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| FOR IMMEDIATE RELEASE | STERLING BANCORP CONTACT: |
| July 25, 2017 | Luis Massiani, SEVP & Chief Financial Officer |
| | 845.369.8040 |
| | http://www.sterlingbancorp.com |
Sterling Bancorp Announces Record Operating Results for the Three Months Ended June 30, 2017.
Strong operating performance continued in the second quarter, highlighted by GAAP diluted earnings per share of $0.31, record adjusted diluted earnings per share1 of $0.33, and new highs in loans and deposits.
Key Performance Highlights for the Three Months ended June 30, 2017 vs. June 30, 2016
|
| | | | | | | | | | | | | | | | | | | | | |
| ($ in thousands except per share amounts) | GAAP / As Reported | | Non-GAAP / As Adjusted1 |
| | 2016 | | 2017 | | Change % / bps | | 2016 | | 2017 | | Change % / bps |
Total revenue2 | $ | 120,822 |
| | $ | 126,876 |
| | 5.0 | % | | $ | 119,509 |
| | $ | 131,301 |
| | 9.9 | % |
| Net income | 37,770 |
| | 42,400 |
| | 12.3 |
| | 35,414 |
| | 44,393 |
| | 25.4 |
|
| Diluted EPS | 0.29 |
| | 0.31 |
| | 6.9 |
| | 0.27 |
| | 0.33 |
| | 22.2 |
|
Net interest margin3 | 3.49 | % | | 3.35 | % | | (14 | ) | | 3.60 | % | | 3.47 | % | | (13 | ) |
| Return on average tangible equity | 16.14 |
| | 14.74 |
| | (140 | ) | | 15.14 |
| | 15.43 |
| | 29 |
|
| Return on average tangible assets | 1.27 |
| | 1.22 |
| | (5 | ) | | 1.19 |
| | 1.28 |
| | 9 |
|
Operating efficiency ratio4 | 49.4 |
| | 47.0 |
| | (240 | ) | | 47.2 |
| | 42.0 |
| | (520 | ) |
| |
| ▪ | Total portfolio loans gross reached a record $10.2 billion as of June 30, 2017. |
| |
| ▪ | Loan growth was $1.6 billion, or 19.1% (end of period balances, including acquired loans). |
| |
| ▪ | Deposit growth was $717.2 million, or 7.3% (end of period balances). |
| |
| ▪ | Loans to deposits ratio of 97.4%; total deposits reached $10.5 billion at June 30, 2017. |
Key Highlights for the Three Months ended June 30, 2017 vs. linked quarter March 31, 2017
|
| | | | | | | | | | | | | | | | | | | | | |
| ($ in thousands except per share amounts) | GAAP / As Reported | | Non-GAAP / As Adjusted1 |
| | 3/31/2017 | | 6/30/2017 | | Change % / bps | | 3/31/2017 | | 6/30/2017 | | Change % / bps |
Total revenue2 | $ | 121,626 |
| | $ | 126,876 |
| | 4.3 | % | | $ | 125,751 |
| | $ | 131,301 |
| | 4.4 | % |
| Net income | 39,067 |
| | 42,400 |
| | 8.5 |
| | 41,461 |
| | 44,393 |
| | 7.1 |
|
| Diluted EPS | 0.29 |
| | 0.31 |
| | 6.9 |
| | 0.31 |
| | 0.33 |
| | 6.5 |
|
Net interest margin3 | 3.42 | % | | 3.35 | % | | (7 | ) | | 3.55 | % | | 3.47 | % | | (8 | ) |
| Return on average tangible equity | 14.31 |
| | 14.74 |
| | 43 |
| | 15.19 |
| | 15.43 |
| | 24 |
|
| Return on average tangible assets | 1.20 |
| | 1.22 |
| | 2 |
| | 1.27 |
| | 1.28 |
| | 1 |
|
Operating efficiency ratio4 | 49.6 |
| | 47.0 |
| | (260 | ) | | 43.7 |
| | 42.0 |
| | (170 | ) |
| |
| ▪ | Annualized loan growth of 19.2% (end of period balances) and 21.8% (average balances) over the linked quarter. |
| |
| ▪ | Total retail and commercial deposits increased by $248.2 million, or annualized growth of 13.2%. |
| |
| ▪ | As adjusted diluted EPS, return on average tangible assets and return on average tangible equity reached record highs. |
| |
| ▪ | As adjusted operating efficiency ratio decreased to a record low at 42.0%. |
| |
| ▪ | Merger with Astoria Financial Corporation (“Astoria”) approved by Sterling and Astoria shareholders in June 2017. |
| |
| ▪ | Announced receipt of Kroll debt rating of BBB+ at Sterling Bancorp and A- at Sterling National Bank. |
1. Non-GAAP / as adjusted measures are defined in the non-GAAP tables beginning on page 16.
2. Total revenue is equal to net interest plus non interest income. 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 is equal to net interest income as a percentage of interest earnings assets. Net interest margin as adjusted is equal to net
interest margin plus the tax equivalent adjustment for tax exempt securities.
4. See page 17 for an explanation of the operating efficiency ratio.
1
MONTEBELLO, N.Y. – July 25, 2017 – 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, 2017. Net income for the quarter ended June 30, 2017 was $42.4 million, or $0.31 per diluted share, compared to net income of $39.1 million, or $0.29 per diluted share, for the linked quarter ended March 31, 2017 and net income of $37.8 million, or $0.29 per diluted share, for the three months ended June 30, 2016.
Net income for the six months ended June 30, 2017 was $81.5 million, or $0.60 per diluted share, compared to net income of $61.5 million, or $0.47 per diluted share, for the six months ended June 30, 2016.
President’s Comments
Jack Kopnisky, President and Chief Executive Officer, commented: “Our positive momentum in operating performance continued in the second quarter of 2017, as we reached new records in loans, deposits, revenues and profitability. As of June 30, 2017, our total assets reached $15.4 billion, compared to $13.1 billion a year ago. Our total portfolio loans gross were $10.2 billion, compared to $8.6 billion a year ago, and our total deposits were $10.5 billion, compared to $9.8 billion a year ago. We continue to make progress in building a high performing regional bank that focuses on serving commercial middle market clients and consumers in the most attractive markets in the Greater New York metropolitan area.
“We had strong earnings performance in the quarter. Our GAAP net income was $42.4 million, or $0.31 per diluted share. Our adjusted net income was $44.4 million and adjusted diluted earnings per share were $0.33, compared to $35.4 million and $0.27, respectively, for the second quarter of 2016. This represents growth in adjusted net income and adjusted diluted earnings per share of 25.4% and 22.2%, respectively. We continue to focus on controlling our operating expenses and improving our operating efficiency. During the quarter, our reported operating efficiency was 47.0% and our adjusted operating efficiency ratio was 42.0%. This represents a decrease of 240 and 520 basis points, respectively, relative to the same quarter a year ago. We also continue to improve our operating leverage. For the quarter ended June 30, 2017, adjusted total revenue grew 9.9% while adjusted non-interest expense declined 2.3% relative to the same quarter a year ago. We have also continued our strategy of reducing our real estate footprint and consolidated two financial center locations during the quarter.
“We have a strong balance sheet with a loan portfolio that has a balanced mix of 45.1% commercial and industrial loans, 43.3% commercial real estate loans, 2.2% acquisition development and construction loans and 9.4% consumer loans. Our diversified loan portfolio and businesses position us well for a rising interest rate environment. During the quarter, the weighted average yield on loans was 4.58%, an increase of one basis point over the linked quarter; excluding the impact of accretion income on acquired loans, yield on loans increased five basis points to 4.47%. We continue to maintain a strong funding profile with a loans to deposits ratio of approximately 97.4% and a weighted average cost of deposits of 0.43%. Our net interest margin was 3.47% on a tax equivalent basis, which represented a decrease of eight basis points over the linked quarter, which was mainly due to lower accretion income, lower prepayment penalties and a shift in the composition of our earning assets in the quarter. Based on our business mix and opportunities for growth in loans and deposits, we anticipate that net interest margin excluding accretion income on acquired loans should increase in the second half of the year, in-line with the guidance we have provided previously of 3.45% to 3.50% for the full year 2017.
“On June 13, 2017, we announced that shareholders of the Company and Astoria voted overwhelmingly in support of our merger with Astoria. Astoria operates in highly attractive markets in New York City and Long Island, has a premier low cost deposit base and the merger will allow us to further accelerate our strategy of building a high performing regional bank. The combined company will have approximately $29 billion in assets and $19 billion in deposits in the Greater New York metropolitan area. We anticipate the merger will close in early fourth quarter 2017, subject to, among other items, regulatory approvals, and will be immediately accretive to tangible book value and earnings per share.
“Lastly, we have declared a dividend on our common stock of $0.07 per share payable on August 21, 2017 to holders of record as of August 7, 2017. Thank you to all of our clients, colleagues and stockholders for your continued support, and we look forward to welcoming our new partners at Astoria so we can work together to build a stronger, more diversified and more profitable company.”
Reconciliation of GAAP Results to Adjusted Results (non-GAAP)
GAAP net income of $42.4 million, or $0.31 per diluted share, for the second quarter of 2017, included a pre-tax net loss on sale of securities of $230 thousand, a pre-tax charge of $1.8 million due to merger-related expense associated with the pending merger with Astoria, a pre-tax charge of $603 thousand associated with the consolidation of financial centers, and the pre-tax amortization of non-compete agreements and acquired customer list intangibles of $354 thousand. Excluding the impact of these items and their corresponding tax adjustment at the Company’s estimated effective tax rate of 32.5% for full year 2017, adjusted net income was $44.4 million, or $0.33 per diluted share.
Non-GAAP financial measures include references to the terms “adjusted” or “excluding”. See the reconciliation of the Company’s non-GAAP financial measures beginning on page 16.
Net Interest Income and Margin
|
| | | | | | | | | | | | | | | | | |
| ($ in thousands) | For the three months ended | | Change % / bps |
| | 6/30/2016 | | 3/31/2017 | | 6/30/2017 | | Y-o-Y | | Linked Qtr |
| Interest income | $ | 114,309 |
| | $ | 126,000 |
| | $ | 134,263 |
| | 17.5 | % | | 6.6 | % |
| Interest expense | 13,929 |
| | 17,210 |
| | 21,005 |
| | 50.8 |
| | 22.1 |
|
| Net interest income | $ | 100,380 |
| | $ | 108,790 |
| | $ | 113,258 |
| | 12.8 |
| | 4.1 |
|
| | | | | | | | | | |
| Accretion income on acquired loans | $ | 4,088 |
| | $ | 3,482 |
| | $ | 2,888 |
| | (29.4 | )% | | (17.1 | )% |
| Yield on loans | 4.68 | % | | 4.57 | % | | 4.58 | % | | (10 | ) | | 1 |
|
| Tax equivalent yield on investment securities | 2.76 |
| | 2.97 |
| | 2.93 |
| | 17 |
| | (4 | ) |
| Tax equivalent yield on interest earning assets | 4.09 |
| | 4.09 |
| | 4.09 |
| | — |
| | — |
|
| Cost of total deposits | 0.35 |
| | 0.38 |
| | 0.43 |
| | 8 |
| | 5 |
|
| Cost of interest bearing deposits | 0.52 |
| | 0.55 |
| | 0.62 |
| | 10 |
| | 7 |
|
| Cost of borrowings | 1.73 |
| | 1.74 |
| | 1.75 |
| | 2 |
| | 1 |
|
Tax equivalent net interest margin5 | 3.60 |
| | 3.55 |
| | 3.47 |
| | (13 | ) | | (8 | ) |
| | | | | | | | | | |
| Average loans, includes loans held for sale | $ | 8,313,529 |
| | $ | 9,281,516 |
| | $ | 9,786,423 |
| | 17.7 | % | | 5.4 | % |
| Average investment securities | 2,869,651 |
| | 3,273,658 |
| | 3,434,535 |
| | 19.7 |
| | 4.9 |
|
| Average total earning assets | 11,558,424 |
| | 12,889,578 |
| | 13,562,853 |
| | 17.3 |
| | 5.2 |
|
| Average deposits and mortgage escrow | 9,561,997 |
| | 10,186,615 |
| | 10,285,349 |
| | 7.6 |
| | 1.0 |
|
5 Tax equivalent net interest margin is equal to net interest income plus the tax equivalent adjustment for tax exempt securities divided by average earning assets.
Second quarter 2017 compared with second quarter 2016
Net interest income was $113.3 million, an increase of $12.9 million compared to the second quarter of 2016. This was mainly due to an increase in average loans originated through our commercial banking teams and the franchise finance loan portfolio acquired from GE Capital, which closed in September 2016. Other key components of the changes in net interest income were the following:
| |
| ▪ | The yield on loans was 4.58%, compared to 4.68% for the three months ended June 30, 2016. The decline in yield on loans was mainly due to lower accretion income on acquired loans of $2.9 million compared to $4.1 million in the second quarter of 2016. In addition, prepayment penalties in the second quarter of 2017 were $747 thousand lower than the year earlier period. |
| |
| ▪ | Average commercial loans were $8.8 billion compared to $7.3 billion in the second quarter of 2016, an increase of $1.5 billion or 21.0%. |
| |
| ▪ | The tax equivalent yield on investment securities increased 17 basis points to 2.93%. This was mainly due to an increase in the proportion of tax exempt securities in the investment portfolio and an increase in market interest rates. Average tax exempt securities balances grew to $1.3 billion for the quarter ended June 30, 2017, compared to $837.1 million in the second quarter of 2016. |
| |
| ▪ | Average investment securities to average total earnings assets were 25.3% in the quarter compared to 24.8% in the same quarter a year ago. |
| |
| ▪ | The tax equivalent yield on interest earning assets was unchanged between the periods at 4.09%. |
| |
| ▪ | The cost of total deposits was 43 basis points and the cost of borrowings was 1.75%, compared to 35 basis points and 1.73%, respectively, for the same period a year ago. |
| |
| ▪ | Tax equivalent net interest margin was 3.47% compared to 3.60% for the same period a year ago. |
| |
| ▪ | Excluding the impact of accretion income on acquired loans, tax equivalent net interest margin was 3.39% compared to 3.46% for the same period a year ago. |
Second quarter 2017 compared with linked quarter ended March 31, 2017
Net interest income increased $4.5 million, or 16.5% annualized, compared to the linked quarter ended March 31, 2017. The increase in net interest income in the second quarter of 2017 relative to the linked quarter was mainly due to the increase in the average balance of loans outstanding in the second quarter of 2017. Key components of the changes in net interest income in the linked quarter were the following:
| |
| ▪ | The yield on loans was 4.58% compared to 4.57% for the linked quarter, an increase of one basis point, which was mainly due to an increase in market interest rates. |
| |
| ▪ | Accretion income on acquired loans was $2.9 million in the second quarter of 2017 compared to $3.5 million in the linked quarter. |
| |
| ▪ | The average balance of loans increased $504.9 million for the second quarter of 2017 compared to the linked quarter. Based on end of period balances, total loans increased $468.4 million, or 19.2% annualized relative to the linked quarter. Similar to the first quarter of 2017, the majority of loan growth in the second quarter was originated in the month of June; as a result, average loans should increase in the third quarter of 2017. |
| |
| ▪ | The tax equivalent yield on investment securities decreased four basis points to 2.93% in the second quarter of 2017. This was mainly the result of investment securities acquired in the quarter as we reposition our securities portfolio in anticipation of the merger with Astoria. Average investment securities increased $160.9 million compared to the linked quarter. |
| |
| ▪ | The company intends to maintain a higher proportion of investment securities to total earning assets of approximately 25.0% in anticipation of the Astoria merger. |
| |
| ▪ | The tax equivalent yield on interest earning assets was unchanged at 4.09% in the quarter. |
| |
| ▪ | The cost of total deposits increased five basis points to 43 basis points in the quarter. The total cost of borrowings increased one basis point to 1.75%. |
| |
| ▪ | Average interest bearing deposits increased by $90.7 million and average borrowings increased $514.8 million relative to the linked quarter, which resulted in an increase of $3.8 million in interest expense. |
| |
| ▪ | Tax equivalent net interest margin was 3.47% compared to 3.55% in the linked quarter. The decrease was mainly due to lower accretion income on acquired loans of $594 thousand and lower prepayment penalties of $870 thousand relative to the linked quarter. |
| |
| ▪ | Excluding the impact of accretion income on acquired loans, tax equivalent net interest margin was 3.39% compared to 3.44% for the linked quarter. |
Non-interest Income
|
| | | | | | | | | | | | | | | | | |
| ($ in thousands) | For the three months ended | | Change % |
| | 6/30/2016 | | 3/31/2017 | | 6/30/2017 | | Y-o-Y | | Linked Qtr |
| Total non-interest income | $ | 20,442 |
| | $ | 12,836 |
| | $ | 13,618 |
| | (33.4 | )% | | 6.1 | % |
| Net gain (loss) on sale of securities | 4,474 |
| | (23 | ) | | (230 | ) | | (105.1 | ) | | NM |
|
| Adjusted non-interest income | $ | 15,968 |
| | $ | 12,859 |
| | $ | 13,848 |
| | (13.3 | ) | | 7.7 |
|
Second quarter 2017 compared with second quarter 2016
Excluding net gain (loss) on sale of securities, adjusted non-interest income declined $2.1 million in the second quarter of 2017 to $13.8 million compared to $16.0 million in the same quarter last year. The change was mainly due to a decrease in mortgage banking fee income of $2.2 million resulting from the sale of our residential mortgage originations business, which occurred in the third quarter of 2016; a decrease of $0.8 million in deposit fees and service charges, associated mainly with the impact of the Durbin Amendment, which decreased our interchange revenue from July 1, 2016 onward; and a decline in investment management fees of $611 thousand, mainly due to the sale of our trust division in the fourth quarter of 2016. Partially offsetting these decreases was an increase in other non-interest income of $1.2 million, which was due to an increase in letters of credit fees, higher other commissions and loan fees, syndication fees and loan swap fees in each case generated by our commercial banking teams.
Second quarter 2017 compared with linked quarter ended March 31, 2017
Excluding net gain (loss) on sale of securities, adjusted non-interest income increased approximately $1.0 million from $12.9 million in the linked quarter ended March 31, 2017 to $13.8 million in the second quarter of 2017. This was mainly due to higher accounts receivable and factoring commissions of $368 thousand, higher other non-interest income of $474 thousand due mainly to an increase in loan swap fees, and higher investment management fees of $92 thousand due to increased sales of
annuities through our financial centers. These increases were partially offset by a decrease in deposit fees and service charges of $86 thousand and a decrease in mortgage banking income of $141 thousand.
Non-interest Expense |
| | | | | | | | | | | | | | | | | |
| ($ in thousands) | For the three months ended | | Change % / bps |
| | 6/30/2016 | | 3/31/2017 | | 6/30/2017 | | Y-o-Y | | Linked Qtr |
| Compensation and benefits | $ | 31,336 |
| | $ | 31,391 |
| | $ | 31,394 |
| | 0.2 | % | | — | % |
| Occupancy and office operations | 8,810 |
| | 8,134 |
| | 8,833 |
| | 0.3 |
| | 8.6 |
|
| Merger-related expense | — |
| | 3,127 |
| | 1,766 |
| | NM |
| | NM |
|
| Charge for asset write-downs | — |
| | — |
| | 603 |
| | NM |
| | NM |
|
| Other real estate owned, net (“OREO”) | 541 |
| | 1,676 |
| | 112 |
| | (79.3 | ) | | (93.3 | ) |
| Other expenses | 18,953 |
| | 16,022 |
| | 16,949 |
| | (10.6 | ) | | 5.8 |
|
| Total non-interest expense | $ | 59,640 |
| | $ | 60,350 |
| | $ | 59,657 |
| | — |
| | (1.1 | ) |
| Full time equivalent employees (“FTEs”) at period end | 1,065 |
| | 978 |
| | 997 |
| | (6.4 | ) | | 1.9 |
|
| Financial centers at period end | 42 |
| | 42 |
| | 40 |
| | (4.8 | ) | | (4.8 | ) |
| Efficiency ratio, as reported | 49.4 | % | | 49.6 | % | | 47.0 | % | | 240 |
| | 260 |
|
Efficiency ratio, as adjusted6 | 47.2 |
| | 43.7 |
| | 42.0 |
| | 520 |
| | 170 |
|
6 See a reconciliation of this non-GAAP financial measure on page 16.
Second quarter 2017 compared with second quarter 2016
Total non-interest expense increased $17 thousand relative to the second quarter of 2016. Total non-interest expense included $1.8 million of merger-related expense incurred in connection with the pending Astoria merger and a $603 thousand charge incurred on the consolidation of two financial centers. Compensation and benefits increased $58 thousand between the periods. Total FTE declined by 68 between the periods mainly due to the sale of the residential mortgage originations business, the sale of the trust division and the consolidation of several financial centers over the last 12 months. Total non-interest expense was positively impacted by a $429 thousand decline in OREO and a $2.0 million decline in other expenses, which was mainly due to lower amortization of intangible assets of $1.1 million. Regulatory fees and assessments also decreased by $266 thousand, as FDIC deposit insurance fees assessed to the bank were reduced.
Second quarter 2017 compared with linked quarter ended March 31, 2017
Total non-interest expense decreased $693 thousand from $60.4 million in the linked quarter to $59.7 million in the second quarter of 2017. The decrease was mainly related to a $1.4 million decline in merger-related expense, and a $1.6 million decline in OREO. In the first quarter of 2017 we incurred OREO expense to write-down properties to their fair value based on updated appraisals and pending and completed sales. Partially offsetting the decline in merger-related expense and OREO expense was a $603 thousand charge to consolidate two financial centers. Occupancy and office operations increased $699 thousand mainly due to an increase in equipment and software maintenance expense. FTE increased by19 relative to the linked quarter due to the addition of two new commercial banking teams, the addition of personnel to existing teams and an increase in risk management personnel.
Taxes
We recorded income tax expense at an effective tax rate of 32.4% for the second quarter of 2017, compared to 32.8% in the second quarter of 2016. The effective tax rate in the linked quarter ended March 31, 2017 was 31.2%.
The adoption of a new accounting standard in the first quarter of 2017 requires that tax benefits in excess of compensation costs associated with our stock-based compensation plans be included in income tax expense as a discrete item. In the first quarter of 2017, we recorded a tax benefit of $742 thousand associated with the vesting of stock-based compensation which reduced our tax rate by 1.3% for the period. In the second quarter of 2017, the tax benefit was $64 thousand and reduced our effective tax rate by 10 basis points from our expected 32.5% for the three months ended June 30, 2017. We anticipate our effective income tax rate, excluding the impact of income tax expense associated with vested stock-based compensation plans in 2017 will remain between 32% and 33%. However, the effective income tax rate may change materially should changes to current tax law be enacted in 2017. Any changes to current tax law may also have an impact on our deferred tax position.
Key Balance Sheet Highlights as of June 30, 2017
|
| | | | | | | | | | | | | | | | | |
| ($ in thousands) | As of | | Change % / bps |
| | 6/30/2016 | | 3/31/2017 | | 6/30/2017 | | Y-o-Y | | Linked Qtr |
| Total assets | $ | 13,065,248 |
| | $ | 14,659,337 |
| | $ | 15,376,676 |
| | 17.7 | % | | 4.9 | % |
| Total portfolio loans, gross | 8,594,295 |
| | 9,763,967 |
| | 10,232,317 |
| | 19.1 |
| | 4.8 |
|
| Commercial & industrial (“C&I”) loans | 3,639,169 |
| | 4,181,818 |
| | 4,619,789 |
| | 26.9 |
| | 10.5 |
|
| Commercial real estate loans | 3,782,659 |
| | 4,376,645 |
| | 4,430,985 |
| | 17.1 |
| | 1.2 |
|
| Acquisition, development and construction loans | 207,868 |
| | 238,966 |
| | 223,713 |
| | 7.6 |
| | (6.4 | ) |
| Total commercial loans | 7,629,696 |
| | 8,797,429 |
| | 9,274,487 |
| | 21.6 |
| | 5.4 |
|
| Total deposits | 9,785,556 |
| | 10,251,725 |
| | 10,502,710 |
| | 7.3 |
| | 2.4 |
|
Core deposits6 | 8,809,242 |
| | 9,087,137 |
| | 9,230,918 |
| | 4.8 |
| | 1.6 |
|
| Investment securities | 2,980,059 |
| | 3,416,395 |
| | 3,552,176 |
| | 19.2 |
| | 4.0 |
|
| Total borrowings | 1,309,954 |
| | 2,328,576 |
| | 2,661,838 |
| | 103.2 |
| | 14.3 |
|
| Loans to deposits | 87.8 | % | | 95.2 | % | | 97.4 | % | | 960 |
| | 220 |
|
| Core deposits to total deposits | 90.0 |
| | 88.6 |
| | 87.9 |
| | (210 | ) | | (70 | ) |
| Investment securities to total assets | 22.8 |
| | 23.3 |
| | 23.1 |
| | 30 |
| | (20 | ) |
6 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.
Highlights in balance sheet items as of June 30, 2017 were the following:
| |
| ▪ | C&I loans (which include traditional C&I, asset-based lending, payroll finance, warehouse lending, factored receivables, equipment financing and public sector finance loans) represented 45.1%, commercial real estate loans represented 43.3%, consumer and residential mortgage loans combined represented 9.4%, and acquisition, development and construction loans represented 2.2% of the total loan portfolio. Loan growth was driven by our commercial banking teams and the GE portfolio of restaurant franchise loans acquired in September 2016. |
| |
| ▪ | Commercial loan growth, which includes all C&I loans, commercial real estate and acquisition, development and construction loans, was $1.6 billion for the twelve months ended June 30, 2017. Commercial loan growth was $477.1 million relative to the linked quarter. |
| |
| ▪ | Mortgage warehouse lending balances were $687.7 million at June 30, 2017, an increase of $201.3 million, or 41.4%, compared to March 31, 2017. |
| |
| ▪ | Aggregate exposure to taxi medallion relationships was $48.6 million, which represented 0.48% of total loans as of June 30, 2017, a decline of $3.0 million from $51.7 million as of December 31, 2016. The decline was due to repayments. |
| |
| ▪ | Total deposits at June 30, 2017 increased $251.0 million, or 2.4%, compared to March 31, 2017, and increased $717.2 million, or 7.3%, over June 30, 2016. The increase in deposits was mainly due to growth in commercial deposits. |
| |
| ▪ | Core deposits at June 30, 2017 increased $143.8 million, compared to March 31, 2017. The increase was mainly due to growth in commercial deposits. Core deposits increased $421.7 million, or 4.8%, over June 30, 2016.6 |
| |
| ▪ | Municipal deposits were $1.3 billion and decreased by $94.3 million relative to the linked quarter. Municipal deposits experience seasonal lows in the second quarter. |
| |
| ▪ | Total retail and commercial deposits increased by $248.2 million relative to the linked quarter, which represented an annualized growth rate of 13.2%. |
| |
| ▪ | Investment securities increased by $135.8 million relative to the linked quarter, and represented 23.1% of total assets. The company intends to maintain a proportion of investment securities to total assets of 23.0% to 25.0% in anticipation of the Astoria merger. |
Credit Quality
|
| | | | | | | | | | | | | | | | | |
| ($ in thousands) | For the three months ended | | Change % / bps |
| | 6/30/2016 | | 3/31/2017 | | 6/30/2017 | | Y-o-Y | | Linked Qtr |
| Provision for loan losses | $ | 5,000 |
| | $ | 4,500 |
| | $ | 4,500 |
| | (10.0 | )% | | — | % |
| Net charge-offs | 2,149 |
| | 1,183 |
| | 1,288 |
| | (40.1 | ) | | 8.9 |
|
| Allowance for loan losses | 55,865 |
| | 66,939 |
| | 70,151 |
| | 25.6 |
| | 4.8 |
|
| Non-performing loans | 79,564 |
| | 72,924 |
| | 71,351 |
| | (10.3 | ) | | (2.2 | ) |
| Net charge-offs annualized | 0.10 | % | | 0.05 | % | | 0.05 | % | | (5 | ) | | — |
|
| Allowance for loan losses to total loans | 0.65 |
| | 0.69 |
| | 0.69 |
| | 4 |
| | — |
|
| Allowance for loan losses to non-performing loans | 70.2 |
| | 91.8 |
| | 98.3 |
| | 2,810 |
| | 650 |
|
Provision for loan losses was $4.5 million for the second quarter of 2017 compared to $4.5 million in the linked quarter and $5.0 million in the same period a year ago. In the second quarter of 2017, provision for loan losses was $3.2 million in excess of net charge-offs of $1.3 million. Allowance coverage ratios were 0.69% of total loans and 98.3% of non-performing loans at June 30, 2017. Non-performing loans decreased by $1.6 million to $71.4 million at June 30, 2017.
Aggregate exposure to taxi medallion relationships as of June 30, 2017 was $48.6 million. This represented a decrease of $1.1 million relative to the linked quarter as a result of repayments.
Capital
|
| | | | | | | | | | | | | | | | | |
| ($ in thousands, except share and per share data) | As of | | Change % / bps |
| | 6/30/2016 | | 3/31/2017 | | 6/30/2017 | | Y-o-Y | | Three months |
| Total stockholders’ equity | $ | 1,735,994 |
| | $ | 1,888,613 |
| | $ | 1,931,383 |
| | 11.3 | % | | 2.3 | % |
| Goodwill and intangible assets | 769,125 |
| | 760,698 |
| | 758,484 |
| | (1.4 | ) | | (0.3 | ) |
| Tangible stockholders’ equity | $ | 966,869 |
| | $ | 1,127,915 |
| | $ | 1,172,899 |
| | 21.3 |
| | 4.0 |
|
| Common shares outstanding | 130,620,463 |
| | 135,604,435 |
| | 135,658,226 |
| | 3.9 |
| | — |
|
| Book value per share | $ | 13.29 |
| | $ | 13.93 |
| | $ | 14.24 |
| | 7.1 |
| | 2.2 |
|
Tangible book value per share7 | 7.40 |
| | 8.32 |
| | 8.65 |
| | 16.9 |
| | 4.0 |
|
Tangible equity to tangible assets7 | 7.86 | % | | 8.12 | % | | 8.02 | % | | 16 |
| | (10 | ) |
| Estimated Tier 1 leverage ratio - Company | 8.36 |
| | 8.89 |
| | 8.72 |
| | 36 |
| | (17 | ) |
| Estimated Tier 1 leverage ratio - Bank | 8.84 |
| | 8.99 |
| | 8.89 |
| | 5 |
| | (10 | ) |
7 See a reconciliation of this non-GAAP financial measure on page 16.
The increase in stockholders’ equity of $42.8 million to $1.9 billion as of June 30, 2017 compared to March 31, 2017 was mainly due to net income of $42.4 million. Also contributing to the increase was a decline in accumulated other comprehensive loss of $7.4 million due to an increase in the fair value of our available for sale securities portfolio. Stock-based compensation activity increased stockholders’ equity by $2.5 million. These increases were partially offset by declared dividends of $9.5 million.
Total goodwill and other intangible assets were $758.5 million at June 30, 2017, a decrease of $2.2 million compared to March 31, 2017, which was due to amortization of intangibles.
For the quarter ended June 30, 2017, basic and diluted weighted average common shares outstanding increased to 135.3 million and 135.9 million, respectively, compared to 135.2 million and 135.8 million, respectively, for the quarter ended March 31, 2017. The increase in the diluted weighted average shares was mainly due to option exercises and grants to newly hired personal. Total common shares outstanding at June 30, 2017 were approximately 135.7 million.
Tangible book value per share7 was $8.65 at June 30, 2017, which represented an increase of 16.9% over a year ago.
Conference Call Information
Sterling Bancorp will host a teleconference and webcast on Wednesday, July 26, 2017 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) 352-6809, Conference ID #2247191. A replay of the teleconference can be accessed through the Company’s website.
About Sterling Bancorp
Sterling Bancorp, whose principal subsidiary is Sterling National Bank, specializes in the delivery of service and solutions to business owners, their families and consumers within the communities it serves 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 obtain regulatory approvals and meet other closing conditions to the merger with Astoria on the expected terms and schedule; delay in closing the Astoria merger; difficulties and delays in integrating Astoria’s business or fully realizing cost savings and other benefits; business disruption following the Astoria transaction; to grow revenues faster than we grow expenses, 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; including our ability to effectively deploy recently raised capital; customer disintermediation; and the success of Sterling Bancorp in managing those risks. Other factors that could cause Sterling Bancorp’s actual results to differ from those indicated in forward-looking statements are included in the “Risk Factors” section of Sterling Bancorp’s filings with the Securities and Exchange Commission. The forward-looking statements speak only as of the date they are made and we undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.
Financial information contained in this release should be considered to be an estimate pending the filing with the Securities and Exchange Commission of the Company’s Quarterly Report on Form 10-Q for the three months ended June 30, 2017. 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)
|
| | | | | | | | | | | |
| | 6/30/2016 | | 12/31/2016 | | 6/30/2017 |
| Assets: | | | | | |
| Cash and cash equivalents | $ | 258,326 |
| | $ | 293,646 |
| | $ | 282,167 |
|
| Investment securities | 2,980,059 |
| | 3,118,838 |
| | 3,552,176 |
|
| Loans held for sale | 57,249 |
| | 41,889 |
| | — |
|
| Portfolio loans: | | | | | |
| Commercial and industrial | 3,639,169 |
| | 4,171,950 |
| | 4,619,789 |
|
| Commercial real estate | 3,782,659 |
| | 4,144,018 |
| | 4,430,985 |
|
| Acquisition, development and construction | 207,868 |
| | 230,086 |
| | 223,713 |
|
| Residential mortgage | 673,208 |
| | 697,108 |
| | 692,562 |
|
| Consumer | 291,391 |
| | 284,068 |
| | 265,268 |
|
| Total portfolio loans, gross | 8,594,295 |
| | 9,527,230 |
| | 10,232,317 |
|
| Allowance for loan losses | (55,865 | ) | | (63,622 | ) | | (70,151 | ) |
| Total portfolio loans, net | 8,538,430 |
| | 9,463,608 |
| | 10,162,166 |
|
| Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank Stock, at cost | 102,855 |
| | 135,098 |
| | 160,241 |
|
| Accrued interest receivable | 35,106 |
| | 43,319 |
| | 47,548 |
|
| Premises and equipment, net | 60,797 |
| | 57,318 |
| | 57,794 |
|
| Goodwill | 696,600 |
| | 696,600 |
| | 696,600 |
|
| Other intangibles | 72,525 |
| | 66,353 |
| | 61,884 |
|
| Bank owned life insurance | 196,665 |
| | 199,889 |
| | 202,911 |
|
| Other real estate owned | 16,590 |
| | 13,619 |
| | 10,198 |
|
| Other assets | 50,046 |
| | 48,270 |
| | 142,991 |
|
| Total assets | $ | 13,065,248 |
| | $ | 14,178,447 |
| | $ | 15,376,676 |
|
| Liabilities: | | | | | |
| Deposits | $ | 9,785,556 |
| | $ | 10,068,259 |
| | $ | 10,502,710 |
|
| FHLB borrowings | 1,074,492 |
| | 1,791,000 |
| | 2,290,000 |
|
| Other borrowings | 28,202 |
| | 16,642 |
| | 122,596 |
|
| Senior notes | 99,099 |
| | 76,469 |
| | 76,635 |
|
| Subordinated notes | 108,161 |
| | 172,501 |
| | 172,607 |
|
| Mortgage escrow funds | 14,283 |
| | 13,572 |
| | 16,431 |
|
| Other liabilities | 219,461 |
| | 184,821 |
| | 264,314 |
|
| Total liabilities | 11,329,254 |
| | 12,323,264 |
| | 13,445,293 |
|
| Stockholders’ equity: | | | | | |
| Common stock | 1,367 |
| | 1,411 |
| | 1,411 |
|
| Additional paid-in capital | 1,503,027 |
| | 1,597,287 |
| | 1,592,299 |
|
| Treasury stock | (69,355 | ) | | (66,188 | ) | | (61,576 | ) |
| Retained earnings | 290,025 |
| | 349,308 |
| | 415,617 |
|
| Accumulated other comprehensive income (loss) | 10,930 |
| | (26,635 | ) | | (16,368 | ) |
| Total stockholders’ equity | 1,735,994 |
| | 1,855,183 |
| | 1,931,383 |
|
| Total liabilities and stockholders’ equity | $ | 13,065,248 |
| | $ | 14,178,447 |
| | $ | 15,376,676 |
|
| |
|
| | | | |
| Shares of common stock outstanding at period end | 130,620,463 |
| | 135,257,570 |
| | 135,658,226 |
|
| Book value per share | $ | 13.29 |
| | $ | 13.72 |
| | $ | 14.24 |
|
Tangible book value per share1 | 7.40 |
| | 8.08 |
| | 8.65 |
|
1 See reconciliation of non-GAAP financial measures beginning on page 16.
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 |
| | 6/30/2016 | | 3/31/2017 | | 6/30/2017 | | 6/30/2016 | | 6/30/2017 |
| Interest and dividend income: | | | | | | | | | |
| Loans and loan fees | $ | 96,658 |
| | $ | 104,570 |
| | $ | 111,840 |
| | $ | 185,692 |
| | $ | 216,410 |
|
| Securities taxable | 10,662 |
| | 12,282 |
| | 13,113 |
| | 22,678 |
| | 25,395 |
|
| Securities non-taxable | 5,871 |
| | 7,618 |
| | 7,791 |
| | 9,750 |
| | 15,409 |
|
| Other earning assets | 1,118 |
| | 1,530 |
| | 1,519 |
| | 2,195 |
| | 3,049 |
|
| Total interest and dividend income | 114,309 |
| | 126,000 |
| | 134,263 |
| | 220,315 |
| | 260,263 |
|
| Interest expense: | | | | | | | | | |
| Deposits | 8,328 |
| | 9,508 |
| | 10,905 |
| | 14,737 |
| | 20,413 |
|
| Borrowings | 5,601 |
| | 7,702 |
| | 10,100 |
| | 11,688 |
| | 17,802 |
|
| Total interest expense | 13,929 |
| | 17,210 |
| | 21,005 |
| | 26,425 |
| | 38,215 |
|
| Net interest income | 100,380 |
| | 108,790 |
| | 113,258 |
| | 193,890 |
| | 222,048 |
|
| Provision for loan losses | 5,000 |
| | 4,500 |
| | 4,500 |
| | 9,000 |
| | 9,000 |
|
| Net interest income after provision for loan losses | 95,380 |
| | 104,290 |
| | 108,758 |
| | 184,890 |
| | 213,048 |
|
| Non-interest income: | | | | | | | | | |
| Accounts receivable / factoring commissions and other fees | 4,156 |
| | 3,769 |
| | 4,137 |
| | 8,650 |
| | 7,906 |
|
| Mortgage banking income | 2,367 |
| | 271 |
| | 130 |
| | 4,369 |
| | 401 |
|
| Deposit fees and service charges | 4,084 |
| | 3,335 |
| | 3,249 |
| | 8,574 |
| | 6,584 |
|
| Net gain (loss) on sale of securities | 4,474 |
| | (23 | ) | | (230 | ) | | 4,191 |
| | (253 | ) |
| Bank owned life insurance | 1,281 |
| | 1,370 |
| | 1,652 |
| | 2,608 |
| | 3,022 |
|
| Investment management fees | 934 |
| | 231 |
| | 323 |
| | 2,058 |
| | 554 |
|
| Other | 3,146 |
| | 3,883 |
| | 4,357 |
| | 5,422 |
| | 8,240 |
|
| Total non-interest income | 20,442 |
| | 12,836 |
| | 13,618 |
| | 35,872 |
| | 26,454 |
|
| Non-interest expense: | | | | | | | | | |
| Compensation and benefits | 31,336 |
| | 31,391 |
| | 31,394 |
| | 61,356 |
| | 62,785 |
|
| Stock-based compensation plans | 1,747 |
| | 1,736 |
| | 1,897 |
| | 3,287 |
| | 3,633 |
|
| Occupancy and office operations | 8,810 |
| | 8,134 |
| | 8,833 |
| | 18,092 |
| | 16,967 |
|
| Amortization of intangible assets | 3,241 |
| | 2,229 |
| | 2,187 |
| | 6,294 |
| | 4,416 |
|
| FDIC insurance and regulatory assessments | 2,300 |
| | 1,888 |
| | 2,034 |
| | 4,558 |
| | 3,922 |
|
| Other real estate owned, net | 541 |
| | 1,676 |
| | 112 |
| | 1,123 |
| | 1,788 |
|
| Merger-related expenses | — |
| | 3,127 |
| | 1,766 |
| | 266 |
| | 4,893 |
|
| Charge for asset write-downs, retention and severance | — |
| | — |
| | 603 |
| | 2,485 |
| | 603 |
|
| Loss on extinguishment of borrowings | — |
| | — |
| | — |
| | 8,716 |
| | — |
|
| Other | 11,665 |
| | 10,169 |
| | 10,831 |
| | 22,394 |
| | 21,000 |
|
| Total non-interest expense | 59,640 |
| | 60,350 |
| | 59,657 |
| | 128,571 |
| | 120,007 |
|
| Income before income tax expense | 56,182 |
| | 56,776 |
| | 62,719 |
| | 92,191 |
| | 119,495 |
|
| Income tax expense | 18,412 |
| | 17,709 |
| | 20,319 |
| | 30,655 |
| | 38,028 |
|
| Net income | $ | 37,770 |
| | $ | 39,067 |
| | $ | 42,400 |
| | $ | 61,536 |
| | $ | 81,467 |
|
| Weighted average common shares: | | | | | | | | | |
| Basic | 130,081,465 |
| | 135,163,347 |
| | 135,317,866 |
| | 129,953,397 |
| | 135,241,034 |
|
| Diluted | 130,688,729 |
| | 135,811,721 |
| | 135,922,897 |
| | 130,522,021 |
| | 135,867,861 |
|
| Earnings per common share: | | | | | | | | | |
| Basic earnings per share | $ | 0.29 |
| | $ | 0.29 |
| | $ | 0.31 |
| | $ | 0.47 |
| | $ | 0.60 |
|
| Diluted earnings per share | 0.29 |
| | 0.29 |
| | 0.31 |
| | 0.47 |
| | 0.60 |
|
| 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 | 6/30/2016 | | 9/30/2016 | | 12/31/2016 | | 3/31/2017 | | 6/30/2017 |
| Total assets | $ | 13,065,248 |
| | $ | 13,617,228 |
| | $ | 14,178,447 |
| | $ | 14,659,337 |
| | $ | 15,376,676 |
|
Tangible assets 1 | 12,296,123 |
| | 12,851,370 |
| | 13,415,494 |
| | 13,898,639 |
| | 14,618,192 |
|
| Securities available for sale | 1,613,013 |
| | 1,417,617 |
| | 1,727,417 |
| | 1,941,671 |
| | 2,095,872 |
|
| Securities held to maturity | 1,367,046 |
| | 1,380,100 |
| | 1,391,421 |
| | 1,474,724 |
| | 1,456,304 |
|
| Portfolio loans | 8,594,295 |
| | 9,168,741 |
| | 9,527,230 |
| | 9,763,967 |
| | 10,232,317 |
|
| Goodwill | 696,600 |
| | 696,600 |
| | 696,600 |
| | 696,600 |
| | 696,600 |
|
| Other intangibles | 72,525 |
| | 69,258 |
| | 66,353 |
| | 64,098 |
| | 61,884 |
|
| Deposits | 9,785,556 |
| | 10,197,253 |
| | 10,068,259 |
| | 10,251,725 |
| | 10,502,710 |
|
| Municipal deposits (included above) | 1,184,231 |
| | 1,551,147 |
| | 1,270,921 |
| | 1,391,221 |
| | 1,297,244 |
|
| Borrowings | 1,309,954 |
| | 1,451,526 |
| | 2,056,612 |
| | 2,328,576 |
| | 2,661,838 |
|
| Stockholders’ equity | 1,735,994 |
| | 1,765,160 |
| | 1,855,183 |
| | 1,888,613 |
| | 1,931,383 |
|
Tangible equity 1 | 966,869 |
| | 999,302 |
| | 1,092,230 |
| | 1,127,915 |
| | 1,172,899 |
|
| Quarterly Average Balances | | | | | | | | | |
| Total assets | 12,700,038 |
| | 13,148,201 |
| | 13,671,676 |
| | 14,015,953 |
| | 14,704,793 |
|
Tangible assets 1 | 11,929,107 |
| | 12,380,448 |
| | 12,907,133 |
| | 13,253,877 |
| | 13,944,946 |
|
| Loans, gross: | | | | | | | | | |
| Commercial real estate (includes multi-family) | 3,694,162 |
| | 3,823,853 |
| | 3,963,216 |
| | 4,190,817 |
| | 4,396,281 |
|
| Acquisition, development and construction | 197,489 |
| | 215,798 |
| | 224,735 |
| | 237,451 |
| | 251,404 |
|
| Commercial and industrial: | | | | | | | | | |
| Traditional commercial and industrial | 1,229,473 |
| | 1,274,194 |
| | 1,383,013 |
| | 1,410,354 |
| | 1,497,005 |
|
Asset-based lending2 | 636,383 |
| | 640,931 |
| | 700,285 |
| | 713,438 |
| | 737,039 |
|
Payroll finance2 | 187,887 |
| | 162,938 |
| | 218,365 |
| | 217,031 |
| | 225,080 |
|
Warehouse lending2 | 301,882 |
| | 404,156 |
| | 551,746 |
| | 379,978 |
| | 430,312 |
|
Factored receivables2 | 183,051 |
| | 200,471 |
| | 231,554 |
| | 184,859 |
| | 181,499 |
|
Equipment financing2 | 630,922 |
| | 652,531 |
| | 586,078 |
| | 595,751 |
| | 660,404 |
|
Public sector finance2 | 226,929 |
| | 350,244 |
| | 361,339 |
| | 370,253 |
| | 441,456 |
|
| Total commercial and industrial | 3,396,527 |
| | 3,685,465 |
| | 4,032,380 |
| | 3,871,664 |
| | 4,172,795 |
|
| Residential mortgage | 729,685 |
| | 727,304 |
| | 729,834 |
| | 700,934 |
| | 697,441 |
|
| Consumer | 295,666 |
| | 292,088 |
| | 287,267 |
| | 280,650 |
| | 268,502 |
|
Loans, total3 | 8,313,529 |
| | 8,744,508 |
| | 9,267,290 |
| | 9,281,516 |
| | 9,786,423 |
|
| Securities (taxable) | 2,032,518 |
| | 1,838,775 |
| | 1,789,553 |
| | 2,016,752 |
| | 2,142,168 |
|
| Securities (non-taxable) | 837,133 |
| | 1,098,933 |
| | 1,183,857 |
| | 1,256,906 |
| | 1,292,367 |
|
| Other interest earning assets | 375,244 |
| | 333,622 |
| | 325,581 |
| | 334,404 |
| | 341,895 |
|
| Total earning assets | 11,558,424 |
| | 12,015,838 |
| | 12,566,281 |
| | 12,889,578 |
| | 13,562,853 |
|
| Deposits: | | | | | | | | | |
| Non-interest bearing demand | 3,059,562 |
| | 3,196,204 |
| | 3,217,156 |
| | 3,177,448 |
| | 3,185,506 |
|
| Interest bearing demand | 2,016,365 |
| | 2,107,669 |
| | 2,116,708 |
| | 1,950,332 |
| | 1,973,498 |
|
| Savings (including mortgage escrow funds) | 809,123 |
| | 827,647 |
| | 798,090 |
| | 797,386 |
| | 816,092 |
|
| Money market | 3,056,188 |
| | 3,174,536 |
| | 3,395,542 |
| | 3,681,962 |
| | 3,725,257 |
|
| Certificates of deposit | 620,759 |
| | 609,438 |
| | 633,526 |
| | 579,487 |
| | 584,996 |
|
| Total deposits and mortgage escrow | 9,561,997 |
| | 9,915,494 |
| | 10,161,022 |
| | 10,186,615 |
| | 10,285,349 |
|
| Borrowings | 1,304,442 |
| | 1,324,001 |
| | 1,517,482 |
| | 1,799,204 |
| | 2,313,992 |
|
| Stockholders’ equity | 1,711,902 |
| | 1,751,414 |
| | 1,805,790 |
| | 1,869,085 |
| | 1,913,933 |
|
Tangible equity 1 | 940,971 |
| | 983,661 |
| | 1,041,247 |
| | 1,107,009 |
| | 1,154,086 |
|
| | | | | | | | | | |
1 See a reconciliation of this non-GAAP financial measure on page 16. |
2 Asset-based lending, payroll finance, warehouse lending, factored receivables, equipment finance and public sector finance comprise our commercial finance loan portfolio. |
3 Includes loans held for sale, but 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 | 6/30/2016 | | 9/30/2016 | | 12/31/2016 | | 3/31/2017 | | 6/30/2017 |
| Basic earnings per share | $ | 0.29 |
| | $ | 0.29 |
| | $ | 0.31 |
| | $ | 0.29 |
| | $ | 0.31 |
|
| Diluted earnings per share | 0.29 |
| | 0.29 |
| | 0.31 |
| | 0.29 |
| | 0.31 |
|
Adjusted diluted earnings per share, non-GAAP 1 | 0.27 |
| | 0.29 |
| | 0.30 |
| | 0.31 |
| | 0.33 |
|
| Dividends declared per share | 0.07 |
| | 0.07 |
| | 0.07 |
| | 0.07 |
| | 0.07 |
|
| Book value per share | 13.29 |
| | 13.49 |
| | 13.72 |
| | 13.93 |
| | 14.24 |
|
Tangible book value per share1 | 7.40 |
| | 7.64 |
| | 8.08 |
| | 8.32 |
| | 8.65 |
|
| Shares of common stock o/s | 130,620,463 |
| | 130,853,673 |
| | 135,257,570 |
| | 135,604,435 |
| | 135,658,226 |
|
| Basic weighted average common shares o/s | 130,081,465 |
| | 130,239,193 |
| | 132,271,761 |
| | 135,163,347 |
| | 135,317,866 |
|
| Diluted weighted average common shares o/s | 130,688,729 |
| | 130,875,614 |
| | 132,995,762 |
| | 135,811,721 |
| | 135,922,897 |
|
| Performance Ratios (annualized) | | | | | | | | | |
| Return on average assets | 1.20 | % | | 1.13 | % | | 1.19 | % | | 1.13 | % | | 1.16 | % |
| Return on average equity | 8.87 | % | | 8.50 | % | | 9.03 | % | | 8.48 | % | | 8.89 | % |
Return on average tangible assets, as reported 1 | 1.27 | % | | 1.20 | % | | 1.26 | % | | 1.20 | % | | 1.22 | % |
Return on average tangible equity, as reported 1 | 16.14 | % | | 15.13 | % | | 15.66 | % | | 14.31 | % | | 14.74 | % |
Return on average tangible assets, as adjusted 1 | 1.19 | % | | 1.21 | % | | 1.23 | % | | 1.27 | % | | 1.28 | % |
Return on average tangible equity, as adjusted 1 | 15.14 | % | | 15.28 | % | | 15.27 | % | | 15.19 | % | | 15.43 | % |
Efficiency ratio, as adjusted 1 | 47.19 | % | | 45.76 | % | | 43.35 | % | | 43.73 | % | | 41.97 | % |
| Analysis of Net Interest Income | | | | | | | | | |
| Accretion income on acquired loans | $ | 4,088 |
| | $ | 4,381 |
| | $ | 4,504 |
| | 3,482 |
| | $ | 2,888 |
|
| Yield on loans | 4.68 | % | | 4.57 | % | | 4.49 | % | | 4.57 | % | | 4.58 | % |
Yield on investment securities - tax equivalent 2 | 2.76 | % | | 2.74 | % | | 2.81 | % | | 2.97 | % | | 2.93 | % |
Yield on interest earning assets - tax equivalent 2 | 4.09 | % | | 4.03 | % | | 4.02 | % | | 4.09 | % | | 4.09 | % |
| Cost of interest bearing deposits | 0.52 | % | | 0.54 | % | | 0.53 | % | | 0.55 | % | | 0.62 | % |
| Cost of total deposits | 0.35 | % | | 0.37 | % | | 0.36 | % | | 0.38 | % | | 0.43 | % |
| Cost of borrowings | 1.73 | % | | 1.75 | % | | 1.72 | % | | 1.74 | % | | 1.75 | % |
| Cost of interest bearing liabilities | 0.72 | % | | 0.74 | % | | 0.74 | % | | 0.79 | % | | 0.89 | % |
Net interest rate spread - tax equivalent basis 2 | 3.37 | % | | 3.29 | % | | 3.28 | % | | 3.30 | % | | 3.20 | % |
| Net interest margin - GAAP basis | 3.49 | % | | 3.41 | % | | 3.40 | % | | 3.42 | % | | 3.35 | % |
Net interest margin - tax equivalent basis 2 | 3.60 | % | | 3.53 | % | | 3.52 | % | | 3.55 | % | | 3.47 | % |
| Capital | | | | | | | | | |
Tier 1 leverage ratio - Company 3 | 8.36 | % | | 8.31 | % | | 8.95 | % | | 8.89 | % | | 8.72 | % |
Tier 1 leverage ratio - Bank only 3 | 8.84 | % | | 8.72 | % | | 9.08 | % | | 8.99 | % | | 8.89 | % |
Tier 1 risk-based capital ratio - Bank only 3 | 10.70 | % | | 10.42 | % | | 10.87 | % | | 10.79 | % | | 10.67 | % |
Total risk-based capital ratio - Bank only 3 | 12.37 | % | | 12.66 | % | | 13.06 | % | | 12.95 | % | | 12.76 | % |
Tangible equity to tangible assets - Company 1 | 7.86 | % | | 7.78 | % | | 8.14 | % | | 8.12 | % | | 8.02 | % |
| Condensed Five Quarter Income Statement | | | | | | | | | |
| Interest and dividend income | $ | 114,309 |
| | $ | 118,161 |
| | $ | 123,075 |
| | $ | 126,000 |
| | $ | 134,263 |
|
| Interest expense | 13,929 |
| | 15,031 |
| | 15,827 |
| | 17,210 |
| | 21,005 |
|
| Net interest income | 100,380 |
| | 103,130 |
| | 107,248 |
| | 108,790 |
| | 113,258 |
|
| Provision for loan losses | 5,000 |
| | 5,500 |
| | 5,500 |
| | 4,500 |
| | 4,500 |
|
| Net interest income after provision for loan losses | 95,380 |
| | 97,630 |
| | 101,748 |
| | 104,290 |
| | 108,758 |
|
| Non-interest income | 20,442 |
| | 19,039 |
| | 16,057 |
| | 12,836 |
| | 13,618 |
|
| Non-interest expense | 59,640 |
| | 62,256 |
| | 57,072 |
| | 60,350 |
| | 59,657 |
|
| Income before income tax expense | 56,182 |
| | 54,413 |
| | 60,733 |
| | 56,776 |
| | 62,719 |
|
| Income tax expense | 18,412 |
| | 16,991 |
| | 19,737 |
| | 17,709 |
| | 20,319 |
|
| Net income | $ | 37,770 |
| | $ | 37,422 |
| | $ | 40,996 |
| | $ | 39,067 |
| | $ | 42,400 |
|
| | | | | | | | | | |
1 See a reconciliation of non-GAAP financial measures beginning on page 16. |
2 Tax equivalent basis 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 | 6/30/2016 | | 9/30/2016 | | 12/31/2016 | | 3/31/2017 | | 6/30/2017 |
| Balance, beginning of period | $ | 53,014 |
| | $ | 55,865 |
| | $ | 59,405 |
| | $ | 63,622 |
| | $ | 66,939 |
|
| Provision for loan losses | 5,000 |
| | 5,500 |
| | 5,500 |
| | 4,500 |
| | 4,500 |
|
Loan charge-offs1: | | | | | | | | | |
| Traditional commercial & industrial | (429 | ) | | (570 | ) | | (219 | ) | | (687 | ) | | (164 | ) |
| Payroll finance | (28 | ) | | — |
| | — |
| | — |
| | — |
|
| Factored receivables | (792 | ) | | (60 | ) | | (267 | ) | | (296 | ) | | (12 | ) |
| Equipment financing | (572 | ) | | (377 | ) | | (576 | ) | | (471 | ) | | (610 | ) |
| Commercial real estate | (100 | ) | | (630 | ) | | (225 | ) | | (83 | ) | | (944 | ) |
| Multi-family | (18 | ) | | (399 | ) | | — |
| | — |
| | — |
|
| Acquisition development & construction | — |
| | — |
| | — |
| | — |
| | (22 | ) |
| Residential mortgage | (209 | ) | | (338 | ) | | (274 | ) | | (158 | ) | | (120 | ) |
| Consumer | (532 | ) | | (259 | ) | | (313 | ) | | (114 | ) | | (417 | ) |
| Total charge offs | (2,680 | ) | | (2,633 | ) | | (1,874 | ) | | (1,809 | ) | | (2,289 | ) |
Recoveries of loans previously charged-off1: | | | | | | | | | |
| Traditional commercial & industrial | 153 |
| | 381 |
| | 152 |
| | 139 |
| | 523 |
|
| Asset-based lending | 46 |
| | — |
| | — |
| | 3 |
| | 1 |
|
| Payroll finance | 28 |
| | — |
| | — |
| | — |
| | — |
|
| Factored receivables | 17 |
| | 10 |
| | 10 |
| | 16 |
| | 2 |
|
| Equipment financing | 102 |
| | 123 |
| | 227 |
| | 140 |
| | 146 |
|
| Commercial real estate | 53 |
| | 111 |
| | 168 |
| | 2 |
| | 98 |
|
| Acquisition development & construction | 104 |
| | — |
| | — |
| | 136 |
| | 133 |
|
| Residential mortgage | 1 |
| | — |
| | 1 |
| | 149 |
| | 10 |
|
| Consumer | 27 |
| | 48 |
| | 33 |
| | 41 |
| | 88 |
|
| Total recoveries | 531 |
| | 673 |
| | 591 |
| | 626 |
| | 1,001 |
|
| Net loan charge-offs | (2,149 | ) | | (1,960 | ) | | (1,283 | ) | | (1,183 | ) | | (1,288 | ) |
| Balance, end of period | $ | 55,865 |
| | $ | 59,405 |
| | $ | 63,622 |
| | $ | 66,939 |
| | $ | 70,151 |
|
| Asset Quality Data and Ratios | | | | | | | | | |
| Non-performing loans (“NPLs”) non-accrual | $ | 79,036 |
| | $ | 77,794 |
| | $ | 77,163 |
| | $ | 72,136 |
| | $ | 70,416 |
|
| NPLs still accruing | 528 |
| | 3,273 |
| | 1,690 |
| | 788 |
| | 935 |
|
| Total NPLs | 79,564 |
| | 81,067 |
| | 78,853 |
| | 72,924 |
| | 71,351 |
|
| Other real estate owned | 16,590 |
| | 16,422 |
| | 13,619 |
| | 9,632 |
| | 10,198 |
|
| Non-performing assets (“NPAs”) | $ | 96,154 |
| | $ | 97,489 |
| | $ | 92,472 |
| | $ | 82,556 |
| | $ | 81,549 |
|
| Loans 30 to 89 days past due | $ | 18,653 |
| | $ | 17,683 |
| | $ | 15,100 |
| | $ | 15,611 |
| | $ | 15,070 |
|
| Net charge-offs as a % of average loans (annualized) | 0.10 | % | | 0.09 | % | | 0.06 | % | | 0.05 | % | | 0.05 | % |
| NPLs as a % of total loans | 0.93 |
| | 0.88 |
| | 0.83 |
| | 0.75 |
| | 0.70 |
|
| NPAs as a % of total assets | 0.74 |
| | 0.72 |
| | 0.65 |
| | 0.56 |
| | 0.53 |
|
| Allowance for loan losses as a % of NPLs | 70.2 |
| | 73.3 |
| | 80.7 |
| | 91.8 |
| | 98.3 |
|
| Allowance for loan losses as a % of total loans | 0.65 |
| | 0.65 |
| | 0.67 |
| | 0.69 |
| | 0.69 |
|
| Special mention loans | $ | 103,710 |
| | $ | 101,784 |
| | $ | 104,569 |
| | $ | 110,832 |
| | $ | 102,996 |
|
| Substandard loans | 125,571 |
| | 112,551 |
| | 95,152 |
| | 101,496 |
| | 97,476 |
|
| Doubtful loans | 330 |
| | 932 |
| | 442 |
| | 902 |
| | 895 |
|
| | | | | | | | | | |
1 There were no charge-offs or recoveries on warehouse lending or public sector finance loans during the periods presented. |
| |
Sterling Bancorp and Subsidiaries
QUARTERLY YIELD TABLE
(unaudited, in thousands, except share and per share data)
|
| | | | | | | | | | | | | | | | | | | | | |
| | For the Quarter Ended |
| | March 31, 2017 | | June 30, 2017 |
| | Average
balance | | Interest | | Yield/Rate | | Average
balance | | Interest | | Yield/Rate |
| | (Dollars in thousands) |
| Interest earning assets: | | | | | | | | | | | |
| Traditional C&I and commercial finance loans | $ | 3,871,664 |
| | $ | 48,237 |
| | 5.05 | % | | $ | 4,172,795 |
| | $ | 52,580 |
| | 5.05 | % |
| Commercial real estate (includes multi-family) | 4,190,817 |
| | 43,186 |
| | 4.18 |
| | 4,396,281 |
| | 45,930 |
| | 4.19 |
|
| Acquisition, development and construction | 237,451 |
| | 3,125 |
| | 5.34 |
| | 251,404 |
| | 3,317 |
| | 5.29 |
|
| Commercial loans | 8,299,932 |
| | 94,548 |
| | 4.62 |
| | 8,820,480 |
| | 101,827 |
| | 4.63 |
|
| Consumer loans | 280,650 |
| | 3,132 |
| | 4.53 |
| | 268,502 |
| | 3,073 |
| | 4.59 |
|
| Residential mortgage loans | 700,934 |
| | 6,890 |
| | 3.93 |
| | 697,441 |
| | 6,940 |
| | 3.98 |
|
Total gross loans 1 | 9,281,516 |
| | 104,570 |
| | 4.57 |
| | 9,786,423 |
| | 111,840 |
| | 4.58 |
|
| Securities taxable | 2,016,752 |
| | 12,282 |
| | 2.47 |
| | 2,142,168 |
| | 13,113 |
| | 2.46 |
|
| Securities non-taxable | 1,256,906 |
| | 11,720 |
| | 3.73 |
| | 1,292,367 |
| | 11,986 |
| | 3.71 |
|
| Interest earning deposits | 210,800 |
| | 254 |
| | 0.49 |
| | 195,004 |
| | 302 |
| | 0.62 |
|
| FHLB and Federal Reserve Bank stock | 123,604 |
| | 1,276 |
| | 4.19 |
| | 146,891 |
| | 1,217 |
| | 3.32 |
|
| Total securities and other earning assets | 3,608,062 |
| | 25,532 |
| | 2.87 |
| | 3,776,430 |
| | 26,618 |
| | 2.83 |
|
| Total interest earning assets | 12,889,578 |
| | 130,102 |
| | 4.09 |
| | 13,562,853 |
| | 138,458 |
| | 4.09 |
|
| Non-interest earning assets | 1,126,375 |
| | | | | | 1,141,940 |
| | | | |
| Total assets | $ | 14,015,953 |
| | | | | | $ | 14,704,793 |
| | | | |
| Interest bearing liabilities: | | | | | | | | | | | |
Demand and savings2 deposits | $ | 2,747,718 |
| | $ | 3,186 |
| | 0.47 |
| | $ | 2,789,590 |
| | $ | 3,875 |
| | 0.56 |
|
| Money market deposits | 3,681,962 |
| | 4,944 |
| | 0.54 |
| | 3,725,257 |
| | 5,510 |
| | 0.59 |
|
| Certificates of deposit | 579,487 |
| | 1,378 |
| | 0.96 |
| | 584,996 |
| | 1,520 |
| | 1.04 |
|
| Total interest bearing deposits | 7,009,167 |
| | 9,508 |
| | 0.55 |
| | 7,099,843 |
| | 10,905 |
| | 0.62 |
|
| Senior notes | 76,497 |
| | 1,141 |
| | 6.05 |
| | 76,580 |
| | 1,142 |
| | 5.98 |
|
| Other borrowings | 1,550,183 |
| | 4,212 |
| | 1.10 |
| | 2,064,840 |
| | 6,608 |
| | 1.28 |
|
| Subordinated notes | 172,524 |
| | 2,349 |
| | 5.45 |
| | 172,572 |
| | 2,350 |
| | 5.45 |
|
| Total borrowings | 1,799,204 |
| | 7,702 |
| | 1.74 |
| | 2,313,992 |
| | 10,100 |
| | 1.75 |
|
| Total interest bearing liabilities | 8,808,371 |
| | 17,210 |
| | 0.79 |
| | 9,413,835 |
| | 21,005 |
| | 0.89 |
|
| Non-interest bearing deposits | 3,177,448 |
| | | | | | 3,185,506 |
| | | | |
| Other non-interest bearing liabilities | 161,049 |
| | | | | | 191,519 |
| | | | |
| Total liabilities | 12,146,868 |
| | | | | | 12,790,860 |
| | | | |
| Stockholders’ equity | 1,869,085 |
| | | | | | 1,913,933 |
| | | | |
| Total liabilities and stockholders’ equity | $ | 14,015,953 |
| | | | | | $ | 14,704,793 |
| | | | |
Net interest rate spread 3 | | | | | 3.30 | % | | | | | | 3.20 | % |
Net interest earning assets 4 | $ | 4,081,207 |
| | | | | | $ | 4,149,018 |
| | | | |
| Net interest margin - tax equivalent | | | 112,892 |
| | 3.55 | % | | | | 117,453 |
| | 3.47 | % |
| Less tax equivalent adjustment | | | (4,102 | ) | | | | | | (4,195 | ) | | |
| Net interest income | | | $ | 108,790 |
| |
| | | | $ | 113,258 |
| | |
| Ratio of interest earning assets to interest bearing liabilities | 146.3 | % | | | | | | 144.1 | % | | | | |
1 Average balances include loans held for sale 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, 2016 | | June 30, 2017 |
| | Average
balance | | Interest | | Yield/Rate | | Average
balance | | Interest | | Yield/Rate |
| | (Dollars in thousands) |
| Interest earning assets: | | | | | | | | | | | |
| Traditional C&I and commercial finance loans | $ | 3,396,527 |
| | $ | 42,935 |
| | 5.08 | % | | $ | 4,172,795 |
| | $ | 52,580 |
| | 5.05 | % |
| Commercial real estate (includes multi-family) | 3,694,162 |
| | 40,733 |
| | 4.43 |
| | 4,396,281 |
| | 45,930 |
| | 4.19 |
|
| Acquisition, development and construction | 197,489 |
| | 2,538 |
| | 5.17 |
| | 251,404 |
| | 3,317 |
| | 5.29 |
|
| Commercial loans | 7,288,178 |
| | 86,206 |
| | 4.76 |
| | 8,820,480 |
| | 101,827 |
| | 4.63 |
|
| Consumer loans | 295,666 |
| | 3,391 |
| | 4.61 |
| | 268,502 |
| | 3,073 |
| | 4.59 |
|
| Residential mortgage loans | 729,685 |
| | 7,061 |
| | 3.87 |
| | 697,441 |
| | 6,940 |
| | 3.98 |
|
Total gross loans 1 | 8,313,529 |
| | 96,658 |
| | 4.68 |
| | 9,786,423 |
| | 111,840 |
| | 4.58 |
|
| Securities taxable | 2,032,518 |
| | 10,662 |
| | 2.11 |
| | 2,142,168 |
| | 13,113 |
| | 2.46 |
|
| Securities non-taxable | 837,133 |
| | 9,032 |
| | 4.32 |
| | 1,292,367 |
| | 11,986 |
| | 3.71 |
|
| Interest earning deposits | 272,426 |
| | 258 |
| | 0.38 |
| | 195,004 |
| | 302 |
| | 0.62 |
|
| FHLB and Federal Reserve Bank stock | 102,818 |
| | 860 |
| | 3.36 |
| | 146,891 |
| | 1,217 |
| | 3.32 |
|
| Total securities and other earning assets | 3,244,895 |
| | 20,812 |
| | 2.58 |
| | 3,776,430 |
| | 26,618 |
| | 2.83 |
|
| Total interest earning assets | 11,558,424 |
| | 117,470 |
| | 4.09 |
| | 13,562,853 |
| | 138,458 |
| | 4.09 |
|
| Non-interest earning assets | 1,141,614 |
| | | | | | 1,141,940 |
| | | | |
| Total assets | $ | 12,700,038 |
| | | | | | $ | 14,704,793 |
| | | | |
| Interest bearing liabilities: | | | | | | | | | | | |
Demand and savings2 deposits | $ | 2,825,488 |
| | $ | 2,835 |
| | 0.40 |
| | $ | 2,789,590 |
| | $ | 3,875 |
| | 0.56 |
|
| Money market deposits | 3,056,188 |
| | 4,152 |
| | 0.55 |
| | 3,725,257 |
| | 5,510 |
| | 0.59 |
|
| Certificates of deposit | 620,759 |
| | 1,341 |
| | 0.87 |
| | 584,996 |
| | 1,520 |
| | 1.04 |
|
| Total interest bearing deposits | 6,502,435 |
| | 8,328 |
| | 0.52 |
| | 7,099,843 |
| | 10,905 |
| | 0.62 |
|
| Senior notes | 99,032 |
| | 1,478 |
| | 6.00 |
| | 76,580 |
| | 1,142 |
| | 5.98 |
|
| Other borrowings | 1,097,270 |
| | 2,642 |
| | 0.97 |
| | 2,064,840 |
| | 6,608 |
| | 1.28 |
|
| Subordinated notes | 108,140 |
| | 1,481 |
| | 5.48 |
| | 172,572 |
| | 2,350 |
| | 5.45 |
|
| Total borrowings | 1,304,442 |
| | 5,601 |
| | 1.73 |
| | 2,313,992 |
| | 10,100 |
| | 1.75 |
|
| Total interest bearing liabilities | 7,806,877 |
| | 13,929 |
| | 0.72 |
| | 9,413,835 |
| | 21,005 |
| | 0.89 |
|
| Non-interest bearing deposits | 3,059,562 |
| | | | | | 3,185,506 |
| | | | |
| Other non-interest bearing liabilities | 121,697 |
| | | | | | 191,519 |
| | | | |
| Total liabilities | 10,988,136 |
| | | | | | 12,790,860 |
| | | | |
| Stockholders’ equity | 1,711,902 |
| | | | | | 1,913,933 |
| | | | |
| Total liabilities and stockholders’ equity | $ | 12,700,038 |
| | | | | | $ | 14,704,793 |
| | | | |
Net interest rate spread 3 | | | | | 3.37 | % | | | | | | 3.20 | % |
Net interest earning assets 4 | $ | 3,751,547 |
| | | | | | $ | 4,149,018 |
| | | | |
| Net interest margin - tax equivalent | | | 103,541 |
| | 3.60 | % | | | | 117,453 |
| | 3.47 | % |
| Less tax equivalent adjustment | | | (3,161 | ) | | | | | | (4,195 | ) | | |
| Net interest income | | | $ | 100,380 |
| | | | | | $ | 113,258 |
| | |
| Ratio of interest earning assets to interest bearing liabilities | 148.1 | % | | | | | | 144.1 | % | | | | |
1 Average balances include loans held for sale 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/adjusted financial measures as management believes this information is useful to investors. See legend on page 19. |
| | As of and for the Quarter Ended |
| | 6/30/2016 | | 9/30/2016 | | 12/31/2016 | | 3/31/2017 | | 6/30/2017 |
| |
The following table shows the reconciliation of stockholders’ equity to tangible equity and the tangible equity ratio1: |
| | | | | | | | | | |
| Total assets | $ | 13,065,248 |
| | $ | 13,617,228 |
| | $ | 14,178,447 |
| | $ | 14,659,337 |
| | $ | 15,376,676 |
|
| Goodwill and other intangibles | (769,125 | ) | | (765,858 | ) | | (762,953 | ) | | (760,698 | ) | | (758,484 | ) |
| Tangible assets | 12,296,123 |
| | 12,851,370 |
| | 13,415,494 |
| | 13,898,639 |
| | 14,618,192 |
|
| Stockholders’ equity | 1,735,994 |
| | 1,765,160 |
| | 1,855,183 |
| | 1,888,613 |
| | 1,931,383 |
|
| Goodwill and other intangibles | (769,125 | ) | | (765,858 | ) | | (762,953 | ) | | (760,698 | ) | | (758,484 | ) |
| Tangible stockholders’ equity | 966,869 |
| | 999,302 |
| | 1,092,230 |
| | 1,127,915 |
| | 1,172,899 |
|
| Common stock outstanding at period end | 130,620,463 |
| | 130,853,673 |
| | 135,257,570 |
| | 135,604,435 |
| | 135,658,226 |
|
| Stockholders’ equity as a % of total assets | 13.29 | % | | 12.96 | % | | 13.08 | % | | 12.88 | % | | 12.56 | % |
| Book value per share | $ | 13.29 |
| | $ | 13.49 |
| | $ | 13.72 |
| | $ | 13.93 |
| | $ | 14.24 |
|
| Tangible equity as a % of tangible assets | 7.86 | % | | 7.78 | % | | 8.14 | % | | 8.12 | % | | 8.02 | % |
| Tangible book value per share | $ | 7.40 |
| | $ | 7.64 |
| | $ | 8.08 |
| | $ | 8.32 |
| | $ | 8.65 |
|
| | | | | | | | | | |
| |
The following table shows the reconciliation of reported return on average tangible equity and adjusted return on average tangible equity2: |
| | | | | | | | | | |
| Average stockholders’ equity | $ | 1,711,902 |
| | $ | 1,751,414 |
| | $ | 1,805,790 |
| | $ | 1,869,085 |
| | $ | 1,913,933 |
|
| Average goodwill and other intangibles | (770,931 | ) | | (767,753 | ) | | (764,543 | ) | | (762,076 | ) | | (759,847 | ) |
| Average tangible stockholders’ equity | 940,971 |
| | 983,661 |
| | 1,041,247 |
| | 1,107,009 |
| | 1,154,086 |
|
| Net income | 37,770 |
| | 37,422 |
| | 40,996 |
| | 39,067 |
| | 42,400 |
|
| Net income, if annualized | 151,910 |
| | 148,874 |
| | 163,093 |
| | 158,438 |
| | 170,066 |
|
| Reported return on average tangible equity | 16.14 | % | | 15.13 | % | | 15.66 | % | | 14.31 | % | | 14.74 | % |
| Adjusted net income (see reconciliation on page 17) | $ | 35,414 |
| | $ | 37,793 |
| | $ | 39,954 |
| | $ | 41,461 |
| | $ | 44,393 |
|
| Annualized adjusted net income | 142,434 |
| | 150,350 |
| | 158,947 |
| | 168,147 |
| | 178,060 |
|
| Adjusted return on average tangible equity | 15.14 | % | | 15.28 | % | | 15.27 | % | | 15.19 | % | | 15.43 | % |
| | | | | | | | | | |
The following table shows the reconciliation of reported return on tangible assets and adjusted return on tangible assets3: |
| | | | | | | | | | |
| Average assets | $ | 12,700,038 |
| | $ | 13,148,201 |
| | $ | 13,671,676 |
| | $ | 14,015,953 |
| | $ | 14,704,793 |
|
| Average goodwill and other intangibles | (770,931 | ) | | (767,753 | ) | | (764,543 | ) | | (762,076 | ) | | (759,847 | ) |
| Average tangible assets | 11,929,107 |
| | 12,380,448 |
| | 12,907,133 |
| | 13,253,877 |
| | 13,944,946 |
|
| Net income | 37,770 |
| | 37,422 |
| | 40,996 |
| | 39,067 |
| | 42,400 |
|
| Net income, if annualized | 151,910 |
| | 148,874 |
| | 163,093 |
| | 158,438 |
| | 170,066 |
|
| Reported return on average tangible assets | 1.27 | % | | 1.20 | % | | 1.26 | % | | 1.20 | % | | 1.22 | % |
| Adjusted net income (see reconciliation on page 17) | $ | 35,414 |
| | $ | 37,793 |
| | $ | 39,954 |
| | $ | 41,461 |
| | $ | 44,393 |
|
| Annualized adjusted net income | 142,434 |
| | 150,350 |
| | 158,947 |
| | 168,147 |
| | 178,060 |
|
| Adjusted return on average tangible assets | 1.19 | % | | 1.21 | % | | 1.23 | % | | 1.27 | % | | 1.28 | % |
| | | | | | | | | | |
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/adjusted financial measures as management believes this information is useful to investors. See legend on page 19. |
| | As of and for the Quarter Ended |
| | 6/30/2016 | | 9/30/2016 | | 12/31/2016 | | 3/31/2017 | | 6/30/2017 |
The following table shows the reconciliation of the reported operating efficiency ratio and adjusted operating efficiency ratio4: |
| | | | | | | | | | |
| Net interest income | $ | 100,380 |
| | $ | 103,130 |
| | $ | 107,248 |
| | $ | 108,790 |
| | $ | 113,258 |
|
| Non-interest income | 20,442 |
| | 19,039 |
| | 16,057 |
| | 12,836 |
| | 13,618 |
|
| Total net revenue | 120,822 |
| | 122,169 |
| | 123,305 |
| | 121,626 |
| | 126,876 |
|
| Tax equivalent adjustment on securities | 3,161 |
| | 3,635 |
| | 3,860 |
| | 4,102 |
| | 4,195 |
|
| Net (gain) loss on sale of securities | (4,474 | ) | | (3,433 | ) | | 102 |
| | 23 |
| | 230 |
|
| Net (gain) on sale of trust division | — |
| | — |
| | (2,255 | ) | | — |
| | — |
|
| Adjusted total net revenue | 119,509 |
| | 122,371 |
| | 125,012 |
| | 125,751 |
| | 131,301 |
|
| Non-interest expense | 59,640 |
| | 62,256 |
| | 57,072 |
| | 60,350 |
| | 59,657 |
|
| Merger-related expense | — |
| | — |
| | — |
| | (3,127 | ) | | (1,766 | ) |
| Charge for asset write-downs, retention and severance | — |
| | (2,000 | ) | | — |
| | — |
| | (603 | ) |
| Loss on extinguishment of borrowings | — |
| | (1,013 | ) | | — |
| | — |
| | — |
|
| Amortization of intangible assets | (3,241 | ) | | (3,241 | ) | | (2,881 | ) | | (2,229 | ) | | (2,187 | ) |
| Adjusted non-interest expense | 56,399 |
| | 56,002 |
| | 54,191 |
| | 54,994 |
| | 55,101 |
|
| Reported operating efficiency ratio | 49.4 | % | | 51.0 | % | | 46.3 | % | | 49.6 | % | | 47.0 | % |
| Adjusted operating efficiency ratio | 47.2 |
| | 45.8 |
| | 43.3 |
| | 43.7 |
| | 42.0 |
|
| | | | | | | | | | |
The following table shows the reconciliation of reported net income (GAAP) and adjusted net income (non-GAAP) and adjusted diluted earnings per share5: |
| | | | | | | | | | |
| Income before income tax expense | $ | 56,182 |
| | $ | 54,413 |
| | $ | 60,733 |
| | $ | 56,776 |
| | $ | 62,719 |
|
| Income tax expense | 18,412 |
| | 16,991 |
| | 19,737 |
| | 17,709 |
| | 20,319 |
|
| Net income (GAAP) | 37,770 |
| | 37,422 |
| | 40,996 |
| | 39,067 |
| | 42,400 |
|
| | | | | | | | | | |
| Adjustments: | | | | | | | | | |
| Net (gain) loss on sale of securities | (4,474 | ) | | (3,433 | ) | | 102 |
| | 23 |
| | 230 |
|
| Net (gain) on sale of trust division | — |
| | — |
| | (2,255 | ) | | — |
| | — |
|
| Merger-related expense | — |
| | — |
| | — |
| | 3,127 |
| | 1,766 |
|
| Charge for asset write-downs, retention and severance | — |
| | 2,000 |
| | — |
| | — |
| | 603 |
|
| Loss on extinguishment of borrowings | — |
| | 1,013 |
| | — |
| | — |
| | — |
|
| Amortization of non-compete agreements and acquired customer list intangible assets | 969 |
| | 970 |
| | 610 |
| | 396 |
| | 354 |
|
| Total adjustments | (3,505 | ) | | 550 |
| | (1,543 | ) | | 3,546 |
| | 2,953 |
|
| Income tax expense (benefit) | 1,149 |
| | (179 | ) | | 501 |
| | (1,152 | ) | | (960 | ) |
| Total adjustments net of taxes | (2,356 | ) | | 371 |
| | (1,042 | ) | | 2,394 |
| | 1,993 |
|
| Adjusted net income (non-GAAP) | $ | 35,414 |
| | $ | 37,793 |
| | $ | 39,954 |
| | $ | 41,461 |
| | $ | 44,393 |
|
| | | | | | | | | | |
| Weighted average diluted shares | 130,688,729 |
| | 130,875,614 |
| | 132,995,762 |
| | 135,811,721 |
| | 135,922,897 |
|
| Diluted EPS as reported (GAAP) | $ | 0.29 |
| | $ | 0.29 |
| | $ | 0.31 |
| | $ | 0.29 |
| | $ | 0.31 |
|
| Adjusted diluted EPS (non-GAAP) | 0.27 |
| | 0.29 |
| | 0.30 |
| | 0.31 |
| | 0.33 |
|
| | | | | | | | | | | |
Sterling Bancorp and Subsidiaries NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
|
| | | | | | | | |
| | | For the Six Months Ended June 30, |
| | | 2016 | | 2017 |
| | | | | |
The following table shows the reconciliation of reported net income (GAAP) and adjusted net income (non-GAAP) and adjusted diluted earnings per share5: |
| Income before income tax expense | | $ | 92,191 |
| | $ | 119,495 |
|
| Income tax expense | | 30,655 |
| | 38,028 |
|
| Net income (GAAP) | | 61,536 |
| | 81,467 |
|
| | | | | |
| Adjustments: | | | | |
| Net (gain) on sale of securities | | (4,191 | ) | | 253 |
|
| Merger-related expense | | 266 |
| | 4,893 |
|
| Charge for asset write-downs, retention and severance | | 2,485 |
| | 603 |
|
| Loss on extinguishment of borrowings | | 8,716 |
| | — |
|
| Amortization of non-compete agreements and acquired customer list intangible assets | | 1,937 |
| | 750 |
|
| Total adjustments | | 9,213 |
| | 6,499 |
|
| Income tax (benefit) | | (3,175 | ) | | (2,112 | ) |
| Total adjustments net of taxes | | 6,038 |
| | 4,387 |
|
| Adjusted net income (non-GAAP) | | $ | 67,574 |
| | $ | 85,854 |
|
| | | | | |
| Weighted average diluted shares | | 130,522,021 |
| | 135,867,861 |
|
| Diluted EPS as reported (GAAP) | | $ | 0.47 |
| | $ | 0.60 |
|
| Adjusted diluted EPS (non-GAAP) | | 0.52 |
| | 0.63 |
|
The non-GAAP / adjusted measures presented above are used by our management and 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/adjusted 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. When non-GAAP / adjusted measures are impacted by income tax expense, we present the pre-tax amount for the income and expense items that result in the non-GAAP adjustments and present the income tax expense impact at the effective tax rate in effect for the period presented.
1 Stockholders’ equity as a percentage of total assets, book value per share, tangible equity as a percentage of tangible assets and tangible book value 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 reported operating efficiency ratio is a non-GAAP measure calculated by dividing our GAAP non-interest expense by the sum of our GAAP net interest income plus GAAP non-interest income. The adjusted operating efficiency ratio is a non-GAAP measure calculated by dividing non-interest expense adjusted for intangible asset amortization and certain expenses generally associated with discrete merger transactions and non-recurring strategic plans by the sum of net interest income plus non-interest income plus the tax equivalent adjustment on securities income and elimination of the impact of gain or loss on sale of securities. 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. Historically we have imputed income tax expense on adjusted earnings at our GAAP earnings effective tax rate. Due to the adoption of a new accounting standard in the second quarter of 2017 that requires vesting of share-based compensation awards be treated as a discrete item in income tax expense, our effective tax rate for GAAP earnings decreased from our estimate for full year 2017 of 32.5% to 32.4% for the quarter ended June 30, 2017. Therefore, for purposes of calculating adjusted net income, we recognized income tax expense at our 2017 anticipated effective tax rate of 32.5%.
