SBT - Earnings call transcript Q2 2018 | Sterling Bancorp, Inc. (Southfield, MI)

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Operator

Good afternoon, and welcome to the Sterling Bancorp Second 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Allyson Pooley of Financial Profiles. Please go ahead.

Allyson Pooley

good and Chad you afternoon everyone. Thank for financial results you XXXX. joining ended us Bancorp's Sterling discuss to for XX, today June Thank the quarter second

discuss us Banking Chief in of for Financial Gary results and we'll Michael be team the Tom Joining participating Retail the Chief Lending Officer the the and Officer open President and and will Commercial Lopp, and portion Chairman Tom Chief then call. CEO; are up Officer Operating Montemayor, from today and Q&A will Judd, and Gary it management questions. who your

disclaims begin remind financial Various be could from discussed actual are call to conference different would factors on website. These involves implied future of filings we or during materially Before any which the with SEC future company factors that expressed obligation any forward-looking the company's available I call. by statements. that like uncertainties. condition such you that respect forward-looking and statements to statements results any forward-looking to in results the Sterling to this made and performance company's Bancorp contains update risk the are The

most refer The the not which call supplement measures to substitute the to may the GAAP contains press GAAP website comparable of are to for intended management and Additionally measures. release other non-GAAP turn financials quantitative also to At on would the directly measures. information but available as well to non-GAAP the like time, to the reconciliation Gary. today as discuss this I over

Gary Judd

of high exceptional today. formula with discussion us and will and profitability. executed of and quality second well thank efficiency that and Allyson credit performance million that for year-over-year generate level we expense a or share. more our of broad and continue of Net level $XX This was quarter and X.XX% I'm joining management in our in the in business the The $X.XX to loan the of from then represents ROATCE model we've generate near quarter and of diluted to and high to a ROA industry continues you the activity XX% the and production, second detail. a of disciplined strong of afternoon, respectively. an Tom in an with quarter. annualized quarter We increase going everyone begin continue for second again XX.X% income Thank are good result per the brief top overview we the developed return you XX%

the demand with loan to the commercial above good our continue markets XX% platform. on sold and been origination products is We have relative was total strategy. to our our of Loan we cost investment loan would suite our the stable This ratio trends. productivity approximately $XXX were mortgage million residential to component quarter, for include loan continued our deposit our enabled including strong growth all the Total across fully in loans. When the customers you strong a of a quarter our loans and continues growth recent first of quarter key priority. increase do managing quarter loan to liquidity to that during to particularly production an X% and target loans the sales while sheet loan a our annualized for continues in of held loan of be manage loans which balance production funding our us keep annualized capitalizing our be consistent and in top our job loan for loans both held resulting reaching X% niche With for of sale. relatively

borrowing deposits. that strategically by and quarter forward with protect our needs meet time NIM growth core customers. deposit and of entirely balance utilize to ensure the our sales deposits the to growth our during grew We by million gathering, $XX continue loan going will driven continue loan our Total to we

in While deposit management. to choosing declines on money and strategic we maturities shift our and experience is our extend mix We're modest market focus in to This DDA's, liability savings primarily due accounts. Competition this we've Francisco rising the deposits influence remains across rate with our high the branch quarter network. third environment. for that markets in being LA particularly deposit and said, San started healthy

we've new region our cost particularly Consistent increase a to of areas. entrant in we opportunity deposits that and openings share think Seattle and in stronger presence there We're our growth industry recent XXXX. acceleration in the believe market generate branch trends deposit also seen market. the in our half in we with will of this as in newer greater the markets significant is expand We our relatively first

been this yields with largely to we've and our pressure most loans able to increases prime. However, assets. earning With of offset the LIBOR on in tied one-year our

We this year. this short-term of impacted are [indiscernible] increasing curve LIBOR notably many the by the with banks flattening yield

beta quarter, and relatively similar our deposit prior net from During margin beta keep were loan helped the our our interest the second unchanged which quarter.

becomes loan we However, on will believe increasing forward. price pricing, side move to we efficiency In the signs of productivity level could Tom we go more control our expense into create high loan interest operating discussion more importance focus see margin. in of continue at do Disciple some which his market of net competition detail some daily the competitive deposit a a of even for headwind as Sterling. strong critical. be and and with

targeted quarter mid-to-high second over ratio first range. quarter within points efficiency of XX.X% the basis down the was XXX Our up from the from our quarter for and second but XX% XXXX

half Looking commercial of healthy and continue estate to in our markets. to Housing second real results. opportunities positive to the continue our delivering be about optimistic year, we're the

XXXX including continued as our pickup Further demand our We loan expect our for to over record record to results second solid. see remains our be at year pipelines profitable in levels our should the our quarter. seeing, for mortgage strong second credit residential in generating support also continue are additional newer helpful With the be to the strong [indiscernible] trends to office Angeles commercial pipelines Seattle franchise an the performance that deposits In through a that solid summary, loan strong drive remain planned high and loan as and in commercial exceptional expand let growth. that high Our Sterling details call returns on operations. our Tom to efficient executing for loans another combined overview second believe our culture loan This markets on touch niche provide and and quarter we of core relationships Tom? the in seeing financial to our deposits production were will half committed on me of a into core to well year. strategy performance and we're our growth. turn Los the New our as should area based shareholders. high with as York production percentage greater back of expansion customer in

Tom Lopp

Thank you, Gary.

As where sheet through walk additional I we to sheet. warranted. some discussion the and going just income our Overall those balance and items I'm earnings were is focus on balance continued growth. with statement pleased

can't the a total measurement we key call, one of quarter-to-quarter last track expense of income percentage a generated all to although loans selling loans. Since variance due mentioned and investments loans loans this as represent XXXX, interest consistently services that our net percentage annualized there up and of from as contribution back X.X% the is of complete non-interest provides picture mortgage on income began held from our this that better non-interest performance X% that metrics the a the we from quarter. believe [ph]. the of more of of revenue basis on loans income or income sources average our in loan and interest significant We I of saw. a XXXX, average quarter's our an in we some revenue be second loans the for from timing internally in net interest portfolio we at residential net in including In first loss our X% of portion quarter metric average As have loans and annual

margin. interest Now the looking at net

of was by point yield increase the bearing interest the liabilities. in of for X.XX% in positively second quarter. basis basis earning NIM quarter in assets, increase It offset first the Our point flat cost was on XXXX impacted XX XX by but the average

Gary deposit mentioned our highly The competitive in deposit our during prime, yield the to so the primarily increases tied loans LIBOR upper or continued gathering repricing see for remains of year. our environment And to to million we [ph] cost. repricing for our of to basis portfolio which As where loans quarter. was the The and loans. would currently due on basis of we the average points average LIBOR expect to make each one-year This our XX repricing XXX these up total points. $XX loans repricing of increase LIBOR in the exceed remainder the based of expect on continues [indiscernible] monthly quarter XX% approximately stands, given number increased

the will So pricing aggressive lower increase we on likely the of to residential level see higher the rates that quarters. forward. Combined will loan in in among competitors positive remain we need order the some competitive. as average This mortgage reduce deposit compression yields lead some average increasingly likely being with of our cost of going to our in expect quarter. coming this some impact we're yields seeing our That loans to in impact loan mentioned NIM so third on Gary finding we're a initial said, to

short-term loans non-interest total deposits gain increase of primarily generate in factors amount gain portfolio loan of on a market XX.X% vary income we number of Our sale The during $X.X increased the our on gathering quarter-to-quarter $X.X levels, increase million. The was based due needs. success in quarter our the the the and to production first our to secondary quarter. million sale a will on in income including liquidity from sold from

earlier and non-interest full primarily in first and increase X.X% to full salary of revenue we March, growth. impact added was opened total We've and professional quarter in of so quarter Much million in second $XX.X increased higher expense, support the fees loan our to drive from the this Our personnel expense quarter. year. also branches the a deposit expense the salary saw effectiveness implemented to due

our that officers loan operating new expect and business increase professional. We we to quarters open continue additional as in branches higher the and expenses development will coming

growth ongoing to our corporate will back We continue our also team increase initiatives. operations office support to

the in million with even increase our respect $XX expenses quarter. as approximately We efficiency $XX within mentioned approximately to $XX reduction million our $XX XXs. this added in mid-to-high rising our ratio range our worth of targeted is an which deposits was maturities up approximately strategic million offset of in on deposits maintaining anticipate partially environment. brokered CDs increase total of the the rate noting two-year of by of our were CDs retail Gary we part quarter, in interest during With deposit, balances extending However, It and million. saw a of focus that deposit as

and estate to quarter decline fully from meaningful Moving million real assets to quarter. continue basis loans. $XX,XXX the do in to that recoveries see recoveries quarter. assets has quality, at the $X,XXX our was Non-performing We XX asset had end to of points significantly end assets residential The portfolio. any experience losses our the been due XX loan being first $X.X charge positive of the past total repaid. primarily and the metrics of subsequently of offs total during upgraded quarter or credit discussed status. any of decline large million we we performing of last basis of at fairly points $X.X due or the net in the The to We not loan

held attributable investment. Our the primarily was quarter provision for million was in the for $X.X loans to our growth loan for which losses

losses call any relatively answer that the Our Operator, basis down up loan steady may for questions the total from open end was XX of prior loss of let's have. quarter. you points for points we're the ready loans basis at two questions. With to

Operator

with question [Operator Aaron come O'Neill ahead. Sandler Instructions] the first go and from will Deer Please Partners.

Aaron Deer

seeing of you're deposit like - year and can amount with you out pipeline for sounds you're But volumes for you you had sure it's optimistic sold versus terms growth. of inflows point sense market. I'm some retain you the outlook loan I this dollar out of maybe would to what on It how terms that full through going terms give to remainder you of expect on balance might the like the how year, in kind pretty as held that, and into to secondary look at basis the expect versus sell support then a origination play in in the sheet what's on you of what start that.

Tom Lopp

Tom. half this the Aaron we I saw the similar second first quarter. is loan expect in as see trends would in in production you will the

loan in stronger strength an showing then the Although and all-time pipeline commercial renewed some high production. some should and residential is see we is

slightly would slightly imply equal, So deposit loan see inflow half say lower year. be also would thus I the quarter being the of would this second strong which than in higher far in the to that for the sales all similar things quarter QX. very we likely

Aaron Deer

about for Okay, sales. and quarter then expectation specifically third the speaking you're loan

Tom Lopp

quarter. Yes, just the third

Aaron Deer

past Do kind the year? weeks maybe to fact And already guys started what kind it catch toward of the reporting seeing pricing pressure deposit what we're pricing kind then seeing you're on higher up [ph] few side you betas given other seeing not on talk side. or you like was just Can earlier always where end the this really some higher you're to what everyone's banks? terms amongst specifically in loan that sounds respect of to deposit materially expect bit about the the well pressure the within the higher pricing the a with or market be had saying you're relative of with seeing of you both in little - SRF you're say and

Michael Montemayor

second the we that certainly in the Aaron but accelerated. feel this the have betas were two competition competition for pressure side maintain the the deposit weeks last [indiscernible] competition pretty on more our market for there's ability month over to balance few deposits as will deposits We're can increases some in to seeing quarter, pleased the for of through. continued some seemed is Michael the where on with our renewed the or come of coming sure, deposits Montemayor. The has We sheet or in quarter.

Tom Lopp

you're a far is that the think was banks a see Tom. increase their more add rate are seeing this in steady betas you that go, as seeing would the we Aaron will, some pretty what or I I if of as should not increase rapid other betas.

trends us. expect from I would similar So

Aaron Deer

the that then that's the production us Okay, you pricing. give guess, to the is average encouraging. SFR rate was currently in with quarter relatively new maybe And respect what - and on where I rate can kind of then

Michael Montemayor

I have all four total loans. the

Let find into, can I me look breakout the [indiscernible]. if for addressing

Aaron Deer

single family I production. [indiscernible] fine. that's the And mean

Michael Montemayor

as try from during help XX see the become that XXX back to which would accelerate mentioned our production have first and growth bank began the to We're the so was over we already presentation, Yes few was absolutely. increase come we to It up results more in wide, a little competitive. weeks. we up bit basis just some to and last - points But quarter. Tom

Aaron Deer

incremental Okay your guess, and would I those cost then loans? of be where funding then

Tom Lopp

as most that, month money that's our been the to put on the as we We're Well two well offerings there. most cost incremental product well range. that and as be would the getting money on the market CD as XX in X.X CD of lead money our the market,

Aaron Deer

I'll one step last back. question, And then

the quarter? were were Just what the that of loans in curious sold volume

Michael Montemayor

what we we've production competitive Well the indication, we can from much we the we end for to give last sale. sell, reasons exactly would exactly sold. don't you our how see books and total quarter disclose don't at good what you due loans from had but It for held on disclose our of

Aaron Deer

consistently Okay, - or in the on been those have has change gain that? sales the premium seen relatively you

Michael Montemayor

It's increasing very very pleased our with have rates, consistent. Aaron. steady. We've pretty Yes, been even premiums been held the

Aaron Deer

good taking my I appreciate Have terrific. guys a afternoon. question. Okay, you

Operator

ahead. next Polini Please Instructions] American Partners. the [Operator Anthony from with question go comes Capital

Anthony Polini

and be put I with the months I at it do that like XX CD sounds recent brokered would rates did most had to X.X% around One the you that question profitability. like on?

Tom Lopp

We've brokered retail. portfolio. That's CD actually lowered our

Michael Montemayor

Like $XX million.

Tom Lopp

have at CDs we balance time. relatively immaterial sheet And brokered on the this

Anthony Polini

Okay you higher. and repricing have month far heard points as I right, million as if at basis $XX loans XXX a you

Tom Lopp

year the that's for average Yes. of the remainder on Yes, correct.

Anthony Polini

you're Now competition down? resi, competitors the aggressively are which pushing that price pricing the seeing for the that on

Michael Montemayor

that between There's particular, other within in that a competitive see we focused the mainstay don't Café East and is relatively of of fair on have been think there number that competition. are but the institutions broad array a the competitors most space. [ph] we of one HSBC, markets West, I

Anthony Polini

you competition that the fact signaling Were the more the given guys especially hikes? the side renewed seems by on surprised to be couple of pricing feds a

Tom Lopp

got Yes actually given we to rising as rate, garner the of the as competition some surprised volume. were competitive

we growth. close priced volumes it, mature a on for to the think eye but that we're deposit looking keeping we're we're for So

Anthony Polini

half of have second what year? Okay, the the kind as Seattle, far expectation of should as for we

Michael Montemayor

are markets been a think on we've able competition in new we'll side. now always the in interesting ideas also surveyed and do which we good be side with have Seattle what to loan Well we for while on of Anthony, deposit both operating

So the it's open ready, first be be very our hard the expectations branch there we week on and end well, the report of deposit at we're results we'll to to we're able some inspections strong the this say But go quarter. all competitive exactly, will some if side but hoping there. have to

Tom Lopp

Yes, [indiscernible] we was in branch retail the presence with success in Anthony gathering, a the and challenging, did hiring you whereas can I deposit what add Michael presence. It open and saw volumes ultimately would a open. retail big LA that be opening first production to really that, when little difference until first that we

Anthony Polini

guide out you hope you things that's that much I the work are time flat, guys in every Okay, will good. you well. margin, down margin real stay Except pretty line. for for

Michael Montemayor

agree. We

Anthony Polini

you Thank guys.

Operator

Judd Gary remarks. This gentlemen. any for to conference question-and-answer our like to session. over back I concludes the would and Ladies turn closing

Gary Judd

appreciate joining you next Have quarter. will time. forward to great we with for look today thank we and afternoon a and speaking your Again you us

Operator

you now Thank attending conference you today's concluded. thank is sir, And presentation. for the

may You your disconnect now lines.

Sterling Bancorp, Inc. (SBT) 30 Jul 182018 Q2 Earnings call transcript