SYS-CON MEDIA Authors: Doug Masi, Mat Mathews, PR.com Newswire, David Smith, Tim Crawford

News Feed Item

Sterling Bancorp Announces Results for the Third Fiscal Quarter and Nine Months Ended June 30, 2014

Strong Quarter Performance Highlighted by Core Diluted Earnings per Share(2) of $0.19, GAAP Diluted Earnings per Share of $0.18, and Annualized Commercial Loan Growth of 33.4%

MONTEBELLO, NY--(Marketwired - July 28, 2014) - Sterling Bancorp (NYSE: STL)

 Key Highlights for the Third Fiscal Quarter 2014

  • Total revenue1 reached $70.7 million.
  • Tax equivalent net interest margin was 3.84%, compared to 3.76% in the linked quarter and 3.46% in the third quarter of fiscal 2013.
  • Total non-interest income excluding securities gains was $12.3 million, which represented 17.4% of total revenue1.
  • Core total revenue growth2 of 6.5% versus an increase in core non-interest expense of 12 basis points (linked quarter).
  • Core operating efficiency2 ratio was 57.8%.
  • Annualized commercial loan growth of 33.4% over linked quarter.
  • Core return on average tangible assets2 was 0.95%, compared to 0.84% in the linked quarter and 0.68% in the third quarter of fiscal 2013.
  • Core return on average tangible equity2 was 12.4%, compared to 10.7% in the linked quarter and 7.5% in the third quarter of fiscal 2013.

Sterling Bancorp (NYSE: STL), the parent company of Sterling National Bank, today announced results for the quarter and nine months ended June 30, 2014. Net income for the quarter was $15.0 million, or $0.18 per diluted share, compared to net income of $6.4 million, or $0.15 per diluted share for the same quarter last year and net income of $10.3 million, or $0.12 per diluted share, for the linked quarter ended March 31, 2014. For the nine months ended June 30, 2014, net income was $11.3 million, or $0.14 per diluted share, compared to net income of $19.9 million, or $0.45 per diluted share for the nine months ended June 30, 2013.

President's Comments
Jack Kopnisky, President and CEO, commented: "The quarter was highlighted by higher profitability, strong loan growth and significant operating leverage, as 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 continue to make significant progress in the integration of legacy Sterling Bancorp, as evidenced by our strong results in the quarter. Our earnings, balance sheet growth and operating efficiency continue to gain momentum and are on-track to achieve our long-term targets."

1. Total revenue is equal to net interest income plus non-interest income excluding securities gains and losses.
2. Core measures are defined in the Non-GAAP tables beginning on page 10.

"Core net income for the quarter was $15.7 million and core earnings per diluted share were $0.19, increasing over both the linked and year ago quarters. Our core return on average tangible assets was 0.95% and core return on average tangible equity was 12.4%. This compares to 0.68% and 7.5%, respectively for the same quarter a year ago. 

"On a linked quarter basis, our core total revenue grew 6.5% while core non-interest expense increased by 0.12%. We are realizing the anticipated revenue and expense benefits of the merger with legacy Sterling Bancorp and the consolidation of our financial centers and other locations. For the quarter, our core operating efficiency ratio was 57.8%, which compares to 61.4% in the linked quarter and 59.1% in the same quarter a year ago.

"We experienced strong loan growth across multiple asset classes. As of June 30, 2014, total loans including loans held for sale were $4.6 billion, which represented annualized growth of 29.4% over the prior quarter end. Our commercial loan balances grew by $286.2 million to $3.7 billion, which represented annualized growth of 33.4% over the prior quarter end. 

"Our funding and liquidity position remains strong. As of June 30, 2014, our retail, commercial and municipal transaction, money market and savings accounts were $4.5 billion, which represented 87.4% of our total deposit balances. A key component of our strategy is to continue growing commercial deposits. During the quarter, commercial transaction deposits increased by $48.0 million, which represented growth of 8.5% over the linked quarter. 

"We continue to focus on diversifying and improving our revenue mix. Non-interest income excluding securities gains was $12.3 million for the quarter, which represented approximately 17.4% of total revenue. We have a significant opportunity 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.

"Net charge-offs against the allowance for loan losses for the quarter ended June 30, 2014 were $1.6 million, compared to $3.4 million in the prior quarter. 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 1.05%. The ratio of allowance for loan losses to non-performing loans continues to strengthen and increased from 53.1% at March 31, 2014 to 64.0% at June 30, 2014.

"All of the issued and outstanding 8.375% Cumulative Trust Preferred Securities of Sterling Bancorp Trust I were redeemed on June 1, 2014, which will generate significant interest expense savings.

"Our capital position remains strong. At June 30, 2014, our tangible equity to tangible assets ratio was 7.60% and our Tier 1 leverage ratio at Sterling National Bank was 9.42%. 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 August 14, 2014 to our holders on the record date of August 4, 2014."

Reconciliation of Core to GAAP Results
Results for the third fiscal quarter of 2014 were impacted by pre-tax gains of $2.8 million and pre-tax charges of $3.8 million, which are listed below. Excluding the impact of these items, net income was $15.7 million, or $0.19 per diluted share.

  • A gain on the sale of a financial center location of $925 thousand. The gain was recognized as a reduction of foreclosed property expense.
  • A gain on sale of securities of $1.2 million.
  • A gain on the redemption of the 8.375% Cumulative Preferred Trust Securities of $712 thousand. The gain was recognized as a reduction of other non-interest expense.
  • Costs associated with the banking systems conversion of $1.7 million, which included the payment of a contract termination fee to our current service provider. The charges were recognized as other non-interest expense.
  • A charge to exit certain financial center locations of $571 thousand, which was recognized in other non-interest expense.
  • Amortization of non-compete intangible assets of $1.5 million.

Results for the nine months ended June 30, 2014 were impacted by merger-related expenses associated with the legacy Sterling Bancorp merger transaction, and charges for asset write-downs, the settlement of benefit plan obligations and other charges. In total, merger-related expenses and other charges were $40.8 million the nine months ended June 30, 2014. Excluding the impact of these items, net income for the nine months ended June 30, 2014 was $39.8 million, or $0.50 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".

Net Interest Income and Margin 
Third quarter fiscal 2014 compared to the third quarter fiscal 2013
Net interest income was $58.5 million, up $30.1 million compared to the third 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 37 basis points and yield on loans increased 24 basis points. Yield on loans included $2.9 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 18 basis points and the cost of borrowings was 2.44%. The net interest margin on a tax-equivalent basis was 3.84% compared to 3.46% for the same period a year ago. 

Third quarter fiscal 2014 compared with linked quarter ended March 31, 2014
Net interest income increased $4.4 million compared to the linked quarter ended March 31, 2014. The increase in net interest income for the third quarter was due to higher average loans and investment securities balances and an increase in net interest margin. Average earning assets for the quarter were $6.3 billion, the yield on loans was 5.04% and tax-equivalent yield on interest earning assets was 4.30%. Tax-equivalent net interest margin increased to 3.84% from 3.76% in the linked quarter.

Non-interest Income
Third quarter fiscal 2014 compared with third quarter fiscal 2013
Excluding net gains on sale of securities, non-interest income increased $7.6 million to $12.3 million during the third 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 $1.2 million for the third quarter of fiscal 2014 compared to net gain on sale of securities of $1.9 million in the year ago quarter.

Third quarter fiscal 2014 compared with linked quarter ended March 31, 2014
Excluding net gains and losses on sale of securities, non-interest income decreased $77 thousand to $12.3 million during the third fiscal quarter of 2014. The decrease was mainly due to lower levels of gain on sale income in mortgage banking. The Company realized a net gain on sale of securities of $60 thousand in the linked quarter ended March 31, 2014.

Non-interest Expense
Third quarter fiscal 2014 compared with third quarter fiscal 2013
Non-interest expense increased $23.1 million relative to the third quarter of fiscal 2013 to $44.9 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 a charge related to the banking systems conversion of $1.2 million, a charge to exit certain financial center locations of $571 thousand, and the amortization of non-compete agreements of approximately $1.5 million. The charge related to the banking systems conversion mainly consisted of an early contract termination fee to our current provider and consulting fees and personnel training costs incurred in connection with the integration of the legacy Provident Bank and legacy Sterling National Bank technology systems. Other expenses also included a favorable gain on the sale of a financial center of $925 thousand included in foreclosed property expense, and a gain on the redemption of the Company's 8.375% Cumulative Trust Preferred Securities of $712 thousand.

Third quarter fiscal 2014 compared with the linked quarter ended March 31, 2014
Non-interest expense decreased $1.8 million compared to the linked quarter. Other expenses in the second fiscal 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 $1.5 million.

Income Taxes
In the third quarter of fiscal 2014 the Company recorded income taxes at a rate of 28.7% compared to an effective tax rate of 30.8% in the linked quarter and 30.8% for the same period in fiscal 2013. During the quarter, the Company completed the income tax returns for fiscal year 2013 which resulted in an adjustment to the effective estimated tax rate for fiscal 2014.

Key Balance Sheet Highlights at June 30, 2014

  • Total assets were $7.3 billion. 
  • Total loans including loans held for sale were $4.6 billion.
  • Commercial and industrial loans represented 43.8%, commercial real estate loans represented 37.6%, consumer and residential mortgage loans represented 16.4%, and acquisition, development and construction loans represented 2.2% of the total loan portfolio.
  • Commercial loan growth, which includes commercial and industrial loans, commercial real estate loans and specialty lending businesses was $286.3 million for the quarter ended June 30, 2014, and represented annualized growth of 33.4% over the prior quarter.
  • Securities, excluding FHLB and FRB stock, were $1.7 billion and represented 23.9% of total assets.
  • Total deposits were $5.1 billion.
  • Transaction, money market and savings deposits (including municipal deposits) were $4.5 billion and represented 87.4% of total deposits.
  • The allowance for loan losses was $36.4 million and represented 1.05% of total loans excluding the impact of loans acquired in the Gotham 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 $6.20.

Credit Quality
Non-performing loans decreased $3.5 million to $56.8 million, or 1.18% of total loans at June 30, 2014 compared to $60.3 million, or 1.30% of total loans at March 31, 2014. Net charge-offs for the third quarter that were charged to the allowance for loan losses were $1.6 million compared to $3.4 million in the linked quarter. The allowance for loan losses at June 30, 2014 was $36.4 million, which represented 64.0% of non-performing loans and 0.80% 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 June 30, 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 1.05% at June 30, 2014. Please refer to the Company's reconciliation of this non-GAAP measure on page 10.

Capital
The Company's stockholders' equity was $953.4 million at June 30, 2014, an increase of $470.6 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 $457.4 million. Other contributors to the change in capital included fiscal year to date net income of $11.3 million, an increase in other comprehensive income of $7.6 million and items related to stock-based compensation of $5.6 million. These increases were partially offset by dividends of $11.7 million declared during the first nine months of fiscal 2014. 

Tangible book value per share decreased from $7.08 at September 30, 2013 to $6.20 at June 30, 2014. Total goodwill and other intangible assets were $435.2 million at June 30, 2014, an increase of $266.2 million over September 30, 2013. For the quarter ended June 30, 2014, basic and diluted weighted average common shares outstanding increased to 83.6 million and 83.8 million, respectively, compared to 43.7 million basic shares and 43.9 million diluted shares, respectively, for the quarter ended September 30, 2013. The increase in weighted average basic and diluted shares is mainly the result of the issuance of 39.1 million shares of common stock on October 31, 2013 in connection with the legacy Sterling Bancorp merger transaction. Total shares outstanding at June 30, 2014 were approximately 83.6 million.

Consolidated tangible equity to tangible assets was 7.60% at June 30, 2014 and Sterling National Bank remained well capitalized with a Tier 1 leverage ratio of 9.42%. 

Sterling Bancorp will host a teleconference and webcast on Tuesday, July 29, 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 #68944927. A replay of the teleconference can be accessed through the Company's website.

About Sterling Bancorp
Sterling Bancorp, of which the principal subsidiary is Sterling National Bank, specializes in the delivery of service and solutions to business owners, their families and consumers within the communities we serve 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 website 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 June 30, 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 Form 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)                  
                                                                            
                                       6/30/2014    9/30/2013    6/30/2013  
                                      -----------  -----------  ----------- 
Assets:                                                                     
Cash and due from banks               $   216,509  $   113,090  $   109,166 
Investment securities                   1,730,980    1,208,392    1,065,724 
Loans held for sale                        20,217        1,011        1,539 
Loans:                                                                      
  Residential mortgage                    528,176      400,009      369,613 
  Commercial real estate                1,721,522    1,277,037    1,210,248 
  Commercial and industrial             2,006,008      439,787      453,145 
  Acquisition, development and                                              
   construction                           102,090      102,494      106,198 
  Consumer                                200,828      193,571      197,330 
                                      -----------  -----------  ----------- 
    Total loans, gross                  4,558,624    2,412,898    2,336,534 
  Allowance for loan losses               (36,350)     (28,877)     (28,374)
                                      -----------  -----------  ----------- 
    Total loans, net                    4,522,274    2,384,021    2,308,160 
Federal Home Loan Bank ("FHLB") and                                         
 Federal Reserve Bank Stock, at cost       74,078       24,312       28,368 
Accrued interest receivable                16,569       11,698       11,320 
Premises and equipment, net                48,286       36,520       37,473 
Goodwill                                  387,325      163,117      163,117 
Other intangibles                          47,860        5,891        6,201 
Bank owned life insurance                 118,689       60,914       60,412 
Other real estate owned                     5,017        6,022        4,376 
Other assets                               62,925       34,184       28,573 
                                      -----------  -----------  ----------- 
    Total assets                      $ 7,250,729  $ 4,049,172  $ 3,824,429 
                                      ===========  ===========  =========== 
Liabilities:                                                                
Deposits                              $ 5,102,457  $ 2,962,294  $ 2,739,214 
FHLB borrowings                           939,868      442,602      532,367 
Other borrowings                           23,601       20,351       20,438 
Senior notes                               98,308       98,033            - 
Mortgage escrow funds                       3,980       12,646       25,915 
Other liabilities                         129,082       30,380       26,330 
                                      -----------  -----------  ----------- 
    Total liabilities                   6,297,296    3,566,306    3,344,264 
Stockholders' equity                      953,433      482,866      480,165 
                                      -----------  -----------  ----------- 
    Total liabilities and                                                   
     stockholders' equity             $ 7,250,729  $ 4,049,172  $ 3,824,429 
                                      ===========  ===========  =========== 
                                                                            
Shares of common stock outstanding at                                       
 period end                            83,600,529   44,351,046   44,353,276 
Book value per share                  $     11.40  $     10.89  $     10.83 
Tangible book value per share                6.20         7.08         7.01 
                                                                            
                                                                            
                                                                            
Sterling Bancorp and Subsidiaries                                           
CONSOLIDATED CONDENSED INCOME STATEMENTS                                    
(unaudited, in thousands, except share and per share data)                  
                                                                            
                                                       For the Nine Months  
                        For the Quarter Ended                 Ended         
                 ----------------------------------- -----------------------
                  6/30/2014   3/31/2014   6/30/2013   6/30/2014   6/30/2013 
                 ----------- ----------- ----------- ----------- -----------
Interest and                                                                
 dividend                                                                   
 income:                                                                    
  Loans and loan                                                            
   fees          $    54,189 $    50,312 $    26,638 $   147,789 $    80,087
  Securities                                                                
   taxable             8,005       7,573       4,189      22,479      12,761
  Securities                                                                
   non-taxable         2,751       2,674       1,500       7,587       4,447
  Other earning                                                             
   assets                816         766         266       1,941         863
                 ----------- ----------- ----------- ----------- -----------
  Total interest                                                            
   income             65,761      61,325      32,593     179,796      98,158
Interest                                                                    
 expense:                                                                   
  Deposits             2,319       2,394       1,151       6,542       4,872
  Borrowings           4,991       4,903       3,125      14,899       9,227
                 ----------- ----------- ----------- ----------- -----------
Total interest                                                              
 expense               7,310       7,297       4,276      21,441      14,099
                 ----------- ----------- ----------- ----------- -----------
Net interest                                                                
 income               58,451      54,028      28,317     158,355      84,059
Provision for                                                               
 loan losses           5,950       4,800       3,900      13,750       9,450
                 ----------- ----------- ----------- ----------- -----------
Net interest                                                                
 income after                                                               
 provision for                                                              
 loan losses          52,501      49,228      24,417     144,605      74,609
Non-interest                                                                
 income:                                                                    
  Accounts                                                                  
   receivable /                                                             
   factoring                                                                
   commissions                                                              
   and other                                                                
   fees                3,613       3,500           -       9,332           -
  Mortgage                                                                  
   banking                                                                  
   income              1,927       2,383         429       5,926       1,682
  Deposit fees                                                              
   and service                                                              
   charges             3,897       3,904       2,615      11,745       8,129
  Net gain on                                                               
   sale of                                                                  
   securities          1,193          60       1,945         607       5,590
  Investment                                                                
   management                                                               
   fees                  681         542         613       1,763       1,740
  Bank owned                                                                
   life                                                                     
   insurance             820         729         496       2,289       1,496
  Other                1,340       1,297         483       3,422       2,455
                 ----------- ----------- ----------- ----------- -----------
Total non-                                                                  
 interest income      13,471      12,415       6,581      35,084      21,092
Non-interest                                                                
 expense:                                                                   
  Compensation                                                              
   and benefits       23,381      25,263      11,320      72,199      35,424
  Stock-based                                                               
   compensation                                                             
   plans                 780         927         547       2,698       1,726
  Occupancy and                                                             
   office                                                                   
   operations          6,992       7,254       3,423      20,579      11,187
  Merger-related                                                            
   expenses                -         388       1,516       9,455       2,058
  Advertising                                                               
   and promotion         963         422         307       1,694       1,086
  Professional                                                              
   fees                1,683       1,500         526       5,000       2,653
  Data and check                                                            
   processing          1,117         663         588       2,375       2,060
  Amortization                                                              
   of intangible                                                            
   assets              2,511       2,511         337       6,897         986
  FDIC insurance                                                            
   and                                                                      
   regulatory                                                               
   assessments         1,795       1,567         875       4,527       2,346
  Other real                                                                
   estate owned,                                                            
   net (income)                                                             
   expense              (881)         61         (28)       (452)      1,172
  Other                6,563       6,167       2,378      39,675       6,976
                 ----------- ----------- ----------- ----------- -----------
Total non-                                                                  
 interest                                                                   
 expense              44,904      46,723      21,789     164,647      67,674
                 ----------- ----------- ----------- ----------- -----------
Income before                                                               
 income tax                                                                 
 expense              21,068      14,920       9,209      15,042      28,027
Income tax                                                                  
 expense               6,057       4,588       2,833       3,701       8,102
                 ----------- ----------- ----------- ----------- -----------
Net income       $    15,011 $    10,332 $     6,376 $    11,341 $    19,925
                 =========== =========== =========== =========== ===========
  Basic earnings                                                            
   per share     $      0.18 $      0.12 $      0.15 $      0.14 $      0.46
  Diluted                                                                   
   earnings per                                                             
   share                0.18        0.12        0.15        0.14        0.45
  Dividends                                                                 
   declared per                                                             
   share                0.07        0.07        0.06        0.14        0.18
Weighted average                                                            
 common shares:                                                             
  Basic           83,580,050  83,497,765  43,801,867  79,142,738  43,766,402
  Diluted         83,806,135  83,794,107  43,906,158  79,401,731  43,850,601
                                                                            
                                                                            
                                                                            
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         6/30/2014  3/31/2014 12/31/2013   9/30/2013  6/30/2013
-------------------- ---------- ---------- ----------  ---------- ----------
Total assets         $7,250,729 $6,924,419 $6,667,437  $4,049,172 $3,824,429
Securities available                                                        
 for sale             1,160,510  1,233,310  1,153,313     954,393    889,747
Securities held to                                                          
 maturity               570,470    527,265    508,337     253,999    175,977
Loans, gross (1)      4,558,624  4,244,354  4,127,141   2,412,898  2,336,534
Goodwill                387,325    387,286    387,517     163,117    163,117
Other intangibles        47,860     50,441     53,020       5,891      6,201
Deposits              5,102,457  5,211,724  4,920,564   2,962,294  2,739,214
Municipal deposits                                                          
 (included above)       824,522    926,618    673,656     757,066    465,566
Borrowings            1,061,777    634,516    696,270     560,986    552,805
Stockholders' equity    953,433    936,466    925,109     482,866    480,165
Tangible equity         518,248    498,739    484,572     313,858    310,847
Average Balances                                                            
--------------------                                                        
Total assets         $7,048,328 $6,747,546 $6,013,816  $3,907,960 $3,745,356
Loans, gross:                                                               
  Residential                                                               
   mortgage             536,038    520,887    491,231     379,640    366,823
  Commercial real                                                           
   estate             1,680,242  1,580,454  1,466,986   1,247,055  1,175,094
  Commercial and                                                            
   industrial         1,805,048  1,625,720  1,268,492     443,349    398,622
  Acquisition,                                                              
   development and                                                          
   construction          94,804     93,531     98,691     104,856    114,286
  Consumer              199,626    199,834    200,637     194,718    199,861
Loans, total (1)      4,315,758  4,020,426  3,526,037   2,369,618  2,254,686
Securities (taxable)  1,444,507  1,386,538  1,330,646     963,949    909,312
Securities (non-                                                            
 taxable)               339,417    324,470    250,520     157,480    184,325
Total earning assets  6,265,883  5,985,054  5,207,436   3,529,321  3,378,655
Deposits:                                                                   
  Non-interest                                                              
   bearing demand     1,681,169  1,640,125  1,361,622     669,067    625,684
  Interest bearing                                                          
   demand               712,051    761,409    619,746     426,602    461,390
  Savings (including                                                        
   mortgage escrow                                                          
   funds)               606,518    613,131    622,530     601,272    581,106
  Money market        1,625,335  1,461,774  1,182,858     715,351    777,857
  Certificates of                                                           
   deposit              549,201    582,580    565,462     335,616    338,017
Total deposits and                                                          
 mortgage escrow      5,174,274  5,059,019  4,352,218   2,747,908  2,784,054
Borrowings              820,607    660,486    709,125     653,147    440,579
Equity                  944,476    934,304    780,241     478,491    494,049
Tangible equity         507,671    494,697    432,703     309,327    324,540
Condensed Tax Equivalent Income Statement                                   
------------------------------------------                                  
Interest and                                                                
 dividend income     $   65,761 $   61,325 $   52,711  $   33,903 $   32,593
Tax equivalent                                                              
 adjustment*              1,481      1,440      1,164         666        808
Interest expense          7,310      7,297      6,835       5,795      4,276
                     ---------- ---------- ----------  ---------- ----------
Net interest income                                                         
 (tax equivalent)        59,932     55,468     47,040      28,774     29,125
Provision for loan                                                          
 losses                   5,950      4,800      3,000       2,700      3,900
                     ---------- ---------- ----------  ---------- ----------
Net interest income                                                         
 after provision for                                                        
 loan losses             53,982     50,668     44,040      26,074     25,225
Non-interest income      13,471     12,415      9,148       6,600      6,581
Non-interest expense     44,904     46,723     72,974      23,367     21,789
                     ---------- ---------- ----------  ---------- ----------
Income (loss) before                                                        
 income tax expense      22,549     16,360    (19,786)      9,307     10,017
Income tax expense                                                          
 (benefit) (tax                                                             
 equivalent)*             7,538      6,028     (5,784)      3,978      3,641
                     ---------- ---------- ----------  ---------- ----------
Net income (loss)    $   15,011 $   10,332 $  (14,002) $    5,329 $    6,376
                     ========== ========== ==========  ========== ==========
(1) Does not reflect allowance for loan losses of $36,350, $32,015, $30,612,
 $28,877 and $28,374.                                                       
*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    6/30/2014   3/31/2014   12/31/2013  9/30/2013   6/30/2013 
----------------------------------------------------------------------------
Basic earnings                                                              
 per share       $      0.18 $      0.12 $    (0.20) $      0.12 $      0.15
Diluted earnings                                                            
 per share              0.18        0.12      (0.20)        0.12        0.15
Dividends                                                                   
 declared per                                                               
 share                  0.07        0.07           -        0.12        0.06
Tangible book                                                               
 value per share        6.20        5.97        5.77        7.08        7.01
Shares of common                                                            
 stock                                                                      
 outstanding      83,600,529  83,544,307  83,955,647  44,351,046  44,353,276
Basic weighted                                                              
 average common                                                             
 shares                                                                     
 outstanding      83,580,050  83,497,765  70,493,305  43,742,903  43,801,867
Diluted weighted                                                            
 average common                                                             
 shares                                                                     
 outstanding      83,806,135  83,794,107  70,493,305  43,859,834  43,906,158
Performance                                                                 
 Ratios                                                                     
 (annualized)                                                               
----------------                                                            
Return on                                                                   
 average assets        0.85%       0.62%     (0.92)%       0.54%       0.68%
Return on                                                                   
 average equity        6.37%       4.48%     (7.12)%       4.42%       5.18%
Return on                                                                   
 average                                                                    
 tangible equity                                                            
 (1)                  11.86%       8.47%    (12.84)%       6.83%       7.88%
Core operating                                                              
 efficiency (1)        57.8%       61.4%       65.4%       64.7%       59.1%
Analysis of Net                                                             
 Interest Income                                                            
----------------                                                            
Yield on loans         5.04%       5.05%       4.88%       4.70%       4.80%
Yield on                                                                    
 investment                                                                 
 securities -                                                               
 tax equivalent                                                             
 (2)                   2.75%       2.77%       2.57%       2.35%       2.38%
Yield on earning                                                            
 assets - tax                                                               
 equivalent (2)        4.30%       4.25%       4.10%       3.89%       3.97%
Cost of deposits       0.18%       0.19%       0.17%       0.15%       0.17%
Cost of                                                                     
 borrowings            2.44%       3.01%       2.80%       2.88%       2.84%
Cost of interest                                                            
 bearing                                                                    
 liabilities           0.68%       0.73%       0.73%       0.84%       0.66%
Net interest                                                                
 rate spread -                                                              
 tax equivalent                                                             
 basis (2)             3.62%       3.52%       3.37%       3.05%       3.31%
Net interest                                                                
 margin - tax                                                               
 equivalent                                                                 
 basis (2)             3.84%      3.76 %       3.58%       3.23%       3.46%
Capital                                                                     
----------------                                                            
Tier 1 leverage                                                             
 ratio - Bank                                                               
 only                  9.42%      9.83 %      10.58%       9.33%       8.49%
Tier 1 risk-                                                                
 based capital -                                                            
 Bank only       $   624,599 $   622,878 $   593,462 $   363,274 $   311,507
Total risk-based                                                            
 capital - Bank                                                             
 only                661,344     655,288     624,469     392,376     340,077
Tangible equity                                                             
 as a % of                                                                  
 tangible assets                                                            
 - consolidated                                                             
 (1)                   7.60%      7.69 %       7.78%       8.09%       8.50%
Asset Quality                                                               
----------------                                                            
Non-performing                                                              
 loans (NPLs)                                                               
 non-accrual     $    53,153 $    54,877 $    35,597 $    22,807 $    27,244
Non-performing                                                              
 loans (NPLs)                                                               
 still accruing        3,645       5,394       2,845       4,099       4,216
Other real                                                                  
 estate owned          5,017       9,275      11,751       6,022       4,376
Non-performing                                                              
 assets (NPAs)        61,815      69,546      50,193      32,928      35,836
Net charge-offs        1,615       3,397       1,265       2,197       3,070
Net charge-offs                                                             
 as a % of                                                                  
 average loans                                                              
 (annualized)          0.15%       0.34%       0.14%       0.37%       0.54%
NPLs as a % of                                                              
 total loans           1.25%       1.42%       0.93%       1.12%       1.35%
NPAs as a % of                                                              
 total assets          0.85%       1.00%       0.75%       0.81%       0.94%
Allowance for                                                               
 loan losses as                                                             
 a % of NPLs           64.0%       53.1%      79.63%      107.3%       90.2%
Allowance for                                                               
 loan losses as                                                             
 a % of total                                                               
 loans                 0.80%       0.75%       0.74%       1.20%       1.21%
Allowance for                                                               
 loan losses as                                                             
 a % of total                                                               
 loans,                                                                     
 excluding                                                                  
 Gotham and                                                                 
 legacy Sterling                                                            
 loans (1)             1.05%       1.12%       1.24%       1.27%       1.30%
Special mention                                                             
 loans           $    41,829 $    39,964 $    38,834 $    13,530 $    24,327
Substandard /                                                               
 doubtful loans       79,110      82,673      77,337      61,095      62,165
----------------------------------------------------------------------------
(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               
               ------------------------------------------------------------ 
                6/30/2014   3/31/2014   12/31/2013   9/30/2013   6/30/2013  
               ----------- ----------- -----------  ----------- ----------- 
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   $ 7,250,729 $ 6,924,419 $ 6,667,437  $ 4,049,172 $ 3,824,429 
Goodwill and                                                                
 other                                                                      
 intangibles      (435,185)   (437,727)   (440,537)    (169,008)   (169,318)
               ----------- ----------- -----------  ----------- ----------- 
Tangible                                                                    
 assets          6,815,544   6,486,692   6,226,900    3,880,164   3,655,111 
               ----------- ----------- -----------  ----------- ----------- 
Stockholders'                                                               
 equity            953,433     936,466     925,109      482,866     480,165 
Goodwill and                                                                
 other                                                                      
 intangibles      (435,185)   (437,727)   (440,537)    (169,008)   (169,318)
               ----------- ----------- -----------  ----------- ----------- 
Tangible                                                                    
 stockholders'                                                              
 equity            518,248     498,739     484,572      313,858     310,847 
               ----------- ----------- -----------  ----------- ----------- 
Shares of                                                                   
 common stock                                                               
 outstanding                                                                
 at period end  83,600,529  83,544,307  83,955,647   44,351,046  44,353,276 
Tangible                                                                    
 equity as a %                                                              
 of tangible                                                                
 assets               7.60%       7.69%       7.78%        8.09%       8.50%
Tangible book                                                               
 value per                                                                  
 share         $      6.20 $      5.97 $      5.77  $      7.08 $      7.01 
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        $   944,476 $   934,304 $   780,241  $   478,491 $   494,049 
Average                                                                     
 goodwill and                                                               
 other                                                                      
 intangibles      (436,805)   (439,613)   (347,538)    (169,164)   (169,509)
               ----------- ----------- -----------  ----------- ----------- 
Average                                                                     
 tangible                                                                   
 stockholders'                                                              
 equity            507,671     494,691     432,703      309,327     324,540 
               ----------- ----------- -----------  ----------- ----------- 
Net income                                                                  
 (loss)             15,011      10,332     (14,002)       5,329       6,376 
Net income                                                                  
 (loss), if                                                                 
 annualized         60,209      41,902     (55,551)      21,142      25,574 
Return on                                                                   
 average                                                                    
 tangible                                                                   
 equity              11.86%       8.47%     (12.84)%       6.83%       7.88%
Core net                                                                    
 income (see                                                                
 reconciliation                                                              
  on page 11)  $    15,715 $    13,094 $     9,805  $     5,006 $     6,079 
Annualized                                                                  
 core net                                                                   
 income             63,033      53,103      38,900       19,861      24,383 
Core return on                                                              
 average                                                                    
 tangible                                                                   
 equity              12.42%      10.73%       8.99%        6.42%       7.51%
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    $ 4,558,624 $ 4,244,354 $ 4,127,141  $ 2,412,898 $ 2,336,534 
Gotham loans       (95,458)   (101,273)   (117,046)    (133,493)   (152,825)
Legacy                                                                      
 Sterling                                                                   
 loans            (996,759) (1,277,335) (1,539,962)           -           - 
               ----------- ----------- -----------  ----------- ----------- 
Total loans,                                                                
 excluding                                                                  
 Gotham and                                                                 
 legacy                                                                     
 Sterling                                                                   
 loans           3,466,407   2,865,746   2,470,133    2,279,405   2,183,709 
Allowance for                                                               
 loan losses        36,350      32,015      30,612       28,877      28,374 
Allowance for                                                               
 loan losses                                                                
 to total                                                                   
 loans                0.80%       0.75%       0.74%        1.20%       1.21%
Allowance for                                                               
 loan losses                                                                
 to total                                                                   
 loans,                                                                     
 excluding                                                                  
 Gotham and                                                                 
 legacy                                                                     
 Sterling                                                                   
 loans                1.05%       1.12%       1.24%        1.27%       1.30%
----------------------------------------------------------------------------
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               
                ----------------------------------------------------------- 
                 6/30/2014   3/31/2014   12/31/2013  9/30/2013   6/30/2013  
                ----------- ----------- ----------- ----------- ----------- 
The following table shows the reconciliation of the core operating          
 efficiency ratio:                                                          
--------------------------------------------------------------------------- 
Net interest                                                                
 income         $    58,451 $    54,028 $    45,876 $    28,108 $    28,317 
Non-interest                                                                
 income              13,471      12,415       9,148       6,600       6,581 
                ----------- ----------- ----------- ----------- ----------- 
Total net                                                                   
 revenue             71,922      66,443      55,024      34,708      34,898 
Tax equivalent                                                              
 adjustment on                                                              
 securities                                                                 
 interest                                                                   
 income               1,481       1,440       1,164         666         808 
Net (gain) loss                                                             
 on sale of                                                                 
 securities          (1,193)        (60)        645      (1,801)     (1,945)
Other (other                                                                
 gains and fair                                                             
 value loss on                                                              
 interest rate                                                              
 caps)                    -           -         (93)         81           - 
                ----------- ----------- ----------- ----------- ----------- 
Core total                                                                  
 revenue             72,210      67,823      56,740      33,654      33,761 
                ----------- ----------- ----------- ----------- ----------- 
Non-interest                                                                
 expense             44,904      46,723      72,974      23,367      21,789 
Merger-related                                                              
 expense                  -        (388)     (9,068)       (714)     (1,516)
Charge for                                                                  
 asset write-                                                               
 downs, banking                                                             
 systems                                                                    
 conversion,                                                                
 retention and                                                              
 severance                                                                  
 compensation        (1,078)       (678)    (22,167)       (564)          - 
Gain on sale of                                                             
 financial                                                                  
 center and                                                                 
 redemption of                                                              
 Trust                                                                      
 Preferred                                                                  
 Securities           1,637           -           -           -           - 
Banking system                                                              
 contract                                                                   
 termination                                                                
 fee                 (1,243)          -           -           -           - 
Charge on                                                                   
 benefit plan                                                               
 settlement               -      (1,486)     (2,743)          -           - 
Amortization of                                                             
 intangible                                                                 
 assets              (2,511)     (2,511)     (1,875)       (310)       (337)
                ----------- ----------- ----------- ----------- ----------- 
Core non-                                                                   
 interest                                                                   
 expense             41,709      41,660      37,121      21,779      19,936 
                ----------- ----------- ----------- ----------- ----------- 
Core efficiency                                                             
 ratio                 57.8%       61.4%       65.4%       64.7%       59.1%
The Company believes the core operating efficiency ratio is a useful tool   
 to help assess the 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 (core diluted EPS):                                 
--------------------------------------------------------------------------- 
Income (loss)                                                               
 before income                                                              
 tax expense    $    21,068 $    14,920 $   (20,950)$     8,641 $     9,209 
Income tax                                                                  
 expense                                                                    
 (benefit)            6,057       4,588      (6,948)      3,312       2,833 
                ----------- ----------- ----------- ----------- ----------- 
Net income                                                                  
 (loss)              15,011      10,332     (14,002)      5,329       6,376 
                                                                            
Net (gain) loss                                                             
 on sale of                                                                 
 securities          (1,193)        (60)        645      (1,801)     (1,945)
Merger-related                                                              
 expense                  -         388       9,068         714       1,516 
Charge for                                                                  
 asset write-                                                               
 downs, banking                                                             
 systems                                                                    
 conversion,                                                                
 retention and                                                              
 severance                                                                  
 compensation         1,078         678      22,167         564           - 
Gain on sale of                                                             
 financial                                                                  
 center and                                                                 
 redemption of                                                              
 Trust                                                                      
 Preferred                                                                  
 Securities          (1,637)          -           -           -           - 
Banking system                                                              
 contract                                                                   
 termination                                                                
 fee                  1,243           -           -           -           - 
Charge on                                                                   
 benefit plan                                                               
 settlement               -       1,486       2,743           -           - 
Amortization of                                                             
 non-compete                                                                
 agreements           1,497       1,497         998           -           - 
                ----------- ----------- ----------- ----------- ----------- 
Total charges           988       3,989      35,621        (523)       (429)
Income tax                                                                  
 (benefit)             (284)     (1,227)    (11,814)        200         132 
                ----------- ----------- ----------- ----------- ----------- 
Total charges                                                               
 net of tax                                                                 
 benefit                704       2,762      23,807        (323)       (297)
                ----------- ----------- ----------- ----------- ----------- 
Core net income $    15,715 $    13,094 $     9,805 $     5,006 $     6,079 
                =========== =========== =========== =========== =========== 
                                                                            
Weighted                                                                    
 average                                                                    
 diluted shares                                                             
 (1)             83,806,135  83,794,107  70,707,292  43,859,834  43,906,158 
Diluted EPS as                                                              
 reported       $      0.18 $      0.12 $     (0.20)$      0.12 $      0.15 
Core diluted                                                                
 EPS (excluding                                                             
 total charges)        0.19        0.16        0.14        0.11        0.14 
--------------------------------------------------------------------------- 
The Company believes the presentation of its net income excluding total     
 charges provides a useful tool to help assess the 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                
              ------------------------------------------------------------- 
                6/30/2014    3/31/2014  12/31/2013   9/30/2013   6/30/2013  
The following table shows the reconciliation of return on tangible assets   
 and core return on tangible assets:                                        
--------------------------------------------------------------------------- 
Average                                                                     
 assets       $  7,048,328 $  6,747,546 $6,013,816  $ 3,907,960 $ 3,745,356 
Average                                                                     
 goodwill and                                                               
 other                                                                      
 intangibles      (436,805)    (439,613)  (347,538)    (169,164)   (169,509)
              ------------ ------------ ----------  ----------- ----------- 
Average                                                                     
 tangible                                                                   
 assets          6,611,523    6,307,933  5,666,278    3,738,796   3,575,847 
Net income                                                                  
 (loss)             15,011       10,332    (14,002)       5,329       6,376 
Net income                                                                  
 (loss), if                                                                 
 annualized         60,209       41,902    (55,551)      21,142      25,574 
              ------------ ------------ ----------  ----------- ----------- 
Return on                                                                   
 average                                                                    
 tangible                                                                   
 assets               0.91%        0.66%     (0.98)%       0.57%       0.72%
Core net                                                                    
 income (see                                                                
 reconciliation                                                               
 on page                                                                 
 11)          $     15,715 $     13,094 $    9,805  $     5,006 $     6,079 
Annualized                                                                  
 core net                                                                   
 income             63,033       53,103     38,900       19,861      24,383 
              ------------ ------------ ----------  ----------- ----------- 
Core return                                                                 
 on average                                                                 
 tangible                                                                   
 assets               0.95%        0.84%      0.69%        0.53%       0.68%
The company believes that the core return on average tangible assets is a   
 useful tool to help assess the Company's profitability.                    
                                                                            
                                                                            
The following table shows the reconciliation of net income and core net     
 income for the nine months ended June 30:                                  
--------------------------------------------------------------------------- 
                                                       For the nine months  
                                                              ended         
                                                    ----------------------- 
                                                      6/30/2014   6/30/2013 
                                                    ----------- ----------- 
Income before                                                               
 income tax                                                                 
 expense                                            $    15,042 $    28,027 
Income tax                                                                  
 expense                                                  3,701       8,102 
                                                    ----------- ----------- 
Net income                                               11,341      19,925 
                                                                            
Net gain on                                                                 
 sale of                                                                    
 securities                                                (607)     (5,590)
Gain on sale                                                                
 of financial                                                               
 center and                                                                 
 redemption                                                                 
 of Trust                                                                   
 Preferred                                                                  
 Securities                                              (1,637)          - 
Merger-                                                                     
 related                                                                    
 expenses                                                 9,455       2,058 
Charge for                                                                  
 asset write-                                                               
 downs,                                                                     
 banking                                                                    
 systems                                                                    
 conversion,                                                                
 retention                                                                  
 and                                                                        
 severance                                               25,354           - 
Charge on                                                                   
 benefit plan                                                               
 settlement                                               4,229           - 
Amortization                                                                
 of non-                                                                    
 compete                                                                    
 agreements                                               3,992           - 
                                                    ----------- ----------- 
Total charges                                            40,786      (3,532)
Income tax                                                                  
 (benefit)                                               12,350      (1,021)
                                                    ----------- ----------- 
Total non-                                                                  
 core charges                                                               
 (gains) net                                                                
 of taxes                                                28,436      (2,511)
                                                    ----------- ----------- 
Core net                                                                    
 income                                             $    39,777 $    17,414 
                                                    =========== =========== 
                                                                            
Weighted                                                                    
 average                                                                    
 diluted                                                                    
 shares                                              79,401,731  43,850,601 
Diluted EPS                                                                 
 as reported                                        $      0.14 $      0.45 
Diluted EPS                                                                 
 (excluding                                                                 
 total                                                                      
 charges)                                                  0.50        0.40 
--------------------------------------------------------------------------- 
The Company believes the presentation of its net income excluding total     
 charges provides a useful tool to help assess the 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

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.