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Form 8-K STERLING BANCORP For: Jan 27

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January 27, 2016 4:13 PM EST
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): January 27, 2016

STERLING BANCORP
(Exact Name of Registrant as Specified in Charter)

    Delaware          001-35385      80-0091851
(State or Other Jurisdiction)    (Commission File No.)    (I.R.S. Employer
of Incorporation) Identification No.)


400 Rella Boulevard, Montebello, New York                          10901
(Address of Principal Executive Offices)                         (Zip Code)

Registrant’s telephone number, including area code:    (845) 369-8040

Not Applicable
(Former name or former address, if changed since last report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Item 2.02. Results of Operations and Financial Condition

On January 27, 2016, Sterling Bancorp (the “Company”) issued a press release regarding its results for the quarter ended December 31, 2015. The press release is included as Exhibit 99.1 to this report.

The information contained in this report, including Exhibit 99.1 attached hereto, is considered to be “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that Section. The information in this Current Report shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

The release contains forward-looking statements regarding the Company and includes a cautionary statement identifying important factors that could cause actual results to differ materially from those anticipated.




        

Item 9.01.     Financial Statements and Exhibits
 
(d)     Exhibits.
 
Exhibit No.
 
Description
99.1
 
Press Release of Sterling Bancorp, dated January 27, 2016.





        


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

STERLING BANCORP



DATE: January 27, 2016
By:/s/ Luis Massiani        
Luis Massiani
Senior Executive Vice President and
Principal Financial Officer



        

EXHIBIT INDEX
 
Exhibit
Number
 
Description
99.1
 
Press Release of Sterling Bancorp, dated January 27, 2016
 




        
 
Sterling Bancorp
 
400 Rella Boulevard
 
Montebello, NY 10901-4243
 
 
News Release
T 845.369.8040
F 845.369.8255
 
 
http://www.sterlingbancorp.com
FOR IMMEDIATE RELEASE
 
January 27, 2016
 
 
 
STERLING BANCORP CONTACT:
 
Luis Massiani, SEVP & Chief Financial Officer
 
845.369.8040
 
Sterling Bancorp Announces Results for the Three Months and Full Year Ended December 31, 2015.
Strong operating momentum in the fourth quarter continues highlighted by core diluted earnings per share1 of $0.26 and GAAP diluted earnings per share of $0.25, and annualized commercial loan2 growth of 20.4%.

Key Highlights for the Full Year ended December 31, 2015
▪
Core net income1 was $105.4 million, which represented 58.1% growth over 2014.
▪
Core diluted earnings per share1 were $0.96, which represented growth of 21.5% over the prior year.
▪
Core operating efficiency ratio1 was 50.8%.
▪
Core return on average tangible assets1 was 1.17% and core return on average tangible equity1 was 13.86%.
Key Highlights for the Three Months ended December 31, 2015
▪
Total revenue3 reached $111.6 million.
▪
Core net income1 was $33.5 million, which represented growth of 4.7% over the linked quarter and 70.9% over the fourth quarter of 2014.
▪
Core diluted earnings per share1 were $0.26; which represented growth of 13.0% over the fourth quarter of 2014.
▪
Tax equivalent net interest margin was 3.68%, compared to 3.76% in the linked quarter and 3.70% in the fourth quarter of 2014.
▪
Total non-interest income excluding securities gains was $16.2 million, which represented 14.5% of total revenue3.
▪
Core total revenue1 grew 2.0% while core non-interest expense decreased by 0.9% over the linked quarter.
▪
Core operating efficiency ratio1 was 47.6%.
▪
Annualized commercial loan growth of 20.4% (end of period balances) and 21.8% (average balances) over the linked quarter.
▪
Loans to deposits ratio of 91.6%; total deposits were $8.6 billion with over 91.2% core deposits4 and a weighted average cost of deposits of 0.26%.
▪
Core return on average tangible assets1 was 1.22%, compared to 1.21% in the linked quarter and 1.13% in the fourth quarter of 2014.
▪
Core return on average tangible equity1 was 14.60%, compared to 14.33% in the linked quarter and 14.42% in the fourth quarter of 2014.
▪
Completed four new team hires in commercial relationship banking and expanded asset-based lending capabilities.

1. Core measures are defined in the non-GAAP tables beginning on page 11.
2. Commercial loans include commercial real estate, commercial and industrial and acquisition, development and construction loans.
3. Total revenue is equal to net interest income plus non-interest income excluding securities gains and losses.
4. Core deposits include retail, commercial and municipal transaction, money market and savings accounts and exclude certificates of deposit and brokered deposits except for reciprocal CDARs.
1

MONTEBELLO, N.Y. – January 27, 2016 – Sterling Bancorp (NYSE: STL), the parent company of Sterling National Bank, (the “Company”) today announced results for the three months ended December 31, 2015. Net income for the quarter was $32.8 million, or $0.25 per diluted share, compared to net income of $24.2 million, or $0.19 per diluted share, for the linked quarter ended September 30, 2015 and net income of $17.0 million, or $0.20 per diluted share, for the fourth quarter of 2014.

Net income for the year ended December 31, 2015 was $66.1 million, or $0.60 per diluted share, compared to net income of $58.7 million, or $0.70 per diluted share for the prior calendar year. Results for the year ended December 31, 2015 included pre-tax merger-related expenses and other restructuring charges of $42.7 million that were incurred in connection with the Company’s merger (the “HVB Merger”) with Hudson Valley Holding Corp. (“Hudson Valley”). Results for 2015 also included a pre-tax charge of $13.4 million related to the termination of the Company’s defined benefit pension plans, which was incurred in the third quarter.

President’s Comments
Jack Kopnisky, President and Chief Executive Officer, commented: “This was another year of strong operating performance, highlighted by significant organic growth in loans and deposits and our acquisition of Hudson Valley in June 2015. Since December 31, 2014, our total loans have grown by $3.0 billion to $7.9 billion, and total commercial loans have grown by $2.8 billion to $6.8 billion. This represents growth of 63.2% and 67.6%, respectively. As of December 31, 2015, our total assets reached $12.0 billion compared to $7.4 billion a year ago. Excluding the balances acquired in the HVB Merger, total loans for the year grew $1.3 billion, or 26.0%; and total deposits grew $206.9 million, or 4.0%. We are well-positioned for future growth and continue to focus on our objective of creating a high performing regional bank.

“Core net income for the quarter was $33.5 million and core diluted earnings per share were $0.26 compared to $19.6 million and $0.23, respectively, for the same quarter a year ago. Our core return on average tangible assets was 1.22% and core return on average tangible equity was 14.60%. This compares to 1.13% and 14.42%, respectively, for the same quarter a year ago.

“For the year ended December 31, 2015, our core net income was $105.4 million and our core earnings per diluted share were $0.96. This represented an increase of 58.1% and 21.5%, respectively, over the same period a year ago. For the year, our core return on average tangible assets was 1.17% and core return on average tangible equity was 13.86%. Both metrics are on-track to achieve our long-term profitability goals.

“On a linked quarter basis, our core total revenue grew 2.0% while core non-interest expense decreased by 0.9%. We are focused on creating positive operating leverage, which continued in the fourth quarter with revenue growth that significantly outpaced the level of expense growth. For the quarter, our core operating efficiency ratio was 47.6%, which compares to 49.0% in the linked quarter and 54.0% in the same quarter last year. For the year, our core operating efficiency ratio was 50.8%, which represented an improvement of 610 basis points relative to the twelve months ended December 31, 2014.

“We continue to experience strong loan growth across multiple asset classes. As of December 31, 2015, total loans were $7.9 billion, which represented annualized growth of 17.6% over the prior quarter end and growth of $623.8 million, or 17.1% annualized, since the completion of the merger with Hudson Valley. During the quarter, our commercial loan balances grew $334.0 million, which represented annualized growth of 20.4% over the prior quarter end. Through the addition of four new teams, we are continuing to build our banking relationships which will support our future growth.

“As of December 31, 2015, our total deposits were $8.6 billion. Our core deposits were $7.8 billion, which represented 91.2% of our total deposit balances. Our total cost of deposits was 0.26% for the three months ended December 31, 2015. For the quarter, the average balances of our demand, savings and money market deposits grew by $122.8 million, an annualized growth rate of 6.0% over the linked quarter.

“We continue to focus on diversifying and improving our revenue mix. Non-interest income excluding securities losses was $16.2 million for the quarter, which represented 14.5% of total revenue. We will continue growing our diversified commercial lending businesses, which are strong fee income generators, and we will continue to actively evaluate opportunistic acquisitions, as we have previously disclosed.

“Net charge-offs against the allowance for loan losses for the three months ended December 31, 2015 were $3.0 million, or 0.15% on an annualized basis, compared to $1.7 million, or 0.09% on an annualized basis, in the three months ended September 30, 2015. The allowance for loan losses to total loans was 0.64%. 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 ratio of allowance for loan losses to non-performing loans continues to strengthen and increased from 70.4% at September 30, 2015 to 75.5% at December 31, 2015.



2

“Our capital position remains strong. At December 31, 2015, our tangible equity to tangible assets ratio was 8.18% and our Tier 1 leverage ratio was 8.94%. At Sterling National Bank, our Tier 1 leverage ratio was 9.65%. We have ample capital and liquidity to support our organic growth and execute our strategy.

“Lastly, I am pleased to announce our Board of Directors has declared a dividend on our common stock of $0.07 per share payable on February 22, 2016 to our holders as of the record date of February 5, 2016.”

Reconciliation of Core to GAAP Results
Net income of $32.8 million, or $0.25 per diluted share, for the fourth quarter of 2015, included a net loss on sale of securities of $121 thousand and amortization of non-compete agreements and acquired customer list intangibles of $961 thousand. Excluding the impact of these items, core net income was $33.5 million, or $0.26 per diluted share.

See the reconciliation of the Company’s non-GAAP financial measures included in this press release beginning on page 11. Non-GAAP financial measures include references to the terms “core” or “excluding”.

Net Interest Income and Margin
Fourth quarter 2015 compared with fourth quarter 2014
Net interest income was $95.4 million, up $35.2 million compared to the fourth quarter of 2014. This was mainly the result of higher average loans and investment securities balances due to the HVB Merger and organic growth. For the fourth quarter of 2015 compared to the fourth quarter of 2014 the tax-equivalent yield on investment securities decreased 7 basis points to 2.66% and the yield on loans decreased 9 basis points to 4.65%. Yield on loans in the fourth quarter of 2015 included $7.1 million in accretion of the fair value discount associated with prior acquisitions. The cost of total deposits was 26 basis points and the cost of borrowings was 2.04% compared to 21 basis points and 2.21%, respectively for the prior year. The tax-equivalent yield on interest earning assets declined 6 basis points from the fourth quarter of 2014 to 4.09% for the fourth quarter of 2015. The net interest margin on a tax-equivalent basis was 3.68% compared to 3.70% for the same period a year ago.

Fourth quarter 2015 compared with linked quarter ended September 30, 2015
Net interest income increased $2.1 million compared to the linked quarter ended September 30, 2015. The increase in net interest income was mainly due to a $327.1 million increase in the average balance of loans outstanding compared to the linked quarter. Partially offsetting this increase was a decline in the yield on loans, which was 4.65% for the quarter compared to 4.75% for the linked quarter. The decline in the yield on loans was mainly the result of lower collections in the fourth quarter on loans formerly charged-off by Hudson Valley and lower loan prepayment penalties. The tax-equivalent yield on interest earning assets was 4.09% compared to 4.15% in the linked quarter. Tax-equivalent net interest margin was 3.68% compared to 3.76% in the linked quarter.

Non-interest Income
Fourth quarter 2015 compared with fourth quarter 2014
Excluding net (loss) gains on sale of securities, non-interest income increased $2.2 million to $16.2 million in the fourth quarter of 2015 compared to the same quarter last year. The increase was mainly due to increases in factoring commissions and other fees, bank owned life insurance, investment management fees and other non-interest income. The Company realized a net loss on sale of securities of $121 thousand in the fourth quarter of 2015 compared to a net loss on sale of securities of $43 thousand in the same quarter last year.

Fourth quarter 2015 compared with linked quarter ended September 30, 2015
Excluding net (loss) gains on sale of securities, non-interest income increased $126 thousand to $16.2 million during the fourth quarter of 2015. The increase was mainly due to an increase in other income of $369 thousand and an increase in bank owned life insurance of $499 thousand. These gains were partially offset by a decrease in factoring commissions and other fees of $372 thousand. The Company realized a net gain on sale of securities of $2.7 million in the linked quarter ended September 30, 2015.

Non-interest Expense
Fourth quarter 2015 compared with fourth quarter 2014
Non-interest expense increased $11.6 million relative to the fourth quarter of 2014 to $57.4 million. The increase was due to increases in compensation and benefits expense of $7.5 million, occupancy and office operations expense of $2.1 million and amortization of intangible assets of $1.6 million which were mainly due to the HVB Merger.


3

Fourth quarter 2015 compared with linked quarter ended September 30, 2015
Non-interest expense decreased $13.9 million compared to the linked quarter, mainly due to a decrease attributed to the pension plan termination charge of $13.4 million, which was incurred in the third quarter of 2015. Also contributing to the decline in non-interest expense was a $1.0 million decrease in other non-interest expense and a decline in occupancy and office operations of $270 thousand. These declines were partially offset by an increase in compensation and benefits expense of $630 thousand, as we have continued to add personnel in our commercial relationship banking, asset-based lending and community development banking businesses to support future growth.

Taxes
In the fourth quarter of 2015, the Company recorded income taxes at a rate of 32.5%, compared to an effective tax rate of 32.5% in the linked quarter and 33.2% for the same quarter last year. We estimate our effective tax rate for 2016 will be 34.0%.

Key Balance Sheet Highlights at December 31, 2015
▪
Total assets were $12.0 billion.
▪
Total loans, including loans held for sale, were $7.9 billion.
▪
Commercial and industrial loans (which includes traditional C&I, asset-based lending, payroll finance, factoring and warehouse lending) represented 39.8%, commercial real estate loans represented 44.9%, consumer and residential mortgage loans represented 12.9%, and acquisition, development and construction loans represented 2.4% of the total loan portfolio.
▪
Commercial loan growth, which includes commercial and industrial loans described above, commercial real estate and acquisition development and construction loans was $334.0 million for the quarter ended December 31, 2015, and represented annualized growth of 20.4% over the prior quarter.
▪
The allowance for loan losses was $50.1 million and represented 0.64% of total loans. Loans acquired in prior merger transactions were recorded at fair value at the acquisition date; a substantial portion of these loans continue to carry no allowance for loan losses.
▪
Securities, excluding FHLB and FRB stock, were $2.6 billion and represented 22.1% of total assets.
▪
Core deposits were $7.8 billion and represented 91.2% of total deposits.
▪
Total deposits were $8.6 billion compared to $8.8 billion at September 30, 2015. Average deposits were $8.8 billion for the fourth quarter compared to $8.7 billion for the prior quarter.
▪
Borrowings were $1.5 billion compared to $948.0 million at September 30, 2015. Average borrowings were $988.6 million for the fourth quarter compared to $772.8 million for the third quarter.
▪
Tangible book value per share was $7.05.

Credit Quality
Non-performing loans, which includes non-accrual loans and loans over 90 days past due still accruing interest, decreased $1.3 million to $66.4 million, or 0.84% of total loans at December 31, 2015 compared to $67.7 million, or 0.90% of total loans at September 30, 2015. Net charge-offs for the fourth quarter of 2015 that were charged to the allowance for loan losses were $3.0 million, compared to $1.7 million in the linked quarter. The allowance for loan losses at December 31, 2015 was $50.1 million, which represented 75.5% of non-performing loans and 0.64% of our total loan portfolio compared to $47.6 million, 70.4% and 0.63%, respectively, as of September 30, 2015. The increase in the balance of the allowance for loan losses was mainly related to the higher balance of loans outstanding at December 31, 2015.

Capital
The Company’s stockholders’ equity was $1.7 billion at December 31, 2015, an increase of $12.9 million relative to September 30, 2015. The increase in stockholders’ equity was mainly the result of net income of $32.8 million and stock option exercises and stock-based compensation which totaled $448 thousand. These increases were partially offset by dividends declared of $9.1 million and a decline in other comprehensive income of $11.3 million, which was mainly due to a change in the fair value of our available for sale securities portfolio.

Tangible book value per share increased to $7.05 at December 31, 2015 from $6.94 at September 30, 2015. Total goodwill and other intangible assets were $748.1 million at December 31, 2015, a decrease of $3.5 million compared to September 30, 2015. For the quarter ended December 31, 2015, basic and diluted weighted average common shares outstanding increased to 129.8 million and 130.4 million, respectively, compared to 129.7 million basic shares and 130.2 million diluted shares, respectively, for the quarter ended September 30, 2015. Total shares outstanding at December 31, 2015 were approximately 130.0 million.


4

Consolidated tangible equity to tangible assets was 8.18% at December 31, 2015 and the Company’s Tier 1 leverage ratio was 8.94%. Sterling National Bank remained well capitalized at December 31, 2015 with a Tier 1 leverage ratio of 9.65%.

Sterling Bancorp will host a teleconference and webcast on Thursday, January 28, 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 (855) 877-0343, Conference ID #19370348. A replay of the teleconference can be accessed through the Company’s website.

About Sterling Bancorp
Sterling Bancorp, with its principal subsidiary Sterling National Bank, specializes in the delivery of service and solutions to business owners, their families and consumers within the communities we serve through teams of dedicated and experienced relationship managers. Sterling National Bank offers a complete line of commercial, business, and consumer banking products and services. For more information, visit the Sterling Bancorp website at www.sterlingbancorp.com.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This release may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may concern Sterling Bancorp’s current expectations about its future results, plans, operations and prospects and involve certain risks, including the following: delays in integrating Hudson Valley Holding Corp. business or fully realizing cost savings and other benefits; inflation; the effects of, and changes in, trade; changes in asset quality and credit risk; introduction, withdrawal, success and timing of business initiatives; capital management activities; customer disintermediation; and the success of Sterling Bancorp in managing those risks. Other factors that could cause Sterling Bancorp’s actual results to differ from those indicated in forward-looking statements are included in the “Risk Factors” section of Sterling Bancorp’s filings with the Securities and Exchange Commission. The forward-looking statements speak only as of the date they are made and we undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.

Financial information contained in this release should be considered to be an estimate pending the filing with the Securities and Exchange Commission of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. While the Company is not aware of any need to revise the results disclosed in this release, accounting literature may require information received by management between the date of this release and the filing of the Annual Report on Form 10-K to be reflected in the results of the fiscal period, even though the new information was received by management subsequent to the date of this release.


5
Sterling Bancorp and Subsidiaries                                        CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION                        (unaudited, in thousands, except share and per share data)    

 
12/31/2014
 
9/30/2015
 
12/31/2015
Assets:
 
 
 
 
 
Cash and cash equivalents
$
121,520

 
$
318,139

 
$
229,513

Investment securities
1,713,183

 
2,527,992

 
2,643,823

Loans held for sale
46,599

 
66,506

 
34,110

Loans:
 
 
 
 
 
Residential mortgage
529,766

 
721,606

 
713,036

Commercial real estate
1,842,821

 
3,320,693

 
3,529,381

Commercial and industrial
2,145,644

 
3,015,043

 
3,131,028

Acquisition, development and construction
96,995

 
177,062

 
186,398

Consumer
200,415

 
291,228

 
299,517

Total loans, gross
4,815,641

 
7,525,632

 
7,859,360

Allowance for loan losses
(42,374
)
 
(47,611
)
 
(50,145
)
Total loans, net
4,773,267

 
7,478,021

 
7,809,215

Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank Stock, at cost
75,437

 
89,626

 
116,758

Accrued interest receivable
19,301

 
31,092

 
31,531

Premises and equipment, net
46,156

 
63,508

 
63,362

Goodwill
388,926

 
670,699

 
670,699

Other intangibles
43,332

 
80,830

 
77,367

Bank owned life insurance
150,522

 
195,741

 
196,288

Other real estate owned
5,867

 
11,831

 
14,614

Other assets
40,712

 
63,408

 
68,672

Total assets
$
7,424,822

 
$
11,597,393

 
$
11,955,952

Liabilities:
 
 
 
 
 
Deposits
$
5,212,325

 
$
8,805,411

 
$
8,580,007

FHLB borrowings
1,003,209

 
806,970

 
1,409,885

Other borrowings
9,846

 
42,286

 
16,566

Senior notes
98,498

 
98,792

 
98,893

Mortgage escrow funds
4,167

 
13,865

 
13,778

Other liabilities
121,577

 
177,865

 
171,750

Total liabilities
6,449,622

 
9,945,189

 
10,290,879

Stockholders’ equity
975,200

 
1,652,204

 
1,665,073

Total liabilities and stockholders’ equity
$
7,424,822

 
$
11,597,393

 
$
11,955,952

 
 
 
 
 
 
Shares of common stock outstanding at period end
83,927,572

 
129,769,569

 
130,006,926

Book value per share
$
11.62

 
$
12.73

 
$
12.81

Tangible book value per share
6.47

 
6.94

 
7.05




6
Sterling Bancorp and Subsidiaries                                        CONSOLIDATED CONDENSED INCOME STATEMENTS
(unaudited, in thousands, except share and per share data)    

 
 
 For the Quarter Ended
 
For the Year Ended
 
 
12/31/2014
 
9/30/2015
 
12/31/2015
 
12/31/2014
 
12/31/2015
Interest and dividend income:
 
 
 
 
 
 
 
 
 
 
Loans and loan fees
 
$
56,869

 
$
87,774

 
$
89,707

 
$
216,563

 
$
292,496

Securities taxable
 
7,413

 
11,114

 
12,201

 
30,577

 
39,369

Securities non-taxable
 
2,865

 
3,169

 
3,139

 
11,157

 
12,076

Other earning assets
 
940

 
1,241

 
1,177

 
3,985

 
4,200

Total interest income
 
68,087

 
103,298

 
106,224

 
262,282

 
348,141

Interest expense:
 
 
 
 
 
 
 
 
 
 
Deposits
 
2,818

 
5,299

 
5,728

 
9,948

 
17,478

Borrowings
 
5,032

 
4,645

 
5,075

 
19,985

 
19,447

Total interest expense
 
7,850

 
9,944

 
10,803

 
29,933

 
36,925

Net interest income
 
60,237

 
93,354

 
95,421

 
232,349

 
311,216

Provision for loan losses
 
3,000

 
5,000

 
5,500

 
19,100

 
15,700

Net interest income after provision for loan losses
 
57,237

 
88,354

 
89,921

 
213,249

 
295,516

Non-interest income:
 
 
 
 
 
 
 
 
 
 
Accounts receivable / factoring commissions and other fees
 
4,134

 
4,761

 
4,389

 
15,054

 
17,088

Mortgage banking income
 
2,858

 
2,956

 
2,762

 
9,328

 
11,405

Deposit fees and service charges
 
4,221

 
4,450

 
4,241

 
15,874

 
15,871

Net (loss) gain on sale of securities
 
(43
)
 
2,726

 
(121
)
 
1,243

 
4,837

Bank owned life insurance
 
1,024

 
1,293

 
1,792

 
3,364

 
5,235

Investment management fees
 
403

 
844

 
877

 
2,072

 
2,397

Other
 
1,360

 
1,772

 
2,141

 
5,244

 
5,918

Total non-interest income
 
13,957

 
18,802

 
16,081

 
52,179

 
62,751

Non-interest expense:
 
 
 
 
 
 
 
 
 
 
Compensation and benefits
 
22,410

 
29,238

 
29,868

 
93,166

 
104,939

Stock-based compensation plans
 
1,146

 
1,064

 
1,281

 
3,858

 
4,581

Occupancy and office operations
 
7,245

 
9,576

 
9,306

 
28,638

 
32,915

Amortization of intangible assets
 
1,873

 
3,431

 
3,431

 
9,406

 
10,043

FDIC insurance and regulatory assessments
 
1,568

 
2,281

 
2,287

 
6,550

 
7,380

Other real estate owned, net (income) expense
 
(81
)
 
183

 
87

 
(686
)
 
274

Merger-related expenses
 
502

 
—

 
—

 
890

 
17,079

Defined benefit plan termination charge
 
—

 
13,384

 
—

 
1,352

 
13,384

Other
 
11,151

 
12,158

 
11,159

 
38,094

 
69,723

Total non-interest expense
 
45,814

 
71,315

 
57,419

 
181,268

 
260,318

Income before income tax expense
 
25,380

 
35,841

 
48,583

 
84,160

 
97,949

Income tax expense
 
8,376

 
11,648

 
15,792

 
25,476

 
31,835

Net income
 
$
17,004

 
$
24,193

 
$
32,791

 
$
58,684

 
$
66,114

Weighted average common shares:
 
 
 
 
 
 
 
 
 
 
Basic
 
83,831,380

 
129,733,911

 
129,812,551

 
83,630,896

 
109,907,645

Diluted
 
84,194,916

 
130,192,937

 
130,354,779

 
83,921,090

 
110,329,353

Earnings per common share:
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
 
$
0.20

 
$
0.19

 
$
0.25

 
$
0.70

 
$
0.60

Diluted earnings per share
 
0.20

 
0.19

 
0.25

 
0.70

 
0.60

Dividends declared per share
 
0.07

 
0.07

 
0.07

 
0.28

 
0.28



7
Sterling Bancorp and Subsidiaries                                        SELECTED FINANCIAL DATA
(unaudited, in thousands, except share and per share data)    

 
As of and for the Quarter Ended
End of Period
12/31/2014
 
3/31/2015
 
6/30/2015
 
9/30/2015
 
12/31/2015
Total assets
$
7,424,822

 
$
7,727,515

 
$
11,566,382

 
$
11,597,393

 
$
11,955,952

Securities available for sale
1,140,846

 
1,214,404

 
2,081,414

 
1,854,862

 
1,921,032

Securities held to maturity
572,337

 
585,633

 
585,196

 
673,130

 
722,791

Loans, gross 1
4,815,641

 
4,938,906

 
7,235,587

 
7,525,632

 
7,859,360

Goodwill
388,926

 
400,941

 
669,590

 
670,699

 
670,699

Other intangibles
43,332

 
51,757

 
84,309

 
80,830

 
77,367

Deposits
5,212,325

 
5,555,946

 
8,836,161

 
8,805,411

 
8,580,007

Municipal deposits (included above)
883,350

 
1,013,835

 
1,212,624

 
1,352,846

 
1,140,206

Borrowings
1,111,553

 
980,978

 
914,921

 
948,048

 
1,525,344

Stockholders’ equity
975,200

 
1,080,543

 
1,623,110

 
1,652,204

 
1,665,073

Tangible equity
542,942

 
627,845

 
869,211

 
900,675

 
917,007

Quarterly Average Balances
 
 
 
 
 
 
 
 
 
Total assets
7,340,332

 
7,438,314

 
8,049,220

 
11,242,870

 
11,622,621

Loans, gross:
 
 
 
 
 
 
 
 
 
   Residential mortgage
566,705

 
531,421

 
539,569

 
780,373

 
777,561

   Commercial real estate
1,850,168

 
1,908,582

 
2,040,094

 
3,253,183

 
3,444,774

   Commercial and industrial
2,038,784

 
2,068,394

 
2,326,902

 
2,831,253

 
2,973,524

   Acquisition, development and construction
95,727

 
97,865

 
97,197

 
173,898

 
181,550

   Consumer
204,631

 
200,504

 
202,044

 
292,852

 
281,242

Loans, total 1
4,756,015

 
4,806,766

 
5,205,806

 
7,331,559

 
7,658,651

Securities (taxable)
1,355,104

 
1,379,861

 
1,527,872

 
1,967,600

 
2,111,953

Securities (non-taxable)
366,017

 
386,326

 
380,544

 
446,875

 
429,633

Total earning assets
6,629,115

 
6,736,422

 
7,309,667

 
10,038,831

 
10,460,168

Deposits:
 
 
 
 
 
 
 
 
 
   Non-interest bearing demand
1,626,341

 
1,503,692

 
1,548,844

 
3,234,450

 
3,017,727

   Interest bearing demand
756,217

 
775,714

 
823,471

 
1,418,803

 
1,485,690

   Savings (including mortgage escrow funds)
685,142

 
766,448

 
802,956

 
950,709

 
962,766

   Money market
1,817,091

 
1,851,839

 
1,922,805

 
2,548,181

 
2,808,734

   Certificates of deposit
457,996

 
452,594

 
536,394

 
539,765

 
550,640

Total deposits and mortgage escrow
5,342,787

 
5,350,287

 
5,634,470

 
8,691,908

 
8,825,557

Borrowings
902,299

 
955,677

 
1,234,958

 
772,777

 
988,550

Equity
973,089

 
1,031,809

 
1,100,897

 
1,639,458

 
1,661,282

Tangible equity
539,693

 
592,839

 
645,577

 
886,757

 
910,948

Condensed Tax Equivalent Income Statement
 
 
 
 
 
 
 
 
 
Interest and dividend income
$
68,087

 
$
66,672

 
$
71,947

 
$
103,298

 
$
106,224

Tax equivalent adjustment*
1,546

 
1,544

 
1,562

 
1,707

 
1,692

Interest expense
7,850

 
7,805

 
8,373

 
9,944

 
10,803

Net interest income (tax equivalent)
61,783

 
60,411

 
65,136

 
95,061

 
97,113

Provision for loan losses
3,000

 
2,100

 
3,100

 
5,000

 
5,500

Net interest income after provision for loan losses
58,783

 
58,311

 
62,036

 
90,061

 
91,613

Non-interest income
13,957

 
14,010

 
13,857

 
18,802

 
16,081

Non-interest expense
45,814

 
45,921

 
85,659

 
71,315

 
57,419

Income (loss) before income tax expense
26,926

 
26,400

 
(9,766
)
 
37,548

 
50,275

Income tax expense (benefit) (tax equivalent)*
9,922

 
9,622

 
(2,120
)
 
13,355

 
17,484

Net income (loss)
$
17,004

 
$
16,778

 
$
(7,646
)
 
$
24,193

 
$
32,791

 
 
 
 
 
 
 
 
 
 
1 Includes loans held for sale, excludes allowance for loan losses.
*Tax exempt income assumed at a statutory 35% federal tax rate.


8
Sterling Bancorp and Subsidiaries                                        SELECTED FINANCIAL RATIOS
(unaudited, in thousands, except share and per share data)

 
As of and for the Quarter Ended
Per Share Data
 
12/31/2014
 
3/31/2015
 
6/30/2015
 
9/30/2015
 
12/31/2015
Basic earnings (loss) per share
 
$
0.20

 
$
0.19

 
$
(0.08
)
 
$
0.19

 
$
0.25

Diluted earnings (loss) per share
 
0.20

 
0.19

 
(0.08
)
 
0.19

 
0.25

Dividends declared per share
 
0.07

 
0.07

 
0.07

 
0.07

 
0.07

Tangible book value per share
 
6.47

 
6.89

 
6.70

 
6.94

 
7.05

Shares of common stock outstanding
 
83,927,572

 
91,121,531

 
129,709,834

 
129,769,569

 
130,006,926

Basic weighted average common shares outstanding
 
83,831,380

 
87,839,029

 
91,565,972

 
129,733,911

 
129,812,551

Diluted weighted average common shares outstanding
 
84,194,916

 
88,252,768

 
91,950,776

 
130,192,937

 
130,354,779

Performance Ratios (annualized)
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
0.92
%
 
0.91
%
 
(0.38
)%
 
0.85
%
 
1.12
%
Return on average equity
 
6.93
%
 
6.59
%
 
(2.79
)%
 
5.85
%
 
7.83
%
Return on average tangible equity 1
 
12.50
%
 
11.48
%
 
(4.75
)%
 
10.82
%
 
14.28
%
Core operating efficiency 1
 
54.0
%
 
56.4
%
 
52.6
%
 
49.0
%
 
47.6
%
Analysis of Net Interest Income
 
 
 
 
 
 
 
 
 
 
Yield on loans
 
4.74
%
 
4.66
%
 
4.60
%
 
4.75
%
 
4.65
%
Yield on investment securities - tax equivalent2
 
2.73
%
 
2.79
%
 
2.71
%
 
2.63
%
 
2.66
%
Yield on earning assets - tax equivalent2
 
4.17
%
 
4.11
%
 
4.03
%
 
4.15
%
 
4.09
%
Cost of deposits
 
0.21
%
 
0.23
%
 
0.24
%
 
0.24
%
 
0.26
%
Cost of borrowings
 
2.21
%
 
2.00
%
 
1.63
%
 
2.38
%
 
2.04
%
Cost of interest bearing liabilities
 
0.67
%
 
0.66
%
 
0.63
%
 
0.63
%
 
0.63
%
Net interest rate spread - tax equivalent basis2
 
3.50
%
 
3.45
%
 
3.40
%
 
3.52
%
 
3.46
%
Net interest margin - tax equivalent basis2
 
3.70
%
 
3.64
%
 
3.57
%
 
3.76
%
 
3.68
%
Capital
 
 
 
 
 
 
 
 
 
 
Tier 1 leverage ratio - Company
 
8.21
%
 
9.46
%
 
12.86
%
 
9.13
%
 
8.94
%
Tier 1 leverage ratio - Bank only
 
9.38
%
 
10.53
%
 
13.81
%
 
9.80
%
 
9.65
%
Tier 1 risk-based capital - Bank only
 
$
651,204

 
$
739,580

 
$
1,015,470

 
$
1,032,930

 
$
1,053,527

Total risk-based capital - Bank only
 
693,973

 
782,859

 
1,060,333

 
1,081,086

 
1,104,221

Tangible equity as a % of tangible assets - consolidated 1
 
7.76
%
 
8.63
%
 
8.04
%
 
8.30
%
 
8.18
%
Asset Quality
 
 
 
 
 
 
 
 
 
 
Non-performing loans (NPLs) non-accrual
 
$
45,859

 
$
45,476

 
$
68,419

 
$
67,390

 
$
65,737

Non-performing loans (NPLs) still accruing
 
783

 
972

 
611

 
282

 
674

Other real estate owned
 
5,867

 
8,231

 
9,575

 
11,831

 
14,614

Non-performing assets (NPAs)
 
52,509

 
54,679

 
78,605

 
79,503

 
81,025

Net charge-offs
 
1,238

 
1,590

 
1,667

 
1,706

 
2,967

Net charge-offs as a % of average loans (annualized)
 
0.10
%
 
0.13
%
 
0.13
%
 
0.09
%
 
0.15
%
NPLs as a % of total loans
 
0.97
%
 
0.94
%
 
0.95
%
 
0.90
%
 
0.84
%
NPAs as a % of total assets
 
0.71
%
 
0.71
%
 
0.68
%
 
0.69
%
 
0.68
%
Allowance for loan losses as a % of NPLs
 
90.8
%
 
92.3
%
 
64.2
%
 
70.4
%
 
75.5
%
Allowance for loan losses as a % of total loans
 
0.88
%
 
0.87
%
 
0.61
%
 
0.63
%
 
0.64
%
Special mention loans
 
$
31,318

 
$
26,057

 
$
65,421

 
$
91,076

 
$
68,003

Substandard / doubtful loans
 
74,901

 
74,252

 
125,994

 
120,836

 
130,378

1 See reconciliation of non-GAAP measures beginning on page 11.
 
 
 
 
 
 
 
2  Tax equivalent adjustment represents interest income earned on municipal securities divided by the applicable Federal tax rate of 35% for all periods presented.


9
Sterling Bancorp and Subsidiaries
YIELD TABLE
(unaudited, in thousands, except share and per share data)

 
For the Quarter Ended
 
September 30, 2015
 
December 31, 2015
 
Average
balance
 
Interest
 
Yield/Rate
 
Average
balance
 
Interest
 
Yield/Rate
 
(Dollars in thousands)
Interest earning assets:
 
 
 
 
 
 
 
 
 
 
 
Commercial loans
$
6,258,334

 
$
77,150

 
4.89
%
 
$
6,599,848

 
$
79,009

 
4.75
%
Consumer loans
292,852

 
3,294

 
4.46
%
 
281,242

 
3,158

 
4.45
%
Residential mortgage loans
780,373

 
7,330

 
3.76
%
 
777,561

 
7,540

 
3.88
%
Total net loans (1)
7,331,559

 
87,774

 
4.75
%
 
7,658,651

 
89,707

 
4.65
%
Securities taxable
1,967,600

 
11,114

 
2.24
%
 
2,111,953

 
12,201

 
2.29
%
Securities non-taxable
446,875

 
4,876

 
4.33
%
 
429,633

 
4,831

 
4.46
%
Interest earning deposits
211,723

 
131

 
0.25
%
 
168,199

 
77

 
0.18
%
FRB and FHLB stock
81,074

 
1,110

 
5.43
%
 
91,732

 
1,100

 
4.76
%
Total securities and other earning assets
2,707,272

 
17,231

 
2.53
%
 
2,801,517

 
18,209

 
2.58
%
Total interest earning assets
10,038,831

 
105,005

 
4.15
%
 
10,460,168

 
107,916

 
4.09
%
Non-interest earning assets
1,204,039

 
 
 
 
 
1,162,453

 
 
 
 
Total assets
$
11,242,870

 
 
 
 
 
$
11,622,621

 
 
 
 
Interest bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
Demand deposits
$
1,418,803

 
$
923

 
0.26
%
 
$
1,485,690

 
$
890

 
0.24
%
Savings deposits (2)
950,709

 
564

 
0.24
%
 
962,766

 
617

 
0.25
%
Money market deposits
2,548,181

 
2,961

 
0.46
%
 
2,808,734

 
3,283

 
0.46
%
Certificates of deposit
539,765

 
851

 
0.63
%
 
550,640

 
938

 
0.68
%
Total interest bearing deposits
5,457,458

 
5,299

 
0.39
%
 
5,807,830

 
5,728

 
0.39
%
Senior notes
98,727

 
1,474

 
5.97
%
 
98,827

 
1,476

 
5.97
%
Other borrowings
674,050

 
3,171

 
1.87
%
 
889,723

 
3,599

 
1.60
%
Total borrowings
772,777

 
4,645

 
2.38
%
 
988,550

 
5,075

 
2.04
%
Total interest bearing liabilities
6,230,235

 
9,944

 
0.63
%
 
6,796,380

 
10,803

 
0.63
%
Non-interest bearing deposits
3,234,450

 
 
 
 
 
3,017,727

 
 
 
 
Other non-interest bearing liabilities
138,727

 
 
 
 
 
147,232

 
 
 
 
Total liabilities
9,603,412

 
 
 
 
 
9,961,339

 
 
 
 
Stockholders’ equity
1,639,458

 
 
 
 
 
1,661,282

 
 
 
 
Total liabilities and stockholders’ equity
$
11,242,870

 
 
 
 
 
$
11,622,621

 
 
 
 
Net interest rate spread (3)
 
 
 
 
3.52
%
 
 
 
 
 
3.46
%
Net interest earning assets (4)
$
3,808,596

 
 
 
 
 
$
3,663,788

 
 
 
 
Net interest margin
 
 
95,061

 
3.76
%
 
 
 
97,113

 
3.68
%
Less tax equivalent adjustment
 
 
(1,707
)
 
 
 
 
 
(1,692
)
 
 
Net interest income
 
 
$
93,354

 
 
 
 
 
$
95,421

 
 
Ratio of interest earning assets to interest bearing liabilities
161.1
%
 
 
 
 
 
153.9
%
 
 
 
 
(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.



10
Sterling Bancorp and Subsidiaries                                         NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)    

 
As of and for the Quarter Ended
 
12/31/2014
 
3/31/2015
 
6/30/2015
 
9/30/2015
 
12/31/2015
The Company provides supplemental reporting of non-GAAP measures as management believes this information is useful to investors.
The following table shows the reconciliation of stockholders’ equity to tangible equity and the tangible equity ratio:
Total assets
$
7,424,822

 
$
7,727,515

 
$
11,566,382

 
$
11,597,393

 
$
11,955,952

Goodwill and other intangibles
(432,258
)
 
(452,698
)
 
(753,899
)
 
(751,529
)
 
(748,066
)
Tangible assets
6,992,564


7,274,817

 
10,812,483

 
10,845,864


11,207,886

Stockholders’ equity
975,200

 
1,080,543

 
1,623,110

 
1,652,204

 
1,665,073

Goodwill and other intangibles
(432,258
)
 
(452,698
)
 
(753,899
)
 
(751,529
)
 
(748,066
)
Tangible stockholders’ equity
542,942

 
627,845

 
869,211

 
900,675


917,007

Common stock outstanding at period end
83,927,572

 
91,121,531

 
129,709,834

 
129,769,569

 
130,006,926

Tangible equity as a % of tangible assets
7.76
%
 
8.63
%
 
8.04
%
 
8.30
%

8.18
%
Tangible book value per share
$
6.47

 
$
6.89

 
$
6.70

 
$
6.94


$
7.05

 
The following table shows the reconciliation of return on average tangible equity and core return on average tangible equity:
Average stockholders’ equity
$
973,089

 
$
1,031,809

 
$
1,100,897

 
$
1,639,458

 
$
1,661,282

Average goodwill and other intangibles
(433,396
)
 
(438,970
)
 
(455,320
)
 
(752,701
)
 
(750,334
)
Average tangible stockholders’ equity
539,693


592,839

 
645,577

 
886,757

 
910,948

Net income (loss)
17,004

 
16,778

 
(7,646
)
 
24,193

 
32,791

Net income (loss), if annualized
67,462


68,044

 
(30,668
)
 
95,983

 
130,095

Return on average tangible equity
12.50
%

11.48
%
 
(4.75
)%
 
10.82
%
 
14.28
%
Core net income (see reconciliation on page 12)
19,615

 
18,501

 
21,361

 
32,035

 
33,525

Annualized core net income
77,820


75,032

 
85,679

 
127,095

 
133,007

Core return on average tangible equity
14.42
%

12.66
%
 
13.27
%
 
14.33
%

14.60
%
 
 
 
 
 
 
 
 
 
 
The following table shows the reconciliation of return on tangible assets and core return on tangible assets:
Average assets
$
7,340,332

 
$
7,438,314

 
$
8,049,220

 
$
11,242,870

 
$
11,622,621

Average goodwill and other intangibles
(433,396
)

(438,970
)
 
(455,320
)
 
(752,701
)

(750,334
)
Average tangible assets
6,906,936


6,999,344

 
7,593,900

 
10,490,169


10,872,287

Net income (loss)
17,004

 
16,778

 
(7,646
)
 
24,193

 
32,791

Net income (loss), if annualized
67,462


68,044

 
(30,668
)
 
95,983


130,095

Return on average tangible assets
0.98
%

0.97
%
 
(0.40
)%
 
0.91
%

1.20
%
Core net income (see reconciliation on page 12)
19,615

 
18,501

 
21,361

 
32,035

 
33,525

Annualized core net income
77,820


75,032

 
85,679

 
127,095


133,007

Core return on average tangible assets
1.13
%

1.07
%
 
1.13
 %
 
1.21
%

1.22
%









11
Sterling Bancorp and Subsidiaries                                         NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)    

 
As of and for the Quarter Ended
 
12/31/2014
 
3/31/2015
 
6/30/2015
 
9/30/2015
 
12/31/2015
 
The following table shows the reconciliation of the core operating efficiency ratio:
Net interest income
$
60,237

 
$
58,867

 
$
63,574

 
$
93,354

 
$
95,421

 
Non-interest income
13,957

 
14,010

 
13,857

 
18,802

 
16,081

 
Total net revenue
74,194


72,877

 
77,431

 
112,156

 
111,502

 
Tax equivalent adjustment on securities interest income
1,546

 
1,544

 
1,562

 
1,707

 
1,692

 
Net loss (gain) on sale of securities
43

 
(1,534
)
 
(697
)
 
(2,726
)
 
121

 
Core total revenue
75,783


72,887

 
78,296

 
111,137

 
113,315

 
Non-interest expense
45,814

 
45,921

 
85,659

 
71,315

 
57,419

 
Merger-related expense
(502
)
 
(2,455
)
 
(14,625
)
 
—

 
—

 
Charge for asset write-downs, banking systems conversion, retention and severance
(2,493
)
 
(971
)
 
(28,055
)
 
—

 
—

 
Charge on benefit plan settlement
—

 
—

 
—

 
(13,384
)
 
—

 
Amortization of intangible assets
(1,873
)
 
(1,399
)
 
(1,780
)
 
(3,431
)
 
(3,431
)
 
Core non-interest expense
40,946


41,096

 
41,199

 
54,500

 
53,988

 
Core operating efficiency ratio
54.0
%
 
56.4
%

52.6
%
 
49.0
%
 
47.6
%
 
 
 
 
 
 
 
 
 
 
 
 
The following table shows the reconciliation of core net income and core earnings per share:
Income (loss) before income tax expense
$
25,380

 
$
24,856

 
$
(11,328
)
 
$
35,841

 
$
48,583

 
Income tax expense (benefit)
8,376

 
8,078

 
(3,682
)
 
11,648

 
15,792

 
Net income (loss)
17,004


16,778

 
(7,646
)
 
24,193

 
32,791

 
 


 


 


 


 


 
Net loss (gain) on sale of securities
43


(1,534
)
 
(697
)
 
(2,726
)
 
121

 
Merger-related expense
502


2,455

 
14,625

 
—

 
—

 
Charge for asset write-downs, banking systems conversion, retention and severance
2,493

 
971

 
28,055

 
—

 
—

 
Charge on benefit plan settlement
—

 
—

 
—

 
13,384

 
—

 
Amortization of non-compete agreements and acquired customer list intangible assets
859

 
660

 
991

 
961

 
961

 
Total charges
3,897


2,552

 
42,974

 
11,619

 
1,082

 
Income tax (benefit)
(1,286
)
 
(829
)
 
(13,967
)
 
(3,777
)
 
(348
)
 
Total non-core charges net of taxes
2,611


1,723

 
29,007

 
7,842

 
734

 
Core net income
$
19,615


$
18,501

 
$
21,361

 
$
32,035

 
$
33,525

 
 


 


 


 


 


 
Weighted average diluted shares
84,194,916

 
88,252,768

 
91,950,776

 
130,192,937

 
130,354,779

 
Diluted EPS as reported
$
0.20


$
0.19

 
$
(0.08
)
 
$
0.19

 
$
0.25

 
Core diluted EPS (excluding total charges)
0.23


0.21

 
0.23

 
0.25

 
0.26

 



12
Sterling Bancorp and Subsidiaries                                         NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)    

 
 
For the Year Ended
 
 
December 31, 2014
 
December 31, 2015
The following table shows the reconciliation of return on average tangible equity and core return on average tangible equity:
Average stockholders’ equity
 
$
952,126

 
$
1,360,858

Average goodwill and other intangibles
 
(435,967
)
 
(600,605
)
Average tangible stockholders’ equity
 
516,159

 
760,253

Net income
 
$
58,684

 
$
66,114

Return on average tangible equity
 
11.37
%
 
8.70
%
Core net income (see reconciliation on page 14)
 
$
66,663

 
$
105,398

Core return on average tangible equity
 
12.92
%
 
13.86
%
The following table shows the reconciliation of return on tangible assets and core return on tangible assets:
Average assets
 
$
7,090,442

 
$
9,604,256

Average goodwill and other intangibles
 
(435,967
)
 
(600,605
)
Average tangible assets
 
6,654,475

 
9,003,651

Net income
 
58,684

 
66,114

Return on average tangible assets
 
0.88
%
 
0.73
%
Core net income
 
$
66,663

 
$
105,398

Core return on average tangible assets
 
1.00
%
 
1.17
%
The following table shows the reconciliation of the core operating efficiency ratio:
Net interest income
 
$
232,349

 
$
311,216

Non-interest income
 
52,179

 
62,751

Total net revenues
 
284,528

 
373,967

Tax equivalent adjustment on securities
 
6,010

 
6,503

(Gain) on sale of securities
 
(1,243
)
 
(4,837
)
Core total revenue
 
289,295

 
375,633

Non-interest expense
 
181,268

 
260,318

Merger-related expense
 
(890
)
 
(17,079
)
Charge for asset write-downs, banking systems conversion, retention, severance
 
(6,595
)
 
(29,046
)
Gain on sale of real estate and TRUPs redemption
 
1,637

 
—

Charge on benefit plan settlement
 
(1,486
)
 
(13,384
)
Amortization of intangible assets
 
(9,406
)
 
(10,041
)
Core non-interest expense
 
164,528

 
190,768

Core operating efficiency ratio
 
56.9
%
 
50.8
%



13
Sterling Bancorp and Subsidiaries                                         NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)    

 
 
For the Year Ended
 
 
December 31, 2014
 
December 31, 2015
 
 
 
 
 
The following table shows the reconciliation of core net income and core earnings per share:
Income before income tax expense
 
$
84,160

 
$
97,949

Income tax expense
 
25,476

 
31,835

Net income
 
58,684

 
66,114

 
 
 
 
 
Net (gain) on sale of securities
 
(1,243
)
 
(4,837
)
Merger-related expense
 
890

 
17,079

Charge for asset write-downs, banking systems conversion, retention, severance
 
6,595

 
29,046

(Gain) on sale of real estate and TRUPs redemption
 
(1,637
)
 
—

Charge on benefit plan settlement
 
1,486

 
13,384

Amortization of non-compete agreements
 
5,350

 
3,526

Total charges
 
11,441

 
58,198

Income tax (benefit)
 
(3,462
)
 
(18,914
)
Total non-core charges net of taxes
 
7,979

 
39,284

Core net income
 
$
66,663

 
$
105,398

 
 
 
 
 
Weighted average diluted shares
 
83,921,090

 
110,329,353

Diluted EPS as reported
 
$
0.70

 
$
0.60

Core diluted EPS (excluding total charges)
 
0.79

 
0.96




14

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