STL - Earnings call transcript Q4 2018

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Operator

Good day everyone. Thank you for standing by. Welcome to the Sterling Bancorp's fourth quarter 2018 conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jack Kopnisky, President and CEO of Sterling Bancorp. sir. ahead, go Please

Jack Kopnisky

and the joining XXXX. fourth everyone our to results for quarter thanks morning us for present Good and year-end

me is Officer. call on our Joining Financial Chief Luis Massiani, the

which We presentation provides information our have on our and results. on website, detailed annual a quarter press along our release, with

asset-based the $XXX we mortgages, our and sale and of update lending fixed fourth rate XXXX million the results from this call, Bank, our progress XXXX. strong review outlook announced During for anticipated our common and previously of purchase describe in will highlight loans for National finance quarter the company, repurchase equipment highlight share residential finally, Woodforest on you

we quarter-over-quarter. basis maximize above by XXXX, revenues average And average the to continued return million, of control to million and risk. finished and over for to our was $X.X assets an balance periods was basis, earnings we leverage In common ratio in or share was return total for Operating last year. of efficiency total adjusted on decreasing quarter for for to available tangible our increase, increasing XXX%, fourth with operating XXXX increases same and representing $XXX.X $X.X periods was XX% to expenses by the evolve increases the for $X, Adjusted Adjusted fourth the XX% metrics quarter Adjusted and was returns continued year representing strong $XXX million, operating adjusted quarter. over sheet continued position. the at year million XX% a and First, be stockholders common targets equity and XX.XX%. XXX points. per on on prior was Adjusted $X.XX income respectively. net the Positive XX%.

at traditional construction loan finance, factoring public targeted increased total overall rate the originated reduced equipment increases points. increased For Commercial lending. in our an quarter, XX approximately loans We Commercial And residential loan sector increased for C&I XX%. by double-digit yields in loans loan balances development the basis basis of and and with year six balances mortgages, XX.X%. balances and in yields annualized CRE loans. improved commercial broker loan fourth mix and increased multifamily acquisition points

During deposits $X.X rate for deposit average grew loans the sale. billion the on moved with Overall quarter, loans million. growing quarter X.X% we into fixed deposits by residential basis XX%. of business an Average demand $XXX held targeted annual grew for balances

at and a to XX% certificates of deposits XX%. past favorable deposits of has We been up XX basis The over deposits, points. XX% of continue a with year XX% the demand savings, mix beta cost MMDA have XX% deposit

in and points Astoria. the core XXX for quarter to basis million in of balance sheet of change $XX.X integration financed $X by benefit strong points overall basis by margin quarter interest Expenses quarter. swap, improved an better ratio priced margin to by be will XX%. funded last stable core from from than core was yielding loans and From deposits the sale deposit sheet by With loan income. less balance the deposit mortgages, relationship The loans to as of mortgages lower we the us oriented over C&I and XXX originated ratio XX% of net fee payroll to of relative factoring enable declined a will loan CRE perspective, mix linked the margins the fees income maintain income multifamily XX.X%. continue From residential us future. of to of continue residential the transition driven you quarter with broker is and a replacing and improve loan million Fee the to interest them expect previous can loans. net that perspective, pending to The

expenses. expect We overall XXXX to expenses than XXXX be lower

overall market special cycle, is additional banking service times. the portfolio on overall we note in included XX% A the loan deck page in regarding concern portfolio estate of commercial X.XX to ratios credit debt slide regarding coverage and loan quality. of the an the our our ratios on real eight the credit Given value

secured in in feel Additionally, C&I with comfortable proven other facilities level and receivables, the portfolios. rates with against our and various advance qualified traditionally rates assets. portfolio, collateral we provide inventory We advance very of levels our

maintain approximately to generate tangible in equity to We levels million generate X.XX%. each maintain quarter continue We excess $XXX capital. of assets strong excess and of capital tangible of and common

returns. low sale balance benefits series Now rate our allow actions. December, acquired tactics approximately a and those discuss capital mortgage merger. the and loans non-strategic result residential we ratios of the exit rate billion a to these margin improve core relationship In tangible as higher funding and announced Astoria potential with position reduce fixed yielding loans net loans oriented $X.X better of We to in notably us sheet business. of risk, our rates let's interest of The sale pressure near-term on yielding replace announced the deposit we increase interest improve can have of reduce

in expect the $XXX lending and asset-based a XXXX. portfolio first We Bank. Woodforest million, National finance from equipment close of of to the quarter purchase sale the loan announced Yesterday, we

in portfolio to also quarter portfolio finance which equipment is development yield is The cash be quality of average and the and of and bankers structure, of underwrote most diligence, our due We X.X%. The the will have this a and purchases transaction. XXX reviewed several pricing of match be purchase, each structures. and loans loans first In year comfortable than the business the the portfolio many retention commercial and more over XXXX includes of to found expected ABL are close the to essentially portfolio. existing acquired the we past in officers,

share $XXX.X increase per with $XX.XX we end Lastly X.X in consideration Board million XXXX, December a XXXX, XX December total shares. Through total shares buyback repurchased a at a of price of the program share an authorized our of to average have million our weighted to of million.

opportunities meet challenging and in share share XX% with or exceed points and ratios portfolio approved greater in In environment. along and strong execute beyond, efficiency was return an greater, very on expect a return In organically fund XXXX our annual to continue ability on year growth average confident model deliver on to average we basis. or growth, than basis our will common return per We XXXX greater earnings and the assets or XXX a and or targets acquisitions. consistently we XX% in competitive tangible XX% our summary, to rate less grow are to repurchase future. program, tangible and on equity of of our

aligned of execution the reposition the in developing by these continuing productivity technology achieve sheet, to will colleagues. and strong retaining, our We teams, and continue increasing high-performance to by balance investing and centric objectives acquiring culturally client

seeking the terrific opportunities for and past constantly are thank support transform to business. colleagues want our year. to their I our shareholders, over We refine our Board and clients,

lines the let's open Now questions. for

Operator

Instructions]. [Operator

We will Haire go first with to Jefferies. Casey

Casey Haire

morning Good guys. Thanks.

Jack Kopnisky

Hi Casey.

Casey Haire

Good off well hike. first on X.XX% sell December as Obviously, quarter book the morning be, take as guys. Starting Woodforest be resi the on and to digest portfolio, will NIM you noisy as guide, the could X.XX%. that

X.XX% guys what assuming kind bake do second of then to here? then could the X.XX% in little we of Fed if your from of quarter, So and the I a is X.XX%, maybe here progression what then sort you the in and could compression hikes get waltz thereafter? just, guidance am we bit up And

Luis Massiani

Yes.

deposit the the the baking, side are in biggest deposit we continues factor to is to beta. the progress that's a how So on over of on the and component determining going performance year so that be course the

rate So the quarter you are pricing be will see beta then going get in are little in what as side that in the it's and timeframe, then have, able today, that sales based the and I about NIM and we Jack's be were perspective better don't fourth complete was to into quarter. from the well then a bit going if to be run on a and as material the quarter. we acquisitions of envision to is will there first we the That perspective the in third able talked and think to the deposit seeing fourth in relative the quarter. the benefit from a to And continues I going we quarter. first to comments, February flat bit compression release progression any on we little that from a second to to should be you first

we and we we it's of about going don't don't as And So go should be help ongoing that up. flat it's compression, then some the see to slightly think it, are be is think first be If out the continue to you sheet going to to transition think material. forward. balance to going that as quarter I there

going have we rid more a the assets of one to a of hike Fed mortgages bit estimating residential fair to are again help floating but there. extent the is out rate getting lot We

and we actions are up two pro that what be So are it the acquiring we for better floating with rate actions ends transitions taking, portfolio of than I going loan to positioned, If hikes, XX% we today. that being rate. is are think forma, the these are we

think So I quarter quarter. course think when to about the over fourth it's flat of first to the year progressively you increasing

Casey Haire

to all actually to deposits at guys That's of end high today, Okay. in deposit loan outlook, on your and and to where the then the the is with helpful. growth it loan could you stuck ratio ratio. middle to And deposit land grow deposit guide the loan at you not

deposit you grow to your loans So current are what strategy this is year? base? grow you looking the that? to let guys the Or deposit growth happy into Are

Jack Kopnisky

growth. Well, the deposit to is most relationship this key

teams allows What incentived non-relationship as structured, not to up And long-term to do we as low have the much deposits. this are our possible. way bring that they highly growth cost, pay for deposit of is So sticky deposits. in to action want us are to

core done the to at it So competitive is things priced much which more of that the market. over to pretty of time, are deposits the us on costs and transactional have and pay much have portion relationship oriented up higher the not more much and well we allows lower deposits that a frankly period for focus in

Casey Haire

lastly just front. million strip And go $X on that about $X.X loan billion to $XXX I this leaves growth Woodforest, If billion in out Okay. year. from the the or

front? holding then optimistic And pipelines you decent on a up quarter after here? are how acquisition are So the portfolio still

Jack Kopnisky

Yes.

the now side We Right economy organic this. is are of very on strong. still confident the

companies companies. We are are buying hiring other more expanding, that of lots people, seeing

So are that. confident we on

and opportunistic regardless of operate economic segments in in diverse, very a very also market, York the We environment Metropolitan large, very of New in some the beyond.

So very full. are pipelines

have continue organically. to a lot grow opportunity We of to

the then throughout confident deal, on start are good we this good loan But I the we growth to important that the very creates the that for sure, ultimate companies is is are with sense. will did guidance those continuing look year. deal diligently portfolios year, acquisitions. scrutinize the future with very and new of that guidance will opportunities, find in to this of be are early in closure flow as on on to that which it a there the Obviously, continue deals and opportunities them we with coming off to earnings are we make side. We as and comfortable numbers we makes Woodforest and very the organically in There already still the am some

Casey Haire

Thank you. Great.

Jack Kopnisky

Thank you.

Operator

next Alex And O'Neill. Sandler to go Twerdahl we will with

Alex Twerdahl

Hi. Good morning guys.

Jack Kopnisky

Alex. Good morning

Alex Twerdahl

in on to $XXX still so, you from borrowings? discussed night? funding First on the this sales to last to how ask other planning paydown security off, just plan borrowings come release are And announced wanted the if I or going is the XX? the acquisition as December wholesale Is press million you

Luis Massiani

$X.X we So sell proceeds. get mortgage, billion $X.X billion, the we of

paydown going of use portion some going to that to to portfolio. trim are the also borrowings we immediately are We securities and

of you earning see targeting to presentation, are XX% we XX% Today, securities to we are about slide at XX%. asset. composition our of If about long-term

can are securities $X.X But the down the of we also progression trim going side down. proceeds of portions borrowings. how pay from the is will mortgage funding is there you sale, to of So that the will we get billion be, the book

the trim borrow then term longer to are will million, well. We book we as securities but $XXX going

net, net for the decrease of remaining the the borrowings modeling So by you the billion relative sale. year for mortgage $X.X purposes, to can

Alex Twerdahl

pipelines organic Okay. Jack, the very And a you about full. then were talking ago minute being

first end loans know it of get there the pipeline driven pause businesses, maybe of going closings just little some is little a in I that those, a paid be Is in end the the loan get bit was compared that the of sometimes year. can immature quarter to as at quarter? last the how of at people to just so However years the nature to they rush closed your

Jack Kopnisky

you funny. It's know Alex, system the there.

a up. are So where because the have time to at year. pipelines in you that were to always is of January, then rushes this ahead banks, the model, close significantly really in All pretty build all and of everybody said, last pipelines loans this end that. year our they of challenge

So pipelines. we have good solid

larger the some bigger companies to pipeline we have really looking we do too, go taking Not bites last time this of but much, deals evolve have deals. that than bit As in opportunities too and of the being would able a are little good we are to better at year. over

And we growth loan the very are so confident in number.

Luis Massiani

slightly the and But is fourth softer quarter. than always third first second, the quarter

quarter see in lending fourth that for same definitely, average balance So the business, you always of you finance back good four you an which when years, always we dynamic in seasonality have go think is is three from are some warehouse and businesses. perspective very those about the factoring, payroll years,

not And seeing fourth ongoing and good. continued you then in quarter start pickup second, First as is third quarter. and

don't end balances this by of deal, uptick different perspective period enjoy will average from in $XXX is are million closed and we we we be So here to perspective, going any an an the that a are February that's that getting balance driven the that see to things going from nice one but Woodforest acquisition. about also year good that envision of

get in first to it good So quarter. done the

Alex Twerdahl

definitely just Is go that talk million going quarter? in additional much release Okay. are $X $X the about definite buybacks finally, pretty to press And then million first number the the you first you a in in quarter. that of

Jack Kopnisky

It's five million. million not shares, $X

million five yes, for shares. plan it's our That's our And So first quarter. that's target. the

Luis Massiani

which like Unless the thing. stock a goes to $XX, would be good

Alex Twerdahl

$XX. my value, That's all Really questions. good

Jack Kopnisky

Exactly. That's right.

Luis Massiani

Alex. Thanks

Jack Kopnisky

Thank you.

Operator

next Bishop Dave with go will We FIG Partners. to

Dave Bishop

Good Hi. gentlemen. morning

Jack Kopnisky

Hi Dave.

Dave Bishop

Jack, terms and pricing away they review that very credit comfortable in wrong, if their to I and about think portfolio your sounds you were structure in hear of did underwriting how able of am I in like the Woodforest preamble, correct terms portfolio. it came XXX% that you me of

through Just us walk maybe that process?

Jack Kopnisky

this, this actually in Yes. cycle re-underwrote Actually, did way loans. we the we the all

did looked the the more returns, and risk-adjusted of So actual we at, the side underwriting and of but pricing credit the loans importantly obviously this. an

have we are and we So they pieces. how are those comfortable what that and all marked

The other is this, national a side bank. of Woodforest

have fund business. regulators by a or non-bank. portfolio this from than private So been had different is They this a a little have bit buying a scrutinized equity since they

the way So look they credit other more at they we maybe have are in some the that than standardized portfolios past. looked at in

Dave Bishop

in sort commercial end? that is And it. these question. deposits Any more it's spots the I tough. from get customers success that Got know past, just been to still that mining acknowledged focus? change from it Is in these here? on acquisitions? finance of a Or Any a of deposits the bright that holistic tough have you

Jack Kopnisky

each the particular the portfolios. types of On We have to a been accounts nature them. just a from pretty getting And of have getting on the balances have of finance pretty we operating because been pretty relationship. deposits about But acquired thinner companies. we of tend equipment broader of churn on from direct successful fairly similarly have basis about successful ABL, loans, getting successful been about you those

in So group we percentage although off was lower this able companies. job a our those to teams do good one because number treasury they base, and in task but a highest solutions being year increase deposit ABL the to a Actually of done our of I bring that. have growth, management deposit to of think past

Dave Bishop

some me be terms here, of briefly to good it be puts commercial some low, first hear. the the in of there's touched then you to terms think to question. seasonality of I Got the tend I Luis, it. quarter in and know which tend segments. seasonally Remind pulls funding? of And in That's earlier which upon seasonally higher

Luis Massiani

be pickup the some When will that, with rolls away winter business up flat Yes. and picking going late lowest starting spring and low warehouse then those portfolio of start see you C&I, stay balance payroll than in again. million Seasonally always the in And lines, organic the rest transaction in loans and that's much average a stay when then those but an decrease it Other first should the traditional from finance, lending an this and quarter. balances some, nice goes first the you will around, their then have line. Other we closed the nice to should on quarter. in lines equipment assuming pretty lending first there will in asset-based pickup factoring, average quarter are finance. And pickup will flat XX, $XXX perspective, relatively uptick the of to quarter. approximately have ABL stay, get you in a that February see a commercial than

Dave Bishop

And commercial it. of or market, environment are some pricing year? I where Got the real your peers to relative getting bit on opportunities terms many bit niches there know XXXX estate have segment little of or to in a structure the more the of in then optimistic a known terms more you that pricing Any this grow and there. little

Jack Kopnisky

We actually year. good in loans pretty a had CRE growth last

I they actually multifamily They weren't the relates on XX%. the They to were client. think mostly relationship broker with you were runoff. originated It they up have have focused all loans. And non-multifamily.

of we different of on what loans in niches to you are are the are certain to They markets. side own. do relationships is their loan on They price to there find So clients market example Those deposit appropriately. stand XX where because thing. relationship the have priced with the that have this the deals all appropriate time holistic that can where, clients several for XX

more about the of holistic of less CRE, client relationship and type the category we about bit it's little view have. the a it's So the the of

CRE. from successes lot owner-occupied a office warehouse, we in So everything to of have found

the Metropolitan about is, CRE and right and in one structures can you the pick risk great pick kind that deals relationship have choose you of do not. frankly So and say being that things New and to components again, deals and of no returns in York can adjusted

just we like, have credit adjusted broker a we standpoint. from get things more trying multifamily So are deals of of this a the to difficult. it's risk price over out originating overall are But again, trying from standpoint. from types They returns as just over and great get company tough thing, return, are said to a

alternatives to the other are there relationship. we So based broader and structure the how deal do, on

Dave Bishop

then final just The the question. color. in That's XX is waiting Got it. one statements that past XX good of of financial pickup And year these loan, for loans? to renew due, to end sort

Jack Kopnisky

is process one decent that us credit of government the There credit of down. about related uptick XX% that's sized actually that is in to that a represents Mostly. related paying

are are we referring be that to, rest highlighted of our press it's of in the exactly payoffs. what are process releases, about that that of the up we is as loans, So in just renew relatively concerned should And shortly which cleaned you here. and the then majority loans is

we at don't no, see this perspective from rest the of point. decreased, NPLs OREO And the look delinquency credits, when at decreased. we any So trends the concerns of the

quickly. is being have being recently, which experience and estate We coming performance out actually are NPLs relatively well. real And actually to, are continuing loans as continue worked that into quickly worked to relatively out good is

signs we there. some to that see from positive So continue perspective,

Dave Bishop

the for Thanks Great. color.

Jack Kopnisky

you. Thank

Luis Massiani

you. Thank

Operator

with to Austin Stephens. Nicholas We next will go

Austin Nicholas

guys. Hi morning. Good

Jack Kopnisky

Good morning.

Austin Nicholas

of resi we remaining what expect can after in the the remind you should the portfolio from mortgage remaining on just portfolio? runoff us Maybe sale,

Jack Kopnisky

of and $XXX in what $XXX runoff of we see should in XXXX. you on quarter seeing third XXXX, another million million Based to are fourth

range. that, be going what's that of three pretty or of $XXX two But rates, happens consistent the based for higher end million now with that's think quarters. been on it's to that I at

XXXX. that's we So to in that think persist going

Austin Nicholas

it. yields, there? just the color looking look at down for maybe Got And quarter? the then you then they C&I first expectations yields traditional were as And Any quarter-over-quarter. those to

Jack Kopnisky

and decrease about think a we only we of loan commercial a it's side had And prepayment a related activity reference had what other businesses estate. real the business. also some commercial lending some in It's and not you Yes. commercial that, do it. on when of Lots had associated mix prepayment And asset-based in our of prepayment actually penalties. we activity, C&I with

will majority floating increase you what exactly been be and rate if the side on adjust was vast which do actually a the know thought of what performance it for you yield have So would in it we is, would the is that, quarter-over-quarter. we C&I

Fed yields to yields an that that in some in business rate continue more on then think hike, I one you net loan is should in over you environment to volatility be going line So to see net loan can rate commercial and the there item, that envision this uptick but be we overall commercial those in XXXX. if C&I continue commercial with lines

Austin Nicholas

continue and Is last still one Got by And that down branches the consolidate it. Thanks. one. low-XXs plan to then just to get XXXX? it to number

Jack Kopnisky

is. There

closed So seven we We another or eight branches are down to XXX. quarter. fourth in the

middle down the We the financial it Astoria now first centers much end going taking to from potentially branches March the of that to XXs the we we still call the are the XXX the, estate working I to consolidating met are when continue had intention low strategy it in announced to and the XX. will one The to where to be that be component is going we and about have by closer deal as low-XXXs. XXXX, of is we do, of will continue XXXX real we below highlighted goal our were out in to we innings

Austin Nicholas

Understood. Thanks questions. taking my for

Jack Kopnisky

you. Thank

Operator

And we KBW. Collyn will go Gilbert next with to

Collyn Gilbert

morning guys. Good Thanks.

Jack Kopnisky

Good morning Collyn.

Collyn Gilbert

question. Luis, just first a quick

to be the million provided blended talking that know you, from assuming that are Woodforest, what accretion on portfolio guys yield you to blended the you that, what funding but $XXX the get about? NIM are are cost commercial you On I

Luis Massiani

the X%. X.X%, well cost blended X%. is

Collyn Gilbert

be about this provision, or That's be it I marked get we portfolio Does helpful. apologize, the right? need does -- should to okay. providing you get, X%, how no? Like, And thinking then would

Luis Massiani

processing kind the and their It's system, we a it's given an guess business that of acquiring asset are I platform, But combination. people origination purchase.

not a are buying company. we So

purposes, will business We asset would. the GAAP But purchase. for that the through same accounting loans are buying accounted for get combination way an this

going are goodwill. generate we some So to see, will this

to We and management fair And on with due risk very front diligence time the was a lot spent to will portfolio before, Jack alluding lengthy the a value. credit we mark as process. of

we mark a same. got portfolio at and right we good accounting are be going a But So different value on finance than place perspective. million. going marked $XXX will have confident it. we we business this this, The from a be very we to be if commercial have the the It's that no fair have to it's would have acquired for

Collyn Gilbert

share is? Okay. the what mark Can you with us

Luis Massiani

that very Advantage, potential, that We the credit face issue with no that mark. are and we have on every we this taken to and not it's mark are have We is we any nature would good similar we confident disclosing given there that done to the we of deals, But a good and near-term a underwrote portfolio the portfolio conservative in other. have info. one the mark, what NewStar

Jack Kopnisky

as at look a the what these is, quality the combination So of you are we and mark. things price the paying credit

All factors And XX% least we of a the XX% all, the generally doing range to things. a always sausage these all it's these combination things. So it put maker at have deals, winning into of through IRR. XX% those exceeded these

consideration. all things take we into those So

Collyn Gilbert

and the for curious, just background a it commercial selling came guess it's finance and am is funding I Okay. on bit what's entities a right of bank, are have as unique, already cited, together this then seems you how restraints. reasoning a little make because I the of they given sense behind this I a maybe to business? disposing guess guys this But

Luis Massiani

to the size. of size business overall Relative the

of business composition the to size So the relative and the overall relative bank. size of

want commercial happens don't when or business, So a we the what exactly happened right. and lines outgrows size the here, company business especially times starts for that acquired that and folks to I NewStar I past on what have portfolio but many balance sheet speak and for size the we to it's think institution. here. similar And what the in The size typically Woodforest over, that's billion bank, $XXX seen finance about overall the is $X what it asset million finance

to more classes And so that of have represents business of when you with a relative we diversified much in of different business, that you that think proportion our the it. bunch commercial will proportion see asset the finance our portfolio a about ABL

for platform do it's But that's don't They for always growing to doing with happens business it. versus larger them. our that want deals, the and the doing sales history business, easier originating development and incumbent in continue have personnel and here So reasons the usually the their they speak if wants originations continue officers of obviously these one the to want of business that us have that things even that to capacity the funding we a organization. balance, larger to

Collyn Gilbert

from off the just Okay. the provision so then book selling That's -- resi helpful. And you remind then mortgage can Luis, I think you impact but said it us, before,

Luis Massiani

impact a Yes. It's have on not going to big it.

way $XX the XX which The going have interest five risk that on next the dynamic. been change mark been and those value have a was anyway had going major we that requirement, expense. GAAP only that driver full the a not and had we tail very focusing them, guiding is we continue we again to being tail quarters. long a that the to to get rid works accounting all that's of. had would was year loans, number rate it this CECL, to provisioning portfolio so carrying bogey. to But then on been The probably years from million That's the the given last four for with the million why or same perspective, are long and to So $XX quarter the that XX for provisioning

purposes, is to going shouldn't modeling sale. decrease provision So the substantially given for the assume you that

Collyn Gilbert

it. Got

deck, a Okay. as provided that the seem on side. the I have they by run And that, guide fee Is That's still am that's little on probably to in feel guess. consolidations. job anything going I to And guess else driven then got pointed to especially of have number? be I comfortable that center that side, I lot great the move done expense you the banking through continued it on slide aggressive, I expense there helpful. expense Is a just assuming guys correct? and the model. you more you out, is a going

Luis Massiani

think I Well, twofold. I think it's twofold. it's

you that in on you to for fourth decrease the the quarter. release, think so to have expense earnings have, big the data we seen third alluded pretty I a the processing as

full the August. in completed and So IT integration systems

that we full had expense So of operating a yet. haven't benefit year

to will year an from So of when ongoing. the are have, IT of annual you integration, be are the XXXX progression guiding the new rate we run OpEx first going perspective, full systems

of financial course consolidated over we So the years. centers the

in you locations. the closed benefit get of So XXXX having full those

You get headquarters building. sold having benefit full of the Lake Success the

You full or dynamic. consolidation the see benefit the of start get to ongoing you benefit the

a those So savings then and of impact bit you XXXX snowball a the or year cost the impact XXXX savings. generated of a is that we waterfall have little of over first full course

with reinvesting in said, that Now we are also the business.

going are be folks. active hiring We to in

We IT infrastructure. continuing invest be our are to in in active going to

are going maintained in constant OpEx $XXX saves. there, we rate our our deck slide continue So as put that today to guidance million. about And is run we there generating we because have

and investment some we the that side deemphasizing and into that grow digital and on going banking are banking infrastructure commercial to have. We to make continue of the traditional going are that redeploy retail the IT brick-and-mortar things continuing and we the we to

are we confident million, $XXX very the about. So

on a that and as our a the earnings very commercial banking investments the a we put had good have side. are release, offshoots made we we in we fee income side side, income businesses out quarter. fee of ancillary lot fourth the On But from that have

event swap are business driven or business originations Our loan those business, new and forth. so all with syndication participations loan loan or

feel to And we we well the in So given But going amount. seeing that we Every about in are have that in then generate $XXX pipelines made, these as very quarter, we able enough XXXX. building, X we are are to investment low-end from have that invested steady-state. income not we initiatives the place the good that side in we confident meaningful generate we million that bogey provided there. being that have growth feel

Collyn Gilbert

super have. then you can are and and still so a aligned a here rate just growth That's you EPS to rate great. talked we that's have what generate XXXX? growth managing And guys have continue going That's know deliver currently about Should Jack that I that the model talked helpful. about finally, in Okay. to with profile you assume XX% that you XX% is profitability EPS you

Jack Kopnisky

Yes.

Luis Massiani

Yes.

Collyn Gilbert

Okay. That's Thanks all I guys. had.

Jack Kopnisky

you. Thank

Luis Massiani

Thank you.

Operator

[Operator Instructions].

Breese We with Jaffray. Piper next Matthew will to go

Matthew Breese

morning everybody. Good

Jack Kopnisky

Good morning Matt.

Matthew Breese

I I the cut go me please hope I long, just last if a questions. and on off. more am few queue I have too in

Luis Massiani

now, of As are. you

Jack Kopnisky

are. You right. That's

Matthew Breese

as net think you loan the couple borrowings a down through just clarity year. So think plan reduction balance the you was I said billion for being Luis, sale being deal, I questions. on on the $X.X $X.X what's And put of about and billion. the

prior portfolio million down So does securities be $XXX consistent would that comments? imply with that your

Luis Massiani

Yes. Correct.

Matthew Breese

And so what's the on? the yield securities on coming

Luis Massiani

X.X%. About

Matthew Breese

X.X%.

Okay. then clarifying question. Casey's back going And the other to question is

organically? target assumed can Or So that Woodford growth is remaining be the in there is that $X.X accomplished a deal, deal the with $X to there? the billion, another bogey, billion

Jack Kopnisky

accomplished organically. can It be

Matthew Breese

And the expectation? is that

Jack Kopnisky

Yes. kind may and done some be dynamics risk-adjusted than says now see that there things we that the organically. we better opportunities, of returns up find as can switch it can accomplished portfolio be toggle organically. are right but have we Again, we find that can of wherever we as the be But has drawn confident But this a right this organically. of we the that that

Matthew Breese

how next teams bolstered. us along many have so investments can I which Okay. know And the you been some been my that loans? has they have the way, there you part segues in-house is, remind do of into question just originating

And and originations for terms both it matured? teams, are give deposits of and targeted what many an are the so you us those loans just how that, on with update can

Jack Kopnisky

Yes.

or we have past in year So case all segments. bolstering primarily, is or in competencies very there we is the one up total the to of where deposit us gathers company. teams good management there treasury have What very either in have for lenders year our the XX over had added the that more we way, we specific has done form, are shape teams have deposit gathers a and/or in for

some tend as a these the are in teams. works know, confident cases some geographically some how model by cases through teams driven, focused cases that and cases variety are very we you are ethnicities. sectors, in sub-segments focus some So industry These of on and we product, by

are we create create relationships that. with Again, So able flow clients. to they have a profitable they been how of on compensated

your So if I Matt. do. you cut answered to if use do question, to we through all sure not that the mechanisms incentive that what all that, that's am of their

Matthew Breese

So partially.

Jack Kopnisky

is me Okay. -- Tell what

Matthew Breese

to quantitative. tend we be more forward, move we As

Jack Kopnisky

So you another number. let quantitative give me

through have than more $X in in So billion we will originated loans teams. those XXXX

billion we were transportation the acquired. the to able company we actually So management $ includes originate,

the you So between originated $X And that, billion. again, also that one we have toggle paydown. is

that. refinanced, effect as have and of coming net you happen get So the paydowns out

in our product those to So continue enough ability confident originating we numbers. internally, to are achieve organically very

Luis Massiani

answered I the question.

a deposits. thinking help teams loans, I little about might bit out number teams because teams of some this So it do whole think differently, Matt, do the and you some

think are it the now business, thinking So the the that's we manage what about that That's team, you way not it, specifically how growth. we each is does about how it. loan represents, which

seeing look you are see is, what look to release, million and worth you and million we various what sector $XXX the growth the anticipate $XXX the comes about at items going that you in side. our of to progression we XXXX to If earnings of line public are have going at from

Woodforest finance million the of that $XXX and And million comes of the growth $XXX category going to business the on our the are about remaining categories, of growth. excluding commercial C&I You represent lines will and about all side to commercial businesses, multifamily. estate CRE $XXX commercial acquisition. unit including million million real broad $XXX to then remaining see

we three by billion. broad Woodforest you putting the sector, are That's offset that add to million $XXX You billion growth. of the are $XXX to That and we there see put get $X.X runoff to to worth range up items loan billion gets commercial CRE to you that going side, acquisition, the that of going residential. on public million commercial of $X in $X.X those be about billion to to $X

Matthew Breese

Perfect.

Okay. Understood.

Okay.

Luis Massiani

Hopefully, for enough you. that's quantitative

Matthew Breese

Yes.

You nailed it.

Luis Massiani

go. you There

Matthew Breese

portfolio confidence quite give quarters, many deal prior level you have or terms the you bids NDAs. talked outlook. a bit the of some outstanding you in In Jack, of those us bids, on, outstanding confidence pull-through? how Could still about color And you there? in have

Jack Kopnisky

Yes.

So how this I answer question can without going too far?

Luis Massiani

would it answer I way. this

and very criteria we have course that XXXX that that an consistent the over or at. been acquisition we think four key look to the have different things three highlighting the had I of

our is, a OCC filter and priority these very better. like Jack's to things like at of we we we regulated or when foremost, this part number First very are before, and entity one regulated much are they one look part much like, of an that is point that bank if even businesses

different underwritten of just Now into is you those of the it underwriting portfolios focus very are quality a bank do When that eligible than we that businesses. always confidence and us those gives box the find you we that on specialty types the The unregulated, start portfolio the are requirements portfolio, portfolio. what out credit whenever requirements the straying into finco, the to do. what of we similar are structuring the

of division bank. foremost, and first a So

these deals. big we pay for don't Second, premiums

in have no we premium this no raise. We are done is capital with much in very past. or required disclosing deals equity not publicly, but the It line the

confident of attractive that to premium we very be consider a this in meets can the to criteria we that being So perspective us. from the be

lines be Third, already we it. in are it has which business in to

business. are We finance in are we in and the equipment ABL

We know have looking personnel can portfolio management, with go established infrastructure and collateral personnel, of credit at. re-underwrite that in an management are there they risk what and

are can once comfortable know As own are the we market So these and us Jack of carrying mentioned, the that fair the we to to thing the and transactions classes asset be more these an have classes are and can we and third we of balance that get loans XX%. very be And have regarding asset to They these re-underwrite going well. that value that is, them. dynamic very what IRR than confident

types a So those is, are we of the we that that's like so Woodforest many criteria. things selection on is good that's and passed Woodforest all focus why we pretty why have meet on. deals those because of Deals

M&A or will our it that have are when If are head vary classes we we about that going we And those component of great. a We to and we capital that's and deal, would something about we opportunities. four don't, are taking we a use But that do will asset to gun do we We ongoing our and it size. to the be don't we a we filter how different more else. shares buyback at number opportunities talked these comes look think between patient. have

that we that were and quite we we time we think is the And that done and with for criteria I are laying some patient have lot I of a in quite all we confident been are XXXX. that demonstrated that think out very like that now. deal in a we announcing we and consistent

criteria not M&A Our to change. is going

four great. works, those that We are if too. not, when or those to And under one of fine to explore different find continue opportunities going five we that's filters and

Matthew Breese

Right.

activity on how the you And deal Do appreciate trending? is is whole updated M&A bank have on on the any that. M&A your That's whether in portfolio marketplace I Okay. radar? color front. not or

Jack Kopnisky

Well, there is lots now. of opportunities right

lot banks I in in people. said banks and are this I of more so when a buying. interest to want seen that interested times more our selling there never that have So have is few

and is period the portfolio it in it's be the price time. related the that Luis has to again timing said, the is everything deals, bank's situation. So right us. to it that case, put will on burner when right on There All for of we right time in on that. back price and a And culture, come together mentioned appropriate for a the like

that's always and to little have are a is the are than And to now back on the we front on more now. going so right bit always going look burner it But right conversations. we burner

Matthew Breese

Great.

Texas. last be my at they located to And Woodford, couple, Okay. just looking happen in

Jack Kopnisky

Woodford. Not Woodforest.

Luis Massiani

Yes.

Matthew Breese

Understood. Texas. They in located Yes. are

And so exposes and I the the sector was acquisition all you at energy what to curious if ways? in

Jack Kopnisky

Yes.

is that acquiring team actually we in the actually Detroit. So are

and Midwest where generally in is the And the which in are Detroit. cover ABL actually are adding Southwest, So they interested we Woodforest equipment capacity. and areas team

some have credits But energy-related of previously. in relates energy of as kind operating have one the It energy. of it So didn't involved deeper companies. of the coverage not we that fundamental side the are had the the spec They of Woodforest, areas this. of does some out that as equipments to benefits we are other energy-related balances types

So businesses. that's are of again, the the with and of very underwriting we if mix part comfortable

Luis Massiani

as credit a of absolutely we can marks the significant not is on. talk about conservative, areas we and energy assume portfolio But Matt, focus are when being the that component you those business. based significant it's not, bank, what based it's not business. said, based Texas did. an a this a It's Texas was not not energy a as It's Jack component but they of

Matthew Breese

Got it.

that would wanted then that Okay. look Advantage be that my necessarily be the at don't which classes portions we there anything that there one to netted folio necessarily of leads I like weren't by Is in. that that to million, you anything were And last the is, $XXX want? here? when know And asset you

Luis Massiani

about does same NewStar, it that have already it. the talked the thing that we that when we the confident fits stuff. work very Advantage, high. and did XX% and rest And done that with will we we thing same it's that But even About But we time these can you business in our the with of you with energy-related then and lines Every businesses, out as what acquire of assume origination platform about credit that done that XX%-plus we are Advantage it's here. we we do as talk NewStar. long on that focuses thing type box, not can it's business that the have same the

we drastic action this of again, have we have and going market where of not, to are component the don't book on So at it's take significant to the a component it's a place a not book. that

are We concerned from perspective. not that

Matthew Breese

Understood.

appreciate you. Thank me. you I with had. I being all patient That's Okay.

Luis Massiani

Matt. Thanks

Jack Kopnisky

else? Anything

Operator

to would no further it remarks. in are There queue. for back over questions or closing speakers to I turn today's additional any like

Jack Kopnisky

Have Yes. much for your Thank day. so a everybody. Great time. you questions great

Operator

you Thank for your conference. today's concludes participation. That

You disconnect. now may

Sterling Bancorp (STL) 24 Jan 192018 Q4 Earnings call transcript