Market Overview

Sterling Bancorp announces record results for the first quarter of 2018 with earnings per share available to common stockholders of $0.43 (as reported) and $0.45 (as adjusted), representing growth of 48.3% and 45.2% over the same quarter a year ago

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Key Performance Highlights for the Three Months ended March 31, 2018 vs. March 31, 2017

       
($ in thousands except per share amounts) GAAP / As Reported   Non-GAAP / As Adjusted1
  3/31/2017   3/31/2018   Change
% / bps
  3/31/2017   3/31/2018   Change
% / bps
Total revenue2 $ 121,626     $ 253,077     108.1 %   $ 125,751     $ 262,568     108.8 %
Net income available to common 39,067     96,873     148.0     41,461     100,880     143.3  
Diluted EPS available to common 0.29     0.43     48.3     0.31     0.45     45.2  
Net interest margin3 3.42 %   3.54 %   12     3.55 %   3.60 %   5  
Return on average tangible common equity 14.31     16.55     224     15.19     17.24     205  
Return on average tangible assets 1.20     1.39     19     1.27     1.45     18  
Operating efficiency ratio4 49.6     44.2     (540 )   43.7     40.3     (340 )
                                   
  • Record net income available to common stockholders of $96.9 million (as reported) and $100.9 million (as adjusted).
  • Reported diluted earnings per share available to common stockholders of $0.43; growth of 48.3% over prior year.
  • Adjusted diluted earnings per share available to common stockholders of $0.45; growth of 45.2% over prior year.
  • Total portfolio loans, gross were $19.9 billion and total deposits were $20.6 billion at March 31, 2018.
  • Completed acquisition of Advantage Funding Management Co., Inc. in April 2018, including $457.0 million loan portfolio.
  • Tangible book value per common share1 of $10.68 at March 31, 2018; growth of 28.4% over the prior year.

Key Performance Highlights for the Three Months ended March 31, 2018 vs. December 31, 2017

       
($ in thousands except per share amounts) GAAP / As Reported   Non-GAAP / As Adjusted1
  12/31/2017   3/31/2018   Change
% / bps
  12/31/2017   3/31/2018   Change
% / bps
Total revenue2 $ 257,786     $ 253,077     (1.8 )%   $ 265,014     $ 262,568     (0.9 )%
Net (loss) income available to common (35,281 )   96,873     NM     87,171     100,880     15.7  
Diluted EPS available to common (0.16 )   0.43     NM     0.39     0.45     15.4  
Net interest margin3 3.57 %   3.54 %   (3 )   3.67 %   3.60 %   (7 )
Return on average tangible common equity (5.87 )   16.55     NM     14.49     17.24     275  
Return on average tangible assets (0.51 )   1.39     NM     1.25     1.45     20  
Operating efficiency ratio4 97.3     44.2     (5,310 )   41.4     40.3     (110 )
                                   
NM - represents not meaningful given the Company reported a net loss in fourth quarter of 2017.
                                   
  • Growth in adjusted diluted earnings per share available to common stockholders of 15.4% over the linked quarter.
  • Integration of Astoria Financial Corporation is on-track; adjusted operating efficiency ratio at record low of 40.3%.
  • Growth in average commercial loan balances of $320.1 million over the linked quarter.
  • Real estate consolidation strategy is underway; consolidated one financial center in the first quarter and announced sale of Lake Success headquarters; six financial centers anticipated to close in the second quarter of 2018.

1. Non-GAAP / as adjusted measures are defined in the non-GAAP tables beginning on page 17.
2. Total revenue is equal to net interest income plus non-interest income. Total revenue as adjusted is equal to tax equivalent net interest income plus non-interest income excluding securities gains and losses.
3. Net interest margin is equal to net interest income divided by average interest earning assets. Net interest margin as adjusted, or tax equivalent net interest margin, is equal to net interest income plus the tax equivalent adjustment for tax exempt securities divided by average interest earning assets.
4. See page 18 and 19 for an explanation of the operating efficiency ratio.

1

MONTEBELLO, N.Y., April 24, 2018 (GLOBE NEWSWIRE) -- Sterling Bancorp (NYSE:STL) (the "Company"), the parent company of Sterling National Bank (the "Bank"), today announced results for the three months ended March 31, 2018. Net income available to common stockholders for the quarter ended March 31, 2018 was $96.9 million, or $0.43 per diluted share, compared to net loss available to common stockholders of $35.3 million, or $0.16 per diluted share, for the linked quarter ended December 31, 2017, and net income available to common stockholders of $39.1 million, or $0.29 per diluted share, for the three months ended March 31, 2017. 

Results for the first quarter of 2018 were impacted by a loss on sale of securities of $5.4 million as the Company continued its earning asset repositioning strategy and generated liquidity for the acquisition of Advantage Funding Management Co., Inc. ("Advantage Funding"), which closed on April 2, 2018. Please refer to the section below "Reconciliation of GAAP Results to Adjusted Results (non-GAAP)" for additional information.

President's Comments
Jack Kopnisky, President and Chief Executive Officer, commented: "We had strong performance in the first quarter of 2018 across all key metrics with record adjusted net income available to common stockholders of over $100.0 million and adjusted diluted earnings per share available to common stockholders of $0.45, which represents growth of 143.3% and 45.2%, respectively, over the first quarter of 2017. Our adjusted return on average tangible assets was 1.45% and our adjusted return on average tangible common equity was 17.24%. As of March 31, 2018, our total assets were $30.5 billion, gross portfolio loans were $19.9 billion and total deposits were $20.6 billion. 

"The transition of our earning assets and balance sheet to a more optimal mix is well underway. The average balance of commercial loans increased by $320.1 million in the first quarter, while the average balance of residential mortgage loans decreased by $191.4 million. We will continue to replace lower yielding assets that we acquired in the merger with Astoria Financial Corporation ("Astoria") with higher yielding, more diversified commercial loans that we originate through our teams or purchase in opportunistic situations, such as the acquisition of Advantage Funding. We anticipate this strategy will allow us to maintain and increase our tax equivalent net interest margin, which was 3.15% in the first quarter of 2018 excluding the impact of accretion income on acquired loans.

"We are ahead of plan on our acquisition of Astoria, and to date we have made significant progress on the integration of personnel, systems, facilities and all other areas of Astoria's operations. Excluding the amortization of intangibles, operating expenses were $105.7 million in the first quarter, which represented a decrease of $3.9 million relative to the linked quarter and an annual run-rate of $428.7 million. Our adjusted operating efficiency ratio reached a record low of 40.3%. Comparing this quarter's performance to the same quarter a year ago, our operating leverage ratio, which we define as growth in operating revenues divided by growth in operating expenses, was 2.7x. We still have much work to do to fully capture the benefits of our acquisition of Astoria, but we are confident in our ability to continue building a larger, more diversified and more profitable company.

"Our tangible common equity ratio was 8.38% and our estimated Tier 1 Leverage ratio was 9.39% at March 31, 2018; we have ample capital to support our strategy. Our tangible book value per common share was $10.68, which represented an increase of 28.4% over a year ago.

"We welcome all of our new colleagues that have joined upon the completion of the Advantage Funding acquisition. Advantage Funding is a leading provider of commercial vehicle and transportation financing services based in Lake Success, NY. Advantage Funding will be integrated into our equipment finance business, which when combined with our existing business, will have over $1.0 billion in loans and leases outstanding.  We anticipate the acquisition should add approximately five basis points to tax equivalent net interest margin in 2018 and will accelerate the transition of our loan portfolio to a more diversified loan mix.

"We would like to thank our clients, colleagues and shareholders for your support and look forward to working with all of our partners as we continue to build a great company.

"Lastly, we have declared a dividend on our common stock of $0.07 per share payable on May 21, 2018 to holders of record as of May 7, 2018."

Reconciliation of GAAP Results to Adjusted Results (non-GAAP)
The Company's GAAP net income available to common stockholders of $96.9 million, or $0.43 per diluted share, for the first quarter of 2018, included the following items:

  • a pre-tax net loss on sale of securities of $5.4 million; and

2

  • the pre-tax amortization of non-compete agreements and acquired customer list intangible assets of $295 thousand.

Excluding the impact of these items, adjusted net income available to common stockholders was $100.9 million, or $0.45 per diluted share, for the three months ended March 31, 2018.

Non-GAAP financial measures include references to the terms "adjusted" or "excluding". See the reconciliation of the Company's non-GAAP financial measures beginning on page 17.

Net Interest Income and Margin

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