 %
Return on average equity     4.48 %     (7.12 )%     4.42 %     5.18 %     5.37 %
Return on average tangible equity1     8.47 %     (12.84 )%     6.83 %     7.88 %     8.21 %
Core operating efficiency1     62.0 %     65.4 %     64.7 %     59.1 %     67.4 %
                                         
Analysis of Net Interest Income                                        
Yield on loans     5.05 %     4.88 %     4.70 %     4.80 %     4.93 %
Yield on investment securities - tax equivalent2     2.77 %     2.57 %     2.35 %     2.38 %     2.32 %
Yield on earning assets - tax equivalent2     4.25 %     4.10 %     3.89 %     3.97 %     3.96 %
Cost of deposits     0.19 %     0.17 %     0.15 %     0.17 %     0.22 %
Cost of borrowings     3.01 %     2.80 %     2.88 %     2.84 %     3.49 %
Cost of interest bearing liabilities     0.73 %     0.73 %     0.84 %     0.66 %     0.70 %
Net interest rate spread - tax equivalent basis2     3.52 %     3.37 %     3.05 %     3.31 %     3.26 %
Net interest margin - tax equivalent basis2     3.76 %     3.58 %     3.23 %     3.46 %     3.41 %
                                         
Capital                                        
Tier 1 leverage ratio - Bank only     9.83 %     10.58 %     9.33 %     8.49 %     8.62 %
Tier 1 risk-based capital - Bank only   $ 622,878     $ 593,462     $ 363,274     $ 311,507     $ 304,696  
Total risk-based capital - Bank only     655,288       624,469       392,376       340,077       332,447  
Tangible equity as a % of tangible assets - consolidated1     7.69 %     7.78 %     8.09 %     8.50 %     9.18 %
                                         
Asset Quality                                        
Non-performing loans (NPLs) non-accrual   $ 54,877     $ 35,597     $ 22,807     $ 27,244     $ 27,019  
Non-performing loans (NPLs) still accruing     280       2,845       4,099       4,216       4,257  
Other real estate owned     9,275       11,751       6,022       4,376       5,486  
Non-performing assets (NPAs)     64,432       50,193       32,928       35,836       36,762  
Net charge-offs     3,397       1,265       2,197       3,070       3,170  
Net charge-offs as a % of average loans (annualized)     0.34 %     0.14 %     0.37 %     0.54 %     0.58 %
NPLs as a % of total loans     1.30 %     0.93 %     1.12 %     1.35 %     1.42 %
NPAs as a % of total assets     0.93 %     0.75 %     0.81 %     0.94 %     0.99 %
Allowance for loan losses as a % of NPLs     58.0 %     79.6 %     107.3 %     90.2 %     88.1 %
Allowance for loan losses as a % of total loans     0.75 %     0.74 %     1.20 %     1.21 %     1.25 %
Allowance for loan losses as a % of total loans, excluding Gotham and legacy Sterling loans1     1.12 %     1.24 %     1.27 %     1.30 %     1.36 %
Special mention loans   $ 39,964     $ 38,834     $ 13,530     $ 24,327     $ 41,778  
Substandard / doubtful loans     82,673       77,337       61,095       62,165       70,688  
                                 
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
    3/31/2014   12/31/2013   9/30/2013   6/30/2013   3/31/2013
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   $ 6,924,419     $ 6,667,437     $ 4,049,172     $ 3,824,429     $ 3,710,440  
Goodwill and other intangibles     (437,727 )     (440,537 )     (169,008 )     (169,318 )     (169,655 )
Tangible assets     6,486,692       6,226,900       3,880,164       3,655,111       3,540,785  
Stockholders' equity     936,466       925,109       482,866       480,165       494,711  
Goodwill and other intangibles     (437,727 )     (440,537 )     (169,008 )     (169,318 )     (169,655 )
Tangible stockholders' equity     498,739       484,572       313,858       310,847       325,056  
Shares of common stock outstanding at period end     83,544,307       83,955,647       44,351,046       44,353,276       44,353,276  
Tangible equity as a % of tangible assets     7.69 %     7.78 %     8.09 %     8.50 %     9.18 %
Tangible book value per share   $ 5.97     $ 5.77     $ 7.08     $ 7.01     $ 7.33  
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   $ 934,304     $ 780,241     $ 478,491     $ 494,049     $ 492,725  
Average goodwill and other intangibles     (439,613 )     (347,538 )     (169,164 )     (169,509 )     (170,042 )
Average tangible stockholders' equity     494,691       432,703       309,327       324,540       322,683  
Net income (loss)     10,332       (14,002 )     5,329       6,376       6,529  
Net income (loss), if annualized     41,902       (55,551 )     21,142       25,574       26,479  
Return on average tangible equity     8.47 %     (12.84 )%     6.83 %     7.88 %     8.21 %
Core net income (see reconciliation on page 11)   $ 13,203     $ 9,374     $ 6,117     $ 7,426     $ 6,934  
Annualized core net income     53,546       37,190       24,269       29,786       28,121  
Core return on average tangible equity     10.82 %     8.59 %     7.85 %     9.18 %     8.71 %
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 the allowance for loan losses to total loans and to total loans excluding Gotham and legacy Sterling Bancorp loans:
 
Total loans   $ 4,244,354     $ 4,127,141     $ 2,412,898     $ 2,336,534     $ 2,204,555  
Gotham loans     (101,273 )     (117,046 )     (133,493 )     (152,825 )     (176,383 )
Legacy Sterling loans     (1,277,335 )     (1,539,962 )     -       -       -  
Total loans, excluding Gotham and legacy Sterling loans     2,865,746       2,470,133       2,279,405       2,183,709       2,028,172  
Allowance for loan losses     32,015       30,612       28,877       28,374       27,544  
Allowance for loan losses to total loans     0.75 %     0.74 %     1.20 %     1.21 %     1.25 %
Allowance for loan losses to total loans, excluding Gotham and legacy Sterling loans     1.12 %     1.24 %     1.27 %     1.30 %     1.36 %
 
As required by GAAP, the Company recorded at fair value the loans acquired in the Gotham and legacy Sterling Bancorp transactions. These loans carry no allowance for loan losses for the periods reflected above.
 
 
     
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
     
    As of and for the Quarter Ended
    3/31/2014   12/31/2013   9/30/2013   6/30/2013   3/31/2013
The following table shows the reconciliation of the core operating efficiency ratio:
Net interest income   $ 54,028     $ 45,876     $ 28,108     $ 28,317     $ 27,819  
Non-interest income     12,415       9,148       6,600       6,581       6,852  
Total net revenues     66,443       55,024       34,708       34,898       34,671  
Tax equivalent adjustment on securities interest income     1,440       1,164       666       808       802  
Net (gain) loss on sale of securities     (60 )     645       (1,801 )     (1,945 )     (2,229 )
Other than temporary loss on securities     -       -       -       -       7  
Other (other gains and fair value loss on interest rate caps)     -       (93 )     81       -       -  
Core total revenues     67,823       56,740       33,654       33,761       33,251  
Non-interest expense     46,723       72,974       23,367       21,789       23,339  
Merger-related expenses     (388 )     (9,068 )     (714 )     (1,516 )     (542 )
Charge for asset write-downs, retention and severance compensation     (255 )     (22,167 )     (564 )     -       -  
Charge on pension plan settlement     (1,486 )     (2,743 )     -       -       -  
Amortization of intangible assets     (2,511 )     (1,875 )     (310 )     (337 )     (388 )
Core non-interest expense     42,083       37,121       21,779       19,936       22,409  
Core efficiency ratio     62.0 %     65.4 %     64.7 %     59.1 %     67.4 %
The Company believes the core operating efficiency ratio is a useful tool to help assess a company's core operating performance.
                                         
The following table shows the reconciliation of net income (loss) and earnings (loss) per share excluding merger-related expenses, a charge for asset write-downs, core conversion, retention and severance compensation, a charge on settlement of benefit pension plans and the amortization of non-compete agreements:
Income (loss) before income tax expense   $ 14,920     $ (20,950 )   $ 8,641     $ 9,209     $ 8,732  
Income tax expense (benefit)     4,588       (6,948 )     3,312       2,833       2,203  
Net income (loss)     10,332       (14,002 )     5,329       6,376       6,529  
                                         
Merger-related expenses     388       9,068       714       1,516       542  
Charge for asset write-downs, core conversion, retention and severance compensation     678       22,167       564       -       -  
Charge on benefit plans settlement     1,486       2,743       -       -       -  
Amortization of non-compete agreements     1,497       998       -       -       -  
Total charges     4,049       34,976       1,278       1,516       542  
Income tax (benefit)     (1,178 )     (11,600 )     (490 )     (466 )     (137 )
Total charges net of tax benefit     2,871       23,376       788       1,050       405  
Net income excluding total charges   $ 13,203     $ 9,374     $ 6,117     $ 7,426     $ 6,934  
                                         
Weighted average diluted shares1     83,794,107       70,707,292       43,859,834       43,906,158       43,848,486  
Diluted EPS as reported   $ 0.12     $ (0.20 )   $ 0.12     $ 0.15     $ 0.15  
Diluted EPS excluding total charges     0.16       0.13       0.14       0.17       0.16  
The Company believes the presentation of its net income excluding total charges provides a useful tool to help assess a company's profitability.
1 For the first fiscal quarter of 2014 represents diluted share calculation to compute diluted EPS assuming net income.
                                         
                                         
     
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
     
    As of and for the Quarter Ended
    3/31/2014   12/31/2013   9/30/2013   6/30/2013   3/31/2013
 
The following table shows the reconciliation of return on tangible assets and core return on tangible assets:
Average assets   $ 6,747,546     $ 6,013,816     $ 3,907,960     $ 3,745,356     $ 3,804,660  
Average goodwill and other intangibles     (439,613 )     (347,538 )     (169,164 )     (169,509 )     (170,042 )
Average tangible assets     6,307,933       5,666,278       3,738,796       3,575,847       3,634,618  
Net income (loss)     10,332       (14,002 )     5,329       6,376       6,529  
Net income (loss), if annualized     41,902       (55,551 )     21,142       25,574       26,479  
Return on average tangible assets     0.66 %     (0.98 )%     0.57 %     0.72 %     0.73 %
Core net income (see reconciliation on page 11)   $ 13,203     $ 9,374     $ 6,117     $ 7,426     $ 6,934  
Annualized core net income     53,546       37,190       24,269       29,786       28,121  
Core return on average tangible assets     0.85 %     0.66 %     0.65 %     0.83 %     0.77 %
The company believes that the core return on average tangible assets is a useful tool to help assess a company's profitability.
 
The following table shows the reconciliation of net (loss) income and core net income for the six months ended March 31:
                            For the six months ended
                            3/31/2014   3/31/2013
(Loss) income before income tax expense                           $ (6,032 )   $ 18,818  
Income tax (benefit) expense                             (2,361 )     5,269  
Net (loss) income                             (3,671 )     13,549  
                                         
Merger-related expenses                             9,456       542  
Charge for asset write-downs, core conversion, retention and severance                             22,845       -  
Charge on pension plans settlement                             4,229       -  
Amortization of non-compete agreements                             2,495       -  
Total charges                             39,025       542  
Income tax (benefit)                             (12,683 )     (152 )
Total charges net of tax benefit                             26,342       390  
Net income excluding total charges                           $ 22,671     $ 13,939  
                                         
Weighted average diluted shares                             76,924,082       43,790,915  
Diluted EPS as reported                           $ (0.05 )   $ 0.31  
Diluted EPS excluding total charges                             0.29       0.32  
The Company believes the presentation of its net income excluding total charges provides a useful tool to help assess a company's profitability.
                                         
                                         

Contact Information

  • STERLING BANCORP CONTACT:
    Luis Massiani
    EVP & 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