MONTEBELLO, NY -- (Marketwired) -- 04/30/14 -- Sterling Bancorp (NYSE: STL)
Key Highlights for the Second Fiscal Quarter 2014
- First full fiscal quarter as the combined Sterling Bancorp (merger of legacy Provident New York Bancorp and legacy Sterling Bancorp).
- Total revenue excluding securities gains was $66.4 million.
- Tax equivalent net interest margin was 3.76%, compared to 3.58% in the linked quarter and 3.41% in the second quarter of fiscal 2013.
- Total non-interest income was $12.4 million, which represented 18.6% of total revenue.
- Core operating efficiency ratio was 62.0%.
- Annualized commercial loan growth of 17.7% over prior quarter.
- Annualized deposit growth (including municipal deposits) of 23.7% over prior quarter.
- Core return on average tangible assets was 0.85%, compared to 0.66% in the linked quarter and 0.77% in the second quarter of fiscal 2013.
- Core return on average tangible equity was 10.8%, compared to 8.6% in the linked quarter and 8.7% in the second quarter of fiscal 2013.
Sterling Bancorp (NYSE: STL), the parent company of Sterling National Bank, today announced results for the quarter and six months ended March 31, 2014. Net income for the quarter was $10.3 million, or $0.12 per diluted share, compared to net income of $6.5 million, or $0.15 per diluted share for the same quarter last year and net loss of $(14.0) million, or $(0.20) per diluted share, which included a number of merger-related expenses and other charges, for the linked quarter ended December 31, 2013. For the six months ended March 31, 2014, net loss was $(3.7) million, or $(0.05) per diluted share, compared to net income of $13.5 million, or $0.31 per diluted share for the six months ended March 31, 2013.
Results for the quarter and six months ended March 31, 2014 were impacted by pre-tax merger-related expenses associated with the legacy Sterling Bancorp merger transaction and pre-tax charges for asset write-downs and the settlement of benefit plan obligations. In total, merger-related expenses and other charges were $4.0 million in the second fiscal quarter of 2014 and $39.0 million in the six months ended March 31, 2014. Excluding the impact of these items, net income for the second fiscal quarter of 2014 was $13.2 million, or $0.16 per diluted share and net income for the six months ended March 31, 2014 was $22.7 million, or $0.29 per diluted share.
See the reconciliation of the Company's non-GAAP financial measures included in this press release beginning on page 10. Non-GAAP financial measures include references to the terms "core" or "excluding".
President's Comments
Jack Kopnisky, President and CEO, commented: "During the quarter we continued to successfully execute our strategy of building a high performance regional bank that delivers superior service to our small and middle market commercial clients and consumers. We have made significant progress in the integration of legacy Sterling Bancorp, as evidenced by our strong results in the quarter which included higher profitability, double-digit loan growth and a significant improvement in operating efficiency.
"Core earnings for the quarter were $13.2 million and core earnings per diluted share were $0.16. Our profitability ratios continued to improve; for the quarter, our core return on average tangible assets was 0.85% and core return on average tangible equity was 10.8%. This compares to 0.77% and 8.7%, respectively for the same quarter a year ago.
"We experienced strong loan growth across multiple asset classes. As of March 31, 2014, total loans including loans held for sale were $4.3 billion, which represented annualized growth of 11.4% over the prior quarter end. Focusing on our commercial portfolio, which includes commercial and industrial loans, commercial real estate loans and specialty lending businesses, commercial loan balances grew by $145.4 million to $3.4 billion, which represented annualized growth of 17.7% over the prior quarter end.
"Our funding and liquidity position remains strong and the increase in our deposit balances also highlights the success of the merger integration. As of March 31, 2014, our retail and commercial transaction, money market and savings accounts were $3.7 billion, which represented annual growth of 7.2% over balances at December 31, 2013. We have re-started our recruiting efforts and hired 11 new relationship bankers during the second quarter. We anticipate that our existing and new commercial relationship teams will continue to drive significant loan and deposit growth.
"We continue to focus on diversifying and improving our revenue mix. Non-interest income was $12.4 million for the quarter, which represented approximately 18.6% of total revenue. We continue to see significant opportunities to grow our specialty lending businesses, which we anticipate will allow us to grow fee income and increase the proportion of fee income to total revenue to approximately 20% - 25% over time.
"We have also begun to realize the anticipated cost savings from the merger. For the quarter, our core operating efficiency ratio was 62.0%, which compares to 65.4% in the linked quarter and 67.4% in the same quarter a year ago. We anticipate we will continue to improve operating efficiency as we realize the benefits of becoming a larger, more diversified company.
"Net charge-offs against the allowance for loan losses for the quarter ended March 31, 2014 were $3.4 million, compared to $1.3 million in the prior quarter. A significant portion of these charge-offs were associated with three acquisition, development and construction relationships, a portfolio we are in the process of liquidating. The allowance for loan losses to total loans, excluding loans acquired in the Gotham and legacy Sterling Bancorp transactions that were recorded at fair value at their acquisition dates and continue to carry no allowance, was 1.12%.
"Today we also announced plans to redeem all of the issued and outstanding 8.375% Cumulative Trust Preferred Securities of Sterling Bancorp Trust I on June 1, 2014, which will generate significant interest expense savings.
"Our capital position remains strong. At March 31, 2014, our tangible equity to tangible assets ratio was 7.69% and our Tier 1 leverage ratio at Sterling National Bank was 9.83%. We have ample capital and liquidity to support our growth and execute our strategy. Lastly, I am pleased to announce our Board of Directors has declared a dividend on our common stock of $0.07 per share payable on May 22, 2014 to our holders on the record date of May 12, 2014."
Net Interest Income and Margin
Second quarter fiscal 2014 compared to the second quarter fiscal 2013
Net interest income was $54.0 million, up $26.2 million compared to the second quarter of fiscal 2013. This was mainly the result of higher average loans and investment securities balances and an increase in net interest margin due to the merger transaction with legacy Sterling Bancorp. The tax-equivalent yield on investments increased 45 basis points and yield on loans increased 12 basis points. Yield on loans included $2.6 million in accretion of the fair value discount associated with the loans acquired from Gotham and legacy Sterling Bancorp. The cost of total deposits was 19 basis points and the cost of borrowings was 3.01%. The net interest margin on a tax-equivalent basis was 3.76% compared to 3.41% for the same period a year ago.
Second quarter fiscal 2014 compared with linked quarter ended December 31, 2013
Net interest income increased $8.2 million compared to the linked quarter ended December 31, 2013. The increase in net interest income for the second quarter was due to higher average loans and investment securities balances and an increase in net interest margin due to the legacy Sterling Bancorp merger transaction. Average earning assets for the quarter were $6.0 billion, the yield on loans increased to 5.05% and tax-equivalent yield on interest earning assets was 4.25%. Tax-equivalent net interest margin increased to 3.76% from 3.58% in the linked quarter.
Non-interest Income
Second quarter fiscal 2014 compared with second quarter fiscal 2013
Excluding net gains and losses on sale of securities, non-interest income increased $7.7 million to $12.4 million during the second quarter of fiscal 2014. The increase was mainly due to an increase in fees associated with service charges on deposits, fees generated in the factoring and payroll finance businesses and gain on sale income in mortgage banking. The Company realized a net gain on sale of securities of $60 thousand for the second quarter of fiscal 2014 compared to net gain on sale of securities of $2.2 million in the year ago quarter.
Second quarter fiscal 2014 compared with linked quarter ended December 31, 2013
Excluding net gains and losses on sale of securities, non-interest income increased $2.6 million to $12.4 million during the second fiscal quarter of 2014. The increase was mainly due to the factors discussed above. The Company realized a net loss on sale of securities of $645 thousand in the linked quarter ended December 31, 2013.
Non-interest Expense
Second quarter fiscal 2014 compared with second quarter fiscal 2013
Non-interest expense increased $23.4 million relative to the second quarter of fiscal 2013 to $46.7 million, principally the result of increased compensation and benefits expense, occupancy and office operations expense, and other expenses due to the legacy Sterling Bancorp merger transaction. Other expenses for the quarter included merger-related expenses of $388 thousand, a charge related to the core banking systems conversion of $423 thousand, severance compensation of $255 thousand, a charge on the settlement of the legacy Provident employee stock ownership plan and a portion of the legacy Sterling Bancorp defined benefit pension plan obligations of $1.5 million, and the amortization of non-compete agreements of approximately $1.5 million. The charge related to the core systems conversion mainly represented consulting fees and personnel training costs incurred in connection with the integration of the legacy Provident Bank and legacy Sterling National Bank technology systems. The merger-related charges incurred in the second fiscal quarter of 2014 represented final expenses related to client communications, branding, relocation of personnel and professional fees.
Second quarter fiscal 2014 compared with the linked quarter ended December 31, 2013
Non-interest expense decreased $26.3 million compared to the linked quarter. The Company incurred merger-related expenses of $9.1 million and a charge for asset write-downs, retention and severance compensation of $22.2 million in the quarter ended December 31, 2013. The decrease in these expenses between the two periods was partially offset by higher expenses given legacy Sterling Bancorp's operations were fully incorporated in the Company's results in the second fiscal quarter of 2014.
Income Taxes
In the second quarter of fiscal 2014 the Company recorded income taxes at a rate of 30.8% compared to an effective tax benefit rate of 33.2% in the linked quarter and 25.2% for the same period in fiscal 2013. Income tax expense for the period was principally impacted by higher pre-tax income, a lower proportion of interest earned on municipal securities and income on bank owned life insurance, and an investment in low income housing tax credits. We have reviewed the changes to the New York State tax laws enacted March 31, 2014 and determined the impact to our financial statements will be immaterial.
Key Balance Sheet Highlights Year-to-Date at March 31, 2014
- Total assets were $6.9 billion.
- Total loans including loans held for sale were $4.3 billion.
- Commercial and industrial loans represented 43.1%, commercial real estate loans represented 38.0%, consumer and residential mortgage loans represented 16.8%, and acquisition, development and construction loans represented 2.1% of the total loan portfolio.
- Commercial loan growth, which includes commercial and industrial loans, commercial real estate loans and specialty lending businesses was $145.4 million for the quarter ended March 31, 2014, and represented annualized growth of 17.7% over the prior quarter.
- Securities, excluding FHLB and FRB Stock, were $1.8 billion and represented 25.4% of total assets.
- Total deposits were $5.2 billion.
- Transaction, money market and savings deposits (including municipal deposits) were $4.7 billion and represented 89.8% of total deposits.
- The allowance for loan losses was $32.0 million and represented 1.12% of total loans excluding the impact of loans acquired in the Gotham transaction and the legacy Sterling Bancorp merger transactions that were recorded at fair value at the acquisition date and continue to carry no allowance for loan losses.
- Tangible book value per share was $5.97.
Credit Quality
Non-performing loans increased $16.8 million to $55.2 million at March 31, 2014 compared to $38.4 million at December 31, 2013. This increase was mainly due to three acquisition, development and construction relationships that were reclassified as non-performing loans during the quarter. Net charge-offs for the second quarter that were charged to the allowance for loan losses were $3.4 million compared to $1.3 million in the linked quarter. The allowance for loan losses at March 31, 2014 was $32.0 million, which represented 58.0% of non-performing loans and 0.75% of our total loan portfolio. The increase in the balance of the allowance for loan losses was mainly related to the higher balance of loans outstanding at March 31, 2014. The allowance for loan losses to total loans, excluding loans acquired in the Gotham and legacy Sterling Bancorp merger transactions that were recorded at fair value at the acquisition dates and continue to carry no allowance, was 1.12% at March 31, 2014. Please refer to the Company's reconciliation of this non-GAAP measure on page 10.
Capital
The Company's stockholders' equity was $936.5 million at March 31, 2014, an increase of $453.6 million relative to September 30, 2013. The increase in stockholders' equity was mainly the result of the legacy Sterling Bancorp merger transaction, which increased capital by $457.8 million. Other contributors to the change in capital included an increase in other comprehensive income of $1.0 million and items related to stock-based compensation of $4.3 million. These increases were partially offset by the net loss of ($3.7 million) and dividends of $5.9 million declared during the first six months of fiscal 2014.
Tangible book value per share decreased from $7.08 at September 30, 2013 to $5.97 at March 31, 2014. Total goodwill and other intangible assets were $437.7 million at March 31, 2014, an increase of $268.7 million over September 30, 2013. For the quarter ended March 31, 2014, basic and diluted weighted average common shares outstanding increased to 83.5 million and 83.8 million, compared to 43.7 million basic shares and 43.9 million diluted shares, respectively, for the quarter ended September 30, 2013. The increase in basic and diluted shares is mainly the result of the issuance of 39.1 million shares of common stock in October 2013 in connection with the legacy Sterling Bancorp merger transaction. Total shares outstanding at March 31, 2014 were approximately 83.5 million.
Consolidated tangible equity to tangible assets was 7.69% at March 31, 2014 and Sterling National Bank remained well capitalized with a Tier 1 leverage ratio of 9.83%.
Sterling Bancorp will host a teleconference and webcast on Thursday, May 1, 2014 at 10:30 AM EDT to discuss the Company's results. Interested parties are invited to listen to the webcast and view accompanying slides on the Company's website www.sterlingbancorp.com. Analysts are invited to listen by dialing (855) 877-0343, Conference ID #27833566. A replay of the teleconference can be accessed through the Company's website.
About Sterling Bancorp
Headquartered in Montebello, N.Y., Sterling Bancorp is the holding company for Sterling National Bank, a growing full service commercial bank with $6.9 billion in assets that specializes in the delivery of service and solutions to business owners, their families, and consumers in communities within the greater New York City metropolitan region 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 web site 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: difficulties and delays in integrating the combined businesses of Provident New York Bancorp and legacy Sterling Bancorp or fully realizing cost savings and other benefits; inflation; the effects of, and changes in, trade; changes in asset quality and credit risk; introduction, withdrawal, success and timing of business initiatives; capital management activities; customer disintermediation; and the success of Sterling Bancorp in managing those risks. Other factors that could cause Sterling Bancorp's actual results to differ from those indicated in forward-looking statements are included in the "Risk Factors" section of Sterling Bancorp's filings with the Securities and Exchange Commission. The forward-looking statements speak only as of the date they are made and we undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.
Financial information contained in this release should be considered to be an estimate pending the filing with the Securities and Exchange Commission of the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2014. 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 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)
3/31/2014 9/30/2013 3/31/2013
----------- ----------- -----------
Assets:
Cash and due from banks $ 164,645 $ 113,090 $ 73,396
Investment securities 1,760,575 1,208,392 1,129,213
Loans held for sale 21,348 1,011 1,040
Loans:
Residential mortgage 512,875 400,009 365,485
Commercial real estate 1,614,002 1,277,037 1,149,463
Commercial and industrial 1,827,374 439,787 370,246
Acquisition, development and
construction 90,905 102,494 118,115
Consumer 199,198 193,571 201,246
---------- ---------- ----------
Total loans, gross 4,244,354 2,412,898 2,204,555
Allowance for loan losses (32,015) (28,877) (27,544)
---------- ---------- ----------
Total loans, net 4,212,339 2,384,021 2,177,011
Federal Home Loan Bank ("FHLB") and
Federal Reserve Bank Stock, at cost 53,346 24,312 20,251
Accrued interest receivable 18,154 11,698 11,819
Premises and equipment, net 49,041 36,520 37,617
Goodwill 387,286 163,117 163,117
Other intangibles 50,441 5,891 6,538
Bank owned life insurance 117,572 60,914 59,916
Other real estate owned 9,275 6,022 5,486
Other assets 80,397 34,184 25,036
---------- ---------- ----------
Total assets $6,924,419 $4,049,172 $3,710,440
========== ========== ==========
Liabilities:
Deposits $5,211,724 $2,962,294 $2,799,658
FHLB borrowings 489,801 442,602 347,450
Other borrowings 19,991 20,351 20,526
Senior notes 98,215 98,033 -
Subordinated debentures 26,509 - -
Mortgage escrow funds 8,711 12,646 17,582
Other liabilities 133,002 30,380 30,513
---------- ---------- ----------
Total liabilities 5,987,953 3,566,306 3,215,729
Stockholders' equity 936,466 482,866 494,711
---------- ---------- ----------
Total liabilities and stockholders'
equity $6,924,419 $4,049,172 $3,710,440
========== ========== ==========
Shares of common stock outstanding at
period end 83,544,307 44,351,046 44,353,276
Book value per share $ 11.21 $ 10.89 $ 11.15
Tangible book value per share 5.97 7.08 7.33
Sterling Bancorp and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share data)
For the Six Months
For the Quarter Ended Ended
--------------------------------- ----------------------
3/31/2014 12/31/2013 3/31/2013 3/31/2014 3/31/2013
---------- ----------- ---------- ----------- ----------
Interest and
dividend income:
Loans and loan
fees $ 50,312 $ 43,288 $ 26,378 $ 93,600 $ 53,449
Securities
taxable 7,573 6,903 4,288 14,475 8,572
Securities non-
taxable 2,674 2,161 1,490 4,835 2,947
Other earning
assets 766 359 264 1,125 597
---------- ---------- ---------- ---------- ----------
Total interest
income 61,325 52,711 32,420 114,035 65,565
Interest expense:
Deposits 2,394 1,834 1,624 4,135 3,721
Borrowings 4,903 5,001 2,977 9,997 6,102
---------- ---------- ---------- ---------- ----------
Total interest
expense 7,297 6,835 4,601 14,132 9,823
---------- ---------- ---------- ---------- ----------
Net interest income 54,028 45,876 27,819 99,903 55,742
Provision for loan
losses 4,800 3,000 2,600 7,800 5,550
---------- ---------- ---------- ---------- ----------
Net interest income
after provision
for loan losses 49,228 42,876 25,219 92,103 50,192
Non-interest
income:
Accounts
receivable /
factoring
commissions and
other fees 3,500 2,226 - 5,720 -
Mortgage banking
income 2,383 1,616 507 3,999 1,253
Deposit fees and
service charges 3,904 3,942 2,736 7,846 5,514
Net gain (loss)
on sale of
securities 60 (645) 2,229 (585) 3,645
Investment
management fees 542 540 422 1,083 1,127
Bank owned life
insurance 729 740 491 1,469 1,000
Other 1,297 729 467 2,032 1,972
---------- ---------- ---------- ---------- ----------
Total non-interest
income 12,415 9,148 6,852 21,564 14,511
Non-interest
expense:
Compensation and
benefits 25,263 23,554 11,805 48,819 24,104
Stock-based
compensation
plans 927 991 679 1,918 1,179
Occupancy and
office
operations 7,254 6,333 3,954 13,587 7,764
Merger-related
expenses 388 9,068 542 9,456 542
Advertising and
promotion 422 309 535 731 779
Professional fees 1,500 1,818 912 3,319 2,127
Data and check
processing 663 595 823 1,258 1,472
Amortization of
intangible
assets 2,511 1,875 388 4,386 649
FDIC insurance
and regulatory
assessments 1,567 1,164 753 2,731 1,471
Other real estate
owned expense 61 368 915 429 1,200
Other 6,167 26,899 2,033 33,065 4,598
---------- ---------- ---------- ---------- ----------
Total non-interest
expense 46,723 72,974 23,339 119,699 45,885
---------- ---------- ---------- ---------- ----------
Income (loss)
before income tax
expense 14,920 (20,950) 8,732 (6,032) 18,818
Income tax expense
(benefit) 4,588 (6,948) 2,203 (2,361) 5,269
---------- ---------- ---------- ---------- ----------
Net income (loss) $ 10,332 $ (14,002) $ 6,529 $ (3,671) $ 13,549
========== ========== ========== ========== ==========
Basic earnings
per share $ 0.12 $ (0.20) $ 0.15 $ (0.05) $ 0.31
Diluted earnings
per share 0.12 (0.20) 0.15 (0.05) 0.31
Dividends
declared per
share 0.07 - 0.06 0.07 0.12
Weighted average
common shares:
Basic 83,497,765 70,493,305 43,743,640 76,924,082 43,704,163
Diluted 83,794,107 70,493,305 43,848,486 76,924,082 43,790,915
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 3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
---------- ----------- ---------- ---------- ----------
Total assets $6,924,419 $6,667,437 $4,049,172 $3,824,429 $3,710,440
Securities available
for sale 1,233,310 1,153,313 954,393 889,747 945,678
Securities held to
maturity 527,265 508,337 253,999 175,977 183,535
Loans, gross (1) 4,244,354 4,127,141 2,412,898 2,336,534 2,204,555
Goodwill 387,286 387,517 163,117 163,117 163,117
Other intangibles 50,441 53,020 5,891 6,201 6,538
Deposits 5,211,724 4,920,564 2,962,294 2,739,214 2,799,658
Municipal deposits
(included above) 926,618 673,656 757,066 465,566 537,070
Borrowings 634,516 696,270 560,986 552,805 367,976
Stockholders' equity 936,466 925,109 482,866 480,165 494,711
Tangible equity 498,739 484,572 313,858 310,847 325,056
Average Balances
Total assets $6,747,546 $6,013,816 $3,907,960 $3,745,356 $3,804,660
Loans, gross:
Residential
mortgage 520,887 491,231 379,640 366,823 360,840
Commercial real
estate 1,580,454 1,466,986 1,247,055 1,175,094 1,138,333
Commercial and
industrial 1,625,720 1,268,492 443,349 398,622 368,896
Acquisition,
development and
construction 93,531 98,691 104,856 114,286 122,937
Consumer 199,834 200,637 194,718 199,861 203,492
Loans, total (1) 4,020,426 3,526,037 2,369,618 2,254,686 2,194,498
Securities (taxable) 1,386,538 1,330,646 963,949 909,312 967,889
Securities (non-
taxable) 324,470 250,520 157,480 184,325 181,803
Total earning assets 5,985,054 5,207,436 3,529,321 3,378,655 3,403,209
Deposits:
Non-interest
bearing demand 1,640,125 1,361,622 669,067 625,684 641,194
Interest bearing
demand 761,409 619,746 426,602 461,390 508,129
Savings (including
mortgage escrow
funds) 613,131 622,530 601,272 581,106 575,380
Money market 1,461,774 1,182,858 715,351 777,857 877,101
Certificates of
deposit 582,580 565,462 335,616 338,017 355,917
Total deposits and
mortgage escrow 5,059,019 4,352,218 2,747,908 2,784,054 2,957,721
Borrowings 660,486 709,125 653,147 440,579 345,717
Equity 934,304 780,241 478,491 494,049 492,725
Tangible equity 494,697 432,703 309,327 324,540 322,683
Condensed Tax
Equivalent Income
Statement
Interest and
dividend income $ 61,325 $ 52,711 $ 33,903 $ 32,593 $ 32,420
Tax equivalent
adjustment* 1,440 1,164 666 808 802
Interest expense 7,297 6,835 5,795 4,276 4,601
---------- ---------- ---------- ---------- ----------
Net interest income
(tax equivalent) 55,468 47,040 28,774 29,125 28,621
Provision for loan
losses 4,800 3,000 2,700 3,900 2,600
---------- ---------- ---------- ---------- ----------
Net interest income
after provision for
loan losses 50,668 44,040 26,074 25,225 26,021
Non-interest income 12,415 9,148 6,600 6,581 6,852
Non-interest expense 46,723 72,974 23,367 21,789 23,339
---------- ---------- ---------- ---------- ----------
Income (loss) before
income tax expense 16,360 (19,786) 9,307 10,017 9,534
Income tax expense
(benefit) (tax
equivalent)* 6,028 (5,784) 3,978 3,641 3,005
---------- ---------- ---------- ---------- ----------
Net income (loss) $ 10,332 $ (14,002) $ 5,329 $ 6,376 $ 6,529
========== ========== ========== ========== ==========
(1) Does not reflect allowance for loan losses of $32,015, $30,612, $28,877,
$28,374 and $27,544.
*Tax exempt income assumed at a statutory 35% federal tax rate.
Sterling Bancorp and Subsidiaries
SELECTED FINANCIAL RATIOS
(unaudited, in thousands, except share and per share data)
For the Quarter Ended
------------------------------------------------------------
Per Share Data 3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
----------- ------------ ----------- ----------- -----------
Basic earnings
per share $ 0.12 $ (0.20) $ 0.12 $ 0.15 $ 0.15
Diluted
earnings per
share 0.12 (0.20) 0.12 0.15 0.15
Dividends
declared per
share 0.07 - 0.12 0.06 0.06
Tangible book
value per
share 5.97 5.77 7.08 7.01 7.33
Shares of
common stock
outstanding 83,544,307 83,955,647 44,351,046 44,353,276 44,353,276
Basic weighted
average common
shares
outstanding 83,497,765 70,493,305 43,742,903 43,801,867 43,743,640
Diluted
weighted
average common
shares
outstanding 83,794,107 70,493,305 43,859,834 43,906,158 43,848,486
Performance
Ratios
(annualized)
Return on
average assets 0.62% (0.92)% 0.54% 0.68% 0.70%
Return on
average equity 4.48% (7.12)% 4.42% 5.18% 5.37%
Return on
average
tangible
equity(1) 8.47% (12.84)% 6.83% 7.88% 8.21%
Core operating
efficiency(1) 62.0% 65.4% 64.7% 59.1% 67.4%
Analysis of Net
Interest
Income
Yield on loans 5.05% 4.88% 4.70% 4.80% 4.93%
Yield on
investment
securities -
tax
equivalent(2) 2.77% 2.57% 2.35% 2.38% 2.32%
Yield on
earning assets
- tax
equivalent(2) 4.25% 4.10% 3.89% 3.97% 3.96%
Cost of
deposits 0.19% 0.17% 0.15% 0.17% 0.22%
Cost of
borrowings 3.01% 2.80% 2.88% 2.84% 3.49%
Cost of
interest
bearing
liabilities 0.73% 0.73% 0.84% 0.66% 0.70%
Net interest
rate spread -
tax equivalent
basis(2) 3.52% 3.37% 3.05% 3.31% 3.26%
Net interest
margin - tax
equivalent
basis(2) 3.76% 3.58% 3.23% 3.46% 3.41%
Capital
Tier 1 leverage
ratio - Bank
only 9.83% 10.58% 9.33% 8.49% 8.62%
Tier 1 risk-
based capital
- Bank only $ 622,878 $ 593,462 $ 363,274 $ 311,507 $ 304,696
Total risk-
based capital
- Bank only 655,288 624,469 392,376 340,077 332,447
Tangible equity
as a % of
tangible
assets -
consolidated(1)
7.69% 7.78% 8.09% 8.50% 9.18%
Asset Quality
Non-performing
loans (NPLs)
non-accrual $ 54,877 $ 35,597 $ 22,807 $ 27,244 $ 27,019
Non-performing
loans (NPLs)
still accruing 280 2,845 4,099 4,216 4,257
Other real
estate owned 9,275 11,751 6,022 4,376 5,486
Non-performing
assets (NPAs) 64,432 50,193 32,928 35,836 36,762
Net charge-offs 3,397 1,265 2,197 3,070 3,170
Net charge-offs
as a % of
average loans
(annualized) 0.34% 0.14% 0.37% 0.54% 0.58%
NPLs as a % of
total loans 1.30% 0.93% 1.12% 1.35% 1.42%
NPAs as a % of
total assets 0.93% 0.75% 0.81% 0.94% 0.99%
Allowance for
loan losses as
a % of NPLs 58.0% 79.6% 107.3% 90.2% 88.1%
Allowance for
loan losses as
a % of total
loans 0.75% 0.74% 1.20% 1.21% 1.25%
Allowance for
loan losses as
a % of total
loans,
excluding
Gotham and
legacy
Sterling
loans(1) 1.12% 1.24% 1.27% 1.30% 1.36%
Special mention
loans $ 39,964 $ 38,834 $ 13,530 $ 24,327 $ 41,778
Substandard /
doubtful loans 82,673 77,337 61,095 62,165 70,688
----------------------------------------------------------------------------
(1) See reconciliation of non-GAAP measure on following page.
(2) Tax equivalent adjustment represents interest income earned on municipal
securities divided by the applicable Federal tax rate of 35% for all
periods presented.
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
As of and for the Quarter Ended
------------------------------------------------------------
3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
----------- ------------ ----------- ----------- -----------
The Company provides supplemental reporting of non-GAAP measures as
management believes this information is useful to investors.
The following table shows the reconciliation of stockholders' equity to
tangible equity and the tangible equity ratio:
Total assets $6,924,419 $6,667,437 $4,049,172 $3,824,429 $3,710,440
Goodwill and
other
intangibles (437,727) (440,537) (169,008) (169,318) (169,655)
---------- ---------- ---------- ---------- ----------
Tangible assets 6,486,692 6,226,900 3,880,164 3,655,111 3,540,785
---------- ---------- ---------- ---------- ----------
Stockholders'
equity 936,466 925,109 482,866 480,165 494,711
Goodwill and
other
intangibles (437,727) (440,537) (169,008) (169,318) (169,655)
---------- ---------- ---------- ---------- ----------
Tangible
stockholders'
equity 498,739 484,572 313,858 310,847 325,056
---------- ---------- ---------- ---------- ----------
Shares of
common stock
outstanding at
period end 83,544,307 83,955,647 44,351,046 44,353,276 44,353,276
Tangible equity
as a % of
tangible
assets 7.69% 7.78% 8.09% 8.50% 9.18%
Tangible book
value per
share $ 5.97 $ 5.77 $ 7.08 $ 7.01 $ 7.33
The Company believes that tangible equity is useful as a tool to help assess
a company's capital position.
The following table shows the reconciliation of return on average tangible
equity and core return on average tangible equity:
Average
stockholders'
equity $ 934,304 $ 780,241 $ 478,491 $ 494,049 $ 492,725
Average
goodwill and
other
intangibles (439,613) (347,538) (169,164) (169,509) (170,042)
---------- ---------- ---------- ---------- ----------
Average
tangible
stockholders'
equity 494,691 432,703 309,327 324,540 322,683
---------- ---------- ---------- ---------- ----------
Net income
(loss) 10,332 (14,002) 5,329 6,376 6,529
Net income
(loss), if
annualized 41,902 (55,551) 21,142 25,574 26,479
Return on
average
tangible
equity 8.47% (12.84)% 6.83% 7.88% 8.21%
Core net income
(see
reconciliation
on page 11) $ 13,203 $ 9,374 $ 6,117 $ 7,426 $ 6,934
Annualized core
net income 53,546 37,190 24,269 29,786 28,121
Core return on
average
tangible
equity 10.82% 8.59% 7.85% 9.18% 8.71%
The Company believes that the return on average tangible stockholders'
equity is useful as a tool to help assess a company's use of tangible
equity.
The following table shows the reconciliation of the allowance for loan
losses to total loans and to total loans excluding Gotham and legacy
Sterling Bancorp loans:
Total loans $4,244,354 $4,127,141 $2,412,898 $2,336,534 $2,204,555
Gotham loans (101,273) (117,046) (133,493) (152,825) (176,383)
Legacy Sterling
loans (1,277,335) (1,539,962) - - -
---------- ---------- ---------- ---------- ----------
Total loans,
excluding
Gotham and
legacy
Sterling loans 2,865,746 2,470,133 2,279,405 2,183,709 2,028,172
Allowance for
loan losses 32,015 30,612 28,877 28,374 27,544
Allowance for
loan losses to
total loans 0.75% 0.74% 1.20% 1.21% 1.25%
Allowance for
loan losses to
total loans,
excluding
Gotham and
legacy
Sterling loans 1.12% 1.24% 1.27% 1.30% 1.36%
----------------------------------------------------------------------------
As required by GAAP, the Company recorded at fair value the loans acquired
in the Gotham and legacy Sterling Bancorp transactions. These loans carry
no allowance for loan losses for the periods reflected above.
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
As of and for the Quarter Ended
-----------------------------------------------------------
3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
----------- ----------- ----------- ----------- -----------
The following table shows the reconciliation of the core operating
efficiency ratio:
Net interest
income $ 54,028 $ 45,876 $ 28,108 $ 28,317 $ 27,819
Non-interest
income 12,415 9,148 6,600 6,581 6,852
---------- ---------- ---------- ---------- ----------
Total net
revenues 66,443 55,024 34,708 34,898 34,671
Tax equivalent
adjustment on
securities
interest income 1,440 1,164 666 808 802
Net (gain) loss
on sale of
securities (60) 645 (1,801) (1,945) (2,229)
Other than
temporary loss
on securities - - - - 7
Other (other
gains and fair
value loss on
interest rate
caps) - (93) 81 - -
---------- ---------- ---------- ---------- ----------
Core total
revenues 67,823 56,740 33,654 33,761 33,251
---------- ---------- ---------- ---------- ----------
Non-interest
expense 46,723 72,974 23,367 21,789 23,339
Merger-related
expenses (388) (9,068) (714) (1,516) (542)
Charge for asset
write-downs,
retention and
severance
compensation (255) (22,167) (564) - -
Charge on
pension plan
settlement (1,486) (2,743) - - -
Amortization of
intangible
assets (2,511) (1,875) (310) (337) (388)
---------- ---------- ---------- ---------- ----------
Core non-
interest
expense 42,083 37,121 21,779 19,936 22,409
---------- ---------- ---------- ---------- ----------
Core efficiency
ratio 62.0% 65.4% 64.7% 59.1% 67.4%
The Company believes the core operating efficiency ratio is a useful tool to
help assess a company's core operating performance.
The following table shows the reconciliation of net income (loss) and
earnings (loss) per share excluding merger-related expenses, a charge for
asset write-downs, core conversion, retention and severance compensation, a
charge on settlement of benefit pension plans and the amortization of non-
compete agreements:
Income (loss)
before income
tax expense $ 14,920 $ (20,950) $ 8,641 $ 9,209 $ 8,732
Income tax
expense
(benefit) 4,588 (6,948) 3,312 2,833 2,203
---------- ---------- ---------- ---------- ----------
Net income
(loss) 10,332 (14,002) 5,329 6,376 6,529
Merger-related
expenses 388 9,068 714 1,516 542
Charge for asset
write-downs,
core
conversion,
retention and
severance
compensation 678 22,167 564 - -
Charge on
benefit plans
settlement 1,486 2,743 - - -
Amortization of
non-compete
agreements 1,497 998 - - -
---------- ---------- ---------- ---------- ----------
Total charges 4,049 34,976 1,278 1,516 542
Income tax
(benefit) (1,178) (11,600) (490) (466) (137)
---------- ---------- ---------- ---------- ----------
Total charges
net of tax
benefit 2,871 23,376 788 1,050 405
---------- ---------- ---------- ---------- ----------
Net income
excluding total
charges $ 13,203 $ 9,374 $ 6,117 $ 7,426 $ 6,934
========== ========== ========== ========== ==========
Weighted average
diluted
shares(1) 83,794,107 70,707,292 43,859,834 43,906,158 43,848,486
Diluted EPS as
reported $ 0.12 $ (0.20) $ 0.12 $ 0.15 $ 0.15
Diluted EPS
excluding total
charges 0.16 0.13 0.14 0.17 0.16
----------------------------------------------------------------------------
The Company believes the presentation of its net income excluding total
charges provides a useful tool to help assess a company's profitability.
(1) For the first fiscal quarter of 2014 represents diluted share
calculation to compute diluted EPS assuming net income.
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
As of and for the Quarter Ended
------------------------------------------------------------
3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013
The following table shows the reconciliation of return on tangible assets
and core return on tangible assets:
Average assets $6,747,546 $6,013,816 $3,907,960 $3,745,356 $3,804,660
Average
goodwill and
other
intangibles (439,613) (347,538) (169,164) (169,509) (170,042)
---------- ---------- ---------- ---------- ----------
Average
tangible
assets 6,307,933 5,666,278 3,738,796 3,575,847 3,634,618
Net income
(loss) 10,332 (14,002) 5,329 6,376 6,529
Net income
(loss), if
annualized 41,902 (55,551) 21,142 25,574 26,479
---------- ---------- ---------- ---------- ----------
Return on
average
tangible
assets 0.66% (0.98)% 0.57% 0.72% 0.73%
Core net income
(see
reconciliation
on page 11) $ 13,203 $ 9,374 $ 6,117 $ 7,426 $ 6,934
Annualized core
net income 53,546 37,190 24,269 29,786 28,121
---------- ---------- ---------- ---------- ----------
Core return on
average
tangible
assets 0.85% 0.66% 0.65% 0.83% 0.77%
The company believes that the core return on average tangible assets is a
useful tool to help assess a company's profitability.
The following table shows the reconciliation of net (loss) income and core
net income for the six months ended March 31:
For the six months
ended
-----------------------
3/31/2014 3/31/2013
----------- -----------
(Loss) income
before income
tax expense $ (6,032) $ 18,818
Income tax
(benefit)
expense (2,361) 5,269
---------- ----------
Net (loss)
income (3,671) 13,549
Merger-related
expenses 9,456 542
Charge for
asset write-
downs, core
conversion,
retention and
severance 22,845 -
Charge on
pension plans
settlement 4,229 -
Amortization of
non-compete
agreements 2,495 -
---------- ----------
Total charges 39,025 542
Income tax
(benefit) (12,683) (152)
---------- ----------
Total charges
net of tax
benefit 26,342 390
---------- ----------
Net income
excluding
total charges $ 22,671 $ 13,939
========== ==========
Weighted
average
diluted shares 76,924,082 43,790,915
Diluted EPS as
reported $ (0.05) $ 0.31
Diluted EPS
excluding
total charges 0.29 0.32
----------------------------------------------------------------------------
The Company believes the presentation of its net income excluding total
charges provides a useful tool to help assess a company's profitability.
STERLING BANCORP CONTACT:
Luis Massiani
EVP & Chief Financial Officer
845.369.8040
Sterling Bancorp
400 Rella Boulevard
Montebello, NY 10901-4243
T 845.369.8040
F 845.369.8255
http://www.sterlingbancorp.com
