Sterling Bancorp Reports Second Quarter 2019 Financial Results

Q2 2019 Highlights

  • Net income of $13.4 million, down from $16.0 million in Q2 2018, and $15.7 million in Q1 2019
  • Included in the second quarter 2019 results was a $1.2 million valuation allowance taken against the Company’s mortgage servicing rights
  • Fully diluted EPS of $0.26, down from $0.30 for both Q2 2018 and Q1 2019
  • Second quarter annualized ROAA of 1.64% and annualized ROATCE of 15.6%
  • Revenue, net of interest expense, of $32.8 million, down from $36.2 million in Q2 2018, and $34.1 million in Q1 2019
  • Total loan originations of $356.5 million, down from $433.9 million in Q2 2018 and up from $304.9 million in Q1 2019
  • Total gross loans, including loans held for investment and loans held for sale, of $2.95 billion, a 3% increase from Q2 2018, and flat from Q1 2019
  • Total deposits of $2.55 billion, a 9% increase from Q2 2018, and a 5% increase from Q1 2019
  • Net interest margin of 3.84%, compared to 3.96% in Q2 2018 and 3.86% in Q1 2019
  • Repurchased approximately 1.0 million shares of common stock at an average price of $9.67 during the quarter

SOUTHFIELD, Mich.--()--Sterling Bancorp, Inc. (NASDAQ: SBT) (the “Company”), the holding company of Sterling Bank and Trust, F.S.B. (the “Bank”), today reported unaudited financial results for its second quarter ended June 30, 2019.

For the second quarter 2019, net income totaled $13.4 million, or $0.26 per diluted share, based on 51.5 million weighted average diluted shares outstanding. This compares to first quarter 2019 net income of $15.7 million, or $0.30 per diluted share, based on 52.6 million weighted average diluted shares outstanding. For the second quarter of 2018, net income totaled $16.0 million, or $0.30 per diluted share, based on 53.0 million weighted average diluted shares outstanding.

“Overall, our financial results for the second quarter of 2019 were generally in line with our expectations,” said Gary Judd, Chairman and CEO of Sterling Bancorp. “We generated higher pre-provision net interest income during the quarter, driven by slightly higher average loan balances and a relatively stable net interest margin. Our non-interest income was marked by a lower gain on the sale of loans and a valuation allowance taken against our mortgage servicing rights primarily due to the decline in long-term interest rates. And while we experienced good loan production, payoffs trended upwards in this low mortgage rate environment, resulting in flat total loan growth.

“Our business remains sound. We will continue to opportunistically utilize loan sales to diversify our revenue. We expect to resume our loan growth as our pipeline is healthy and credit quality remains excellent, which should translate into continued strong returns for our shareholders,” Mr. Judd concluded.

Financial Highlights (Unaudited)

At or for the Three Months Ended

(dollars in thousands, except per share data)

June 30,

2019

 

March 31,

2019

 

June 30,

2018

Net income

$

13,434

 

$

15,683

 

$

15,982

 

Income per share, diluted

$

0.26

 

$

0.30

 

$

0.30

 

Net interest income

$

30,715

 

$

30,300

 

$

29,857

 

Net interest margin

 

3.84

%

 

3.86

%

 

3.96

%

Non-interest income

$

2,068

 

$

3,828

 

$

6,297

 

Non-interest expense

$

13,725

 

$

13,122

 

$

12,621

 

Loans, net of allowance for loan losses

$

2,924,813

 

$

2,923,576

 

$

2,816,156

 

Total deposits

$

2,546,660

 

$

2,436,567

 

$

2,340,605

 

Nonperforming loans

$

6,697

 

$

7,337

 

$

641

 

Allowance for loan losses to total loans

 

0.71

%

 

0.70

%

 

0.72

%

Allowance for loan losses to nonperforming loans

 

312

%

 

282

%

 

3,167

%

Provision (recovery) for loan losses

$

180

 

$

(1,014

)

$

1,120

 

Net charge offs (recoveries)

$

(40

)

$

138

 

$

(48

)

Return on average assets

 

1.64

%

 

1.94

%

 

2.08

%

Return on average shareholders' equity

 

15.54

%

 

18.44

%

 

21.31

%

Efficiency ratio

 

41.87

%

 

38.45

%

 

34.91

%

Operating Results for the Second Quarter 2019

Revenue

Revenue, net of interest expense, was $32.8 million for the second quarter of 2019, a decrease of 4% from the first quarter of 2019. The decrease was primarily attributable to a $1.2 million valuation allowance taken against the Company’s mortgage servicing rights, and to a lesser extent, a reduction in gain on loan sales.

Revenue, net of interest expense, for the second quarter of 2018 was $36.2 million. The $3.4 million year-over-year decrease was due to a $4.2 million decrease in non-interest income, partially offset by a $0.8 million increase in net interest income.

Net Interest Income

Net interest income for the second quarter of 2019 was $30.7 million, an increase of 1% from $30.3 million for the first quarter of 2019. The slight increase in net interest income was primarily attributable to a $54.1 million increase in average interest earning assets, partially offset by a 2 basis point decrease in the net interest margin.

Relative to the second quarter of 2018, net interest income increased 3% from $29.9 million. The increase in net interest income from the second quarter of 2018 was primarily driven by a $184.2 million increase in average interest earning assets, partially offset by a 12 basis point decrease in the net interest margin.

Net Interest Margin

Net interest margin for the second quarter of 2019 was 3.84%, down 2 basis points from the net interest margin of 3.86% for the first quarter of 2019. Net interest margin was impacted by an 11 basis point increase in the average cost of interest-bearing liabilities, growth in interest-bearing liabilities outpacing growth in interest earning assets, and was partially offset by an 11 basis point increase in the average yield on interest earning assets.

Relative to the second quarter of 2018, net interest margin decreased from 3.96%, primarily due to a 55 basis point increase in the average cost of interest-bearing liabilities, partially offset by a 35 basis point increase in the average yield on interest earning assets.

Non-interest Income

Non-interest income for the second quarter of 2019 was $2.1 million, a decrease from $3.8 million for the first quarter of 2019. The decrease was primarily attributable to the $1.2 million mortgage servicing rights valuation allowance, and to a lesser extent, a $478,000 decrease in the gain on sale of loans.

Non-interest income decreased $4.2 million from $6.3 million in the second quarter of 2018, primarily as a result of a $3.1 million decrease in the gain on sale of loans due to fewer residential mortgages sold in the secondary market as compared to the prior year period, and the $1.2 million mortgage servicing rights valuation allowance taken in the second quarter of 2019.

Non-interest Expense

Non-interest expense for the second quarter of 2019 was $13.7 million, an increase from $13.1 million for the first quarter of 2019. The increase was primarily attributable to slightly higher salaries and employee benefits and professional fees, a portion of which were related to increased regulatory compliance initiatives.

Relative to the second quarter of 2018, non-interest expense increased 9% from $12.6 million. The increase was primarily due to an increase in salaries and employee benefits and occupancy and equipment costs required to support new offices and the growth in the Company’s operations, as well as higher professional fees.

The Company’s operating efficiency ratio was 41.9% in the second quarter of 2019, compared with 38.5% in the first quarter of 2019 and 34.9% in the second quarter of 2018.

Income Taxes

The effective tax rate for the second quarter of 2019 was 29%, comparable to the effective tax rate of 29% for both the first quarter of 2019 and the second quarter of 2018.

Loan Portfolio

Total gross loans, which includes those held for investment and held for sale, were $2.95 billion at June 30, 2019, an increase from $2.94 billion at March 31, 2019. The Company had a $29.9 million increase in residential mortgage loans held for investment and a $0.3 million increase in residential mortgage loans held for sale, partially offset by a $20.3 million decrease in construction and commercial real estate loans, and an $8.1 million decrease in commercial and industrial loans. As the Company continues to utilize loan sales to support balance sheet and liquidity strategies, the amount of residential mortgage loans held for sale may vary from quarter to quarter.

During the second quarter of 2019, the Company originated $356.5 million in loans, which included $316.1 million in residential mortgage loans and $40.4 million in commercial real estate, construction loans and commercial lines of credit.

Deposits

Total deposits were $2.55 billion at June 30, 2019, compared with $2.44 billion at March 31, 2019. The $110.1 million increase was primarily attributable to a $229.9 million increase in time deposits, partially offset by a $119.7 million decrease in money market, savings and NOW deposits. Within time deposits, retail deposits increased by $154.9 million to $1.089 billion and brokered CD increased by $75.0 million, from a zero balance at March 31, 2019.

Credit Quality

Nonperforming assets totaled $12.2 million, or 0.37% of total assets, at June 30, 2019, compared with $14.2 million, or 0.44% of total assets, at March 31, 2019. The decrease was primarily due to a $2.0 million construction loan, which was placed on non-accrual in the prior quarter, being paid off in full during the second quarter.

Recoveries for the second quarter of 2019 were $40,000 and there were no charge-offs during the quarter. The Company recorded a provision for loan losses of $180,000 for the second quarter of 2019.

The allowance for loan losses was 0.71% of total loans and 312% of nonperforming loans at June 30, 2019, compared with 0.70% and 282%, respectively, at March 31, 2019.

Capital

At June 30, 2019, the Bank exceeded all regulatory capital requirements under Basel III and was considered to be a ‘‘well-capitalized’’ financial institution, as summarized in the following tables:

 

 

Well

Capitalized

 

Company Actual at

June 30, 2019

 

Total adjusted capital to risk-weighted assets

 

N/A

 

21.91

%

Tier 1 (core) capital to risk-weighted assets

 

N/A

 

17.51

%

Common Tier 1 (CET 1)

 

N/A

 

17.51

%

Tier 1 (core) capital to adjusted tangible assets

 

N/A

 

10.40

%

 

 

 

Well

Capitalized

 

Sterling Bank Actual at

June 30, 2019

 

Total adjusted capital to risk-weighted assets

 

10.00

%

17.72

%

Tier 1 (core) capital to risk-weighted assets

 

8.00

%

16.64

%

Common Tier 1 (CET 1)

 

6.50

%

16.64

%

Tier 1 (core) capital to adjusted tangible assets

 

5.00

%

9.88

%

Share Repurchase Program

During the quarter, the Company repurchased approximately 1.0 million shares of common stock at an average price of $9.67 per share. Year-to-date, approximately 2.2 million shares have been repurchased at an average price of $9.59 per share.

Conference Call and Webcast

Management will host a conference call today at 5:00 p.m. Eastern Time to discuss the Company's financial results. The conference call number for U.S. participants is (833) 535-2201 and the conference call number for participants outside the U.S. is (412) 902-6744. Additionally, interested parties can listen to a live webcast of the call in the "Investor Relations" section of the Company's website at www.sterlingbank.com. An archived version of the webcast will be available in the same location shortly after the live call has ended.

A replay of the conference call may be accessed through August 12, 2019 by dialing (877) 344-7529, using conference ID number 10133156.

About Sterling Bancorp, Inc.

Sterling Bancorp, Inc. is a unitary thrift holding company. Its wholly owned subsidiary, Sterling Bank and Trust, F.S.B., has primary branch operations in San Francisco and Los Angeles, California, New York City and Bellevue, Washington. Sterling offers a broad range of loan products to the residential and commercial markets, as well as retail and business banking services. Sterling also has an operations center and a branch in Southfield, Michigan. Sterling was named as the top performing community bank in the United States with total assets between $3 billion and $10 billion in 2018 by S&P Global Market Intelligence for the second year in a row (in 2017 the asset range was $1 billion to $10 billion). For additional information, please visit the Company’s website at http://www.sterlingbank.com.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures include “Average Tangible Common Equity,” and “Return on Average Tangible Common Equity,” each of which are common metrics in the banking industry. Our management uses these non-GAAP financial measures to assess the Company’s capital strength and business performance. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies. For further information see “Return on Average Tangible Common Equity Reconciliations (non-GAAP)” in the Financial Data section that follows.

Forward-Looking Statements

Readers should note that in addition to the historical information contained herein, this press release includes "forward-looking statements," within the meaning of the federal securities laws, including but not limited to statements about the Company’s expected loan production, operating expenses and future earnings levels. These statements are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, including changes in the financial markets; changes in business plans as circumstances warrant; and other risks detailed from time to time in filings made by the Company with the Securities and Exchange Commission. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe" or "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Sterling Bancorp, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(dollars in thousands)

June 30,

2019

 

March 31,

2019

 

%

change

 

December 31,

2018

 

%

change

 

June 30,

2018

 

%

change

Assets
Cash and due from banks

$

80,416

$

58,030

39%

$

52,526

 

53%

$

36,820

 

118%

Interest-bearing deposits with other banks

 

1,100

 

1,100

0%

 

1,100

 

0%

 

-

 

N/M

Investment securities

 

153,449

 

151,049

2%

 

148,896

 

3%

 

142,648

 

8%

Mortgage loans held for sale

 

500

 

165

203%

 

1,248

 

(60)%

 

21,641

 

(98)%

Loans, net of allowance for loan losses of $20,918, $20,698, $21,850 and $20,300

 

2,924,813

 

2,923,576

0%

 

2,895,953

 

1%

 

2,816,156

 

4%

Accrued interest receivable

 

13,842

 

13,746

1%

 

13,529

 

2%

 

12,396

 

12%

Mortgage servicing rights, net

 

9,772

 

10,755

(9)%

 

10,633

 

(8)%

 

9,295

 

5%

Leasehold improvements and equipment, net

 

9,675

 

9,680

0%

 

9,489

 

2%

 

8,413

 

15%

Federal Home Loan Bank stock, at cost

 

22,950

 

22,950

0%

 

22,950

 

0%

 

22,950

 

0%

Cash surrender value of bank-owned life insurance

 

31,606

 

31,454

0%

 

31,302

 

1%

 

30,991

 

2%

Operating lease right-of-use assets

 

20,454

 

21,398

(4)%

 

-

 

N/M

 

-

 

N/M

Deferred tax asset, net

 

6,440

 

5,938

8%

 

6,122

 

5%

 

5,905

 

9%

Other assets

 

4,115

 

2,351

75%

 

3,026

 

36%

 

4,124

 

0%

Total assets

$

3,279,132

$

3,252,192

1%

$

3,196,774

 

3%

$

3,111,339

 

5%

 
Liabilities
Noninterest-bearing deposits

$

70,406

$

70,527

0%

$

76,815

 

(8)%

$

73,791

 

(5)%

Interest-bearing deposits

 

2,476,254

 

2,366,040

5%

 

2,375,870

 

4%

 

2,266,814

 

9%

Total deposits

 

2,546,660

 

2,436,567

5%

 

2,452,685

 

4%

 

2,340,605

 

9%

Federal Home Loan Bank borrowings

 

240,000

 

333,051

(28)%

 

293,000

 

(18)%

 

350,000

 

(31)%

Subordinated notes, net

 

65,102

 

65,065

0%

 

65,029

 

0%

 

64,958

 

0%

Operating lease liabilities

 

21,480

 

22,331

(4)%

 

-

 

N/M

 

-

 

N/M

Accrued expenses and other liabilities

 

63,837

 

56,276

13%

 

51,003

 

25%

 

51,666

 

24%

Total liabilities

 

2,937,079

 

2,913,290

1%

 

2,861,717

 

3%

 

2,807,229

 

5%

 
Shareholders’ Equity
Preferred stock, authorized 10,000,000 shares; no shares issued and outstanding

 

-

 

-

-

 

-

 

-

 

-

 

-

Common stock, no par value, authorized 500,000,000 shares; issued and outstanding 50,846,521 shares at June 30, 2019, 51,870,853 shares at March 31, 2019, 53,012,283 shares at December 31, 2018, and 53,002,963 shares at June 30, 2018

 

89,683

 

99,694

(10)%

 

111,238

 

(19)%

 

111,238

 

(19)%

Additional paid-in capital

 

12,992

 

12,839

1%

 

12,713

 

2%

 

12,501

 

4%

Retained earnings

 

239,190

 

226,272

6%

 

211,115

 

13%

 

180,438

 

33%

Accumulated other comprehensive income (loss)

 

188

 

97

94%

 

(9

)

N/M

 

(67

)

N/M

Total shareholders’ equity

 

342,053

 

338,902

1%

 

335,057

 

2%

 

304,110

 

12%

Total liabilities and shareholders’ equity

$

3,279,132

$

3,252,192

1%

$

3,196,774

 

3%

$

3,111,339

 

5%

N/M- not meaningful
Sterling Bancorp, Inc.
Condensed Consolidated Statements of Income (Unaudited)

Three Months Ended

 

Six Months Ended

June 30,

 

March 31,

 

%

 

June 30,

 

%

 

June 30,

 

June 30,

 

%

(dollars in thousands, except per share amounts)

2019

 

2019

 

change

 

2018

 

change

 

2019

 

 

2018

 

change

Interest income:
Interest and fees on loans

$

43,301

 

$

41,722

 

4%

$

38,580

12%

$

85,023

 

$

74,980

13%

Interest and dividends on investment securities and restricted stock

 

1,272

 

 

1,227

 

4%

 

842

51%

 

2,499

 

 

1,661

50%

Other interest

 

216

 

 

236

 

(8)%

 

119

82%

 

452

 

 

233

94%

Total interest income

 

44,789

 

 

43,185

 

4%

 

39,541

13%

 

87,974

 

 

76,874

14%

Interest expense:
Interest on deposits

 

11,524

 

 

10,656

 

8%

 

7,179

61%

 

22,180

 

 

13,768

61%

Interest on Federal Home Loan Bank borrowings

 

1,375

 

 

1,055

 

30%

 

1,334

3%

 

2,430

 

 

2,167

12%

Interest on subordinated notes

 

1,175

 

 

1,174

 

0%

 

1,171

0%

 

2,349

 

 

2,343

0%

Total interest expense

 

14,074

 

 

12,885

 

9%

 

9,684

45%

 

26,959

 

 

18,278

47%

Net interest income

 

30,715

 

 

30,300

 

1%

 

29,857

3%

 

61,015

 

 

58,596

4%

Provision (recovery) for loan losses

 

180

 

 

(1,014

)

118%

 

1,120

(84)%

 

(834

)

 

1,761

(147)%

Net interest income after provision (recovery) for loan losses

 

30,535

 

 

31,314

 

(2)%

 

28,737

6%

 

61,849

 

 

56,835

9%

Non-interest income:
Service charges and fees

 

112

 

 

104

 

8%

 

92

22%

 

216

 

 

166

30%

Investment management and advisory fees

 

425

 

 

340

 

25%

 

500

(15)%

 

765

 

 

1,123

(32)%

Gain on sale of loans

 

2,002

 

 

2,480

 

(19)%

 

5,096

(61)%

 

4,482

 

 

9,102

(51)%

Net servicing (loss) income

 

(1,002

)

 

325

 

(408)%

 

233

(530)%

 

(677

)

 

710

(195)%

Other income

 

531

 

 

579

 

(8)%

 

376

41%

 

1,110

 

 

689

61%

Total non-interest income

 

2,068

 

 

3,828

 

(46)%

 

6,297

(67)%

 

5,896

 

 

11,790

(50)%

Non-interest expense:
Salaries and employee benefits

 

7,381

 

 

7,267

 

2%

 

7,229

2%

 

14,648

 

 

13,878

6%

Occupancy and equipment

 

2,170

 

 

2,237

 

(3)%

 

1,610

35%

 

4,407

 

 

3,156

40%

Professional fees

 

1,104

 

 

962

 

15%

 

824

34%

 

2,066

 

 

1,446

43%

Advertising and marketing

 

406

 

 

439

 

(8)%

 

351

16%

 

845

 

 

700

21%

FDIC assessments

 

190

 

 

255

 

(25)%

 

474

(60)%

 

445

 

 

1,017

(56)%

Data processing

 

303

 

 

308

 

(2)%

 

295

3%

 

611

 

 

583

5%

Other

 

2,171

 

 

1,654

 

31%

 

1,838

18%

 

3,825

 

 

3,344

14%

Total non-interest expense

 

13,725

 

 

13,122

 

5%

 

12,621

9%

 

26,847

 

 

24,124

11%

Income before income taxes

 

18,878

 

 

22,020

 

(14)%

 

22,413

(16)%

 

40,898

 

 

44,501

(8)%

Income tax expense

 

5,444

 

 

6,337

 

(14)%

 

6,431

(15)%

 

11,781

 

 

12,770

(8)%

Net income

$

13,434

 

$

15,683

 

(14)%

$

15,982

(16)%

$

29,117

 

$

31,731

(8)%

Income per share, basic and diluted

$

0.26

 

$

0.30

 

$

0.30

$

0.56

 

$

0.60

Weighted average common shares outstanding:
Basic

 

51,510,951

 

 

52,554,446

 

 

52,963,308

 

52,029,816

 

 

52,963,308

Diluted

 

51,520,944

 

 

52,562,820

 

 

52,965,365

 

52,039,000

 

 

52,965,133

Sterling Bancorp, Inc.
Selected Financial Data (Unaudited)
As of and for the Three Months Ended
June 30, March 31, June 30,
Performance Ratios:

2019

2019

2018

Return on average assets

1.64%

1.94%

2.08%

Return on average shareholders' equity

15.54%

18.44%

21.31%

Return on average tangible common equity

15.55%

18.46%

21.36%

Yield on earning assets

5.60%

5.49%

5.25%

Cost of average interest-bearing liabilities

2.02%

1.91%

1.47%

Net interest spread

3.58%

3.58%

3.78%

Net interest margin

3.84%

3.86%

3.96%

Efficiency ratio (1)

41.87%

38.45%

34.91%

 
(1) Efficiency Ratio is computed as the ratio of non-interest expense divided by the sum of net interest income and non-interest income.
Sterling Bancorp, Inc.
Yield Analysis and Net Interest Income (Unaudited)

Three Months Ended

June 30, 2019

March 31, 2019

June 30, 2018

(dollars in thousands)

Average

Balance

Interest

Average

Yield/

Rate

Average

Balance

Interest

Average

Yield/

Rate

Average

Balance

Interest

Average

Yield/

Rate

Interest earning assets
Loans (1)

$ 2,994,142

$ 43,301

5.78%

$ 2,942,261

$ 41,722

5.67%

$ 2,829,819

$ 38,580

5.45%

Securities, includes restricted stock

174,823

1,272

2.91%

170,117

1,227

2.89%

159,243

842

2.12%

Other interest earning assets

28,794

216

3.00%

31,293

236

3.02%

24,496

119

1.94%

Total interest earning assets

$ 3,197,759

$ 44,789

5.60%

$ 3,143,671

$ 43,185

5.49%

$ 3,013,558

$ 39,541

5.25%

Interest-bearing liabilities
Money Market, Savings, NOW

$ 1,356,200

$ 4,961

1.47%

$ 1,474,129

$ 5,378

1.48%

$ 1,515,912

$ 4,468

1.18%

Time deposits

1,044,388

6,563

2.52%

922,996

5,278

2.32%

715,863

2,711

1.52%

Total interest-bearing deposits

2,400,588

11,524

1.93%

2,397,125

10,656

1.80%

2,231,775

7,179

1.29%

FHLB borrowings

323,583

1,375

1.68%

268,566

1,055

1.57%

351,846

1,334

1.50%

Subordinated debt

65,079

1,175

7.22%

65,043

1,174

7.22%

64,935

1,171

7.21%

Total borrowings

388,662

2,550

2.60%

333,609

2,229

2.67%

416,781

2,505

2.38%

Total interest-bearing liabilities

$ 2,789,250

14,074

2.02%

$ 2,730,734

12,885

1.91%

$ 2,648,556

9,684

1.47%

Net interest income and spread (2)

$ 30,715

3.58%

$ 30,300

3.58%

$ 29,857

3.78%

Net interest margin (2)

3.84%

3.86%

3.96%

 
(1) Nonaccrual loans are included in the respective average loan balances. Income, if any, on such loans is recognized on a cash basis.
(2) Interest income does not include taxable equivalent adjustments.

Six Months Ended

June 30, 2019

June 30, 2018

(dollars in thousands)

Average

Balance

Interest

Average

Yield/

Rate

Average

Balance

Interest

Average

Yield/

Rate

Interest earning assets
Loans (1)

$

2,968,345

$

85,023

5.73%

$

2,782,055

$

74,980

5.39%

Securities, includes restricted stock

 

172,483

 

2,499

2.90%

 

150,478

 

1,661

2.21%

Other interest earning assets

 

30,037

 

452

3.01%

 

24,579

 

233

1.90%

Total interest earning assets

$

3,170,865

$

87,974

5.55%

$

2,957,112

$

76,874

5.20%

Interest-bearing liabilities
Money Market, Savings, NOW

$

1,414,839

$

10,339

1.47%

$

1,520,648

$

8,602

1.14%

Time deposits

 

984,027

 

11,841

2.43%

 

710,872

 

5,166

1.47%

Total interest-bearing deposits

 

2,398,866

 

22,180

1.86%

 

2,231,520

 

13,768

1.24%

FHLB borrowings

 

296,227

 

2,430

1.63%

 

305,707

 

2,167

1.41%

Subordinated debt

 

65,061

 

2,349

7.22%

 

64,918

 

2,343

7.22%

Total borrowings

 

361,288

 

4,779

2.63%

 

370,625

 

4,510

2.42%

Total interest-bearing liabilities

$

2,760,154

 

26,959

1.97%

$

2,602,145

 

18,278

1.42%

Net interest income and spread (2)

$

61,015

3.58%

$

58,596

3.78%

Net interest margin (2)

3.85%

3.96%

 
(1) Nonaccrual loans are included in the respective average loan balances. Income, if any, on such loans is recognized on a cash basis.
(2) Interest income does not include taxable equivalent adjustments.
Sterling Bancorp, Inc.
Loan Composition (Unaudited)
(dollars in thousands)

June 30,

2019

 

March 31,

2019

 

%

change

 

December 31,

2018

 

%

change

 

June 30,

2018

 

%

change

Residential real estate

$

2,523,883

 

$

2,494,030

 

1%

$

2,452,441

 

3%

$

2,367,876

 

7%

Commercial real estate

 

220,388

 

 

240,896

 

(9)%

 

250,955

 

(12)%

 

250,465

 

(12)%

Construction

 

172,656

 

 

172,398

 

0%

 

176,605

 

(2)%

 

172,262

 

0%

Commercial lines of credit

 

28,774

 

 

36,916

 

(22)%

 

37,776

 

(24)%

 

45,821

 

(37)%

Other consumer

 

30

 

 

34

 

(12)%

 

26

 

15%

 

32

 

(6)%

Total loans held for investment

 

2,945,731

 

 

2,944,274

 

0%

 

2,917,803

 

1%

 

2,836,456

 

4%

Less: allowance for loan losses

 

(20,918

)

 

(20,698

)

1%

 

(21,850

)

(4)%

 

(20,300

)

3%

Loans, net

$

2,924,813

 

$

2,923,576

 

0%

$

2,895,953

 

1%

$

2,816,156

 

4%

 
Mortgage loans held for sale

$

500

 

$

165

 

203%

$

1,248

 

(60)%

$

21,641

 

(98)%

Total gross loans

$

2,946,231

 

$

2,944,439

 

0%

$

2,919,051

 

1%

$

2,858,097

 

3%

Sterling Bancorp, Inc.
Allowance for Loan Losses (Unaudited)
Three Months Ended
(dollars in thousands)

June 30,

2019

March 31,

2019

December 31,

2018

June 30,

2018

Balance at beginning of period

$

20,698

$

21,850

 

$

20,765

$

19,132

 

Provision (recovery) for loan losses

 

180

 

(1,014

)

 

1,045

 

1,120

 

Charge offs

 

-

 

(176

)

 

-

 

(4

)

Recoveries

 

40

 

38

 

 

40

 

52

 

Balance at end of period

$

20,918

$

20,698

 

$

21,850

$

20,300

 

Sterling Bancorp, Inc.
Deposit Composition (Unaudited)
(dollars in thousands)

June 30,

2019

March 31,

2019

%

change

December 31,

2018

%

change

June 30,

2018

%

change

Noninterest bearing demand deposits

$

70,406

$

70,527

0%

$

76,815

(8)%

$

73,791

(5)%

Money Market, Savings and NOW

 

1,312,010

 

1,431,715

(8)%

 

1,481,591

(11)%

 

1,518,635

(14)%

Time deposits

 

1,164,244

 

934,325

25%

 

894,279

30%

 

748,179

56%

Total deposits

$

2,546,660

$

2,436,567

5%

$

2,452,685

4%

$

2,340,605

9%

Sterling Bancorp, Inc.
Capital and Credit Quality Ratios (Unaudited)

As of and for the Three Months Ended

(dollars in thousands)

June 30,

2019

 

March 31,

2019

 

December 31,

2018

 

June 30,

2018

Capital Ratios
Regulatory and Other Capital Ratios— Consolidated:
Total adjusted capital to risk-weighted assets

 

21.91

%

 

21.64

%

 

21.98

%

 

20.77

%

Tier 1 (core) capital to risk-weighted assets

 

17.51

%

 

17.27

%

 

17.45

%

 

16.21

%

Common Tier 1 (CET 1)

 

17.51

%

 

17.27

%

 

17.45

%

 

16.21

%

Tier 1 (core) capital to adjusted tangible assets

 

10.40

%

 

10.49

%

 

10.42

%

 

9.88

%

 
Regulatory and Other Capital Ratios—Bank:
Total adjusted capital to risk-weighted assets

 

17.72

%

 

17.12

%

 

16.94

%

 

15.60

%

Tier 1 (core) capital to risk-weighted assets

 

16.64

%

 

16.07

%

 

15.80

%

 

14.52

%

Common Tier 1 (CET 1)

 

16.64

%

 

16.07

%

 

15.80

%

 

14.52

%

Tier 1 (core) capital to adjusted tangible assets

 

9.88

%

 

9.76

%

 

9.44

%

 

8.84

%

 
Credit Quality Data
Nonperforming loans (1)

$

6,697

 

$

7,337

 

$

4,500

 

$

641

 

Nonperforming loans to total loans

 

0.23

%

 

0.25

%

 

0.15

%

 

0.02

%

Nonperforming assets (2)

$

12,190

 

$

14,155

 

$

10,157

 

$

3,583

 

Nonperforming assets to total assets

 

0.37

%

 

0.44

%

 

0.32

%

 

0.12

%

Allowance for loan losses to total loans

 

0.71

%

 

0.70

%

 

0.75

%

 

0.72

%

Allowance for loan losses to nonperforming loans

 

312

%

 

282

%

 

486

%

 

3,167

%

Net charge offs (recoveries) to average loans

 

(0.00

)%

 

0.00

%

 

(0.00

)%

 

0.00

%

 
(1) Nonperforming loans include nonaccrual loans and loans past due 90 days or more and still accruing interest.
(2) Nonperforming assets include nonperforming loans and loans modified under troubled debt restructurings and other repossessed assets.

Return on Average Tangible Common Equity Reconciliations (non-GAAP)

Average tangible common equity and return on average tangible common equity are non-GAAP disclosures. Sterling’s management uses these non-GAAP financial measures to assess the Company’s capital strength and business performance. Average tangible common equity excludes the effect of intangible assets. This non-GAAP financial measure should not be considered a substitute for those comparable measures that are similarly titled that are determined in accordance with U.S. GAAP that may be used by other companies. The following is a reconciliation of average tangible common equity to the average shareholders’ equity, its most comparable GAAP measure, as well as a calculation of return on average tangible common equity as of June 30, 2019 and 2018, and March 31, 2019.

Sterling Bancorp, Inc.
GAAP to Non-GAAP Reconciliations

As of and for the Three Months Ended

 

As of and for the Six Months Ended

June 30,

 

March 31,

 

June 30,

 

June 30,

 

June 30,

(dollars in thousands)

2019

 

2019

 

2018

 

2019

 

2018

Net Income

$

13,434

 

$

15,683

 

$

15,982

 

$

29,117

 

$

31,731

 

Average shareholders' equity

 

345,806

 

 

340,221

 

 

299,988

 

 

343,029

 

 

292,088

 

Adjustment
Customer-related intangible

 

(300

)

 

(413

)

 

(750

)

 

(356

)

 

(806

)

Average tangible common equity

$

345,506

 

$

339,808

 

$

299,238

 

$

342,673

 

$

291,282

 

Return on average tangible common equity*

 

15.55

%

 

18.46

%

 

21.36

%

 

16.99

%

 

21.79

%

 
*Annualized

 

Contacts

Financial Profiles, Inc.
Larry Clark
310-622-8223
Kristen Papke
310-622-8225
SBT@finprofiles.com

Release Summary

Sterling Bancorp's Second Quarter Earnings Release

Contacts

Financial Profiles, Inc.
Larry Clark
310-622-8223
Kristen Papke
310-622-8225
SBT@finprofiles.com