SBT - Earnings call 4 2022 | Sterling Bancorp, Inc. (Southfield, MI)

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Operator

Good morning, everyone. Thank you for joining us today to discuss Sterling Bancorp's Financial Results for the Fourth Quarter and Full Year ended December 31, 2022.

Joining us today from Sterling's management team are Tom O'Brien, Chairman, CEO and President; and Karen Knott, Chief Financial Officer and Treasurer. Tom will discuss the fourth quarter results, and then we'll open the call to your questions. .

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

intended available refer to the financial may Additionally, to website to to today well measures. information substitute GAAP which are be contains quantitative but non-GAAP for GAAP as supplement, non-GAAP management as most measures. measures, not The on the comparable reconciliation directly the other the discussed press and release the of

call I'd Tom At like to the turn to over time, Tom? O'Brien. this

Thomas O'Brien

the morning. dogged had for financial call going not of could spend release, another the last lot quarter -- time quarter Joe. loss Sterling have in in of out lot results. our to a came on a X a X share. Welcome the be have bank on the Bancorp. join small the continue Good again those to But for of note to that I awful issues lot We call The you of years mentioned that happy that quarterly per of as to in Thanks, us. lot an on. We're a to the press the present --

was as I and highlights $XXX,XXX little loss here But take go then some those through we'll the quarter. questions. in the of a kind So said, bit

margin better it made in year. was than quarter, in we the X.XX year, at the $X earlier the million. The For obviously

holding us -- tune nature most the I rates what probably subordinated level adjustable of drag on XX-or-so have to the the the side helped the is of basis rate margin points. consolidated and debt depressant of bank's at of The company a on the loans. think return liquidity a higher

finish We to governmental can't much investigation. do address we subordinated debt with the until the

tolerate along. kind we amount, see interest quarter, go we'll, just pretty go million. did but will significant expense investigations. Karen through not a to some these have So breakdown, during unfortunately, the we still buy that the And a of huge but loans as relative $XX We expense carry to you'll

the pretty investigations Asset the good. issues on to all other that note, continues and And the that should notwithstanding been the their loans, be legacy internal too, quality previously. to of we a at control the I also of low source loss advantage have issues continue have that ratio bank existed

I'm The to fairly uncertainties. is of big I question -- stable, keep as quote the kept these protect where high -- And lot be as into the Justice. the a we capital company to there, on we just mind shareholders said the don't everybody's deal sheet -- have balance are of with we the with going the ratio to a it. visibility Department its tried maintain and we sure in

end would we they It have all they to the I believe cooperate. their respect on us to information with heavily We bank, appear And the that focus think continue need. the to at is investigation individuals.

cooperation get information provide. you appreciation going. that understand where help and -- for But say say there's to have continue to I in to cooperate of an can't point that than we give I I the we might it's us We that said, don't. And more little this was hints of direction the at or as other as just into I said, We'll we guidance have the to no anything way time. they I would visibility hoping a that. that And or continue completely. in expression

everything predict of collectively do the quarter, to stretch of it's we the don't line by but have imagination. hard it's But resolved -- it's my resolution on we urgency that point. can beginnings make sometime I but respond can't any certainly sense as to I a time possible. hold resolution, known get We they again, predict going it, And hopefully, any this case as strong at very at need be this of the or think completely and a pushing least and necessarily that to quickly we to to and I forward would and do questions. said, we And quickly just that just like as

say we with tend find control I'd watch to I the just to the that, itself, here. -- the obviously continue trying a costs. evaporate margin it's challenge. maintain But we time guess, We're to So bank where opportunities and

Fortunately, last and call, quarter done the issues, as the with order from the you the we're all that, completed and we've signed know, fine. OCC consent paid

would continue to in and in taken I terms of agencies bank, the needed. we say it's wherever and transparency So provide the -- cooperation an interest that all of have

that wasn't wasn't have I as at So look on Karen no multiyear And understand, questions to misbehaved. that an who ask lot know. DOJ problem. were couple XXXX And frauds there's go as a It the Try back with uncovered, just awful back a to respect highlights of issues. that. I'll understand more continuing. I'm and financial just -- to to and too, condition about. was was to records I just should of than an concerns and through the going to person this you at it. the get that substantial much then single And all part, It ask on early incident. going a you multiyear. a in It and It guess was

you Karen, So if would?

Karen Knott

Sure.

the see going XX%, noninterest was continue talk a little still the We just expense of about we elevated So bit guess to fees. though I even to reduction I professional did see for quarter. a

stuff that's fee professional going the So all number, fees on. of both legal to and compliant that consists become expenses us million with professional help $X.X other

just X/X due to that is guess operations. number So company we these to salary it, look not probably then Same a bank And the it again, people more our normal general investigations. is being a a $X.X normalize other X/X of and I the if lot at thing bank, have. run the of of public try bad stuff and in there a other rate for BSA for we work might not benefits million. that have size although, of and line, work, That's normally

] month. recapture pool purchase of the in In as a we residential loans. book prior in terms high this have reduction been of our And the conforming balance huge wasn't a didn't it a we allowance, loan had as did quarters. big noted, Tom There jumbo [

is of sure we've worked be which through that CECL, on and everyone's -- I'm now process are mind, of most to terms we need that In really

[Audio Gap]

then auditors external that as validated to our required. controls and we'll and be by implement internal prepared and

and of accrual to payments over put a just X Tom them and consistent million. go similar quarters, noted assets, were ahead we slightly them back are we months remind are to of the just want nonperforming loans are lot on they prior And to at before paying of that and everyone, even, that upgrade down $XX.X half quarter-over-quarter status. see -- current those and

you We price as relatively month-over-month of increased. or NIM, $X came the a were deposit The can as at it stable quarter-over-quarter, deposits. the book see reduction. balance a But was able million in a little to stabilize sheet just bit

Thomas O'Brien

Okay.

value flushed couple more add liquidity -- industry rates deposits, terms the not a just or I'll the But where increase of commentary. we're high general flow I and comments and with to a a with relatively was So in here XXXX, have of period industry think long of ago in in so the probably deposits. back deposits

And have obviously, suppression more price that years earned their rates, low been for for yield. my -- a press had so demand higher institutions in couple -- interest we've I more rates consumers seen in but the of and pent-up noted pressures, release, the in some with -- quote ultra experience rates as

several had certainly I significant banks And their of increases cost in that funds. follow

dealing wisdom of we into the that think will as 'XX. with. I guess structure the 'XX And in I debt something benefits well, side things, thrown terms our the did it's we we think course subordinated as speaking I have of that helped continue we've get the on with I is deal of its to show said But there. during the cost reasonably derisking of to

I that estate got a And at in very very side criticized down the anything the terms with had several and And in The we're I there would credit. no in pressure aggressively. of worked -- no a the significant department commercial way and foreclosures, what our but characterize better for book, commercial the real there on very serious out last have clean of is credit. at a of high prices. we credit quarters, manageable nothing property been I beginning. And exposure -- We more loans, too our there. of construction type -- exposure handful those several and joined in get on the time on and construction the there really than to and attractive producing We credit risk the especially -- some delinquencies, book properties income pretty tackled bank really much levels think there much pretty the the

total million. was recall, criticized portfolio, the $XXX and so not And if bank over ago, long you classified

the very initially arrived the that exposure commercial concerned I when we I think I on I as I bank, So said, -- feel perspective -- was the from had. credit at

improving think we I 'XX and some of 'XX -- 'XX out. boats and lifted in took and earlier advantage market the got late early that

concerns pretty are, And I this the satisfied expressed think, I then at so point. back well

to questions happy some take hear we'll mind. now, So what's your and on

Operator

Hovde. [Operator here going Instructions] Gerlinger is And Ben come from our from first to question

Benjamin Gerlinger

so the Just breakdown. for of had a quick kind the more on Karen expense, question,

about for like some X/X regular in the was fees, the was BSA. investigation So you professional there -- salaries ongoing then said, and was

little -- wondering kind I more. clear could you clarify a It's was of if

done, like fall completed. now once fees So BSA the I the DOJ wane down? precipitously the then ahead. seems professional that But also off curious, is that And that is can rather go was will

Karen Knott

for we of BSA our size, Yes, I a I mean a bank have hefty pretty right, think department.

loans a of advantaged those have do still we However, system. book our on large

that that while our that time to as balance happen, think those sheet. on to it's business long -- So some down, will still eventually of book right, we for wane I going have take as

Benjamin Gerlinger

you the just core level -- much like . can like are you Can don't a where say to how at quantify? run number? potentially is off you not the it true BSA -- Or could want -- you core, like

Karen Knott

prepared Yes. I'd time, at this to to say that. haven't answer for hesitant I be

tell So you roughly in can I there's our currently. people BSA department or XX

you that a looks on $X.X like? gives So a sense bank, it billion what

Benjamin Gerlinger

fourth to today, I liquidity when then the you proved quarter a growth? about more you Sure. currently guys that's feel I lot been deposits are it, but just that, [indiscernible]. When quite bit. the this value. know, you know I Yes, of have kind in need And really shrinking whoever a And you because the a find then bit Tom, the think -- think wants industry have or to banks struggling of loan think about they referenced still? fund Or

curious CD expense appetite your your I kind for -- relative was mode deposits of the on kind still the to shrink type, of in market sheet. the you're just money on balance of

on the setting you approach you overall just of -- don't what to lose the so market? curious giving kind Just you takes Are costs? clients the of kind or you funding market are your

Thomas O'Brien

handle can Ben. that, I Yes,

goal I CDs X run that our advantage the historically bank that here. balance large of I'd to pretty group -- rate utilized higher market bank the and say, let's -- fund growth the flat, a and that's loan we're than much we to had kept off the the had We had. last sheet pretty much quarters, So think

quo there, is say challenge market not goal is status the as are much an market. historically old-line that bank I out now that the pretty We're right much and The anything. rates around and the operated so would and in pretty thrift. around -- in chasing the the

deposit And obviously, have so demand things accounts that. corporate And really DDAs, no a like didn't book. business or

a gear pretty there. money CD was or deposit much bank the market So

on marketing say, but a developed over We started had product, good -- then then there's Ben, the with X, a some last, with demand we've relative months, and basis, way to starting I'd success a have X long pretty we go. that,

-- think securities other guess And or do industry you've where a period is said, has TCE certainly we're on the diminution lower pretty the expensive. value. a as significant the long-duration Wholesale higher funding very from cases, But liquidity more in thing some seen I is at rates. I in I in rates relatively

X but So our experienced are years. I that those little noticed. that, huge things but a don't duration the issue a I've think over of is we've, some here, obviously,

Benjamin Gerlinger

you. Good. more of then Got And lastly, it a was clarification.

Odds be million $X have not it's you income won't balance that or i.e., is sheet as $X over is it asking So it's legal a -- life going it's how under, because assuming if investigations. or But not -- this it for flow exactly statement, if or works. million still under that to are the I'm the reserved doesn't correct? through adjustment

Thomas O'Brien

It won't bank? the close

Benjamin Gerlinger

No, no, a adjustment, reserved, It I'm at. net won't over have tax flow you the getting sorry. reserved whether not is will under or really through, change what

Thomas O'Brien

No, there's no fines deductible. adjustment not because penalties are and tax

that's are So million can just is the I and most get I comes $X there. in to gross net Whatever same. the mean be.

that. know So that's don't why I million, more than but it's $X

Operator

next come Our question will RLH Investments. here Ross Haberman with from

Ross Haberman

have the How CECL you want But do a and CECL defaults this looks what who to hell of do quarter? have sort historical CECL realistically I follow as pending you quarter? first work going the -- that I of liability how [indiscernible] the government is sort this like the you the CECL the adjustment make adjustment as wanted with to do guess possible delinquencies your question up up -- with given being. end knows just you reserve. last of or I to that first make the number of about

Thomas O'Brien

credit implemented, fully debit to know, a or when CECL, as Well, just you the...

Ross Haberman

The equity.

Thomas O'Brien

accounts. Equity

have say think allowance plus full have for we say CECL effect reserve -- penalties. we nothing think I significant is have to probably of amounts. we it expect significant do mean, to And impact. remaining have the I the think we I out don't obviously, it's concerns implementation. probably I I reserve safe or -- minus with and with appropriate we has fairly can insignificant the of we no that anything the the think for

Ross Haberman

given the over basis margin "Hey, XX much sort a Okay. couple And last do months, X have your the saying, up we quarters? X of affecting coming margin. next in see another than deposits quickly is of If else, in how ratcheting do XX everything question how points are about spread follow-up we see your expected." to bank the Every and that deposits up quicker just ever you older jumped and or

Thomas O'Brien

were the was in and Well, you funny greater. because obviously, I watch But the -- but the same do. and was Yes. the banks of furious it's of lot probably that a all repricing, increases us, for magnitude lag liability fast there the typical

So of felt a it lot more others. than institutions

as Honestly, 'XX are variety we to But and the ] I think case, and it painful in our 'XX that case, of risk. reduced Ross, in that liquidity any as Sterling. in -- we dealt obviously, a had been credit for, reasons building liquidity was [ unique

least dividend for So this time. I at in some us proactive think being there's at point

the about very doing, sheet, and balance will of couple way got, another a but have billion billion. our go on we liability the loan off -- But out I $X.X the can up liquidity costs I I million don't me you now. little between here, billion. a else joined The everybody know, think, $XXX is I'm increases along Karen, It's when $X.X -- portfolio, primary heavily I secondary loan around it's The And if of advantaged guess. I over was bank think portfolio. about arm-weighted $X it's correct

speeds, pay So but to that continues down. different at it --

as originated adjustables. were -- been have those of bulk the But

on some credit We date, -- should respect haven't as adjust. Ross, shocks. especially side some higher loans the haven't looked significant we've I with the -- the we with issues to at do But to [ on seen we analysis also X rates mention ], to any payment done residential continue

the of I'm third written quarter since an haven't going advantage to XXXX. say around We loan

give very all equity they're obviously, seasoned. well some are the levels And even the markets if pretty back, So very, significant.

that So from they credit less the with. everyone answer, that pays a we continue same behave one to have off to perspective, -- deal way. is And Long sorry.

Ross Haberman

with how don't you on to to are a and money them I what no, multimillion large you're in No, a -- a of to can what -- know are don't you know in, adjusting dollar just come market couple know, I X-something level? don't today, they appreciate specifically, if XXX-ish. paying when I you've I dealing or depositors X-year, Okay. that. got those markets are I say, you do guys me? for immediately on They in what they X-plus going you then Are get come and what XXX, and -- How

Thomas O'Brien

-- largest Well, those is mean, right. maintenance just mean, viewed California-based fortunately, bank, noticeable guess, gathering down cases, you to what I all I higher several pretty we they're even manageable. -- they're those but don't cost reprice. in of pretty levels. to you'd all the nurtured to I at I tell anybody had would system. looking expect margins, when that and that And I now, I the one more it have -- it's several we've and There's a I those so deposit we there modest much joined But before. no several can't were be were in retail as,

Operator

[Operator Instructions] would remarks. conference this to will session. conclude our for remaining to I And turn question-and-answer the with closing no like back Tom questions, any O'Brien over

Thomas O'Brien

Okay.

happy obviously, quickly, and to joining thank for everybody, us. Just you XXXX

quickly can you, the of time, to the resources I issues bring with I a spend and to mentioned respect As as we to bank all possible. energy close significant as earlier, assure

We will call continue a day. you. our earnings do first Have quarter 'XX look that. to good And in April. we to forward Thank

Operator

you for very presentation. Thank concluded. attending much now has conference today's The

lines. your disconnect now may You

Sterling Bancorp, Inc. (SBT) 30 Jan 232022 Q4 Earnings call transcript