Sterling Bancorp Announces Results for the Three Months Ended March 31, 2016
Strong Operating Momentum in the First Quarter Continues, Highlighted by Core Diluted Earnings per Share(1) of $0.25, GAAP Diluted Earnings per Share of $0.18 and Strong Growth as Loan and Deposit Volumes Reached Record Levels; Key Highlights for the Three Months Ended March 31, 2016
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MONTEBELLO, NY -- (Marketwired) -- 04/26/16 --
- Total revenue2 was $109.2 million.
- Core net income1 was $32.2 million compared to $18.5 million for the first quarter of 2015, an increase of 73.8%.
- Core diluted earnings per share1 were $0.25, which represented growth of 19.0% over the first quarter of 2015.
- Tax equivalent net interest margin was 3.53% compared to 3.64% in the first quarter of 2015.
- Total non-interest income excluding securities losses was $15.7 million, which represented 14.4% of total revenue2 and growth of 25.9% over the first quarter of 2015.
- Core operating efficiency ratio1 was 48.9% compared to 56.4% in the first quarter of 2015.
- Annualized commercial loan3 growth of 25.0% (end of period balances including acquired loans) and 5.6% (average balances) over the linked quarter.
- Annualized core deposit4 growth of 36.6% (end of period balances) over the linked quarter.
- Loans to deposits ratio of 88.8%; total deposits were $9.3 billion with over 91.5% core deposits4 and a total cost of deposits of 0.29%.
- Core return on average tangible assets1 was 1.15% compared to 1.07% in the first quarter of 2015.
- Core return on average tangible equity1 was 13.78% compared to 12.66% in the first quarter of 2015.
- Completed a $110.0 million subordinated notes offering at Sterling National Bank, adding to Tier 2 capital.
- Completed the acquisition of NewStar Business Credit, LLC ("NSBC") doubling the size of our asset-based loan portfolio to $629.8 million.
- Announced the pending sale of our trust division to Midland States Bank, expected to be complete in Q3 2016.
- Repayment of $220.0 million of Federal Home Loan Bank ("FHLB") advances with a weighted average rate of 4.17%.
- Core measures are defined in the non-GAAP tables beginning on page 12.
- Total revenue is equal to net interest income plus non-interest income excluding securities gains and losses.
- Commercial loans include commercial real estate, commercial and industrial and acquisition, development and construction loans.
- Core deposits include retail, commercial and municipal transaction, money market and savings accounts and exclude certificates of deposit and brokered deposits except for reciprocal Certificate of Deposit Account Registry balances.
Sterling Bancorp (NYSE: STL) , the parent company of Sterling National Bank (the "Company"), today announced results for the three months ended March 31, 2016. Net income for the quarter was $23.8 million, or $0.18 per diluted share, compared to net income of $32.8 million, or $0.25 per diluted share, for the linked quarter ended December 31, 2015 and net income of $16.8 million, or $0.19 per diluted share, for the first quarter of 2015.
Net income for the first quarter of 2016 was negatively impacted by a loss on extinguishment of FHLB borrowings, merger related expenses and other restructuring charges, which are detailed in our Non-GAAP Financial Measures beginning on page 12.
President's Comments
Jack Kopnisky, President and Chief Executive Officer, commented: "Our positive momentum in operating performance continued this quarter, highlighted by strong profitability and significant growth in loans and deposits. As of March 31, 2016, our total assets reached $12.9 billion, compared to $7.7 billion a year ago. We are well-positioned for future growth and continue to execute our strategy of creating a high performing regional bank that focuses on serving commercial middle market clients and consumers.
"Core net income for the quarter was $32.2 million and core diluted earnings per share were $0.25, compared to $18.5 million and $0.21, respectively, for the same quarter a year ago. This represents growth of 73.8% and 19.0%, respectively, between the two periods. Our core return on average tangible assets was 1.15% and core return on average tangible equity was 13.78%. This compares to 1.07% and 12.66%, respectively, for the same quarter a year ago.
"On March 31, 2016, we completed the acquisition of NSBC, doubling the size of our asset-based lending business. The transaction exceeds all of our acquisition criteria; it is expected to be accretive to earnings per share, has an estimated internal rate of return greater than 20% and a tangible book value earn-back period of less than 2.5 years. Furthermore, the acquired loans are all floating-rate loans and have an attractive yield greater than 5%.
"We are focused on creating positive operating leverage and becoming a more efficient company. In the first quarter, we consolidated four financial centers bringing our total to 48 locations as of March 31, 2016. We expect to consolidate five additional financial centers in the second quarter of 2016. Additionally, we announced the sale of our trust division, which we expect to complete in the third quarter of 2016. We will continue to evaluate opportunities to create a more efficient, commercial client-focused bank. For the quarter, our core operating efficiency ratio was 48.9%, which compares to 56.4% in the same quarter last year.
"We continue to experience strong organic and acquired loan growth across multiple asset classes. As of March 31, 2016, total portfolio loans were $8.3 billion, which represented annualized growth of 21.8% over year end. Including the acquisition of NSBC, our commercial loan balances grew $425.5 million during the quarter, which represented annualized growth of 25.0% over the linked quarter end.
"As of March 31, 2016, our total deposits were $9.3 billion. Our core deposits were $8.5 billion, which represented 91.5% of our total deposit balances. Our total cost of deposits was 0.29% for the three months ended March 31, 2016. Our strong commercial deposit growth will allow us to continue reducing expenses and capital investments associated with our financial centers and enhance our ability to grow profitability.
"We continue to focus on diversifying and improving our revenue mix. Non-interest income excluding securities gains/losses was $15.7 million for the quarter, which represented 14.4% of total revenue and growth of 25.9% over the same quarter a year ago. We expect to continue growing our diversified commercial lending businesses, which are strong fee income generators, and we will continue to actively evaluate opportunistic acquisitions.
"Net charge-offs against the allowance for loan losses for the three months ended March 31, 2016 were $1.1 million, or 0.06% on an annualized basis, compared to $3.0 million, or 0.15% on an annualized basis, in the three months ended December 31, 2015. The allowance for loan losses to total loans was 0.64% at March 31, 2016 and December 31, 2015. As a result of purchase accounting, a substantial portion of the loans acquired in prior merger transactions do not have an allocation in the allowance for loan losses as the performance of these loans remains satisfactory. The total valuation balances recorded against portfolio loans to adjusted gross portfolio loans was 1.16% and 1.17% at December 31, 2015 and March 31, 2016, respectively. In the first quarter, non-performing loans increased by $19.0 million to $85.4 million mainly due to one taxi medallion relationship with a balance of $23.9 million that was placed on non-accrual during the quarter. As a result, the ratio of allowance for loan losses to non-performing loans declined to 62.0% at March 31, 2016 compared to 75.5% at December 31, 2015.
"We also enhanced our capital position during the quarter. On March 29, 2016, we completed the issuance of $110.0 million of subordinated notes by Sterling National Bank. The offering provides us with additional liquidity and regulatory capital to support
growth and will qualify as Tier 2 capital. At March 31, 2016, our tangible equity to tangible assets ratio was 7.66% and our estimated Tier 1 leverage ratio was 8.61%. At Sterling National Bank, our estimated Tier 1 leverage ratio was 9.16%.
"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 23, 2016 to our holders as of the record date of May 6, 2016."
Reconciliation of Core to GAAP Results
GAAP net income of $23.8 million, or $0.18 per diluted share, for the first quarter of 2016, included: (i) a pre-tax net loss on sale of securities of $283 thousand; (ii) a loss on the early extinguishment of FHLB borrowings of $8.7 million; (iii) a pre-tax charge of $2.8 million due to merger-related expenses and restructuring charges incurred in connection with the acquisition of NSBC and the continued consolidation of financial centers and other locations; and (iv) amortization of non-compete agreements and acquired customer list intangibles of $968 thousand. Excluding the impact of these items, core net income was $32.2 million, or $0.25 per diluted share.
See the reconciliation of the Company's Non-GAAP Financial Measures beginning on page 12. Non-GAAP financial measures include references to the terms "core" or "excluding".
Net Interest Income and Margin
First quarter 2016 compared with first quarter 2015
Net interest income was $93.5 million, an increase of $34.6 million compared to the first quarter of 2015. This was mainly the result of higher average loans and investment securities balances due to the merger with Hudson Valley Holding Corp. (the "HVB Merger") and organic growth. For the first quarter of 2016, the yield on loans was 4.62% and declined 4 basis points compared to the first quarter of 2015. Yield on loans included $5.6 million of accretion of the fair value discount associated with prior acquisitions compared to $926 thousand in the first quarter of 2015. The tax-equivalent yield on investment securities decreased 14 basis points to 2.65%. The cost of total deposits was 29 basis points and the cost of borrowings was 1.92% compared to 23 basis points and 2.00%, respectively, for the same period a year ago. The tax-equivalent yield on interest earning assets declined 11 basis points from the first quarter of 2015 to 4.00% for the first quarter of 2016. The net interest margin on a tax-equivalent basis was 3.53% compared to 3.64% for the same period a year ago.
First quarter 2016 compared with linked quarter ended December 31, 2015
Net interest income declined $1.9 million compared to the linked quarter ended December 31, 2015. The decrease in net interest income was mainly due to lower accretion of the fair value discount, which was $7.1 million in the fourth quarter of 2015 compared to $5.6 million in the first quarter of 2016, and higher average borrowings balances which resulted in an increase of $1.0 million in interest expense in the first quarter of 2016. The yield on loans was 4.62% for the quarter compared to 4.65% for the linked quarter. The tax-equivalent yield on investment securities decreased one basis point to 2.65% in the quarter. The cost of total deposits increased 3 basis points from 26 basis points in the linked quarter and the total cost of borrowings declined 12 basis points from 2.04% in the linked quarter. The tax-equivalent yield on interest earning assets was 4.00% compared to 4.09% in the linked quarter. Tax-equivalent net interest margin was 3.53% compared to 3.68% in the linked quarter. Average interest-bearing cash balances increased by $128.5 million in the quarter, which resulted in an approximate five basis point decrease in net interest margin.
Non-interest Income
First quarter 2016 compared with first quarter 2015
Excluding net gain (loss) on sale of securities, non-interest income increased $3.2 million in the first quarter of 2016 to $15.7 million compared to $12.5 million in the same quarter last year. The increase was mainly due to increases in factoring commissions and other fees, an increase in other loan fees and commissions, and an increase in deposit fees and service charges. Partially offsetting these increases was a decline of $1.2 million in mortgage banking income. The Company realized a net loss on sale of securities of $283 thousand in the first quarter of 2016 compared to a net gain on sale of securities of $1.5 million in the same quarter last year.
First quarter 2016 compared with linked quarter ended December 31, 2015
Excluding net gain (loss) on sale of securities, non-interest income declined $489 thousand from $16.2 million during the fourth quarter of 2015. This was mainly the result of decreases in mortgage banking income of $760 thousand and bank owned life insurance of $465 thousand. The Company realized a net loss on sale of securities of $121 thousand in the linked quarter ended December 31, 2015.
Non-interest Expense
First quarter 2016 compared with first quarter 2015
Non-interest expense increased $23.0 million relative to the first quarter of 2015 to $68.9 million. The increase was due to increases in compensation and benefits expense of $6.9 million, occupancy and office operations expense of $2.7 million and amortization of intangible assets of $1.7 million which were all mainly due to the HVB Merger. In addition, in the first quarter of 2016, we recorded a pre-tax charge of $2.8 million due to merger-related expenses and other restructuring charges incurred in connection with the acquisition of NSBC and the consolidation of financial centers and other locations, and a pre-tax charge of $8.7 million related to a loss on extinguishment of $220.0 million of FHLB borrowings.
First quarter 2016 compared with linked quarter ended December 31, 2015
Non-interest expense increased $11.5 million compared to $57.4 million for the linked quarter, mainly due to the merger-related expenses and other restructuring charges and the loss on extinguishment of FHLB borrowings discussed above. Excluding the impact of these items, core non-interest expense increased $424 thousand between the first quarter of 2016 and the linked quarter.
Taxes
In the first quarter of 2016, the Company recorded income taxes at an estimated effective tax rate of 34.0%, compared to an effective tax rate of 32.5% in the linked quarter and the same quarter last year.
Key Balance Sheet Highlights at March 31, 2016
- Total assets were $12.9 billion.
- Total loans, including loans held for sale, were $8.3 billion.
- Commercial and industrial ("C&I") loans (which includes traditional C&I, asset-based lending, payroll finance, factoring and warehouse lending) represented 41.2%, commercial real estate loans represented 44.4%, consumer and residential mortgage loans represented 12.2%, and acquisition, development and construction loans represented 2.2% of the total loan portfolio.
- Commercial loan growth, which includes all C&I loans, commercial real estate and acquisition development and construction loans, was $425.5 million for the quarter ended March 31, 2016. Organic loan growth, which excludes the NSBC acquisition, was $102.9 million, and represented annualized growth of 6.0% over the prior quarter. Average commercial loans were $6.7 billion for the first quarter of 2016 compared to $6.6 billion for the linked quarter.
- The allowance for loan losses was $53.0 million and represented 0.64% of total loans. Loans acquired in prior merger transactions were recorded at fair value at the acquisition date and at March 31, 2016; the remaining purchase accounting adjustments on acquired loan were $44.2 million. The ratio of total valuation balances recorded against portfolio loans to adjusted gross portfolio loans was 1.17%. See a reconciliation of this non-GAAP measure on page 14.
- Investment securities, excluding FHLB and FRB stock, were $2.8 billion and represented 22.1% of total assets.
- Core deposits were $8.5 billion and represented 91.5% of total deposits.
- Total deposits were $9.3 billion compared to $8.6 billion at December 31, 2015. Average deposits were $8.9 billion compared to $8.8 billion for the linked quarter.
- Borrowings were $1.7 billion compared to $1.5 billion at December 31, 2015. Average borrowings were $1.3 billion compared to $988.6 million for the linked quarter.
- Tangible book value per share was $7.09.
Credit Quality
Non-performing loans, which includes non-accrual loans and loans over 90 days past due still accruing interest, increased $19.0 million to $85.4 million, or 1.03% of total loans at March 31, 2016 compared to $66.4 million, or 0.84% of total loans at December 31, 2015. The increase was mainly the result of one taxi medallion relationship with a balance of $23.9 million that was placed on non-accrual. Net charge-offs for the first quarter of 2016 that were charged to the allowance for loan losses were $1.1 million, compared to $3.0 million in the linked quarter. The allowance for loan losses at March 31, 2016 was $53.0 million, which represented 62.0% of non-performing loans and 0.64% of our total portfolio loans compared to $50.1 million, 75.5% and 0.64%, respectively, as of December 31, 2015.
Capital
The Company's stockholders' equity was $1.7 billion at March 31, 2016, an increase of $33.1 million relative to December 31, 2015. The increase in stockholders' equity was mainly the result of net income of $23.8 million and an increase in other comprehensive income of $16.3 million, which was primarily due to a change in the fair value of our available for sale securities portfolio, and stock option exercises and stock-based compensation, which totaled $853 thousand. These increases were partially offset by declared dividends of $9.1 million.
Tangible book value per share was $7.09 at March 31, 2016 compared to $7.05 at December 31, 2015. Total goodwill and other intangible assets were $772.4 million at March 31, 2016, an increase of $24.3 million compared to December 31, 2015, due to the NSBC acquisition. For the quarter ended March 31, 2016, basic and diluted weighted average common shares outstanding increased to 130.0 million and 130.5 million, respectively, compared to 129.8 million basic shares and 130.4 million diluted shares, respectively, for the quarter ended December 31, 2015. Total shares outstanding at March 31, 2016 were approximately 130.5 million.
Consolidated tangible equity to tangible assets was 7.66% at March 31, 2016 and the Company's estimated Tier 1 leverage ratio was 8.61%. Sterling National Bank remained well capitalized at March 31, 2016 with an estimated Tier 1 leverage ratio of 9.16%.
Sterling Bancorp will host a teleconference and webcast on Wednesday, April 27, 2016 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 (888) 437-9445, Conference ID #6055694. A replay of the teleconference can be accessed through the Company's website.
About Sterling Bancorp
Sterling Bancorp, of which the principal subsidiary is 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: our ability to successfully implement growth, grow revenues faster than we grow expenses, other strategic initiatives and to integrate and fully realize cost savings and other benefits we estimate in connection with acquisitions; a deterioration in general economic conditions, either nationally, internationally, or in our market areas, including extended declines in the real estate market and constrained financial markets; inflation; the effects of, and changes in, trade; changes in asset quality and credit risk; introduction, withdrawal, success and timing of business initiatives; capital management activities; customer disintermediation; and the success of Sterling Bancorp in managing those risks. Other factors that could cause Sterling Bancorp's actual results to differ from those indicated in forward-looking statements are included in the "Risk Factors" section of Sterling Bancorp's filings with the Securities and Exchange Commission. The forward-looking statements speak only as of the date they are made and we undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.
Financial information contained in this release should be considered to be an estimate pending the filing with the Securities and Exchange Commission of the Company's Quarterly Report on Form 10-Q for the three months ended March 31, 2016. While the Company is not aware of any need to revise the results disclosed in this release, accounting literature may require information received by management between the date of this release and the filing of the Quarterly Report on Form 10-Q to be reflected in the results of the fiscal period, even though the new information was received by management subsequent to the date of this release.
Sterling Bancorp and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(unaudited, in thousands, except share and per share data)
3/31/2015 12/31/2015 3/31/2016
------------ ------------ ------------
Assets:
Cash and cash equivalents $ 186,701 $ 229,513 $ 486,730
Investment securities 1,800,037 2,643,823 2,847,742
Loans held for sale 53,737 34,110 27,237
Portfolio loans:
Residential mortgage 494,106 713,036 718,733
Commercial real estate 1,916,937 3,529,381 3,676,214
Commercial and industrial 2,232,442 3,131,028 3,416,538
Acquisition, development and
construction 95,567 186,398 179,517
Consumer 199,854 299,517 295,161
------------ ------------ ------------
Total portfolio loans, gross 4,938,906 7,859,360 8,286,163
Allowance for loan losses (42,884) (50,145) (53,014)
------------ ------------ ------------
Total portfolio loans, net 4,896,022 7,809,215 8,233,149
Federal Home Loan Bank and Federal
Reserve Bank Stock, at cost 68,864 116,758 118,330
Accrued interest receivable 21,367 31,531 33,392
Premises and equipment, net 45,076 63,362 62,432
Goodwill 400,941 670,699 696,600
Other intangibles 51,757 77,367 75,790
Bank owned life insurance 151,323 196,288 197,615
Other real estate owned 8,231 14,614 14,527
Other assets 43,459 68,672 71,812
------------ ------------ ------------
Total assets $ 7,727,515 $ 11,955,952 $ 12,865,356
============ ============ ============
Liabilities:
Deposits $ 5,555,946 $ 8,580,007 $ 9,328,622
FHLB borrowings 857,138 1,409,885 1,444,817
Other borrowings 25,245 16,566 23,571
Senior notes 98,595 98,893 98,996
Subordinated notes - - 108,124
Mortgage escrow funds 5,805 13,778 14,972
Other liabilities 104,243 171,750 148,121
------------ ------------ ------------
Total liabilities 6,646,972 10,290,879 11,167,223
Stockholders' equity:
Common stock 981 1,367 1,367
Additional paid-in capital 943,764 1,506,612 1,501,417
Treasury stock (79,530) (76,190) (70,142)
Retained earnings 220,067 245,408 261,332
Accumulated other comprehensive
(loss) income (4,739) (12,124) 4,159
------------ ------------ ------------
Total stockholders' equity 1,080,543 1,665,073 1,698,133
------------ ------------ ------------
Total liabilities and
stockholders' equity $ 7,727,515 $ 11,955,952 $ 12,865,356
============ ============ ============
Shares of common stock outstanding at
period end 91,121,531 130,006,926 130,548,989
Book value per share $ 11.86 $ 12.81 $ 13.01
Tangible book value per share 6.89 7.05 7.09
Sterling Bancorp and Subsidiaries
CONSOLIDATED CONDENSED INCOME STATEMENTS
(unaudited, in thousands, except share and per share data)
For the Quarter Ended
----------------------------------------
3/31/2015 12/31/2015 3/31/2016
------------ ------------ ------------
Interest and dividend income:
Loans and loan fees $ 55,271 $ 89,707 $ 89,034
Securities taxable 7,632 12,201 12,016
Securities non-taxable 2,867 3,139 3,879
Other earning assets 902 1,177 1,077
------------ ------------ ------------
Total interest and dividend
income 66,672 106,224 106,006
Interest expense:
Deposits 3,091 5,728 6,409
Borrowings 4,714 5,075 6,087
------------ ------------ ------------
Total interest expense 7,805 10,803 12,496
------------ ------------ ------------
Net interest income 58,867 95,421 93,510
Provision for loan losses 2,100 5,500 4,000
------------ ------------ ------------
Net interest income after
provision for loan losses 56,767 89,921 89,510
Non-interest income:
Accounts receivable / factoring
commissions and other fees 3,502 4,389 4,494
Mortgage banking income 3,157 2,762 2,002
Deposit fees and service charges 3,622 4,241 4,496
Net gain (loss) on sale of
securities 1,534 (121) (283)
Bank owned life insurance 1,076 1,792 1,327
Investment management fees 360 877 1,124
Other 759 2,141 2,270
------------ ------------ ------------
Total non-interest income 14,010 16,081 15,430
Non-interest expense:
Compensation and benefits 23,165 29,868 30,020
Stock-based compensation plans 1,109 1,281 1,540
Occupancy and office operations 6,580 9,306 9,282
Amortization of intangible
assets 1,399 3,431 3,053
FDIC insurance and regulatory
assessments 1,428 2,287 2,258
Other real estate owned, net
(income) expense (37) 87 582
Merger-related expenses 2,455 - 265
Loss on extinguishment of FHLB
borrowings - - 8,716
Other 9,822 11,159 13,215
------------ ------------ ------------
Total non-interest expense 45,921 57,419 68,931
------------ ------------ ------------
Income before income tax expense 24,856 48,583 36,009
Income tax expense 8,078 15,792 12,243
------------ ------------ ------------
Net income $ 16,778 $ 32,791 $ 23,766
============ ============ ============
Weighted average common shares:
Basic 87,839,029 129,812,551 129,974,025
Diluted 88,252,768 130,354,779 130,500,975
Earnings per common share:
Basic earnings per share $ 0.19 $ 0.25 $ 0.18
Diluted earnings per share 0.19 0.25 0.18
Dividends declared per share 0.07 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 3/31/2015 6/30/2015 9/30/2015 12/31/2015 3/31/2016
----------- ----------- ----------- ----------- -----------
Total assets $ 7,727,515 $11,566,382 $11,597,393 $11,955,952 $12,865,356
Tangible assets
(1) 7,274,817 10,812,483 10,845,864 11,207,886 12,092,966
Securities
available for
sale 1,214,404 2,081,414 1,854,862 1,921,032 1,894,820
Securities held
to maturity 585,633 585,196 673,130 722,791 952,922
Portfolio loans 4,938,906 7,235,587 7,525,632 7,859,360 8,286,163
Goodwill 400,941 669,590 670,699 670,699 696,600
Other
intangibles 51,757 84,309 80,830 77,367 75,790
Deposits 5,555,946 8,836,161 8,805,411 8,580,007 9,328,622
Municipal
deposits
(included
above) 1,013,835 1,212,624 1,352,846 1,140,206 1,285,263
Borrowings 980,978 914,921 948,048 1,525,344 1,675,508
Stockholders'
equity 1,080,543 1,623,110 1,652,204 1,665,073 1,698,133
Tangible equity
(1) 627,845 869,211 900,675 917,007 925,743
Quarterly
Average
Balances
Total assets 7,438,314 8,049,220 11,242,870 11,622,621 12,001,370
Tangible assets
(1) 6,999,344 7,593,900 10,490,169 10,872,287 11,253,958
Loans, gross:
Residential
mortgage 531,421 539,569 780,373 777,561 755,564
Commercial real
estate 1,908,582 2,040,094 3,253,183 3,444,774 3,587,341
Commercial and
industrial:
Commercial and
industrial 898,839 966,411 1,295,034 1,378,642 1,381,107
Asset based
lending 296,409 297,846 303,387 304,113 304,779
Payroll
finance 158,493 170,905 175,240 199,856 192,428
Warehouse
lending 157,038 263,802 286,557 293,387 248,831
Factored
receivables 134,105 150,569 192,380 210,081 181,974
Equipment
financing 423,510 477,369 578,655 587,445 616,995
----------- ----------- ----------- ----------- -----------
Total
commercial
and
industrial 2,068,394 2,326,902 2,831,253 2,973,524 2,926,114
Acquisition,
development
and
construction 97,865 97,197 173,898 181,550 179,420
Consumer 200,504 202,044 292,852 281,242 297,028
Loans, total (2) 4,806,766 5,205,806 7,331,559 7,658,651 7,745,467
Interest bearing
cash and cash
equivalents 113,152 114,128 211,723 168,199 296,668
Securities
(taxable) 1,379,861 1,527,872 1,967,600 2,111,953 2,139,547
Securities (non-
taxable) 386,326 380,544 446,875 429,633 593,777
Total earning
assets 6,736,422 7,309,667 10,038,831 10,460,168 10,880,356
Deposits:
Non-interest
bearing demand 1,503,692 1,548,844 3,234,450 3,017,727 3,009,085
Interest
bearing demand 775,714 823,471 1,418,803 1,485,690 1,607,227
Savings
(including
mortgage
escrow funds) 766,448 802,956 950,709 962,766 814,485
Money market 1,851,839 1,922,805 2,548,181 2,808,734 2,866,666
Certificates of
deposit 452,594 536,394 539,765 550,640 619,154
Total deposits
and mortgage
escrow 5,350,287 5,634,470 8,691,908 8,825,557 8,916,617
Borrowings 955,677 1,234,958 772,777 988,550 1,274,605
Stockholders'
equity 1,031,809 1,100,897 1,639,458 1,661,282 1,686,274
Tangible
equity(1) 592,839 645,577 886,757 910,948 938,862
----------------------------------------------------------------------------
1 See a reconciliation of this Non-GAAP Financial Measure on page 12.
2 Includes loans held for sale, excludes allowance for loan losses.
Sterling Bancorp and Subsidiaries
SELECTED FINANCIAL DATA AND PERFORMANCE RATIOS
(unaudited, in thousands, except share and per share data)
As of and for the Quarter Ended
------------ --------------------------------------- ------------
Per Share
Data 3/31/2015 6/30/2015 9/30/2015 12/31/2015 3/31/2016
------------ ------------ ------------ ------------ ------------
Basic
earnings
(loss)
per share$ 0.19 $ (0.08) $ 0.19 $ 0.25 $ 0.18
Diluted
earnings
(loss)
per share 0.19 (0.08) 0.19 0.25 0.18
Core
earnings
per share
(1) 0.21 0.23 0.25 0.26 0.25
Dividends
declared
per share 0.07 0.07 0.07 0.07 0.07
Tangible
book
value per
share 6.89 6.70 6.94 7.05 7.09
Shares of
common
stock o/s 91,121,531 129,709,834 129,769,569 130,006,926 130,548,989
Basic
weighted
average
common
shares
o/s 87,839,029 91,565,972 129,733,911 129,812,551 129,974,025
Diluted
weighted
average
common
shares
o/s 88,252,768 91,950,776 130,192,937 130,354,779 130,500,975
Performance
Ratios
(annualized)
Return on
average
assets 0.91% (0.38)% 0.85% 1.12% 0.80%
Return on
average
equity 6.59% (2.79)% 5.85% 7.83% 5.67%
Return on
average
tangible
assets
(1) 0.97% (0.40)% 0.91% 1.20% 0.85%
Return on
average
tangible
equity
(1) 11.48% (4.75)% 10.82% 14.28% 10.18%
Core
return on
average
tangible
assets
(1) 1.07% 1.13% 1.21% 1.22% 1.15%
Core
return on
average
tangible
equity
(1) 12.66% 13.27% 14.33% 14.60% 13.78%
Core
operating
efficiency
(1) 56.4% 52.6% 49.0% 47.6% 48.9%
Analysis
of Net
Interest
Income
Yield on
loans 4.66% 4.60% 4.75% 4.65% 4.62%
Yield on
investment
securities
- tax
equivalent
(2) 2.79% 2.71% 2.63% 2.66% 2.65%
Yield on
interest
earning
assets -
tax
equivalent
(2) 4.11% 4.03% 4.15% 4.09% 4.00%
Cost of
total
deposits 0.23% 0.24% 0.24% 0.26% 0.29%
Cost of
borrowings 2.00% 1.63% 2.38% 2.04% 1.92%
Cost of
interest
bearing
liabilities 0.66% 0.63% 0.63% 0.63% 0.70%
Net
interest
rate
spread -
tax
equivalent
basis
(2) 3.45% 3.40% 3.52% 3.46% 3.30%
Net
interest
margin -
GAAP
basis 3.45% 3.49% 3.69% 3.62% 3.46%
Net
interest
margin -
tax
equivalent
basis
(2) 3.64% 3.57% 3.76% 3.68% 3.53%
Capital
Tier 1
leverage
ratio -
Company
(3) 9.55% 12.92% 9.12% 9.03% 8.61%
Tier 1
leverage
ratio -
Bank only
(3) 10.53% 13.81% 9.80% 9.65% 9.16%
Tier 1
risk-
based
capital -
Bank only
(3) $ 739,580 $ 1,015,470 $ 1,032,930 $ 1,053,527 $ 1,032,118
Total
risk-
based
capital -
Bank only
(3) 782,859 1,060,332 1,081,090 1,104,221 1,193,801
Tangible
equity to
tangible
assets -
Company
(1) 8.63% 8.04% 8.30% 8.18% 7.66%
Condensed
Five
Quarter
Income
Statement
Interest
and
dividend
income $ 66,672 $ 71,947 $ 103,298 $ 106,224 $ 106,006
Interest
expense 7,805 8,373 9,944 10,803 12,496
------------ ------------ ------------ ------------ ------------
Net
interest
income 58,867 63,574 93,354 95,421 93,510
Provision
for loan
losses 2,100 3,100 5,000 5,500 4,000
------------ ------------ ------------ ------------ ------------
Net
interest
income
after
provision
for loan
losses 56,767 60,474 88,354 89,921 89,510
Non-
interest
income 14,010 13,857 18,802 16,081 15,430
Non-
interest
expense 45,921 85,659 71,315 57,419 68,931
------------ ------------ ------------ ------------ ------------
Income
(loss)
before
income
tax
expense 24,856 (11,328) 35,841 48,583 36,009
Income tax
expense
(benefit) 8,078 (3,682) 11,648 15,792 12,243
------------ ------------ ------------ ------------ ------------
Net income
(loss) $ 16,778 $ (7,646) $ 24,193 $ 32,791 $ 23,766
============ ============ ============ ============ ============
1 See a reconciliation of Non-GAAP Financial Measures beginning on page 12.
2 Tax equivalent adjustment represents interest income earned on municipal securities divided by the applicable Federal tax rate of 35%.
3 Regulatory capital amounts and ratios are preliminary estimates pending filing of the Company's and Bank's regulatory reports.
Sterling Bancorp and Subsidiaries
ASSET QUALITY INFORMATION
(unaudited, in thousands, except share and per share data)
As of and for the Quarter
Ended
--------- ------------------------------ ---------
Allowance for Loan
Losses Roll Forward 3/31/2015 6/30/2015 9/30/2015 12/31/2015 3/31/2016
--------- --------- --------- ---------- ---------
Balance, beginning of
period $ 42,374 $ 42,884 $ 44,317 $ 47,611 $ 50,145
Provision for loan
losses 2,100 3,100 5,000 5,500 4,000
Loan charge-offs:
Commercial &
industrial (842) (228) (224) (281) (489)
Payroll finance (303) (59) (44) - -
Warehouse lending - - - - -
Factored receivables (72) (146) (52) (21) (81)
Equipment financing (153) (438) (1,369) (1,463) (457)
Commercial real estate (62) (276) (223) (1,134) (4)
Multi-family (17) - - - -
ADC - - - - -
Residential mortgage (181) - (546) (524) (224)
Consumer (342) (821) (387) (810) (511)
--------- --------- --------- ---------- ---------
Total charge offs (1,972) (1,968) (2,845) (4,233) (1,766)
Recoveries of loans
previously charged-off:
Commercial &
industrial 101 163 781 675 329
Payroll finance 11 - - 24 4
Warehouse lending - - - - -
Factored receivables 19 9 18 14 24
Equipment financing 172 96 148 409 108
Commercial real estate 16 - 76 56 21
Multi-family - - - 9 2
ADC 9 - - 43 -
Residential mortgage 2 9 81 - 28
Consumer 52 24 35 37 119
--------- --------- --------- ---------- ---------
Total recoveries 382 301 1,139 1,267 635
Net loan charge-offs (1,590) (1,667) (1,706) (2,966) (1,131)
--------- --------- --------- ---------- ---------
Balance, end of period $ 42,884 $ 44,317 $ 47,611 $ 50,145 $ 53,014
--------- --------- --------- ---------- ---------
Asset Quality Data and
Ratios
Non-performing loans
(NPLs) non-accrual $ 45,476 $ 68,419 $ 67,390 $ 65,737 $ 84,436
NPLs still accruing 972 611 282 674 1,002
--------- --------- --------- ---------- ---------
Total NPLs 46,448 69,030 67,672 66,411 85,438
Other real estate
owned 8,231 9,575 11,831 14,614 14,527
--------- --------- --------- ---------- ---------
Non-performing assets
(NPAs) $ 54,679 $ 78,605 $ 79,503 $ 81,025 $ 99,965
--------- --------- --------- ---------- ---------
Loans 30 to 89 days
past due $ 35,267 $ 40,957 $ 30,881 $ 67,996 $ 19,168
Net charge-offs as a %
of average loans
(annualized) 0.13% 0.13% 0.09% 0.15% 0.06%
NPLs as a % of total
loans 0.94% 0.95% 0.90% 0.84% 1.03%
NPAs as a % of total
assets 0.71% 0.68% 0.69% 0.68% 0.78%
Allowance for loan
losses as a % of NPLs 92.3% 64.2% 70.4% 75.5% 62.0%
Allowance for loan
losses as a % of
total loans 0.87% 0.61% 0.63% 0.64% 0.64%
Total valuation
balances recorded
against portfolio
loans to adjusted
gross portfolio loans
(1) 0.97% 1.36% 1.28% 1.16% 1.17%
Special mention loans $ 26,057 $ 65,421 $ 91,076 $ 68,003 $ 101,560
Substandard loans 74,095 125,602 120,684 129,665 131,919
Doubtful loans 157 392 152 713 556
(1) See a reconciliation of this non-GAAP measure on page 14.
Sterling Bancorp and Subsidiaries
QUARTERLY YIELD TABLE
(unaudited, in thousands, except share and per share data)
For the Quarter Ended
--------------------------------------------------------
December 31, 2015 March 31, 2016
--------------------------- ---------------------------
Average Yield/ Average Yield/
balance Interest Rate balance Interest Rate
----------- -------- ------ ----------- -------- ------
(Dollars in thousands)
Interest earning
assets:
Commercial loans $ 6,599,848 $ 79,009 4.75% $ 6,692,875 $ 78,137 4.70%
Consumer loans 281,242 3,158 4.45% 297,028 3,296 4.46%
Residential
mortgage loans 777,561 7,540 3.88% 755,564 7,601 4.02%
----------- -------- ----------- --------
Total net loans
(1) 7,658,651 89,707 4.65% 7,745,467 89,034 4.62%
Securities
taxable 2,111,953 12,201 2.29% 2,139,547 12,016 2.26%
Securities non-
taxable 429,633 4,831 4.46% 593,777 5,968 4.04%
Interest earning
deposits 168,199 77 0.18% 296,668 311 0.42%
FRB and FHLB
stock 91,732 1,100 4.76% 104,897 766 2.94%
----------- -------- ----------- --------
Total
securities
and other
earning
assets 2,801,517 18,209 2.58% 3,134,889 19,061 2.45%
----------- -------- ----------- --------
Total interest
earning assets 10,460,168 107,916 4.09% 10,880,356 108,095 4.00%
Non-interest
earning assets 1,162,453 1,121,014
----------- -----------
Total assets $11,622,621 $12,001,370
=========== ===========
Interest bearing
liabilities:
Demand deposits $ 1,485,690 $ 890 0.24% $ 1,607,227 $ 1,004 0.25%
Savings deposits
(2) 962,766 617 0.25% 814,485 606 0.30%
Money market
deposits 2,808,734 3,283 0.46% 2,866,666 3,672 0.52%
Certificates of
deposit 550,640 938 0.68% 619,154 1,127 0.73%
----------- -------- ----------- --------
Total interest
bearing deposits 5,807,830 5,728 0.39% 5,907,532 6,409 0.44%
Senior notes 98,827 1,476 5.97% 98,928 1,478 5.98%
Other borrowings 889,723 3,599 1.60% 1,172,112 4,560 1.56%
Subordinated
notes - - -% 3,565 49 5.50%
----------- -------- ----------- --------
Total
borrowings 988,550 5,075 2.04% 1,274,605 6,087 1.92%
----------- -------- ----------- --------
Total interest
bearing
liabilities 6,796,380 10,803 0.63% 7,182,137 12,496 0.70%
Non-interest
bearing deposits 3,017,727 3,009,085
Other non-interest
bearing
liabilities 147,232 123,874
----------- -----------
Total liabilities 9,961,339 10,315,096
Stockholders'
equity 1,661,282 1,686,274
----------- -----------
Total liabilities
and stockholders'
equity $11,622,621 $12,001,370
=========== ===========
Net interest rate
spread (3) 3.46% 3.30%
Net interest
earning assets
(4) $ 3,663,788 $ 3,698,219
=========== ===========
Net interest
margin - tax
equivalent 97,113 3.68% 95,599 3.53%
Less tax
equivalent
adjustment (1,692) (2,089)
-------- --------
Net interest
income $ 95,421 $ 93,510
======== ========
Ratio of interest
earning assets to
interest bearing
liabilities 153.9% 151.5%
----------------------------------------------------------------------------
1 Average balances include the effect of net deferred loan origination fees and costs, allowance for loan losses and non-accrual loans. Interest 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
---------------------------------------------------------------
3/31/2015 6/30/2015 9/30/2015 12/31/2015 3/31/2016
----------- ----------- ----------- ----------- -----------
The Company provides supplemental reporting of Non-GAAP Financial Measures as management believes this information is useful to investors. See legend on page 14.
The following table shows the reconciliation of stockholders' equity to tangible equity and the tangible equity ratio 1:
Total
assets $ 7,727,515 $ 11,566,382 $ 11,597,393 $ 11,955,952 $ 12,865,356
Goodwill
and
other
intang-
ibles (452,698) (753,899) (751,529) (748,066) (772,390)
------------ ----------- ----------- ----------- -----------
Tangible
assets 7,274,817 10,812,483 10,845,864 11,207,886 12,092,966
------------ ----------- ----------- ----------- -----------
Stock-
holders'
equity 1,080,543 1,623,110 1,652,204 1,665,073 1,698,133
Goodwill
and
other
intang-
ibles (452,698) (753,899) (751,529) (748,066) (772,390)
------------ ----------- ----------- ----------- -----------
Tangible
stock
holders'
equity 627,845 869,211 900,675 917,007 925,743
Common
stock
outstanding
at
period
end 91,121,531 129,709,834 129,769,569 130,006,926 130,548,989
Tangible
equity
as
a %
of
tangible
assets 8.63% 8.04% 8.30% 8.18% 7.66%
Tangible
book
value
per
share $ 6.89 $ 6.70 $ 6.94 $ 7.05 $ 7.09
The following table shows the reconciliation of return on average tangible equity and core return on average tangible equity 2:
Average
stockholders'
equity $1,031,809 $1,100,897 $1,639,458 $1,661,282 $1,686,274
Average goodwill
and other
intangibles (438,970) (455,320) (752,701) (750,334) (747,412)
---------- ---------- ---------- ---------- ----------
Average tangible
stockholders'
equity 592,839 645,577 886,757 910,948 938,862
Net income (loss) 16,778 (7,646) 24,193 32,791 23,766
Net income (loss),
if annualized 68,044 (30,668) 95,983 130,095 95,586
Return on average
tangible equity 11.48% (4.75)% 10.82% 14.28% 10.18%
Core net income
(see
reconciliation
on page 13) $ 18,501 $ 21,361 $ 32,035 $ 33,525 $ 32,159
Annualized core net
income 75,032 85,679 127,095 133,007 129,343
Core return on
average tangible
equity 12.66% 13.27% 14.33% 14.60% 13.78%
The following table shows the reconciliation of return on tangible assets and core return on tangible assets3:
Average assets $7,438,314 $8,049,220 $11,242,870 $11,622,621 $12,001,370
Average goodwill
and other
intangibles (438,970) (455,320) (752,701) (750,334) (747,412)
---------- ---------- ----------- ----------- -----------
Average tangible
assets 6,999,344 7,593,900 10,490,169 10,872,287 11,253,958
Net income
(loss) 16,778 (7,646) 24,193 32,791 23,766
Net income
(loss), if
annualized 68,044 (30,668) 95,983 130,095 95,586
Return on
average
tangible assets 0.97% (0.40)% 0.91% 1.20% 0.85%
Core net income
(see
reconciliation
on page
13) $ 18,501 $ 21,361 $ 32,035 $ 33,525 $ 32,159
Annualized core
net income 75,032 85,679 127,095 133,007 129,343
Core return on
average
tangible assets 1.07% 1.13% 1.21% 1.22% 1.15%
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
As of and for the Quarter Ended
------------------------------------------------------
3/31/2015 6/30/2015 9/30/2015 12/31/2015 3/31/2016
---------- ---------- ---------- ---------- ----------
The Company provides supplemental reporting of non-GAAP measures as management believes this information is useful to investors. See legend on page 14.
The following table shows the reconciliation of the core operating efficiency ratio 4:
Net interest income $ 58,867 $ 63,574 $ 93,354 $ 95,421 $ 93,510
Non-interest income 14,010 13,857 18,802 16,081 15,430
--------- --------- --------- --------- ---------
Total net revenue 72,877 77,431 112,156 111,502 108,940
Tax equivalent adjustment
on securities interest
income 1,544 1,562 1,707 1,692 2,091
Net (gain) loss on sale
of securities (1,534) (697) (2,726) 121 283
--------- --------- --------- --------- ---------
Core total revenue 72,887 78,296 111,137 113,315 111,314
--------- --------- --------- --------- ---------
Non-interest expense 45,921 85,659 71,315 57,419 68,931
Merger-related expense (2,455) (14,625) - - (265)
Charge for asset write-
downs, banking systems
conversion, retention
and severance (971) (28,055) - - (2,485)
Charge on benefit plan
settlement - - (13,384) - -
Loss on extinguishment of
FHLB borrowings - - - - (8,716)
Amortization of
intangible assets (1,399) (1,780) (3,431) (3,431) (3,053)
--------- --------- --------- --------- ---------
Core non-interest expense 41,096 41,199 54,500 53,988 54,412
Core operating efficiency
ratio 56.4% 52.6% 49.0% 47.6% 48.9%
The following table shows the reconciliation of core net income and core earnings per share5:
Income
(loss)
before
income tax
expense $ 24,856 $ (11,328)$ 35,841 $ 48,583 $ 36,009
Income tax
expense
(benefit) 8,078 (3,682) 11,648 15,792 12,243
----------- ----------- ------------ ------------ ------------
Net income
(loss) 16,778 (7,646) 24,193 32,791 23,766
Net (gain)
loss on
sale of
securities (1,534) (697) (2,726) 121 283
Merger-
related
expense 2,455 14,625 - - 265
Charge for
asset
write-
downs,
banking
systems
conversion,
retention
and
severance 971 28,055 - - 2,485
Charge on
benefit
plan
settlement - - 13,384 - -
Loss on
extinguishm
ent of FHLB
borrowings - - - - 8,716
Amortization
of non-
compete
agreements
and
acquired
customer
list
intangible
assets 660 991 961 961 968
----------- ----------- ------------ ------------ ------------
Total
charges 2,552 42,974 11,619 1,082 12,717
Income tax
(benefit) (829) (13,967) (3,777) (348) (4,324)
----------- ----------- ------------ ------------ ------------
Total non-
core
charges net
of taxes 1,723 29,007 7,842 734 8,393
----------- ----------- ------------ ------------ ------------
Core net
income $ 18,501 $ 21,361 $ 32,035 $ 33,525 $ 32,159
=========== =========== ============ ============ ============
Weighted
average
diluted
shares 88,252,768 91,950,776 130,192,937 130,354,779 130,500,975
Diluted EPS
as reported $ 0.19 $ (0.08)$ 0.19 $ 0.25 $ 0.18
Core diluted
EPS
(excluding
total
charges) 0.21 0.23 0.25 0.26 0.25
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
As of and for the Quarter Ended
-----------------------------------------------------------
3/31/2015 6/30/2015 9/30/2015 12/31/2015 3/31/2016
----------- ----------- ----------- ----------- -----------
The Company provides supplemental reporting of non-GAAP measures as management believes this information is useful to investors. See legend below.
The following table shows a reconciliation of the allowance for loan losses and remaining purchase accounting adjustments to portfolio loans 6:
Allowance for loan
losses $ 42,884 $ 44,317 $ 47,611 $ 50,145 $ 53,014
Remaining purchase
accounting
adjustments:
Acquired
performing loans 4,388 36,889 31,364 24,766 27,340
Purchased credit
impaired loans 724 18,014 17,783 16,617 16,862
---------- ---------- ---------- ---------- ----------
Total remaining
purchase
accounting
adjustments 5,112 54,903 49,147 41,383 44,202
---------- ---------- ---------- ---------- ----------
Total valuation
balances recorded
against portfolio
loans $ 47,996 $ 99,220 $ 96,758 $ 91,528 $ 97,216
========== ========== ========== ========== ==========
Total portfolio
loans, gross $4,938,906 $7,235,587 $7,525,632 $7,859,360 $8,286,163
Remaining purchase
accounting
adjustments:
Acquired
performing loans 4,388 36,889 31,364 24,766 27,340
---------- ---------- ---------- ---------- ----------
Purchased credit
impaired loans 724 18,014 17,783 16,617 16,862
========== ========== ========== ========== ==========
Adjusted portfolio
loans, gross $4,944,018 $7,290,490 $7,574,779 $7,900,743 $8,330,365
Allowance for loan
losses to total
portfolio loans,
gross 0.87% 0.61% 0.63% 0.64% 0.64%
Total valuation
balances recorded
against portfolio
loans to adjusted
gross portfolio
loans 0.97% 1.36% 1.28% 1.16% 1.17%
The non-GAAP measures presented above are used by management and the Board of Directors on a regular basis in addition to our GAAP results to facilitate the assessment of our financial performance and to assess our performance compared to our annual budget and strategic plans. These non-GAAP financial measures complement our GAAP reporting and are presented above to provide investors, analysts, regulators and others information that we use to manage and evaluate our performance each period. This information supplements our GAAP reported results, and should not be viewed in isolation from, or as a substitute for, our GAAP results.
1 Tangible equity as a % of tangible assets provides information to help assess our capital position and financial strength. We believe tangible book measures improve comparability to other banking organizations that have not engaged in acquisitions that have resulted in the accumulation of goodwill and other intangible assets.
2 Return on average tangible equity and core return on average tangible equity measures provide information to evaluate the use of our tangible equity.
3 Return on tangible assets and the core return on tangible assets measures provide information to help assess our profitability.
4 The core operating efficiency ratio is a non-GAAP measure calculated by dividing non-interest expense by total net revenue. The core operating efficiency ratio is a measure we use to assess our core operating performance.
5 Core net income and core earnings per share present a summary of our earnings to exclude certain non-core revenues and non-core expenses to help in assessing our core profitability.
6 The reconciliation of the allowance for loan losses and remaining purchase accounting adjustments to portfolio loans provides information to evaluate the impact of purchase accounting adjustments and the allowance for loan losses on our portfolio loans. In purchase accounting, the prior allowance for loan losses is not carried over, and in place, we are required to estimate the fair value of the loan which includes an estimate of life of loan losses on the portfolio, which is included as a purchase discount within the acquired loan population.
Sterling Bancorp 400 Rella Boulevard Montebello, NY 10901-4243 T 845.369.8040 F 845.369.8255 http://www.sterlingbancorp.com STERLING BANCORP CONTACT: Luis Massiani SEVP & Chief Financial Officer 845.369.8040
Source: Sterling Bancorp
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