|
| |
| | 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 | |
| July 26, 2016 | |
| | |
| STERLING BANCORP CONTACT: | |
| Luis Massiani, SEVP & Chief Financial Officer | |
| 845.369.8040 | |
Sterling Bancorp Announces Record Results for the Three and Six Months Ended June 30, 2016.
Strong operating momentum in the second quarter continues, highlighted by GAAP diluted earnings per share of $0.29, adjusted diluted earnings per share1 of $0.27 and record volumes in loans and deposits.
Key Performance Highlights for the Three Months ended June 30, 2016 vs. June 30, 2015
|
| | | | | | | | | | | | | | | | | | | | | | |
| ($ in thousands except per share amounts) | | GAAP / As Reported | | Non-GAAP / As Adjusted1 |
| | | 2015 | | 2016 | | Change % / bps | | 2015 | | 2016 | | Change % / bps |
Total revenue2 | | $ | 77,431 |
| | $ | 120,822 |
| | 56.0 | % | | $ | 78,296 |
| | $ | 119,510 |
| | 52.6 | % |
| Net (loss) income | | (7,646 | ) | | 37,770 |
| | NM |
| | 21,361 |
| | 35,414 |
| | 65.8 |
|
| Diluted EPS | | (0.08 | ) | | 0.29 |
| | NM |
| | 0.23 |
| | 0.27 |
| | 17.4 |
|
Net interest margin3 | | 3.49 | % | | 3.50 | % | | 1 |
| | 3.57 | % | | 3.60 | % | | 3 |
|
| Return on average tangible equity | | (4.75 | ) | | 16.14 |
| | NM |
| | 13.27 |
| | 15.14 |
| | 187 |
|
| Return on average tangible assets | | (0.40 | ) | | 1.27 |
| | NM |
| | 1.13 |
| | 1.19 |
| | 6 |
|
| Efficiency ratio | | 110.6 |
| | 49.4 |
| | NM |
| | 52.6 |
| | 47.2 |
| | (540 | ) |
▪Total portfolio loans reached a record $8.6 billion at June 30, 2016.
| |
| ▪ | Annualized loan growth of 15.0% (end of period balances, including acquired loans) and 29.5% (average balances) over the linked quarter. |
| |
| ▪ | Loans to deposits ratio of 87.8%; total deposits reached a record $9.8 billion at June 30, 2016 with over 90.0% core deposits4 and a total cost of deposits of 0.35%. |
| |
| ▪ | Annualized core deposit4 growth of 22.2% (end of period balances) and 27.1% (average balances) over the linked quarter. |
| |
| ▪ | Announced the pending acquisition of an ~$190 million portfolio of U.S. restaurant franchise financing loans. |
| |
| ▪ | Completed the consolidation of seven financial centers in the second quarter of 2016, 11 in total for the six months ended June 30, 2016; total financial centers were 42 as of June 30, 2016. |
| |
| ▪ | Announced divestiture of residential mortgage originations business; anticipated closing in Q3 2016. |
1. Adjusted measures are defined in the non-GAAP tables beginning on page 15.
2. Total revenue as adjusted is equal to tax equivalent net interest income plus non-interest income excluding securities gains and losses.
3. Net interest margin as adjusted is equal to net interest margin plus the tax equivalent adjustment for tax exempt securities.
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 Certificate of Deposit Account Registry balances.
1
MONTEBELLO, N.Y. – July 26, 2016 – Sterling Bancorp (NYSE: STL) (the “Company”), the parent company of Sterling National Bank (the “Bank”), today announced results for the three and six months ended June 30, 2016. Net income for the quarter was $37.8 million, or $0.29 per diluted share, compared to net income of $23.8 million, or $0.18 per diluted share, for the linked quarter ended March 31, 2016 and a net loss of $(7.6) million, or $(0.08) per diluted share, for the second quarter of 2015.
Net income for the six months ended June 30, 2016 was $61.5 million, or $0.47 per diluted share, compared to net income of $9.1 million, or $0.10 per diluted share for the first six months of 2015.
President’s Comments
Jack Kopnisky, President and Chief Executive Officer, commented: “Our positive momentum in operating performance continued this quarter, highlighted by higher profitability and significant growth in loans and deposits. As of June 30, 2016, our total assets reached $13.1 billion, compared to $11.6 billion a year ago. We continue to execute our strategy of creating a high performing regional bank that focuses on serving commercial middle market clients and consumers.
“The positive impact of our strategic initiatives, which include continuing to reduce our network of financial centers and diversifying and expanding our commercial banking relationships and operations, is evident in our results. For the second quarter, our GAAP net income was $37.8 million, or $0.29 per diluted share. Our adjusted net income was $35.4 million and adjusted diluted earnings per share were $0.27, compared to $21.4 million and $0.23, respectively, for the same quarter a year ago. This represents growth of 65.8% and 17.4%, respectively, between the two periods. Our adjusted return on average tangible assets for the quarter was 1.19% and adjusted return on average tangible equity was 15.14%. This compares to 1.13% and 13.27%, respectively, for the same quarter a year ago.
“Consistent with our focus on leveraging our commercial lending platforms and expertise, during the quarter we announced the pending acquisition of an approximate $190 million portfolio of restaurant franchise financing loans from GE Capital. We anticipate the acquisition will close in this year’s third quarter.
“We continuously evaluate the performance of our business lines to determine where we should allocate our capital and resources. In the first quarter of 2016, we announced we had entered into a definitive agreement to divest our trust operations. The divestiture process remains on-track and we anticipate closing the transaction by October 2016. During the second quarter, we also entered into a definitive agreement to divest our residential mortgage originations business, which we anticipate will close in this year’s third quarter. We will reallocate capital and resources from these businesses to other businesses that are more in-line with our diversified commercial banking strategy and where we can achieve risk-adjusted returns that exceed our targets.
“We have a strong and diversified balance sheet, with ample funding to continue executing our strategy. We are well-positioned to continue delivering profitable and sustainable growth for our shareholders.
“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 August 23, 2016 to our holders as of the record date of August 8, 2016.”
Reconciliation of GAAP Results to Adjusted Results (non-GAAP)
GAAP net income of $37.8 million, or $0.29 per diluted share, for the second quarter of 2016, included a pre-tax net gain on sale of securities of $4.5 million and the amortization of non-compete agreements and acquired customer list intangibles of $968 thousand. Excluding the impact of these items, adjusted net income was $35.4 million, or $0.27 per diluted share.
Net income for the first quarter of 2016 was impacted by a loss on extinguishment of Federal Home Loan Bank (“FHLB”) borrowings, merger-related expense and other restructuring charges incurred mainly in connection with the acquisition of NewStar Business Credit LLC (“NSBC”). The net loss incurred for the second quarter of 2015 was due mainly to merger-related expense and other restructuring charges incurred in connection with the acquisition of Hudson Valley Holding Corp (“Hudson Valley”). See the reconciliation of the Company’s Non-GAAP Financial Measures beginning on page 15.
Non-GAAP financial measures include references to the terms “adjusted” or “excluding”.
Net Interest Income and Margin
|
| | | | | | | | | | | | | | | | | |
| ($ in thousands) | For the three months ended | | Change % / bps |
| | 6/30/2015 | | 3/31/2016 | | 6/30/2016 | | Y-o-Y | | Linked Qtr |
| Interest income | $ | 71,947 |
| | $ | 106,006 |
| | $ | 114,309 |
| | 58.9 | % | | 7.8 | % |
| Interest expense | 8,373 |
| | 12,496 |
| | 13,929 |
| | 66.4 |
| | 11.5 |
|
| Net interest income | $ | 63,574 |
| | $ | 93,510 |
| | $ | 100,380 |
| | 57.9 |
| | 7.3 |
|
| | | | | | | | | | |
| Accretion on acquired loans | $ | 1,107 |
| | $ | 5,605 |
| | $ | 4,088 |
| | 269.3 | % | | (27.1 | )% |
| Yield on loans | 4.60 | % | | 4.62 | % | | 4.68 | % | | 0.08 |
| | 0.06 |
|
| Tax equivalent yield on securities | 2.71 |
| | 2.65 |
| | 2.76 |
| | 0.05 |
| | 0.11 |
|
| Tax equivalent yield on interest earning assets | 4.03 |
| | 4.00 |
| | 4.09 |
| | 0.06 |
| | 0.09 |
|
| Cost of total deposits | 0.24 |
| | 0.29 |
| | 0.35 |
| | 0.11 |
| | 0.06 |
|
| Cost of interest bearing deposits | 0.33 |
| | 0.44 |
| | 0.52 |
| | 0.19 |
| | 0.08 |
|
| Cost of borrowings | 1.63 |
| | 1.92 |
| | 1.73 |
| | 0.10 |
| | (0.19 | ) |
| Tax equivalent net interest margin | 3.57 |
| | 3.53 |
| | 3.60 |
| | 0.03 |
| | 0.07 |
|
| | | | | | | | | | |
| Average loans | $ | 5,205,806 |
| | $ | 7,745,467 |
| | $ | 8,313,529 |
| | 59.7 | % | | 7.3 | % |
| Average securities | 1,908,416 |
| | 2,733,324 |
| | 2,869,651 |
| | 50.4 |
| | 5.0 |
|
| Average total earning assets | 7,309,667 |
| | 10,880,356 |
| | 11,558,424 |
| | 58.1 |
| | 6.2 |
|
| Average deposits | 5,634,470 |
| | 8,916,617 |
| | 9,561,997 |
| | 69.7 |
| | 7.2 |
|
Second quarter 2016 compared with second quarter 2015
Net interest income was $100.4 million, an increase of $36.8 million compared to the second quarter of 2015. This was mainly the result of higher average loans and investment securities balances due to the merger with Hudson Valley and organic growth. Other key components of the changes in net interest income were the following:
| |
| ▪ | The yield on loans was 4.68%, compared to 4.60% for the three months ended June 30, 2015. |
| |
| ▪ | Yield on loans included $4.1 million of accretion of the fair value discount associated with prior acquisitions compared to $1.1 million in the second quarter of 2015. |
| |
| ▪ | The tax equivalent yield on investment securities increased five basis points to 2.76%. |
| |
| ▪ | The cost of total deposits was 35 basis points and the cost of borrowings was 1.73% compared to 24 basis points and 1.63%, respectively, for the same period a year ago. |
| |
| ▪ | The tax equivalent yield on interest earning assets increased six basis points from the second quarter of 2015 to 4.09% for the second quarter of 2016. |
| |
| ▪ | Tax equivalent net interest margin was 3.60% compared to 3.57% for the same period a year ago. |
Second quarter 2016 compared with linked quarter ended March 31, 2016
Net interest income increased $6.9 million compared to the linked quarter ended March 31, 2016. The increase was mainly due to the NSBC acquisition, which closed on March 31, 2016, and organic loan growth. This was partially offset by lower accretion of the fair value discount on acquired loans, which was $5.6 million in the first quarter of 2016 compared to $4.1 million in the second quarter of 2016, and higher average deposit and borrowings balances which resulted in an increase of $1.4 million in interest expense in the second quarter of 2016 over the first quarter of 2016. In March 2016, we redeemed $220.0 million of FHLB borrowings with a weighted average rate of 4.17% and issued $110.0 million of tier 2 qualifying subordinated notes at Sterling National Bank with a weighted average rate of 5.48%.
Other key components of the change in net interest income were the following:
| |
| ▪ | The yield on loans was 4.68% for the quarter compared to 4.62% for the linked quarter. |
| |
| ▪ | The tax equivalent yield on investment securities increased 11 basis point to 2.76% in the quarter. |
| |
| ▪ | The cost of total deposits increased six basis points from 29 basis points in the linked quarter and the total cost of borrowings declined 19 basis points from 1.92% in the linked quarter to 1.73% for the second quarter of 2016. |
| |
| ▪ | The tax equivalent yield on interest earning assets increased nine basis points compared to 4.00% in the linked quarter. |
| |
| ▪ | Tax equivalent net interest margin was 3.60% compared to 3.53% in the linked quarter. |
Non-interest Income
|
| | | | | | | | | | | | | | | | | |
| ($ in thousands) | For the three months ended | | Change % |
| | 6/30/2015 | | 3/31/2016 | | 6/30/2016 | | Y-o-Y | | Linked Qtr |
| Total non-interest income | $ | 13,857 |
| | $ | 15,430 |
| | $ | 20,442 |
| | 47.5 | % | | 32.5 | % |
| Securities gains (losses) | 697 |
| | (283 | ) | | 4,474 |
| | NM |
| | NM |
|
| Adjusted non-interest income | $ | 13,160 |
| | $ | 15,713 |
| | $ | 15,968 |
| | 21.3 |
| | 1.6 |
|
Second quarter 2016 compared with second quarter 2015
Excluding net gain (loss) on sale of securities, adjusted non-interest income increased $2.8 million in the second quarter of 2016 to $16.0 million compared to $13.2 million in the same quarter last year. The change was mainly due to an increase in lines of credit commissions and loan fees and loan swap fee income of $1.9 million. The increase was also due to higher deposit fees and service charges of $446 thousand and trust fees of $599 thousand. Trust fees are included in investment management fees; we will not continue to generate trust fee income once the sale of our trust business is completed, which is anticipated to occur in the third quarter of 2016. These increases were partially offset by a decrease in mortgage banking income and accounts receivable/factoring commissions of $442 thousand.
Second quarter 2016 compared with linked quarter ended March 31, 2016
Excluding net gain (loss) on sale of securities, adjusted non-interest income increased $255 thousand from $15.7 million in the first quarter of 2016 to $16.0 million in the second quarter of 2016. This was mainly due to higher loan fees and commissions as a result of the NSBC acquisition, higher loan swap fee income and an increase in mortgage banking income which aggregated to income of $941 thousand. This was partially offset by a decrease of $338 thousand in accounts receivable/factoring commissions and a decrease of $405 thousand in deposit fees and service charges.
Non-interest Expense
|
| | | | | | | | | | | | | | | | | |
| ($ in thousands) | For the three months ended | | Change % / bps |
| | 6/30/2015 | | 3/31/2016 | | 6/30/2016 | | Y-o-Y | | Linked Qtr |
| Compensation and benefits | $ | 22,667 |
| | $ | 30,020 |
| | $ | 31,336 |
| | 38.2 | % | | 4.4 | % |
| Occupancy and office operations | 7,453 |
| | 9,282 |
| | 8,810 |
| | 18.2 |
| | (5.1 | ) |
| Merger-related expenses | 14,625 |
| | 265 |
| | — |
| | (100.0 | ) | | (100.0 | ) |
| Loss on extinguishment of FHLB borrowings | — |
| | 8,716 |
| | — |
| | — |
| | (100.0 | ) |
| Charge for asset write-downs, banking systems conversions, retention and severance | 28,055 |
| | 2,485 |
| | — |
| | (100.0 | ) | | (100.0 | ) |
| Other expenses | 12,859 |
| | 18,163 |
| | 19,494 |
| | 51.6 |
| | 7.3 |
|
| Total non-interest expense | $ | 85,659 |
| | $ | 68,931 |
| | $ | 59,640 |
| | (30.4 | ) | | (13.5 | ) |
| Full time equivalent employees at period end | 1,196 |
| | 1,078 |
| | 1,065 |
| | (11.0 | ) | | (1.2 | ) |
| Financial centers at period end | 59 |
| | 48 |
| | 42 |
| | (28.8 | ) | | (12.5 | ) |
| Efficiency ratio, as reported | 110.6 | % | | 63.3 | % | | 49.4 | % | | 61.2 |
| | 13.9 |
|
| Efficiency ratio, as adjusted | 52.6 |
| | 48.9 |
| | 47.2 |
| | 5.4 |
| | 1.7 |
|
Second quarter 2016 compared with second quarter 2015
Non-interest expense decreased $26.0 million relative to the second quarter of 2015, from $85.7 million to $59.6 million for the second quarter of 2016. The change was the result of a decrease in merger-related expense and charge for asset write-downs, banking systems conversion, retention and severance, which were incurred in connection with the Hudson Valley merger, partially offset by increases in compensation and benefits expense of $8.7 million and occupancy and office operations expense of $1.4 million associated mainly with the Hudson Valley merger.
Second quarter 2016 compared with linked quarter ended March 31, 2016
Non-interest expense decreased $9.3 million from $68.9 million for the linked quarter to $59.6 million for the second quarter of 2016. This was mainly due to the loss on extinguishment of FHLB borrowings and merger-related expense and other charges incurred in the linked quarter. The increase in compensation and benefits from the linked quarter to the second quarter of 2016 was mainly due to the NSBC acquisition. The full integration of NSBC into our existing asset based lending operations will be completed by the fourth quarter of 2016. The decline in occupancy and office operations between the periods was due to the ongoing consolidation of our financial centers, which decreased by seven locations in the second quarter of 2016.
Taxes
Given the Company’s emphasis on growing its public sector finance loans and municipal securities portfolio, total tax exempt earning assets increased to over $1 billion and represent 9.0% of earning assets at June 30, 2016, compared to 4.9% at December 31, 2015, when the Company initially estimated its effective tax rate for fiscal 2016. As a result, the Company has revised its estimated effective tax rate for 2016 to 33.3%, compared to a rate of 34.0% used in the first quarter of 2016, and recorded income taxes at an effective tax rate of 32.8% in the second quarter of 2016. The Company anticipates its tax rate will be 33.3% in the third and fourth quarters of 2016.
The Company’s tax rate was 32.5% for the second quarter of 2015.
Key Balance Sheet Highlights at June 30, 2016
|
| | | | | | | | | | | | | | | | | |
| ($ in thousands) | As of | | Change % / bps |
| | 6/30/2015 | | 12/31/2015 | | 6/30/2016 | | Y-o-Y | | Six months |
| Total assets | $ | 11,566,382 |
| | $ | 11,955,952 |
| | $ | 13,065,248 |
| | 13.0 | % | | 9.3 | % |
| Total loans | 7,235,587 |
| | 7,859,360 |
| | 8,594,295 |
| | 18.8 |
| | 9.4 |
|
| Commercial & industrial (“C&I”) loans | 2,884,440 |
| | 3,131,028 |
| | 3,639,169 |
| | 26.2 |
| | 16.2 |
|
| Commercial real estate loans | 3,330,687 |
| | 3,715,779 |
| | 3,990,527 |
| | 19.8 |
| | 7.4 |
|
| Total commercial loans | 6,215,127 |
| | 6,846,807 |
| | 7,629,696 |
| | 22.8 |
| | 11.4 |
|
| Total deposits | 8,836,161 |
| | 8,473,360 |
| | 9,785,556 |
| | 10.7 |
| | 15.5 |
|
| Loans to deposits | 81.9 | % | | 92.8 | % | | 87.8 | % | | 5.9 |
| | (5.0 | ) |
| Core deposits | $ | 8,253,333 |
| | $ | 7,822,637 |
| | $ | 8,809,242 |
| | 6.7 |
| | 12.6 |
|
| Core deposits to total deposits | 93.4 | % | | 92.3 | % | | 90.0 | % | | (3.40 | ) | | (2.30 | ) |
| Investment securities | $ | 2,666,610 |
| | $ | 2,643,823 |
| | $ | 2,980,059 |
| | 11.8 |
| | 12.7 |
|
| Investment securities to total assets | 23.1 | % | | 22.1 | % | | 22.8 | % | | (0.3 | ) | | 0.7 |
|
Highlights in balance sheet items in the second quarter of 2016 were the following:
| |
| ▪ | C&I loans (which include traditional C&I, asset-based lending, payroll finance, warehouse lending, factoring and equipment finance) represented 42.4%, commercial real estate loans represented 44.0%, consumer and residential mortgage loans represented 11.2%, and acquisition, development and construction loans represented 2.4% of the total loan portfolio. |
| |
| ▪ | Commercial loan growth, which includes all C&I loans, commercial real estate and acquisition, development and construction loans, was $357.4 million for the quarter ended June 30, 2016. |
| |
| ▪ | Average commercial loans were $7.3 billion compared to $6.7 billion for the linked quarter. |
| |
| ▪ | Average total deposits were $9.6 billion compared to $8.9 billion for the linked quarter. |
| |
| ▪ | Borrowings were $1.3 billion compared to $1.5 billion at December 31, 2015. Average borrowings were $1.3 billion for both the linked quarter and second quarter 2016. |
Credit Quality
|
| | | | | | | | | | | | | | | | | |
| ($ in thousands) | For the three months ended | | Change % / bps |
| | 6/30/2015 | | 3/31/2016 | | 6/30/2016 | | Y-o-Y | | Linked Qtr |
| Provision for loan losses | $ | 3,100 |
| | $ | 4,000 |
| | $ | 5,000 |
| | 61.3 | % | | 25.0 | % |
| Net charge-offs | 1,667 |
| | 1,131 |
| | 2,149 |
| | 28.9 |
| | 90.0 |
|
| Allowance for loan losses | 44,317 |
| | 53,014 |
| | 55,865 |
| | 26.1 |
| | 5.4 |
|
| Non-performing loans | 69,030 |
| | 85,438 |
| | 79,564 |
| | 15.3 |
| | (6.9 | ) |
| Net charge-offs annualized | 0.13 | % | | 0.06 | % | | 0.10 | % | | 3.0 |
| | (4.0 | ) |
| Allowance for loan losses to total loans | 0.61 |
| | 0.64 |
| | 0.65 |
| | 4.0 |
| | 1.0 |
|
Total valuation balances recorded against portfolio loans to adjusted gross portfolio loans1 | 1.36 |
| | 1.17 |
| | 1.11 |
| | (25.0 | ) | | (6.0 | ) |
| Allowance for loan losses to non-performing loans | 64.2 |
| | 62.0 |
| | 70.2 |
| | 6.0 |
| | 8.2 |
|
Provision for loan losses was $5.0 million in the second quarter of 2016, an increase of $1.0 million from the linked quarter. This was mainly due to organic loan growth.
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 loans1 was 1.17% and 1.11% at March 31, 2016 and June 30, 2016, respectively.
Non-performing loans at June 30, 2016, which includes non-accrual loans and loans over 90 days past due still accruing interest decreased by $5.9 million to $79.6 million from the linked quarter. This was mainly due to the transfer to other real estate owned of residential mortgage loans and charge-offs.
1 See a reconciliation of this non-GAAP financial measure on page 17.
Capital
|
| | | | | | | | | | | | | | | | | |
| ($ in thousands, except share and per share data) | As of | | Change % / bps |
| | 6/30/2015 | | 12/31/2015 | | 6/30/2016 | | Y-o-Y | | Six months |
| Total stockholders’ equity | $ | 1,623,110 |
| | $ | 1,665,073 |
| | $ | 1,735,994 |
| | 7.0 | % | | 4.3 | % |
| Goodwill and intangible assets | 753,899 |
| | 748,066 |
| | 769,125 |
| | 2.0 |
| | 2.8 |
|
| Tangible stockholders’ equity | $ | 869,211 |
| | $ | 917,007 |
| | $ | 966,869 |
| | 11.2 |
| | 5.4 |
|
| Common shares outstanding | 129,709,834 |
| | 130,006,926 |
| | 130,620,463 |
| | 0.7 |
| | 0.5 |
|
| Book value per share | $ | 12.51 |
| | $ | 12.81 |
| | $ | 13.29 |
| | 6.2 |
| | 3.7 |
|
| Tangible book value per share | 6.70 |
| | 7.05 |
| | 7.40 |
| | 10.4 |
| | 5.0 |
|
| Tangible equity to tangible assets | 8.04 | % | | 8.18 | % | | 7.89 | % | | (0.15 | ) | | (0.29 | ) |
| Estimated Tier 1 leverage ratio - Company | 12.92 |
| | 9.03 |
| | 8.37 |
| | (4.55 | ) | | (0.66 | ) |
| Estimated Tier 1 leverage ratio - Bank | 13.82 |
| | 9.65 |
| | 8.84 |
| | (4.98 | ) | | (0.81 | ) |
The $70.9 million increase in stockholders’ equity at June 30, 2016 compared to December 31, 2015 was mainly the result of net income of $61.5 million and an increase in other comprehensive income of $23.1 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 $4.5 million. These increases were partially offset by declared dividends of $18.2 million.
Total goodwill and other intangible assets were $769.1 million at June 30, 2016, an increase of $21.1 million compared to December 31, 2015, which was due to the NSBC acquisition and partially offset by amortization of $6.3 million.
For the quarter ended June 30, 2016, basic and diluted weighted average common shares outstanding increased to 130.1 million and 130.7 million, respectively, compared to 130.0 million basic shares and 130.5 million diluted shares, respectively, for the quarter ended March 31, 2016. Total common shares outstanding at June 30, 2016 were approximately 130.6 million.
Conference Call Information
Sterling Bancorp will host a teleconference and webcast on Wednesday, July 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) 523-1225, Conference ID #6232464. 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 strategic initiatives, grow revenues faster than we grow expenses, 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 and six months ended June 30, 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)
|
| | | | | | | | | | | |
| | 6/30/2015 | | 12/31/2015 | | 6/30/2016 |
| Assets: | | | | | |
| Cash and cash equivalents | $ | 362,856 |
| | $ | 229,513 |
| | $ | 258,326 |
|
| Federal Funds Sold | 3,571 |
| | — |
| | — |
|
| Investment securities | 2,666,610 |
| | 2,643,823 |
| | 2,980,059 |
|
| Loans held for sale | 73,523 |
| | 34,110 |
| | 57,249 |
|
| Portfolio loans: | | | | | |
| Residential mortgage | 725,803 |
| | 713,036 |
| | 673,208 |
|
| Commercial real estate | 3,160,553 |
| | 3,529,381 |
| | 3,782,659 |
|
| Commercial and industrial | 2,884,440 |
| | 3,131,028 |
| | 3,639,169 |
|
| Acquisition, development and construction | 170,134 |
| | 186,398 |
| | 207,868 |
|
| Consumer | 294,657 |
| | 299,517 |
| | 291,391 |
|
| Total portfolio loans, gross | 7,235,587 |
| | 7,859,360 |
| | 8,594,295 |
|
| Allowance for loan losses | (44,317 | ) | | (50,145 | ) | | (55,865 | ) |
| Total portfolio loans, net | 7,191,270 |
| | 7,809,215 |
| | 8,538,430 |
|
| FHLB and Federal Reserve Bank Stock, at cost | 74,233 |
| | 116,758 |
| | 102,855 |
|
| Accrued interest receivable | 29,015 |
| | 31,531 |
| | 35,106 |
|
| Premises and equipment, net | 63,555 |
| | 63,362 |
| | 60,797 |
|
| Goodwill | 669,590 |
| | 670,699 |
| | 696,600 |
|
| Other intangibles | 84,309 |
| | 77,367 |
| | 72,525 |
|
| Bank owned life insurance | 196,629 |
| | 196,288 |
| | 196,665 |
|
| Other real estate owned | 9,575 |
| | 14,614 |
| | 16,590 |
|
| Other assets | 141,646 |
| | 68,672 |
| | 50,046 |
|
| Total assets | $ | 11,566,382 |
| | $ | 11,955,952 |
| | $ | 13,065,248 |
|
| Liabilities: | | | | | |
| Deposits | $ | 8,836,161 |
| | $ | 8,580,007 |
| | $ | 9,785,556 |
|
| FHLB borrowings | 777,047 |
| | 1,409,885 |
| | 1,074,492 |
|
| Other borrowings | 39,181 |
| | 16,566 |
| | 28,202 |
|
| Senior notes | 98,693 |
| | 98,893 |
| | 99,099 |
|
| Subordinated notes | — |
| | — |
| | 108,161 |
|
| Mortgage escrow funds | 12,142 |
| | 13,778 |
| | 14,283 |
|
| Other liabilities | 180,048 |
| | 171,750 |
| | 219,461 |
|
| Total liabilities | 9,943,272 |
| | 10,290,879 |
| | 11,329,254 |
|
| Stockholders’ equity: | | | | | |
| Common stock | 1,367 |
| | 1,367 |
| | 1,367 |
|
| Additional paid-in capital | 1,507,837 |
| | 1,506,612 |
| | 1,503,027 |
|
| Treasury stock | (78,972 | ) | | (76,190 | ) | | (69,355 | ) |
| Retained earnings | 206,079 |
| | 245,408 |
| | 290,025 |
|
| Accumulated other comprehensive (loss) income | (13,201 | ) | | (12,124 | ) | | 10,930 |
|
| Total stockholders’ equity | 1,623,110 |
| | 1,665,073 |
| | 1,735,994 |
|
| Total liabilities and stockholders’ equity | $ | 11,566,382 |
| | $ | 11,955,952 |
| | $ | 13,065,248 |
|
| |
|
| | | | |
| Shares of common stock outstanding at period end | 129,709,834 |
| | 130,006,926 |
| | 130,620,463 |
|
| Book value per share | $ | 12.51 |
| | $ | 12.81 |
| | $ | 13.29 |
|
| Tangible book value per share | 6.70 |
| | 7.05 |
| | 7.40 |
|
Sterling Bancorp and Subsidiaries CONSOLIDATED CONDENSED INCOME STATEMENTS
(unaudited, in thousands, except share and per share data)
|
| | | | | | | | | | | | | | | | | | | | |
| | | For the Quarter Ended | | For the Six Months Ended |
| | | 6/30/2015 | | 3/31/2016 | | 6/30/2016 | | 6/30/2015 | | 6/30/2016 |
| Interest and dividend income: | | | | | | | | | | |
| Loans and loan fees | | $ | 59,744 |
| | $ | 89,034 |
| | $ | 96,658 |
| | $ | 115,015 |
| | $ | 185,692 |
|
| Securities taxable | | 8,423 |
| | 12,016 |
| | 10,662 |
| | 16,054 |
| | 22,678 |
|
| Securities non-taxable | | 2,900 |
| | 3,879 |
| | 5,871 |
| | 5,768 |
| | 9,750 |
|
| Other earning assets | | 880 |
| | 1,077 |
| | 1,118 |
| | 1,782 |
| | 2,195 |
|
| Total interest and dividend income | | 71,947 |
| | 106,006 |
| | 114,309 |
| | 138,619 |
| | 220,315 |
|
| Interest expense: | | | | | | | | | | |
| Deposits | | 3,359 |
| | 6,409 |
| | 8,328 |
| | 6,452 |
| | 14,737 |
|
| Borrowings | | 5,014 |
| | 6,087 |
| | 5,601 |
| | 9,728 |
| | 11,688 |
|
| Total interest expense | | 8,373 |
| | 12,496 |
| | 13,929 |
| | 16,180 |
| | 26,425 |
|
| Net interest income | | 63,574 |
| | 93,510 |
| | 100,380 |
| | 122,439 |
| | 193,890 |
|
| Provision for loan losses | | 3,100 |
| | 4,000 |
| | 5,000 |
| | 5,200 |
| | 9,000 |
|
| Net interest income after provision for loan losses | | 60,474 |
| | 89,510 |
| | 95,380 |
| | 117,239 |
| | 184,890 |
|
| Non-interest income: | | | | | | | | | | |
| Accounts receivable / factoring commissions and other fees | | 4,435 |
| | 4,494 |
| | 4,156 |
| | 7,937 |
| | 8,650 |
|
| Mortgage banking income | | 2,530 |
| | 2,002 |
| | 2,367 |
| | 5,687 |
| | 4,369 |
|
| Deposit fees and service charges | | 3,639 |
| | 4,496 |
| | 4,084 |
| | 7,181 |
| | 8,574 |
|
| Net gain (loss) on sale of securities | | 697 |
| | (283 | ) | | 4,474 |
| | 2,231 |
| | 4,191 |
|
| Bank owned life insurance | | 1,074 |
| | 1,327 |
| | 1,281 |
| | 2,150 |
| | 2,608 |
|
| Investment management fees | | 316 |
| | 1,124 |
| | 934 |
| | 676 |
| | 2,058 |
|
| Other | | 1,166 |
| | 2,270 |
| | 3,146 |
| | 2,008 |
| | 5,422 |
|
| Total non-interest income | | 13,857 |
| | 15,430 |
| | 20,442 |
| | 27,870 |
| | 35,872 |
|
| Non-interest expense: | | | | | | | | | | |
| Compensation and benefits | | 22,667 |
| | 30,020 |
| | 31,336 |
| | 45,833 |
| | 61,356 |
|
| Stock-based compensation plans | | 1,128 |
| | 1,540 |
| | 1,747 |
| | 2,236 |
| | 3,287 |
|
| Occupancy and office operations | | 7,453 |
| | 9,282 |
| | 8,810 |
| | 14,033 |
| | 18,092 |
|
| Amortization of intangible assets | | 1,780 |
| | 3,053 |
| | 3,241 |
| | 3,180 |
| | 6,294 |
|
| FDIC insurance and regulatory assessments | | 1,384 |
| | 2,258 |
| | 2,300 |
| | 2,812 |
| | 4,558 |
|
| Other real estate owned, net | | 40 |
| | 582 |
| | 541 |
| | 4 |
| | 1,123 |
|
| Merger-related expenses | | 14,625 |
| | 265 |
| | — |
| | 17,080 |
| | 266 |
|
| Loss on extinguishment of FHLB borrowings | | — |
| | 8,716 |
| | — |
| | — |
| | 8,716 |
|
| Other | | 36,582 |
| | 13,215 |
| | 11,665 |
| | 46,405 |
| | 24,879 |
|
| Total non-interest expense | | 85,659 |
| | 68,931 |
| | 59,640 |
| | 131,583 |
| | 128,571 |
|
| (Loss) income before income tax expense | | (11,328 | ) | | 36,009 |
| | 56,182 |
| | 13,526 |
| | 92,191 |
|
| Income tax (benefit) expense | | (3,682 | ) | | 12,243 |
| | 18,412 |
| | 4,396 |
| | 30,655 |
|
| Net (loss) income | | $ | (7,646 | ) | | $ | 23,766 |
| | $ | 37,770 |
| | $ | 9,130 |
| | $ | 61,536 |
|
| Weighted average common shares: | | | | | | | | | | |
| Basic | | 91,565,972 |
| | 129,974,025 |
| | 130,081,465 |
| | 89,712,796 |
| | 129,953,397 |
|
| Diluted | | 91,950,776 |
| | 130,500,975 |
| | 130,688,729 |
| | 90,099,788 |
| | 130,522,021 |
|
| Earnings per common share: | | | | | | | | | | |
| Basic (loss) earnings per share | | $ | (0.08 | ) | | $ | 0.18 |
| | $ | 0.29 |
| | $ | 0.10 |
| | $ | 0.47 |
|
| Diluted (loss) earnings per share | | (0.08 | ) | | 0.18 |
| | 0.29 |
| | 0.10 |
| | 0.47 |
|
| Dividends declared per share | | 0.07 |
| | 0.07 |
| | 0.07 |
| | 0.14 |
| | 0.14 |
|
| | | | | | | | | | | |
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 | 6/30/2015 | | 9/30/2015 | | 12/31/2015 | | 3/31/2016 | | 6/30/2016 |
| Total assets | $ | 11,566,382 |
| | $ | 11,597,393 |
| | $ | 11,955,952 |
| | $ | 12,865,356 |
| | $ | 13,065,248 |
|
Tangible assets 1 | 10,812,483 |
| | 10,845,864 |
| | 11,207,886 |
| | 12,092,966 |
| | 12,296,123 |
|
| Securities available for sale | 2,081,414 |
| | 1,854,862 |
| | 1,921,032 |
| | 1,894,820 |
| | 1,613,013 |
|
| Securities held to maturity | 585,196 |
| | 673,130 |
| | 722,791 |
| | 952,922 |
| | 1,367,046 |
|
| Portfolio loans | 7,235,587 |
| | 7,525,632 |
| | 7,859,360 |
| | 8,286,163 |
| | 8,594,295 |
|
| Goodwill | 669,590 |
| | 670,699 |
| | 670,699 |
| | 696,600 |
| | 696,600 |
|
| Other intangibles | 84,309 |
| | 80,830 |
| | 77,367 |
| | 75,790 |
| | 72,525 |
|
| Deposits | 8,836,161 |
| | 8,805,411 |
| | 8,580,007 |
| | 9,328,622 |
| | 9,785,547 |
|
| Municipal deposits (included above) | 1,212,624 |
| | 1,352,846 |
| | 1,140,206 |
| | 1,285,263 |
| | 1,184,231 |
|
| Borrowings | 914,921 |
| | 948,048 |
| | 1,525,344 |
| | 1,675,508 |
| | 1,309,954 |
|
| Stockholders’ equity | 1,623,110 |
| | 1,652,204 |
| | 1,665,073 |
| | 1,698,133 |
| | 1,735,994 |
|
Tangible equity 1 | 869,211 |
| | 900,675 |
| | 917,007 |
| | 925,743 |
| | 966,869 |
|
| Quarterly Average Balances | | | | | | | | | |
| Total assets | 8,049,220 |
| | 11,242,870 |
| | 11,622,621 |
| | 12,001,370 |
| | 12,700,038 |
|
Tangible assets 1 | 7,593,900 |
| | 10,490,169 |
| | 10,872,287 |
| | 11,253,958 |
| | 11,929,107 |
|
| Loans, gross: | | | | | | | | | |
| Residential mortgage | 539,569 |
| | 780,373 |
| | 777,561 |
| | 755,564 |
| | 729,685 |
|
| Commercial real estate | 2,040,094 |
| | 3,253,183 |
| | 3,444,774 |
| | 3,587,341 |
| | 3,694,162 |
|
| Commercial and industrial: | | | | | | | | | |
| Commercial and industrial | 966,411 |
| | 1,295,034 |
| | 1,378,642 |
| | 1,381,107 |
| | 1,456,402 |
|
| Asset based lending | 297,846 |
| | 303,387 |
| | 304,113 |
| | 304,779 |
| | 636,383 |
|
| Payroll finance | 170,905 |
| | 175,240 |
| | 199,856 |
| | 192,428 |
| | 187,887 |
|
| Warehouse lending | 263,802 |
| | 286,557 |
| | 293,387 |
| | 248,831 |
| | 301,882 |
|
| Factored receivables | 150,569 |
| | 192,380 |
| | 210,081 |
| | 181,974 |
| | 183,051 |
|
| Equipment financing | 477,369 |
| | 578,655 |
| | 587,445 |
| | 616,995 |
| | 630,922 |
|
| Total commercial and industrial | 2,326,902 |
| | 2,831,253 |
| | 2,973,524 |
| | 2,926,114 |
| | 3,396,527 |
|
| Acquisition, development and construction | 97,197 |
| | 173,898 |
| | 181,550 |
| | 179,420 |
| | 197,489 |
|
| Consumer | 202,044 |
| | 292,852 |
| | 281,242 |
| | 297,028 |
| | 295,666 |
|
Loans, total 2 | 5,205,806 |
| | 7,331,559 |
| | 7,658,651 |
| | 7,745,467 |
| | 8,313,529 |
|
| Interest bearing cash and cash equivalents | 114,128 |
| | 211,723 |
| | 168,199 |
| | 296,668 |
| | 272,426 |
|
| Securities (taxable) | 1,527,872 |
| | 1,967,600 |
| | 2,111,953 |
| | 2,139,547 |
| | 2,032,518 |
|
| Securities (non-taxable) | 380,544 |
| | 446,875 |
| | 429,633 |
| | 593,777 |
| | 837,133 |
|
| Total earning assets | 7,309,667 |
| | 10,038,831 |
| | 10,460,168 |
| | 10,880,356 |
| | 11,558,424 |
|
| Deposits: | | | | | | | | | |
| Non-interest bearing demand | 1,548,844 |
| | 3,234,450 |
| | 3,017,727 |
| | 3,009,085 |
| | 3,059,562 |
|
| Interest bearing demand | 823,471 |
| | 1,418,803 |
| | 1,485,690 |
| | 1,607,227 |
| | 2,016,365 |
|
| Savings (including mortgage escrow funds) | 802,956 |
| | 950,709 |
| | 962,766 |
| | 814,485 |
| | 809,123 |
|
| Money market | 1,922,805 |
| | 2,548,181 |
| | 2,808,734 |
| | 2,866,666 |
| | 3,056,188 |
|
| Certificates of deposit | 536,394 |
| | 539,765 |
| | 550,640 |
| | 619,154 |
| | 620,759 |
|
| Total deposits and mortgage escrow | 5,634,470 |
| | 8,691,908 |
| | 8,825,557 |
| | 8,916,617 |
| | 9,561,997 |
|
| Borrowings | 1,234,958 |
| | 772,777 |
| | 988,550 |
| | 1,274,605 |
| | 1,304,442 |
|
| Stockholders’ equity | 1,100,897 |
| | 1,639,458 |
| | 1,661,282 |
| | 1,686,274 |
| | 1,711,902 |
|
Tangible equity 1 | 645,577 |
| | 886,757 |
| | 910,948 |
| | 938,862 |
| | 940,971 |
|
| | | | | | | | | | |
1 See a reconciliation of this Non-GAAP Financial Measure on page 15. |
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 | 6/30/2015 | | 9/30/2015 | | 12/31/2015 | | 3/31/2016 | | 6/30/2016 |
| Basic (loss) earnings per share | $ | (0.08 | ) | | $ | 0.19 |
| | $ | 0.25 |
| | $ | 0.18 |
| | $ | 0.29 |
|
| Diluted (loss) earnings per share | (0.08 | ) | | 0.19 |
| | 0.25 |
| | 0.18 |
| | 0.29 |
|
Adjusted diluted earnings per share, non-GAAP 1 | 0.23 |
| | 0.25 |
| | 0.26 |
| | 0.25 |
| | 0.27 |
|
| Dividends declared per share | 0.07 |
| | 0.07 |
| | 0.07 |
| | 0.07 |
| | 0.07 |
|
| Tangible book value per share | 6.70 |
| | 6.94 |
| | 7.05 |
| | 7.09 |
| | 7.40 |
|
| Shares of common stock o/s | 129,709,834 |
| | 129,769,569 |
| | 130,006,926 |
| | 130,548,989 |
| | 130,620,463 |
|
| Basic weighted average common shares o/s | 91,565,972 |
| | 129,733,911 |
| | 129,812,551 |
| | 129,974,025 |
| | 130,081,465 |
|
| Diluted weighted average common shares o/s | 91,950,776 |
| | 130,192,937 |
| | 130,354,779 |
| | 130,500,975 |
| | 130,688,729 |
|
| Performance Ratios (annualized) | | | | | | | | | |
| Return on average assets | (0.38 | )% | | 0.85 | % | | 1.12 | % | | 0.80 | % | | 1.20 | % |
| Return on average equity | (2.79 | )% | | 5.85 | % | | 7.83 | % | | 5.67 | % | | 8.87 | % |
Return on average tangible assets, as reported 1 | (0.40 | )% | | 0.91 | % | | 1.20 | % | | 0.85 | % | | 1.27 | % |
Return on average tangible equity, as reported 1 | (4.75 | )% | | 10.82 | % | | 14.28 | % | | 10.18 | % | | 16.14 | % |
Return on average tangible assets, as adjusted 1 | 1.13 | % | | 1.21 | % | | 1.22 | % | | 1.15 | % | | 1.19 | % |
Return on average tangible equity, as adjusted 1 | 13.27 | % | | 14.33 | % | | 14.60 | % | | 13.78 | % | | 15.14 | % |
Operating efficiency, as adjusted 1 | 52.6 | % | | 49.0 | % | | 47.6 | % | | 48.9 | % | | 47.2 | % |
| Analysis of Net Interest Income | | | | | | | | | |
| Yield on loans | 4.60 | % | | 4.75 | % | | 4.65 | % | | 4.62 | % | | 4.68 | % |
Yield on investment securities - tax equivalent 2 | 2.71 | % | | 2.63 | % | | 2.66 | % | | 2.65 | % | | 2.76 | % |
Yield on interest earning assets - tax equivalent 2 | 4.03 | % | | 4.15 | % | | 4.09 | % | | 4.00 | % | | 4.09 | % |
| Cost of total deposits | 0.24 | % | | 0.24 | % | | 0.26 | % | | 0.29 | % | | 0.35 | % |
| Cost of borrowings | 1.63 | % | | 2.38 | % | | 2.04 | % | | 1.92 | % | | 1.73 | % |
| Cost of interest bearing liabilities | 0.63 | % | | 0.63 | % | | 0.63 | % | | 0.70 | % | | 0.72 | % |
Net interest rate spread - tax equivalent basis 2 | 3.40 | % | | 3.52 | % | | 3.46 | % | | 3.30 | % | | 3.37 | % |
| Net interest margin - GAAP basis | 3.49 | % | | 3.69 | % | | 3.62 | % | | 3.46 | % | | 3.50 | % |
Net interest margin - tax equivalent basis 2 | 3.57 | % | | 3.76 | % | | 3.68 | % | | 3.53 | % | | 3.60 | % |
| Capital | | | | | | | | | |
Tier 1 leverage ratio - Company 3 | 12.92 | % | | 9.12 | % | | 9.03 | % | | 8.61 | % | | 8.37 | % |
Tier 1 leverage ratio - Bank only 3 | 13.82 | % | | 9.80 | % | | 9.65 | % | | 9.16 | % | | 8.84 | % |
Tier 1 risk-based capital ratio - Bank only 3 | 11.98 | % | | 11.79 | % | | 11.45 | % | | 10.89 | % | | 10.52 | % |
Total risk-based capital ratio - Bank only 3 | 12.51 | % | | 12.34 | % | | 12.00 | % | | 12.60 | % | | 12.15 | % |
Tangible equity to tangible assets - Company 1 | 8.04 | % | | 8.30 | % | | 8.18 | % | | 7.66 | % | | 7.86 | % |
| Condensed Five Quarter Income Statement | | | | | | | | | |
| Interest and dividend income | $ | 71,947 |
| | $ | 103,298 |
| | $ | 106,224 |
| | $ | 106,006 |
| | $ | 114,309 |
|
| Interest expense | 8,373 |
| | 9,944 |
| | 10,803 |
| | 12,496 |
| | 13,929 |
|
| Net interest income | 63,574 |
| | 93,354 |
| | 95,421 |
| | 93,510 |
| | 100,380 |
|
| Provision for loan losses | 3,100 |
| | 5,000 |
| | 5,500 |
| | 4,000 |
| | 5,000 |
|
| Net interest income after provision for loan losses | 60,474 |
| | 88,354 |
| | 89,921 |
| | 89,510 |
| | 95,380 |
|
| Non-interest income | 13,857 |
| | 18,802 |
| | 16,081 |
| | 15,430 |
| | 20,442 |
|
| Non-interest expense | 85,659 |
| | 71,315 |
| | 57,419 |
| | 68,931 |
| | 59,640 |
|
| (Loss) income before income tax expense | (11,328 | ) | | 35,841 |
|
| 48,583 |
|
| 36,009 |
|
| 56,182 |
|
| Income tax (benefit) expense | (3,682 | ) | | 11,648 |
| | 15,792 |
| | 12,243 |
| | 18,412 |
|
| Net (loss) income | $ | (7,646 | ) | | $ | 24,193 |
| | $ | 32,791 |
| | $ | 23,766 |
| | $ | 37,770 |
|
| | | | | | | | | | |
1 See a reconciliation of Non-GAAP Financial Measures beginning on page 15. |
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 | 6/30/2015 | | 9/30/2015 | | 12/31/2015 | | 3/31/2016 | | 6/30/2016 |
| Balance, beginning of period | $ | 42,884 |
| | $ | 44,317 |
| | $ | 47,611 |
| | $ | 50,145 |
| | $ | 53,014 |
|
| Provision for loan losses | 3,100 |
| | 5,000 |
| | 5,500 |
| | 4,000 |
| | 5,000 |
|
| Loan charge-offs: | | | | | | | | | |
| Commercial & industrial | (228 | ) | | (224 | ) | | (281 | ) | | (489 | ) | | (429 | ) |
| Payroll finance | (59 | ) | | (44 | ) | | — |
| | — |
| | (28 | ) |
| Warehouse lending | — |
| | — |
| | — |
| | — |
| | — |
|
| Factored receivables | (146 | ) | | (52 | ) | | (21 | ) | | (81 | ) | | (792 | ) |
| Equipment financing | (438 | ) | | (1,369 | ) | | (1,463 | ) | | (457 | ) | | (572 | ) |
| Commercial real estate | (276 | ) | | (223 | ) | | (1,134 | ) | | (4 | ) | | (100 | ) |
| Multi-family | — |
| | — |
| | — |
| | — |
| | (18 | ) |
| Acquisition development & construction | — |
| | — |
| | — |
| | — |
| | — |
|
| Residential mortgage | — |
| | (546 | ) | | (524 | ) | | (224 | ) | | (209 | ) |
| Consumer | (821 | ) | | (387 | ) | | (810 | ) | | (511 | ) | | (532 | ) |
| Total charge offs | (1,968 | ) | | (2,845 | ) | | (4,233 | ) | | (1,766 | ) | | (2,680 | ) |
| Recoveries of loans previously charged-off: | | | | | | | | | |
| Commercial & industrial | 163 |
| | 781 |
| | 675 |
| | 329 |
| | 199 |
|
| Payroll finance | — |
| | — |
| | 24 |
| | 4 |
| | 28 |
|
| Warehouse lending | — |
| | — |
| | — |
| | — |
| | — |
|
| Factored receivables | 9 |
| | 18 |
| | 14 |
| | 24 |
| | 17 |
|
| Equipment financing | 96 |
| | 148 |
| | 409 |
| | 108 |
| | 102 |
|
| Commercial real estate | — |
| | 76 |
| | 56 |
| | 21 |
| | 53 |
|
| Multi-family | — |
| | — |
| | 9 |
| | 2 |
| | — |
|
| Acquisition development & construction | — |
| | — |
| | 43 |
| | — |
| | 104 |
|
| Residential mortgage | 9 |
| | 81 |
| | — |
| | 28 |
| | 1 |
|
| Consumer | 24 |
| | 35 |
| | 37 |
| | 119 |
| | 27 |
|
| Total recoveries | 301 |
| | 1,139 |
| | 1,267 |
| | 635 |
| | 531 |
|
| Net loan charge-offs | (1,667 | ) | | (1,706 | ) | | (2,966 | ) | | (1,131 | ) | | (2,149 | ) |
| Balance, end of period | $ | 44,317 |
| | $ | 47,611 |
| | $ | 50,145 |
| | $ | 53,014 |
| | $ | 55,865 |
|
| Asset Quality Data and Ratios | | | | | | | | | |
| Non-performing loans (“NPLs”) non-accrual | $ | 68,419 |
| | $ | 67,390 |
| | $ | 65,737 |
| | $ | 84,436 |
| | $ | 79,036 |
|
| NPLs still accruing | 611 |
| | 282 |
| | 674 |
| | 1,002 |
| | 528 |
|
| Total NPLs | 69,030 |
| | 67,672 |
| | 66,411 |
| | 85,438 |
| | 79,564 |
|
| Other real estate owned | 9,575 |
| | 11,831 |
| | 14,614 |
| | 14,527 |
| | 16,590 |
|
| Non-performing assets (“NPAs”) | $ | 78,605 |
| | $ | 79,503 |
| | $ | 81,025 |
| | $ | 99,965 |
| | $ | 96,154 |
|
| Loans 30 to 89 days past due | $ | 40,957 |
| | $ | 30,881 |
| | $ | 67,996 |
| | $ | 19,168 |
| | $ | 18,803 |
|
| Net charge-offs as a % of average loans (annualized) | 0.13 | % | | 0.09 | % | | 0.15 | % | | 0.06 | % | | 0.10 | % |
| NPLs as a % of total loans | 0.95 |
| | 0.90 |
| | 0.84 |
| | 1.03 |
| | 0.93 |
|
| NPAs as a % of total assets | 0.68 |
| | 0.69 |
| | 0.68 |
| | 0.78 |
| | 0.74 |
|
| Allowance for loan losses as a % of NPLs | 64.2 |
| | 70.4 |
| | 75.5 |
| | 62.0 |
| | 70.2 |
|
| Allowance for loan losses as a % of total loans | 0.61 |
| | 0.63 |
| | 0.64 |
| | 0.64 |
| | 0.65 |
|
Total valuation balances recorded against portfolio loans to adjusted gross portfolio loans 1 | 1.36 |
| | 1.28 |
| | 1.16 |
| | 1.17 |
| | 1.11 |
|
| Special mention loans | $ | 65,421 |
| | $ | 91,076 |
| | $ | 68,003 |
| | $ | 101,560 |
| | $ | 103,710 |
|
| Substandard loans | 125,602 |
| | 120,684 |
| | 129,665 |
| | 131,919 |
| | 125,571 |
|
| Doubtful loans | 392 |
| | 152 |
| | 713 |
| | 556 |
| | 330 |
|
1 See a reconciliation of this non-GAAP measure on page 17. |
Sterling Bancorp and Subsidiaries
QUARTERLY YIELD TABLE
(unaudited, in thousands, except share and per share data)
|
| | | | | | | | | | | | | | | | | | | | | |
| | For the Quarter Ended |
| | March 31, 2016 | | June 30, 2016 |
| | Average
balance | | Interest | | Yield/Rate | | Average
balance | | Interest | | Yield/Rate |
| | (Dollars in thousands) |
| Interest earning assets: | | | | | | | | | | | |
| Commercial loans | $ | 6,692,875 |
| | $ | 78,137 |
| | 4.70 | % | | $ | 7,288,178 |
| | $ | 86,206 |
| | 4.76 | % |
| Consumer loans | 297,028 |
| | 3,296 |
| | 4.46 | % | | 295,666 |
| | 3,391 |
| | 4.61 | % |
| Residential mortgage loans | 755,564 |
| | 7,601 |
| | 4.02 | % | | 729,685 |
| | 7,061 |
| | 3.87 | % |
Total net loans 1 | 7,745,467 |
| | 89,034 |
| | 4.62 | % | | 8,313,529 |
| | 96,658 |
| | 4.68 | % |
| Securities taxable | 2,139,547 |
| | 12,016 |
| | 2.26 | % | | 2,032,518 |
| | 10,662 |
| | 2.11 | % |
| Securities non-taxable | 593,777 |
| | 5,968 |
| | 4.04 | % | | 837,133 |
| | 9,032 |
| | 4.34 | % |
| Interest earning deposits | 296,668 |
| | 311 |
| | 0.42 | % | | 272,426 |
| | 258 |
| | 0.38 | % |
| FHLB and Federal Reserve Bank stock | 104,897 |
| | 766 |
| | 2.94 | % | | 102,818 |
| | 860 |
| | 3.36 | % |
| Total securities and other earning assets | 3,134,889 |
| | 19,061 |
| | 2.45 | % | | 3,244,895 |
| | 20,812 |
| | 2.58 | % |
| Total interest earning assets | 10,880,356 |
| | 108,095 |
| | 4.00 | % | | 11,558,424 |
| | 117,470 |
| | 4.09 | % |
| Non-interest earning assets | 1,121,014 |
| | | | | | 1,141,614 |
| | | | |
| Total assets | $ | 12,001,370 |
| | | | | | $ | 12,700,038 |
| | | | |
| Interest bearing liabilities: | | | | | | | | | | | |
| Demand deposits | $ | 1,607,227 |
| | $ | 1,004 |
| | 0.25 | % | | $ | 2,016,365 |
| | $ | 1,994 |
| | 0.40 | % |
Savings deposits 2 | 814,485 |
| | 606 |
| | 0.30 | % | | 809,123 |
| | 841 |
| | 0.42 | % |
| Money market deposits | 2,866,666 |
| | 3,672 |
| | 0.52 | % | | 3,056,188 |
| | 4,152 |
| | 0.55 | % |
| Certificates of deposit | 619,154 |
| | 1,127 |
| | 0.73 | % | | 620,759 |
| | 1,341 |
| | 0.87 | % |
| Total interest bearing deposits | 5,907,532 |
| | 6,409 |
| | 0.44 | % | | 6,502,435 |
| | 8,328 |
| | 0.52 | % |
| Senior notes | 98,928 |
| | 1,478 |
| | 5.98 | % | | 99,032 |
| | 1,478 |
| | 5.97 | % |
| Other borrowings | 1,172,112 |
| | 4,560 |
| | 1.56 | % | | 1,097,270 |
| | 2,642 |
| | 0.97 | % |
| Subordinated notes | 3,565 |
| | 49 |
| | 5.50 | % | | 108,140 |
| | 1,481 |
| | 5.48 | % |
| Total borrowings | 1,274,605 |
| | 6,087 |
| | 1.92 | % | | 1,304,442 |
| | 5,601 |
| | 1.73 | % |
| Total interest bearing liabilities | 7,182,137 |
| | 12,496 |
| | 0.70 | % | | 7,806,877 |
| | 13,929 |
| | 0.72 | % |
| Non-interest bearing deposits | 3,009,085 |
| | | | | | 3,059,562 |
| | | | |
| Other non-interest bearing liabilities | 123,874 |
| | | | | | 121,697 |
| | | | |
| Total liabilities | 10,315,096 |
| | | | | | 10,988,136 |
| | | | |
| Stockholders’ equity | 1,686,274 |
| | | | | | 1,711,902 |
| | | | |
| Total liabilities and stockholders’ equity | $ | 12,001,370 |
| | | | | | $ | 12,700,038 |
| | | | |
Net interest rate spread 3 | | | | | 3.30 | % | | | | | | 3.37 | % |
Net interest earning assets 4 | $ | 3,698,219 |
| | | | | | $ | 3,751,547 |
| | | | |
| Net interest margin - tax equivalent | | | 95,599 |
| | 3.53 | % | | | | 103,541 |
| | 3.60 | % |
| Less tax equivalent adjustment | | | (2,089 | ) | | | | | | (3,161 | ) | | |
| Net interest income | | | $ | 93,510 |
| | | | | | $ | 100,380 |
| | |
| Ratio of interest earning assets to interest bearing liabilities | 151.5 | % | | | | | | 148.1 | % | | | | |
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 club accounts and 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
QUARTERLY YIELD TABLE
(unaudited, in thousands, except share and per share data)
|
| | | | | | | | | | | | | | | | | | | | | |
| | For the Quarter Ended |
| | June 30, 2015 | | June 30, 2016 |
| | Average
balance | | Interest | | Yield/Rate | | Average
balance | | Interest | | Yield/Rate |
| | (Dollars in thousands) |
| Interest earning assets: | | | | | | | | | | | |
| Commercial loans | $ | 4,464,193 |
| | $ | 51,805 |
| | 4.65 | % | | $ | 7,288,178 |
| | $ | 86,206 |
| | 4.76 | % |
| Consumer loans | 202,044 |
| | 1,975 |
| | 3.92 | % | | 295,666 |
| | 3,391 |
| | 4.61 | % |
| Residential mortgage loans | 539,569 |
| | 5,964 |
| | 4.43 | % | | 729,685 |
| | 7,061 |
| | 3.87 | % |
Total net loans 1 | 5,205,806 |
| | 59,744 |
| | 4.60 | % | | 8,313,529 |
| | 96,658 |
| | 4.68 | % |
| Securities taxable | 1,527,872 |
| | 8,423 |
| | 2.21 | % | | 2,032,518 |
| | 10,662 |
| | 2.11 | % |
| Securities non-taxable | 380,544 |
| | 4,462 |
| | 4.70 | % | | 837,133 |
| | 9,032 |
| | 4.34 | % |
| Interest earning deposits | 114,128 |
| | 48 |
| | 0.17 | % | | 272,426 |
| | 258 |
| | 0.38 | % |
| FHLB and Federal Reserve Bank stock | 81,317 |
| | 832 |
| | 4.10 | % | | 102,818 |
| | 860 |
| | 3.36 | % |
| Total securities and other earning assets | 2,103,861 |
| | 13,765 |
| | 2.62 | % | | 3,244,895 |
| | 20,812 |
| | 2.58 | % |
| Total interest earning assets | 7,309,667 |
| | 73,509 |
| | 4.03 | % | | 11,558,424 |
| | 117,470 |
| | 4.09 | % |
| Non-interest earning assets | 739,553 |
| | | | | | 1,141,614 |
| | | | |
| Total assets | $ | 8,049,220 |
| | | | | | $ | 12,700,038 |
| | | | |
| Interest bearing liabilities: | | | | | | | | | | | |
| Demand deposits | $ | 823,471 |
| | $ | 207 |
| | 0.10 | % | | $ | 2,016,365 |
| | $ | 1,994 |
| | 0.40 | % |
Savings deposits 2 | 802,956 |
| | 482 |
| | 0.24 | % | | 809,123 |
| | 841 |
| | 0.42 | % |
| Money market deposits | 1,922,805 |
| | 1,931 |
| | 0.40 | % | | 3,056,188 |
| | 4,152 |
| | 0.55 | % |
| Certificates of deposit | 536,394 |
| | 739 |
| | 0.55 | % | | 620,759 |
| | 1,341 |
| | 0.87 | % |
| Total interest bearing deposits | 4,085,626 |
| | 3,359 |
| | 0.33 | % | | 6,502,435 |
| | 8,328 |
| | 0.52 | % |
| Senior notes | 98,629 |
| | 1,473 |
| | 5.99 | % | | 99,032 |
| | 1,478 |
| | 5.97 | % |
| Other borrowings | 1,136,329 |
| | 3,541 |
| | 1.25 | % | | 1,097,270 |
| | 2,642 |
| | 0.97 | % |
| Subordinated notes | — |
| | — |
| | — | % | | 108,140 |
| | 1,481 |
| | 5.48 | % |
| Total borrowings | 1,234,958 |
| | 5,014 |
| | 1.63 | % | | 1,304,442 |
| | 5,601 |
| | 1.73 | % |
| Total interest bearing liabilities | 5,320,584 |
| | 8,373 |
| | 0.63 | % | | 7,806,877 |
| | 13,929 |
| | 0.72 | % |
| Non-interest bearing deposits | 1,548,844 |
| | | | | | 3,059,562 |
| | | | |
| Other non-interest bearing liabilities | 78,895 |
| | | | | | 121,697 |
| | | | |
| Total liabilities | 6,948,323 |
| | | | | | 10,988,136 |
| | | | |
| Stockholders’ equity | 1,100,897 |
| | | | | | 1,711,902 |
| | | | |
| Total liabilities and stockholders’ equity | $ | 8,049,220 |
| | | | | | $ | 12,700,038 |
| | | | |
Net interest rate spread 3 | | | | | 3.40 | % | | | | | | 3.37 | % |
Net interest earning assets 4 | $ | 1,989,083 |
| | | | | | $ | 3,751,547 |
| | | | |
| Net interest margin - tax equivalent | | | 65,136 |
| | 3.57 | % | | | | 103,541 |
| | 3.60 | % |
| Less tax equivalent adjustment | | | (1,562 | ) | | | | | | (3,161 | ) | | |
| Net interest income | | | $ | 63,574 |
| | | | | | $ | 100,380 |
| | |
| Ratio of interest earning assets to interest bearing liabilities | 137.4 | % | | | | | | 148.1 | % | | | | |
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 club accounts and 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)
|
| | | | | | | | | | | | | | | | | | | |
| The Company provides supplemental reporting of Non-GAAP Financial Measures as management believes this information is useful to investors. See legend on page 17. |
| | As of and for the Quarter Ended |
| | 6/30/2015 | | 9/30/2015 | | 12/31/2015 | | 3/31/2016 | | 6/30/2016 |
| |
The following table shows the reconciliation of stockholders’ equity to tangible equity and the tangible equity ratio1: |
| | | | | | | | | | |
| Total assets | $ | 11,566,382 |
| | $ | 11,597,393 |
| | $ | 11,955,952 |
| | $ | 12,865,356 |
| | $ | 13,065,248 |
|
| Goodwill and other intangibles | (753,899 | ) | | (751,529 | ) | | (748,066 | ) | | (772,390 | ) | | (769,125 | ) |
| Tangible assets | 10,812,483 |
|
| 10,845,864 |
| | 11,207,886 |
| | 12,092,966 |
|
| 12,296,123 |
|
| Stockholders’ equity | 1,623,110 |
| | 1,652,204 |
| | 1,665,073 |
| | 1,698,133 |
| | 1,735,994 |
|
| Goodwill and other intangibles | (753,899 | ) | | (751,529 | ) | | (748,066 | ) | | (772,390 | ) | | (769,125 | ) |
| Tangible stockholders’ equity | 869,211 |
| | 900,675 |
| | 917,007 |
| | 925,743 |
|
| 966,869 |
|
| Common stock outstanding at period end | 129,709,834 |
| | 129,769,569 |
| | 130,006,926 |
| | 130,548,989 |
| | 130,620,463 |
|
| Stockholders’ equity as a % of total assets | 14.03 | % | | 14.25 | % | | 13.93 | % | | 13.20 | % | | 13.29 | % |
| Book value per share | $ | 12.51 |
| | $ | 12.73 |
| | $ | 12.81 |
| | $ | 13.01 |
| | $ | 13.29 |
|
| Tangible equity as a % of tangible assets | 8.04 | % | | 8.30 | % | | 8.18 | % | | 7.66 | % |
| 7.86 | % |
| Tangible book value per share | $ | 6.70 |
| | $ | 6.94 |
| | $ | 7.05 |
| | $ | 7.09 |
|
| $ | 7.40 |
|
| | | | | | | | | | |
| |
The following table shows the reconciliation of reported return on average tangible equity and adjusted return on average tangible equity2: |
| | | | | | | | | | |
| Average stockholders’ equity | $ | 1,100,897 |
| | $ | 1,639,458 |
| | $ | 1,661,282 |
| | $ | 1,686,274 |
| | $ | 1,711,902 |
|
| Average goodwill and other intangibles | (455,320 | ) | | (752,701 | ) | | (750,334 | ) | | (747,412 | ) | | (770,931 | ) |
| Average tangible stockholders’ equity | 645,577 |
|
| 886,757 |
| | 910,948 |
| | 938,862 |
| | 940,971 |
|
| Net (loss) income | (7,646 | ) | | 24,193 |
| | 32,791 |
| | 23,766 |
| | 37,770 |
|
| Net (loss) income, if annualized | (30,668 | ) |
| 95,983 |
| | 130,095 |
| | 95,586 |
| | 151,910 |
|
| Reported return on average tangible equity | (4.75 | )% |
| 10.82 | % | | 14.28 | % | | 10.18 | % | | 16.14 | % |
| Adjusted net income (see reconciliation on page 16) | $ | 21,361 |
| | $ | 32,035 |
| | $ | 33,525 |
| | $ | 32,159 |
| | $ | 35,414 |
|
| Annualized adjusted net income | 85,679 |
|
| 127,095 |
| | 133,007 |
| | 129,343 |
| | 142,434 |
|
| Adjusted return on average tangible equity | 13.27 | % |
| 14.33 | % | | 14.60 | % | | 13.78 | % |
| 15.14 | % |
| | | | | | | | | | |
The following table shows the reconciliation of reported return on tangible assets and adjusted return on tangible assets3: |
| | | | | | | | | | |
| Average assets | $ | 8,049,220 |
| | $ | 11,242,870 |
| | $ | 11,622,621 |
| | $ | 12,001,370 |
| | $ | 12,700,038 |
|
| Average goodwill and other intangibles | (455,320 | ) |
| (752,701 | ) | | (750,334 | ) | | (747,412 | ) |
| (770,931 | ) |
| Average tangible assets | 7,593,900 |
|
| 10,490,169 |
| | 10,872,287 |
| | 11,253,958 |
|
| 11,929,107 |
|
| Net (loss) income | (7,646 | ) | | 24,193 |
| | 32,791 |
| | 23,766 |
| | 37,770 |
|
| Net (loss) income, if annualized | (30,668 | ) |
| 95,983 |
| | 130,095 |
| | 95,586 |
|
| 151,910 |
|
| Reported return on average tangible assets | (0.40 | )% |
| 0.91 | % | | 1.20 | % | | 0.85 | % |
| 1.27 | % |
| Adjusted net income (see reconciliation on page 16) | $ | 21,361 |
| | $ | 32,035 |
| | $ | 33,525 |
| | $ | 32,159 |
| | $ | 35,414 |
|
| Annualized adjusted net income | 85,679 |
|
| 127,095 |
| | 133,007 |
| | 129,343 |
|
| 142,434 |
|
| Adjusted return on average tangible assets | 1.13 | % |
| 1.21 | % | | 1.22 | % | | 1.15 | % |
| 1.19 | % |
Sterling Bancorp and Subsidiaries NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
|
| | | | | | | | | | | | | | | | | | | | | |
| The Company provides supplemental reporting of non-GAAP measures as management believes this information is useful to investors. See legend on page 17. |
| | As of and for the Quarter Ended |
| | 6/30/2015 | | 9/30/2015 | | 12/31/2015 | | 3/31/2016 | | 6/30/2016 | |
| |
The following table shows the reconciliation of the reported operating efficiency ratio and adjusted operating efficiency ratio4: |
| | | | | | | | | | | |
| Net interest income | $ | 63,574 |
| | $ | 93,354 |
| | $ | 95,421 |
| | $ | 93,510 |
| | $ | 100,379 |
| |
| Non-interest income | 13,857 |
| | 18,802 |
| | 16,081 |
| | 15,430 |
| | 20,445 |
| |
| Total net revenue | 77,431 |
|
| 112,156 |
| | 111,502 |
| | 108,940 |
| | 120,824 |
| |
| Tax equivalent adjustment on securities interest income | 1,562 |
| | 1,707 |
| | 1,692 |
| | 2,091 |
| | 3,161 |
| |
| Net (gain) loss on sale of securities | (697 | ) | | (2,726 | ) | | 121 |
| | 283 |
| | (4,474 | ) | |
| Adjusted total revenue | 78,296 |
|
| 111,137 |
| | 113,315 |
| | 111,314 |
| | 119,511 |
| |
| Non-interest expense | 85,659 |
| | 71,315 |
| | 57,419 |
| | 68,931 |
| | 59,639 |
| |
| Merger-related expense | (14,625 | ) | | — |
| | — |
| | (265 | ) | | — |
| |
| Charge for asset write-downs, banking systems conversion, retention and severance | (28,055 | ) | | — |
| | — |
| | (2,485 | ) | | — |
| |
| Charge on benefit plan settlement | — |
| | (13,384 | ) | | — |
| | — |
| | — |
| |
| Loss on extinguishment of FHLB borrowings | — |
| | — |
| | — |
| | (8,716 | ) | | — |
| |
| Amortization of intangible assets | (1,780 | ) | | (3,431 | ) | | (3,431 | ) | | (3,053 | ) | | (3,241 | ) | |
| Adjusted non-interest expense | 41,199 |
|
| 54,500 |
| | 53,988 |
| | 54,412 |
| | 56,398 |
| |
| Reported operating efficiency ratio | 110.6 | % | | 63.6 | % | | 51.5 | % | | 63.3 | % | | 49.4 | % | |
| Adjusted operating efficiency ratio | 52.6 | % | | 49.0 | % |
| 47.6 | % | | 48.9 | % | | 47.2 | % | |
| | | | | | | | | | | |
The following table shows the reconciliation of reported net income (GAAP) and adjusted net income (non-GAAP) and adjusted diluted earnings per share5: |
| | | | | | | | | | | |
| (Loss) income before income tax expense | $ | (11,328 | ) | | $ | 35,841 |
| | $ | 48,583 |
| | $ | 36,009 |
| | $ | 56,182 |
| |
| Income tax (benefit) expense | (3,682 | ) | | 11,648 |
| | 15,792 |
| | 12,243 |
| | 18,412 |
| |
| Net (loss) income (GAAP) | (7,646 | ) |
| 24,193 |
| | 32,791 |
| | 23,766 |
| | 37,770 |
| |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Adjustments: | | | | | | | | | | |
| Net (gain) loss on sale of securities | (697 | ) |
| (2,726 | ) | | 121 |
| | 283 |
| | (4,474 | ) | |
| Merger-related expense | 14,625 |
|
| — |
| | — |
| | 265 |
| | — |
| |
| Charge for asset write-downs, banking systems conversion, retention and severance | 28,055 |
| | — |
| | — |
| | 2,485 |
| | — |
| |
| Charge on benefit plan settlement | — |
| | 13,384 |
| | — |
| | — |
| | — |
| |
| Loss on extinguishment of FHLB borrowings | — |
| | — |
| | — |
| | 8,716 |
| | — |
| |
| Amortization of non-compete agreements and acquired customer list intangible assets | 991 |
| | 961 |
| | 961 |
| | 968 |
| | 969 |
| |
| Total adjustments | 42,974 |
|
| 11,619 |
| | 1,082 |
| | 12,717 |
| | (3,505 | ) | |
| Income tax (benefit) expense | (13,967 | ) | | (3,777 | ) | | (348 | ) | | (4,324 | ) | | 1,149 |
| |
| Total adjustments net of taxes | 29,007 |
|
| 7,842 |
| | 734 |
| | 8,393 |
| | (2,356 | ) | |
| Adjusted net income (non-GAAP) | $ | 21,361 |
|
| $ | 32,035 |
| | $ | 33,525 |
| | $ | 32,159 |
| | $ | 35,414 |
| |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Weighted average diluted shares | 91,950,776 |
| | 130,192,937 |
| | 130,354,779 |
| | 130,500,975 |
| | 130,688,729 |
| |
| Diluted EPS as reported (GAAP) | $ | (0.08 | ) |
| $ | 0.19 |
| | $ | 0.25 |
| | $ | 0.18 |
| | $ | 0.29 |
| |
| Adjusted diluted EPS (non-GAAP) | 0.23 |
|
| 0.25 |
| | 0.26 |
| | 0.25 |
| | 0.27 |
| |
Sterling Bancorp and Subsidiaries NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
|
| | | | | | | | | | | | | | | | | | | |
| The Company provides supplemental reporting of non-GAAP measures as management believes this information is useful to investors. See legend below. |
| | As of and for the Quarter Ended |
| | 6/30/2015 | | 9/30/2015 | | 12/31/2015 | | 3/31/2016 | | 6/30/2016 |
The following table shows a reconciliation of the allowance for loan losses and remaining purchase accounting adjustments to portfolio loans6: |
| Allowance for loan losses | $ | 44,317 |
| | $ | 47,611 |
| | $ | 50,145 |
| | $ | 53,014 |
| | $ | 55,865 |
|
| Remaining purchase accounting adjustments: | | | | | | | | | |
| Acquired performing loans | 36,889 |
| | 31,364 |
| | 24,766 |
| | 27,340 |
| | 23,802 |
|
| Purchased credit impaired loans | 18,014 |
| | 17,783 |
| | 16,617 |
| | 16,862 |
| | 15,955 |
|
| Total remaining purchase accounting adjustments | 54,903 |
| | 49,147 |
| | 41,383 |
| | 44,202 |
| | 39,757 |
|
| Total valuation balances recorded against portfolio loans | $ | 99,220 |
| | $ | 96,758 |
| | $ | 91,528 |
| | $ | 97,216 |
| | $ | 95,622 |
|
| | | | | | | | | | |
| Total portfolio loans, gross | $ | 7,235,587 |
| | $ | 7,525,632 |
| | $ | 7,859,360 |
| | $ | 8,286,163 |
| | $ | 8,594,295 |
|
| Remaining purchase accounting adjustments: | | | | | | | | | |
| Acquired performing loans | 36,889 |
| | 31,364 |
| | 24,766 |
| | 27,340 |
| | 23,802 |
|
| Purchased credit impaired loans | 18,014 |
| | 17,783 |
| | 16,617 |
| | 16,862 |
| | 15,955 |
|
| Adjusted portfolio loans, gross | $ | 7,290,490 |
| | $ | 7,574,779 |
| | $ | 7,900,743 |
| | $ | 8,330,365 |
| | $ | 8,634,052 |
|
| Allowance for loan losses to total portfolio loans, gross | 0.61 | % | | 0.63 | % | | 0.64 | % | | 0.64 | % | | 0.65 | % |
| Total valuation balances recorded against portfolio loans to adjusted gross portfolio loans | 1.36 | % | | 1.28 | % | | 1.16 | % | | 1.17 | % | | 1.11 | % |
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 Stockholders’ equity as a percentage of total assets, book value per share, tangible equity as a percentage of total assets and tangible book value equity per share 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 Reported return on average tangible equity and adjusted return on average tangible equity measures provide information to evaluate the use of our tangible equity.
3 Reported return on tangible assets and adjusted return on tangible assets measures provide information to help assess our profitability.
4 The adjusted operating efficiency ratio is a non-GAAP measure calculated by dividing non-interest expense by total net revenue.
The adjusted operating efficiency ratio is a measure we use to assess our operating performance.
5 Adjusted net income and adjusted earnings per share present a summary of our earnings which includes adjustments to exclude certain revenues and expenses (generally associated with discrete merger transactions and non-recurring strategic plans) to help in assessing our 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.
