STERLING BANCORP
Sterling Bancorp announces results for the fourth quarter and full year of 2021. Reporting record diluted earnings per share available to common stockholders in the fourth quarter of 2021 of $0.57 (as reported) and $0.64 (as adjusted).
Key Performance Highlights
▪GAAP net income available to common stockholders was $109.6 million.
▪Adjusted net income was $121.9 million, an all-time high, and an increase of 22.4% over the linked quarter.
▪Adjusted PPNR, excluding accretion income,1, 2 was $130.8 million; an increase of $10.1 million, or 8.4%, versus the linked quarter. For the full year, adjusted PPNR was $499.6 million in 2021 compared to $493.6 million in 2020.
▪Reported tax equivalent net interest margin excluding accretion income1 was 3.23% compared to 3.25% in the linked quarter.
▪Cost of funding liabilities was unchanged from the linked quarter at 19 bps; earning asset yields decreased by three bps to 3.49%.
▪Total core deposits were $22.8 billion, down 2.5% verses the linked quarter as a result of seasonal municipal outflows, and up 6.2% from a year ago.
▪Total commercial loans were $19.9 billion, an increase of $127.1 million, or 0.6%, compared to the linked quarter. In the fourth quarter of 2021 our commercial teams originated $1.4 billion of loans, the highest level in our history.
▪Released $20.0 million from ACL for portfolio loans given decreases in NPLs and criticized and classified loans.
▪NPLs decreased by $48.6 million to $156.9 million; ACL / portfolio loans of 1.30% and ACL / NPLs of 177.4%.
▪TCE / TA1 was 10.69% and tangible book value per common share1 was $15.50, an increase of 11.8% from a year ago.
▪Anticipated closing date of merger with Webster Financial Corporation ("Webster") is February 1, 2022.
▪Declared fourth quarter dividend per common share of $0.07.
Results for the Three Months ended December 31, 2021 vs. December 31, 2020
| ($ in thousands except per share amounts) | GAAP / As Reported |
Non-GAAP / As Adjusted1
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| December 31, 2020 | December 31, 2021 | Change % / bps | December 31, 2020 | December 31, 2021 | Change % / bps | |||||||
| Total assets | $ | 29,820,138 | $ | 29,659,471 | (0.5) | % | $ | 29,820,138 | $ | 29,659,471 | (0.5) | % |
| Total portfolio loans, gross | 21,848,409 | 21,356,956 | (2.2) | 21,848,409 | 21,356,956 | (2.2) | ||||||
| Total deposits | 23,119,522 | 22,814,875 | (1.3) | 23,119,522 | 22,814,875 | (1.3) | ||||||
PPNR1, 2
| 122,474 | 126,183 | 3.0 | 130,257 | 130,821 | 0.4 | ||||||
| Net income available to common | 74,457 | 109,625 | 47.2 | 94,323 | 121,912 | 29.2 | ||||||
| Diluted EPS available to common | 0.38 | 0.57 | 50.0 | 0.49 | 0.64 | 30.6 | ||||||
| Net interest margin | 3.33 | % | 3.27 | % | (6) | 3.38 | % | 3.32 | % | (6) | ||
Tangible book value per common share1
| $ | 13.87 | $ | 15.50 | 11.8 | $ | 13.87 | $ | 15.50 | 11.8 |
Results for the Three Months ended December 31, 2021 vs. September 30, 2021
| ($ in thousands except per share amounts) | GAAP / As Reported |
Non-GAAP / As Adjusted1
| ||||||||||
| September 30, 2021 | December 31, 2021 | Change % / bps | September 30, 2021 | December 31, 2021 | Change % / bps | |||||||
PPNR1, 2
| $ | 121,416 | $ | 126,183 | 3.9 | % | $ | 120,734 | $ | 130,821 | 8.4 | % |
| Net income available to common | 93,715 | 109,625 | 17.0 | 99,589 | 121,912 | 22.4 | ||||||
| Diluted EPS available to common | 0.49 | 0.57 | 16.3 | 0.52 | 0.64 | 23.1 | ||||||
| Net interest margin | 3.30 | % | 3.27 | % | (3) | 3.35 | % | 3.32 | % | (3) | ||
Operating efficiency ratio3
| 50.7 | 51.1 | 40 | 45.4 | 44.6 | (80) | ||||||
| Allowance for credit losses ("ACL") - loans | $ | 309,915 | $ | 278,232 | (10.2) | $ | 309,915 | $ | 278,232 | (10.2) | ||
| ACL to portfolio loans | 1.46 | % | 1.30 | % | (16) | 1.46 | % | 1.30 | % | (16) | ||
| ACL to NPLs | 150.8 | 177.4 | 27 | 150.8 | 177.4 | 27 | ||||||
Tangible book value per common share1
| $ | 15.03 | $ | 15.50 | 3.1 | $ | 15.03 | $ | 15.50 | 3.1 |
1. Non-GAAP / as adjusted measures are defined in the non-GAAP tables beginning on page 19.
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2. PPNR represents pretax pre-provision net revenue. PPNR and PPNR excluding accretion income are non-GAAP measures and are measured as net interest income plus non-interest income less operating expenses before tax.
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3. Operating efficiency ratio is a non-GAAP measure. See page 24 for an explanation of the operating efficiency ratio.
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PEARL RIVER, N.Y. - January 19, 2022 - Sterling Bancorp (NYSE: STL) (the "Company"), the parent company of Sterling National Bank (the "Bank"), today announced results for the three and twelve months ended December 31, 2021. Net income available to common stockholders for the three months ended December 31, 2021 was $109.6 million, or $0.57 per diluted share, compared to net income available to common stockholders of $93.7 million, or $0.49 per diluted share, for the linked quarter ended September 30, 2021, and net income available to common stockholders of $74.5 million, or $0.38 per diluted share, for the three months ended December 31, 2020.
Net income available to common stockholders for the year ended December 31, 2021 was $396.9 million, or $2.07 per diluted share, compared to net income available to common stockholders of $217.9 million, or $1.12 per diluted share, for the year ended December 31, 2020.
Chief Executive Officer's Comments
Jack Kopnisky, President and Chief Executive Officer, commented: "We are pleased with our results for the fourth quarter of 2021, which delivered record levels of adjusted net income, EPS and adjusted EPS, and tangible book value per share. Our strong performance included continued improvement in our credit outlook, an increase in our net interest income of $3.5 million, growth in key commercial portfolios, driven by record commercial originations of $1.4 billion, while maintaining a stable net interest margin, and continued optimization of our funding base in anticipation of our merger with Webster, which we expect to close by February 1, 2022.
"Adjusted PPNR was $130.8 million in the fourth quarter compared to $120.7 million in the third quarter, and was $499.6 million for the full year 2021, compared to $493.6 million in 2020. In addition to the $3.5 million increase in net interest income, fee income grew by $8.4 million in the period, which included $5.3 million in gains from our venture equity investments. Adjusted operating expenses increased $4.0 million, mainly due to higher compensation accruals, stock-based compensation expense and an increase in information technology expense. These increases were partially offset by a decline of $3.6 million in other expenses.
"Our net interest income was $217.4 million in the fourth quarter, compared to $213.8 million in the linked quarter, in line with the 2.5% quarter over quarter increase in earning assets. Our net interest margin excluding accretion income was 3.23%, a decline of two basis points from the linked quarter, a result of continued downward pressure on securities yields and an increase in average balances of short-term assets. At December 31, 2021, our total commercial loans were $19.9 billion, an increase of $127.1 million, or 0.6% over the linked quarter, driven mainly by traditional C&I loans and public sector finance portfolios. We experienced a decline in mortgage warehouse loans in line with the rising rate environment and lower mortgage refinancing activity. Excluding mortgage warehouse loans, commercial loans were up 2.0% quarter over quarter. Our total core deposits were $22.8 billion, which represented a decrease of $583.5 million compared to the linked quarter. The decline in core deposits was mainly due to seasonal municipal deposit outflows. In the fourth quarter, we further reduced our reliance on brokered and wholesale deposits, which declined $537.6 million and were less than $6.0 million at year end.
"In our fee-based businesses, client activity and transaction volumes continued to build from pandemic lows. In the fourth quarter, adjusted non-interest income was $40.9 million, an increase of $10.0 million from the linked quarter. Relative to the linked quarter, we saw growth in fee income in our syndications, payroll finance and factoring, and derivatives businesses.
"In the fourth quarter, our adjusted non-interest expenses increased $4.0 million to $115.3 million, and our adjusted operating efficiency ratio was 44.6%. The expense increase reflects an increase in incentive compensation, and continued investments in our digital platforms and back-office automation, as well as in our organic asset generation capabilities.
"As of December 31, 2021, our allowance for credit losses - portfolio loans was $278.2 million, or 1.30% of total portfolio loans and 177.4% of non-performing loans, a decrease from the $309.9 million allowance we reported at the end of the third quarter. We released $20.0 million from our allowance for credit losses - loans in the quarter, based on the decline in non-performing loans and criticized and classified loans and the continued improvement in the macro economic environment.
"We continue to build on our already strong capital position. At December 31, 2021, our tangible book value per common share was $15.50, an increase of 11.8% over a year ago. Our tangible common equity to tangible assets ratio was 10.69% and our Tier 1 leverage ratio was 11.42%. We declared our regular dividend of $0.07 on our common stock, payable on February 18, 2022 to holders of record as of January 24, 2022.
"Since the announcement of our definitive merger agreement with Webster Financial Corporation on April 19, 2021, we have been actively engaged with our partners at Webster to design a comprehensive integration plan that prioritizes our commitment to value creation, providing best-in-class service to our customers and continued adherence to the highest standards of risk governance. We received Federal Reserve approval for the merger on December 17, 2021 and anticipate merging with and into Webster Financial Corporation by February 1, 2022. We continue to be confident in the merits of our proposed combination, and we believe this merger will be beneficial to our clients, stockholders and colleagues.
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Reconciliation of GAAP Results to Adjusted Results (non-GAAP)
The Company's GAAP net income available to common stockholders of $109.6 million, or $0.57 per diluted share, for the fourth quarter of 2021, included the following items:
▪merger-related expense of $7.7 million, which included additional compensation expense related to personnel retention and integration efforts and professional fees related to merger integration planning and diligence;
▪a pre-tax charge of $2.6 million related to our real estate consolidation strategy; and
▪the pre-tax amortization of non-compete agreements and acquired customer list intangible assets of $148 thousand.
Excluding the impact of these items, adjusted net income available to common stockholders for the fourth quarter of 2021 was $121.9 million, or $0.64 per diluted share. In the fourth quarter of 2021, we increased our estimated effective tax rate for full year 2021 by 1.1% to 21.1%, which resulted in an effective income tax rate of 23.9% for the fourth quarter.
Non-GAAP financial measures include the terms "adjusted" or "excluding". See the reconciliation of the Company's non-GAAP financial measures beginning on page 19.
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Net Interest Income and Margin
| ($ in thousands) | For the three months ended | Change % / bps | ||||||||
| December 31, 2020 | September 30, 2021 | December 31, 2021 | Y-o-Y | Linked Qtr | ||||||
| Interest and dividend income | $ | 242,610 | $ | 225,089 | $ | 228,672 | (5.7) | % | 1.6 | % |
| Interest expense | 20,584 | 11,252 | 11,318 | (45.0) | 0.6 | |||||
| Net interest income | $ | 222,026 | $ | 213,837 | $ | 217,354 | (2.1) | 1.6 | ||
| Accretion income on acquired loans | $ | 8,560 | $ | 6,197 | $ | 5,769 | (32.6) | % | (6.9) | % |
| Yield on loans | 3.90 | % | 3.79 | % | 3.80 | % | (10) | 1 | ||
Tax equivalent yield on investment securities4
| 2.94 | 2.77 | 2.74 | (20) | (3) | |||||
Tax equivalent yield on interest earning assets4
| 3.69 | 3.52 | 3.49 | (20) | (3) | |||||
| Cost of total deposits | 0.22 | 0.11 | 0.10 | (12) | (1) | |||||
| Cost of interest bearing deposits | 0.29 | 0.14 | 0.14 | (15) | - | |||||
| Cost of borrowings | 3.35 | 3.87 | 3.69 | 34 | (18) | |||||
| Cost of interest bearing liabilities | 0.43 | 0.25 | 0.25 | (18) | - | |||||
Total cost of funding liabilities5
| 0.33 | 0.19 | 0.19 | (14) | - | |||||
Tax equivalent net interest margin6
| 3.38 | 3.35 | 3.32 | (6) | (3) | |||||
Average loans, including loans held for sale
| $ | 21,879,511 | $ | 20,629,138 | $ | 20,912,552 | (4.4) | % | 1.4 | % |
Average commercial loans
| 19,992,074 | 19,093,778 | 19,372,639 | (3.1) | 1.5 | |||||
Average investment securities
| 4,155,784 | 4,320,243 | 4,363,146 | 5.0 | 1.0 | |||||
Average cash balances
| 331,587 | 604,396 | 911,674 | 174.9 | 50.8 | |||||
Average total interest earning assets
| 26,522,991 | 25,705,007 | 26,338,797 | (0.7) | 2.5 | |||||
Average deposits and mortgage escrow
| 23,849,187 | 23,151,444 | 23,581,300 | (1.1) | 1.9 |
4. Tax equivalent basis represents interest income earned on tax exempt securities divided by the applicable federal tax rate of 21%.
5. Includes interest bearing liabilities and non-interest bearing deposits.
6. 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. The tax equivalent adjustment is assumed at a 21% federal tax rate in all periods presented.
Fourth quarter 2021 compared with fourth quarter 2020
Net interest income was $217.4 million for the quarter ended December 31, 2021, a decrease of $4.7 million compared to the fourth quarter of 2020. This was mainly due to a decline in accretion income and a decline in average interest earning assets between the periods. The impact of these two factors was substantially offset by a decline in interest expense. Other key components of changes in net interest income were the following:
▪The average balance of commercial loans declined $619.4 million, mainly due to a $773.7 million decline in mortgage warehouse, runoff from our equipment finance portfolio totaling $339.8 million and a $164.7 million decline in asset-based
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lending loans. In addition, during the year we sold commercial loans totaling $328.6 million.
▪The tax equivalent yield on interest earning assets decreased 20 basis points to 3.49%, as legacy assets repriced and securities and other short-term assets comprised a greater portion of our earning assets.
▪Loan yields declined from 3.90% in the fourth of 2020 to 3.80% in the fourth quarter of 2021 as a result of continued downward pressure on yields, resulting from the competitive lending environment created by fiscal stimulus and other measures taken in response to the economic slowdown and were also impacted by lower accretion income.
▪Accretion income on acquired loans was $5.8 million in the fourth quarter of 2021, compared to $8.6 million in the fourth quarter of 2020, a decline of $2.8 million.
▪Average investment securities were $4.4 billion, or 16.6%, of average total interest earning assets for the fourth quarter of 2021 compared to $4.2 billion, or 15.7%, of average total interest earning assets for the fourth quarter of 2020. The tax equivalent yield on investment securities was 2.74% for the fourth quarter of 2021 compared to 2.94% for the same period last year. The decline in yield on investments was mainly a result of an increase in US Treasury securities held in our portfolio, as well as from runoff in the portfolio being backfilled at lower yields.
▪Total interest expense was $11.3 million, a decline of $9.3 million compared to the fourth quarter of 2020. This was mainly due to lower interest expense paid on deposits and short-term borrowings and repayment of higher cost borrowings.
▪The cost of total deposits was 10 basis points for the fourth quarter of 2021 compared to 22 basis points for the same period a year ago, a result of repricing strategies in response to the low interest rate environment.
▪The cost of borrowings was 3.69% for the fourth quarter of 2021 compared to 3.35% for the same period a year ago. The increase was mainly due to the change in composition of our borrowings, with average borrowings of $549.4 million in the current quarter being comprised of $57.0 million in short-term borrowings and $492.4 million in higher coupon longer term borrowings, while for the prior year quarter short-term borrowings represented a larger portion of the overall composition of total borrowings.
▪The total cost of interest bearing liabilities was 25 basis points for the fourth quarter of 2021 compared to 43 basis points for the same period a year ago. The decline was due to both changes in market rates of interest and changes in funding mix.
▪Average deposits and mortgage escrow of $23.6 billion decreased $267.9 million during the fourth quarter of 2021 compared to the same period a year ago. This was mainly due to a $881.5 million decrease in certificate accounts, which were allowed to mature without renewal.
Fourth quarter 2021 compared with third quarter 2021
Net interest income increased $3.5 million for the quarter ended December 31, 2021 compared to the linked quarter, mainly due to the impact of higher prepayment fees on certain commercial real estate and multi-family loans. Other key components of the changes in net interest income were the following:
▪The average balance of commercial loans increased $278.9 million, mainly due to an increase of $352.7 million in traditional C&I and an increase of $170.5 million in public sector finance loans. These increases were partially offset by payoffs from mortgage warehouse and equipment finance loans.
▪The tax equivalent net interest margin was 3.32% compared to 3.35% in the linked quarter. Excluding accretion income on acquired loans, tax equivalent net interest margin was 3.23% compared to 3.25%, which was mainly due to elevated cash levels in the fourth quarter.
▪The yield on loans was 3.80% compared to 3.79% for the linked quarter. The increase was mainly due to higher prepayment fees from commercial real estate and multi-family loans.
▪The tax equivalent yield on interest earning assets was 3.49% compared to 3.52% in the linked quarter, the decline was primarily as a result of the factors discussed above.
▪The tax equivalent yield on investment securities was 2.74% compared to 2.77% for the linked quarter. The decline in yield was mainly due to the deployment of excess cash into US Treasury securities.
▪The total cost of borrowings was at 3.69% compared to 3.87% for the linked quarter. The decline was due to an increase in short-term lower cost borrowings in the fourth quarter relative to the third quarter.
▪Average deposits and mortgage escrow increased by $429.9 million and average borrowings increased by $27.1 million relative to the linked quarter.
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Non-interest Income
| ($ in thousands) | For the three months ended | Change % | ||||||||
| December 31, 2020 | September 30, 2021 | December 31, 2021 | Y-o-Y | Linked Qtr | ||||||
| Deposit fees and service charges | $ | 5,975 | $ | 7,007 | $ | 8,753 | 46.5 | % | 24.9 | % |
| Accounts receivable management / factoring commissions and other related fees | 6,498 | 5,937 | 6,556 | 0.9 | % | 10.4 | % | |||
| Bank owned life insurance ("BOLI") | 4,961 | 5,009 | 5,033 | 1.5 | % | 0.5 | % | |||
| Loan commissions and fees | 13,220 | 8,620 | 9,282 | (29.8) | % | 7.7 | % | |||
| Investment management fees | 1,700 | 1,819 | 1,770 | 4.1 | % | (2.7) | % | |||
| Net (loss) gain on sale of securities | (111) | 1,656 | - | (100.0) | % | NM | ||||
| Net gain on security calls | - | 85 | 587 | NM | NM | |||||
| Other | 1,678 | 2,414 | 8,937 | 432.6 | % | 270.2 | % | |||
| Total non-interest income | 33,921 | 32,547 | 40,918 | 20.6 | % | 25.7 | % | |||
| Net (loss) gain on sale of securities | (111) | 1,656 | - | (100.0) | % | NM | ||||
| Adjusted non-interest income | $ | 34,032 | $ | 30,891 | $ | 40,918 | 20.2 | % | 32.5 | % |
Fourth quarter 2021 compared with fourth quarter 2020
Adjusted non-interest income increased $6.9 million in the fourth quarter of 2021, compared to the same quarter last year. The increase was mainly due to an increase in other income of $6.4 million which included gains on equity investments and revenues related to credit and debit card transaction activity. Deposit fees and service charges increased between the periods as client transaction volumes continued to recover. In the fourth quarter of 2020, we realized a gain on the sale of Paycheck Protection Program loans of $3.7 million, which was the main cause of the decline in loan commissions and fees between the periods. In the fourth quarter of 2020, we realized a loss of $111 thousand on the sale of available for sale securities compared to $0 in the fourth quarter of 2021.
Fourth quarter 2021 compared with third quarter 2021
Adjusted non-interest income increased approximately $10.0 million relative to the linked quarter to $40.9 million, primarily as a result of the factors discussed above. In addition, accounts receivable management and factoring commissions are generally highest in the fourth quarter and our syndications business and transaction fees also increased due to increased transactional activity versus the linked quarter.
In the fourth quarter of 2021, we realized a gain of $0 on sale of available for securities compared to $1.7 million in the linked quarter.
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Non-interest Expense
| ($ in thousands) | For the three months ended | Change % / bps | ||||||||
| December 31, 2020 | September 30, 2021 | December 31, 2021 | Y-o-Y | Linked Qtr | ||||||
| Compensation and benefits | $ | 56,563 | $ | 57,178 | $ | 59,641 | 5.4 | % | 4.3 | % |
| Stock-based compensation plans | 5,222 | 6,648 | 8,861 | 69.7 | 33.3 | |||||
| Occupancy and office operations | 14,742 | 13,967 | 13,980 | (5.2) | 0.1 | |||||
Information technology
| 9,559 | 10,214 | 11,516 | 20.5 | 12.7 | |||||
| Professional fees | 7,343 | 7,251 | 6,687 | (8.9) | (7.8) | |||||
Amortization of intangible assets
| 4,200 | 3,776 | 3,776 | (10.1) | - | |||||
FDIC insurance and regulatory assessments
| 2,865 | 2,844 | 2,579 | (10.0) | (9.3) | |||||
Other real estate owned ("OREO"), net
| 283 | 1 | (7) | NM | NM | |||||
| Merger-related expenses | - | 4,581 | 7,688 | NM | 67.8 | |||||
| Impairment related to financial centers and real estate consolidation strategy | 13,311 | 118 | 2,571 | NM | 2,078.8 | |||||
Loss on extinguishment of borrowings
| 2,749 | - | - | (100.0) | NM | |||||
Other expenses
| 16,636 | 18,390 | 14,797 | (11.1) | (19.5) | |||||
Total non-interest expense
| $ | 133,473 | $ | 124,968 | $ | 132,089 | (1.0) | 5.7 | ||
Full time equivalent employees ("FTEs") at period end
| 1,460 | 1,460 | 1,439 | (1.4) | (1.4) | |||||
| Financial centers at period end | 76 | 72 | 72 | (5.3) | - | |||||
Operating efficiency ratio, as reported7
| 52.1 | % | 50.7 | % | 51.1 | % | (100) | 40 | ||
Operating efficiency ratio, as adjusted7
| 43.0 | 45.4 | 44.6 | 160 | (80) | |||||
7. See a reconciliation of non-GAAP financial measures beginning on page 19.
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Fourth quarter 2021 compared with fourth quarter 2020
Total non-interest expense decreased $1.4 million relative to the fourth quarter of 2020. Key components of the change in non-interest expense between the periods include the following:
▪Compensation and benefits increased $3.1 million mainly due to an increase in the incentive compensation accrual compared to the prior year period, in line with improved performance.
▪Stock-based compensation plans expense increased mainly due to the accelerated vesting in the fourth quarter of 2021 of performance awards granted in 2019. In line with performance measurement criteria under the plan, the awards vested above target, resulting in $2.5 million in incremental expense recorded in the period.
▪Occupancy and office operations expense decreased $762 thousand, mainly due to continued consolidation of financial centers and other back-office locations.
▪Information technology expense increased $2.0 million mainly due to the amortization of investments related to various back-office automation and digital banking initiatives.
▪Professional fees decreased $656 thousand mainly due to a decline in consulting fees incurred in connection with certain infrastructure related projects.
▪Merger-related expenses of $7.7 million were incurred in connection with our pending merger with Webster, and included compensation costs, including fees for integration efforts and personnel retention awards and professional fees incurred.
▪In the fourth quarter of 2020, impairment related to financial centers and real estate consolidation represents loss on sale of financial centers and other locations and early termination payments on leased locations. In the fourth quarter of 2021, impairments were related mainly to the write-off of fixed assets for back office locations.
▪Other expenses in the fourth quarter of 2021decreased $1.8 million mainly due to lower residential mortgage loan servicing fees, as we sold the majority of our mortgage servicing asset earlier in the year, and a decline in depreciation expense on operating leases.
▪Loss on extinguishment of borrowings in the fourth quarter of 2020 was incurred in connection with the repayment of $250.0 million of FHLB advances and $30.0 million of subordinated notes - Bank.
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Fourth quarter 2021 compared with third quarter 2021
Total non-interest expense increased $7.1 million to $132.1 million versus the linked quarter and included merger-related expenses and an impairment charge to write-off fixed assets that are no longer in use. Other key components of the change in non-interest expense include the following:
▪Compensation and benefits increased $2.5 million to $59.6 million in the fourth quarter of 2021. The increase was mainly due to an increase in our incentive compensation accrual.
▪Stock-based compensation expenses increased $2.2 million, which was mainly related to the vesting of 2019 performance awards.
▪Other expenses declined $3.6 million versus the linked quarter. In the third quarter of 2021, we recorded an accrual for legal settlements of $2.0 million, which did not recur in the fourth quarter. The balance of the decline was mainly due to the reasons discussed above.
Taxes
We recorded income tax expense of $35.0 million in the fourth quarter of 2021, compared to income tax expense of $25.7 million in the linked quarter, and $18.6 million in the prior year quarter. For the three months ended December 31, 2021, we recorded income tax expense at an estimated effective income tax rate of 23.9% compared to 21.2% for the three months ended September 30, 2021. Our estimated effective income tax rate for 2021 was to 21.1% an increase from 20.0% that we used at September 30, 2021.
Key Balance Sheet Highlights as of December 31, 2021
| ($ in thousands) | As of | Change % / bps | ||||||||
| December 31, 2020 | September 30, 2021 | December 31, 2021 | Y-o-Y | Linked Qtr | ||||||
| Total assets | $ | 29,820,138 | $ | 30,028,425 | $ | 29,659,471 | (0.5) | % | (1.2) | % |
| Total portfolio loans, gross | 21,848,409 | 21,276,549 | 21,356,956 | (2.2) | 0.4 | |||||
Commercial & industrial ("C&I") loans
| 9,160,268 | 8,794,329 | 8,836,087 | (3.5) | 0.5 | |||||
Commercial real estate loans (including multi-family)
| 10,238,650 | 10,238,337 | 10,313,499 | 0.7 | 0.7 | |||||
Acquisition, development and construction ("ADC") loans
| 642,943 | 694,443 | 704,670 | 9.6 | 1.5 | |||||
| Total commercial loans | 20,041,861 | 19,727,109 | 19,854,256 | (0.9) | 0.6 | |||||
| Residential mortgage loans | 1,616,641 | 1,395,248 | 1,357,622 | (16.0) | (2.7) | |||||
| Loan portfolio composition: | ||||||||||
Commercial & industrial ("C&I") loans
| 41.9 | % | 41.3 | % | 41.4 | % | (50) | 10 | ||
Commercial real estate loans (including multi-family)
| 46.9 | 48.1 | 48.3 | 140 | 20 | |||||
Acquisition, development and construction ("ADC") loans
| 2.9 | 3.3 | 3.3 | 40 | - | |||||
| Residential and consumer | 8.3 | 7.3 | 7.1 | (120) | (20) | |||||
| BOLI | $ | 629,576 | $ | 640,294 | $ | 644,007 | 2.3 | 0.6 | ||
Core deposits9
| 21,482,525 | 23,392,701 | 22,809,171 | 6.2 | (2.5) | |||||
| Total deposits | 23,119,522 | 23,936,023 | 22,814,875 | (1.3) | (4.7) | |||||
| Municipal deposits (included in core deposits) | 1,648,945 | 2,443,905 | 1,931,738 | 17.1 | (21.0) | |||||
| Investment securities, net | 4,039,456 | 4,283,969 | 4,434,604 | 9.8 | 3.5 | |||||
Investment securities, net to earning assets
| 15.4 | % | 16.5 | % | 17.0 | % | 160 | 50 | ||
| Total borrowings | $ | 1,321,714 | $ | 523,406 | $ | 1,212,553 | (8.3) | 131.7 | ||
| Loans to deposits | 94.5 | % | 88.9 | % | 93.6 | % | (90) | 470 | ||
Core deposits9 to total deposits
| 92.9 | 97.7 | 100.0 | 710 | 230 |
9 Core deposits include retail, commercial and municipal transaction, money market, savings accounts and certificates of deposit accounts, and reciprocal Certificate of Deposit Account Registry balances and exclude brokered and wholesale deposits.
Highlights related to balance sheet items as of December 31, 2021 included the following:
▪C&I loans and commercial real estate loans represented 89.7% of our loan portfolio as of December 31, 2021 compared to 88.8% a year ago. C&I loans include traditional C&I, asset-based lending, payroll finance, warehouse lending, factored
7
receivables, equipment financing and public sector finance loans.
▪In the fourth quarter of 2021, we sold $76.5 million of commercial real estate loans that were rated special mention and substandard. Related to the sale, we recorded a charge-off of $7.3 million against the allowance for credit losses - loans to reduce the carrying value of those loans to fair value.
▪Commercial loans increased $127.1 million in the fourth quarter versus the linked quarter, which was mainly due to growth of $218.1 million in traditional C&I loans and $164.3 million in public sector finance loans.
▪Residential mortgage loans were $1.4 billion as of December 31, 2021, a decrease of $37.6 million from the linked quarter, which was due to repayments and the sale of approximately $29.0 million of loans many of which were modified during the pandemic. We recorded a charge-off of $3.4 million against the allowance for credit losses - loans to reduce the carrying value of those loans to fair value. Residential mortgage loans declined $259.0 million from the same period a year ago. The decline was mainly due to repayments.
▪Total deposits as of December 31, 2021 were $22.8 billion, a decrease of $1.1 billion, compared to September 30, 2021 and a decline of $304.6 million compared to December 31, 2020. A significant driver of the decrease versus the linked quarter was the non-renewal of $537.6 million of wholesale and brokered deposits. In addition, seasonal outflows of municipal deposits were $512.2 million. In the year over year period, the non-renewal of wholesale and brokered deposits was $1.6 billion.
▪Core deposits as of December 31, 2021 were $22.8 billion, a decrease of $583.5 million compared to September 30, 2021, and an increase of $1.3 billion compared to December 31, 2020. In the fourth quarter, the decline in core deposits was due to outflows of municipal deposits. The growth in core deposits on an annual basis was a result both of our successful deposit gathering strategies, including approximately $300 million in incremental banking as a service and digital deposits, as well as the increase in liquidity in the banking system overall, from government stimulus and other measures implemented in response to the economic downturn.
▪Certificate of deposit accounts declined $84.7 million as higher costing balances matured and were not renewed. Compared to December 31, 2020, certificate of deposit accounts declined $614.1 million.
▪Municipal deposits as of December 31, 2021 were $1.9 billion, a decrease of $512.2 million relative to September 30, 2021. Municipal deposits generally reach their peak at the end of the third quarter due to seasonal tax collections by local municipalities.
▪Investment securities, net, increased by $150.6 million from September 30, 2021 and increased $395.1 million from December 31, 2020, representing 17.0% of earning assets as of December 31, 2021. In the fourth quarter of 2021, the increase in investment securities was mainly due to purchases of US Treasury, MBS and corporate securities in order to deploy excess cash balances held at the Federal Reserve Bank.
▪Total borrowings as of December 31, 2021 were $1.2 billion, an increase of $689.1 million relative to September 30, 2021, and a decrease of $109.2 million relative to December 31, 2020. As compared to 2020, the decline was mainly a result of the repayment of FHLB borrowings and the subordinated notes - Bank earlier in 2021. The increase in the linked quarter was mainly due to loan growth and deposit outflows.
Credit Quality
| ($ in thousands) | For the three months ended | Change % / bps | |||||||
| December 31, 2020 | September 30, 2021 | December 31, 2021 | Y-o-Y | Linked Qtr | |||||
| Provision for credit losses - loans | $ | 27,500 | $ | - | $ | (20,000) | (172.7) | % | NM |
| Net charge-offs | 27,343 | 4,958 | 11,683 | (57.3) | 135.6 | ||||
| ACL - loans | 326,100 | 309,915 | 278,232 | (14.7) | (10.2) | ||||
| Loans 30 to 89 days past due, accruing | 72,912 | 68,719 | 46,402 | (36.4) | (32.5) | ||||
Non-performing loans
| 167,059 | 205,453 | 156,878 | (6.1) | (23.6) | ||||
Annualized net charge-offs to average loans
| 0.50 | % | 0.10 | % | 0.22 | % | (28) | 12 | |
| Special mention loans | $ | 461,458 | $ | 351,692 | $ | 343,200 | (25.6) | (2.4) | |
| Substandard loans | 528,760 | 621,901 | 524,316 | (0.8) | (15.7) | ||||
| Total criticized and classified loans | 990,522 | 977,946 | 871,722 | (12.0) | (10.9) | ||||
ACL - loans to total loans
| 1.49 | % | 1.46 | % | 1.30 | % | (19) | (16) | |
ACL - loans to non-performing loans
| 195.2 | 150.8 | 177.4 | (1,780) | 2,660 |
8
For the three months ended December 31, 2021, we recorded a release of provision for credit losses - loans of $20.0 million. The release was based on improvements in non-performing loans, special mention loans and substandard loans as well as in macro-economic factors and outlook which, together, resulted in a lower modeled loss reserve requirement. The provision for credit losses - loans is based on our reasonable and supportable forecasts of expected future losses inherent in our portfolio.
Net charge-offs were $11.7 million in the fourth quarter of 2021, which included $7.3 million of charge-offs related to the sale of $76.5 million of commercial loans that were rated substandard and special mention.
Non-performing loans decreased by $48.6 million to $156.9 million at December 31, 2021 compared to the linked quarter. The decrease was mainly due to the sale of non-performing loans. Loans 30 to 89 days past due were $46.4 million, a decrease of $22.3 million from the linked quarter. The decrease was mainly due to loans that became current during the fourth quarter.
Total criticized and classified loans were $871.7 million representing a decrease of $106.2 million relative to the linked quarter.
Special mention loans decreased by $8.5 million from the linked quarter. This was mainly due to loans that were upgraded to pass grade or repayments.
Substandard loans decreased $97.6 million versus the linked quarter. In the fourth quarter, we sold substandard loans with an unpaid principal balance of $54.5 million. The balance of the decrease was largely due to repayments.
For additional information on our credit quality metrics including delinquency, criticized and classified, see page 17, "Asset Quality Information by Portfolio".
Capital
($ in thousands, except share and per share data)
| As of | Change % / bps | ||||||||
| December 31, 2020 | September 30, 2021 | December 31, 2021 | Y-o-Y | Linked Qtr | ||||||
| Total stockholders' equity | $ | 4,590,514 | $ | 4,797,629 | $ | 4,880,149 | 6.3 | % | 1.7 | % |
Preferred stock
| 136,689 | 135,986 | 135,745 | (0.7) | (0.2) | |||||
Goodwill and other intangible assets
| 1,777,046 | 1,765,718 | 1,761,942 | (0.8) | (0.2) | |||||
Tangible common stockholders' equity 10
| $ | 2,676,779 | $ | 2,895,925 | $ | 2,982,462 | 11.4 | 3.0 | ||
| Common shares outstanding | 192,923,371 | 192,681,503 | 192,435,253 | (0.3) | (0.1) | |||||
| Book value per common share | $ | 23.09 | $ | 24.19 | $ | 24.65 | 6.8 | 1.9 | ||
Tangible book value per common share 10
| 13.87 | 15.03 | 15.50 | 11.8 | 3.1 | |||||
Tangible common equity as a % of tangible assets 10
| 9.55 | % | 10.25 | % | 10.69 | % | 114 | 44 | ||
| Est. Tier 1 leverage ratio - Company | 10.14 | 11.35 | 11.42 | 128 | 7 | |||||
| Est. Tier 1 leverage ratio - Company fully implemented | 9.80 | 10.99 | 11.10 | 130 | 11 | |||||
Est. Tier 1 leverage ratio - Bank
| 11.33 | 12.60 | 12.75 | 142 | 15 | |||||
| Est. Tier 1 leverage ratio - Bank fully implemented | 11.01 | 12.25 | 12.44 | 143 | 19 | |||||
10 See a reconciliation of non-GAAP financial measures beginning on page 19.
|
Total stockholders' equity increased $82.5 million to $4.9 billion versus the linked quarter, as a result of net income of $111.6 million, stock-based compensation of $8.9 million, partially offset by common dividends of $13.9 million, other comprehensive loss of $16.1 million, preferred dividends of $2.2 million and other stock activity net of stock option exercises of $5.7 million.
We elected to rely on the five-year transition for our adoption of Current Expected Credit Loss ("CECL"), which allows us to delay for two years the full impact on regulatory capital of our adoption of this accounting standard, followed by a three-year transition period. The December 31, 2021 fully implemented data reflects the full impact of CECL and excludes the benefits of phase-ins.
Tangible book value per common share was $15.50 at December 31, 2021, which represented an increase of 11.8% compared to a year ago.
Conference Call Information
Sterling Bancorp will not host a teleconference or webcast due to the anticipated merger closing with Webster on February 1, 2022.
9
About Sterling Bancorp
Sterling Bancorp, whose principal subsidiary is Sterling National Bank, specializes in the delivery of services and solutions to business owners, their families and consumers within the communities it serves 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 certain forward-looking statements, including, but not limited to, certain plans, expectations, goals, projections, and statements about the Company and the benefits of the proposed transaction between Webster and the Company, the plans, objectives, expectations and intentions of Webster and the Company, the expected timing of completion of the transaction, and other statements that are not historical fact. Such statements are subject to numerous assumptions, risks, and uncertainties. Statements that do not describe historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements may be identified by words such as expect, anticipate, believe, intend, estimate, plan, target, goal, or similar expressions, or future or conditional verbs such as will, may, might, should, would, could, or similar variations. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995.
While there is no assurance that any list of uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in general economic, political, or industry conditions; the magnitude and duration of the COVID-19 pandemic and its impact on the global economy and financial market conditions and our business, results of operations, and financial condition; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; movements in interest rates; reform of LIBOR; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services; the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, including those related to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III regulatory capital reforms, as well as those involving the OCC, Federal Reserve, FDIC, and CFPB; the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the merger agreement between Webster and the Company; the outcome of any legal proceedings that may be instituted against Webster or the Company; delays in completing the transaction; the failure to satisfy any of the other conditions to the transaction on a timely basis or at all; the possibility that the anticipated benefits of the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Webster and the Company do business; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management's attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction; the ability to complete the transaction and integration of Webster and the Company successfully; the dilution caused by Webster's issuance of additional shares of its capital stock in connection with the transaction; and other factors that may affect the future results of Webster and the Company. Additional factors that could cause results to differ materially from those described above can be found in Webster's Annual Report on Form 10-K for the year ended December 31, 2020, which is on file with the Securities and Exchange Commission (the "SEC") and available on Webster's investor relations website, https://webster.gcs-web.com/, under the heading "Financials" and in other documents Webster files with the SEC, and in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, which is on file with the SEC and available on the Company's investor relations website, https://sterlingbank.gcs-web.com/investor-relations, under the heading "Financials" and in other documents the Company files with the SEC.
All forward-looking statements speak only as of the date they are made and are based on information available at that time. Neither Webster nor the Company assumes any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.
Financial information contained in this release should be considered to be an estimate. 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 after the date of this release 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.
10
Sterling Bancorp and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(unaudited, in thousands, except share and per share data)
| December 31, 2020 | September 30, 2021 | December 31, 2021 | ||||
| Assets: | ||||||
| Cash and cash equivalents | $ | 305,002 | $ | 929,320 | $ | 308,013 |
| Investment securities, net | 4,039,456 | 4,283,969 | 4,434,604 | |||
| Loans held for sale | 11,749 | - | 6,924 | |||
| Portfolio loans: | ||||||
| Commercial and industrial ("C&I") | 9,160,268 | 8,794,329 | 8,836,087 | |||
| Commercial real estate (including multi-family) | 10,238,650 | 10,238,337 | 10,313,499 | |||
| Acquisition, development and construction ("ADC") loans | 642,943 | 694,443 | 704,670 | |||
| Residential mortgage | 1,616,641 | 1,395,248 | 1,357,622 | |||
| Consumer | 189,907 | 154,192 | 145,078 | |||
| Total portfolio loans, gross | 21,848,409 | 21,276,549 | 21,356,956 | |||
| ACL - loans | (326,100) | (309,915) | (278,232) | |||
| Total portfolio loans, net | 21,522,309 | 20,966,634 | 21,078,724 | |||
FHLB and Federal Reserve Bank Stock, at cost
| 166,190 | 151,004 | 175,008 | |||
| Accrued interest receivable | 97,505 | 99,450 | 95,152 | |||
| Premises and equipment, net | 202,555 | 202,519 | 197,216 | |||
| Goodwill | 1,683,482 | 1,683,482 | 1,683,482 | |||
| Other intangibles | 93,564 | 82,236 | 78,460 | |||
| BOLI | 629,576 | 640,294 | 644,007 | |||
| Other real estate owned | 5,347 | 816 | 197 | |||
| Other assets | 1,063,403 | 988,701 | 957,684 | |||
| Total assets | $ | 29,820,138 | $ | 30,028,425 | $ | 29,659,471 |
| Liabilities: | ||||||
| Deposits | $ | 23,119,522 | $ | 23,936,023 | $ | 22,814,875 |
| FHLB borrowings | 382,000 | - | 542,000 | |||
| Federal Funds Purchased | 277,000 | - | 150,000 | |||
| Other borrowings | 27,101 | 31,023 | 28,008 | |||
| Subordinated notes - Company | 491,910 | 492,383 | 492,545 | |||
| Subordinated notes - Bank | 143,703 | - | - | |||
| Mortgage escrow funds | 59,686 | 79,221 | 58,438 | |||
| Other liabilities | 728,702 | 692,146 | 693,456 | |||
| Total liabilities | 25,229,624 | 25,230,796 | 24,779,322 | |||
| Stockholders' equity: | ||||||
| Preferred stock | 136,689 | 135,986 | 135,745 | |||
| Common stock | 2,299 | 2,299 | 2,299 | |||
| Additional paid-in capital | 3,761,993 | 3,760,279 | 3,767,532 | |||
| Treasury stock | (686,911) | (697,433) | (704,452) | |||
| Retained earnings | 1,291,628 | 1,539,354 | 1,638,011 | |||
| Accumulated other comprehensive income | 84,816 | 57,144 | 41,014 | |||
| Total stockholders' equity | 4,590,514 | 4,797,629 | 4,880,149 | |||
| Total liabilities and stockholders' equity | $ | 29,820,138 | $ | 30,028,425 | $ | 29,659,471 |
| Shares of common stock outstanding at period end | 192,923,371 | 192,681,503 | 192,435,253 | |||
| Book value per common share | $ | 23.09 | $ | 24.19 | $ | 24.65 |
Tangible book value per common share1
| 13.87 | 15.03 | 15.50 | |||
1 See reconciliation of non-GAAP financial measures beginning on page 19.
|
11
.
Sterling Bancorp and Subsidiaries
CONSOLIDATED INCOME STATEMENTS
(unaudited, in thousands, except share and per share data)
| For the Quarter Ended | For the Year Ended | |||||||||
| December 31, 2020 | September 30, 2021 | December 31, 2021 | December 31, 2020 | December 31, 2021 | ||||||
| Interest and dividend income: | ||||||||||
| Loans and loan fees | $ | 214,522 | $ | 197,157 | $ | 200,463 | $ | 882,874 | $ | 805,160 |
| Securities taxable | 15,679 | 15,433 | 15,547 | 73,786 | 62,081 | |||||
| Securities non-taxable | 11,839 | 11,607 | 11,535 | 49,924 | 46,598 | |||||
| Other earning assets | 570 | 892 | 1,127 | 7,437 | 4,079 | |||||
| Total interest and dividend income | 242,610 | 225,089 | 228,672 | 1,014,021 | 917,918 | |||||
| Interest expense: | ||||||||||
| Deposits | 13,417 | 6,161 | 6,207 | 105,559 | 27,934 | |||||
| Borrowings | 7,167 | 5,091 | 5,111 | 43,541 | 22,352 | |||||
| Total interest expense | 20,584 | 11,252 | 11,318 | 149,100 | 50,286 | |||||
| Net interest income | 222,026 | 213,837 | 217,354 | 864,921 | 867,632 | |||||
| Provision for credit losses - loans | 27,500 | - | (20,000) | 251,683 | (4,000) | |||||
| Provision for credit losses - held to maturity securities | - | - | (399) | 703 | (1,149) | |||||
| Net interest income after provision for credit losses | 194,526 | 213,837 | 237,753 | 612,535 | 872,781 | |||||
| Non-interest income: | ||||||||||
| Deposit fees and service charges | 5,975 | 7,007 | 8,753 | 23,903 | 29,419 | |||||
| Accounts receivable management / factoring commissions and other related fees | 6,498 | 5,937 | 6,556 | 21,847 | 23,410 | |||||
| BOLI | 4,961 | 5,009 | 5,033 | 20,292 | 19,978 | |||||
| Loan commissions and fees | 13,220 | 8,620 | 9,282 | 39,537 | 37,141 | |||||
| Investment management fees | 1,700 | 1,819 | 1,770 | 6,660 | 7,459 | |||||
| Net (loss) gain on sale of securities | (111) | 1,656 | - | 9,428 | 2,361 | |||||
| Net gain on security calls | - | 85 | 587 | 4,880 | 606 | |||||
| Other | 1,678 | 2,414 | 8,937 | 9,015 | 15,661 | |||||
| Total non-interest income | 33,921 | 32,547 | 40,918 | 135,562 | 136,035 | |||||
| Non-interest expense: | ||||||||||
| Compensation and benefits | 56,563 | 57,178 | 59,641 | 222,067 | 231,859 | |||||
| Stock-based compensation plans | 5,222 | 6,648 | 8,861 | 23,010 | 28,907 | |||||
| Occupancy and office operations | 14,742 | 13,967 | 13,980 | 59,358 | 56,337 | |||||
| Information technology | 9,559 | 10,214 | 11,516 | 33,311 | 40,717 | |||||
| Professional fees | 7,343 | 7,251 | 6,687 | 24,893 | 28,576 | |||||
| Amortization of intangible assets | 4,200 | 3,776 | 3,776 | 16,800 | 15,104 | |||||
| FDIC insurance and regulatory assessments | 2,865 | 2,844 | 2,579 | 13,041 | 10,997 | |||||
| Other real estate owned, net | 283 | 1 | (7) | 1,719 | (146) | |||||
| Merger-related expenses | - | 4,581 | 7,688 | - | 14,750 | |||||
| Impairment related to financial centers and real estate consolidation strategy | 13,311 | 118 | 2,571 | 13,311 | 3,797 | |||||
| Loss on extinguishment of borrowings | 2,749 | - | - | 19,462 | 1,243 | |||||
| Other | 16,636 | 18,390 | 14,797 | 65,457 | 63,710 | |||||
| Total non-interest expense | 133,473 | 124,968 | 132,089 | 492,429 | 495,851 | |||||
| Income before income tax expense | 94,974 | 121,416 | 146,582 | 255,668 | 512,965 | |||||
| Income tax expense | 18,551 | 25,745 | 35,005 | 29,899 | 108,228 | |||||
| Net income | 76,423 | 95,671 | 111,577 | 225,769 | 404,737 | |||||
| Preferred stock dividend | 1,966 | 1,956 | 1,952 | 7,883 | 7,830 | |||||
| Net income available to common stockholders | $ | 74,457 | $ | 93,715 | $ | 109,625 | $ | 217,886 | $ | 396,907 |
| Weighted average common shares: | ||||||||||
| Basic | 193,036,678 | 191,508,071 | 191,548,887 | 194,084,358 | 191,591,952 | |||||
| Diluted | 193,530,930 | 192,340,487 | 191,942,078 | 194,393,343 | 191,955,440 | |||||
| Earnings per common share: | ||||||||||
| Basic earnings per share | $ | 0.39 | $ | 0.49 | $ | 0.57 | $ | 1.12 | $ | 2.07 |
| Diluted earnings per share | 0.38 | 0.49 | 0.57 | 1.12 | 2.07 | |||||
| Dividends declared per share | 0.07 | 0.07 | 0.07 | 0.28 | 0.28 |
12
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 | December 31, 2020 | March 31, 2021 | June 30, 2021 | September 30, 2021 | December 31, 2021 | |||||
| Total assets | $ | 29,820,138 | $ | 29,914,282 | $ | 29,143,918 | $ | 30,028,425 | $ | 29,659,471 |
Tangible assets 1
| 28,043,092 | 28,141,012 | 27,374,424 | 28,262,707 | 27,897,529 | |||||
| Securities available for sale | 2,298,618 | 2,524,671 | 2,671,000 | 2,614,822 | 2,795,718 | |||||
| Securities held to maturity, net | 1,740,838 | 1,716,786 | 1,695,470 | 1,669,147 | 1,638,886 | |||||
Loans held for sale2
| 11,749 | 36,237 | 19,088 | - | 6,924 | |||||
| Portfolio loans | 21,848,409 | 21,151,973 | 20,724,097 | 21,276,549 | 21,356,956 | |||||
| Goodwill | 1,683,482 | 1,683,482 | 1,683,482 | 1,683,482 | 1,683,482 | |||||
| Other intangibles | 93,564 | 89,788 | 86,012 | 82,236 | 78,460 | |||||
| Deposits | 23,119,522 | 23,841,718 | 23,146,711 | 23,936,023 | 22,814,875 | |||||
| Municipal deposits (included above) | 1,648,945 | 2,047,349 | 1,844,719 | 2,443,905 | 1,931,738 | |||||
| Borrowings | 1,321,714 | 667,499 | 518,021 | 523,406 | 1,212,553 | |||||
| Stockholders' equity | 4,590,514 | 4,620,164 | 4,722,856 | 4,797,629 | 4,880,149 | |||||
Tangible common equity 1
| 2,676,779 | 2,710,436 | 2,817,138 | 2,895,925 | 2,982,462 | |||||
| Quarterly Average Balances | ||||||||||
| Total assets | 30,024,165 | 29,582,605 | 29,390,977 | 29,147,332 | 29,728,436 | |||||
Tangible assets 1
| 28,244,364 | 27,806,859 | 27,619,006 | 27,379,123 | 27,964,017 | |||||
| Loans, gross: | ||||||||||
| Commercial real estate (includes multi-family) | 10,191,707 | 10,283,292 | 10,331,355 | 10,121,953 | 10,178,840 | |||||
| ADC | 685,368 | 624,259 | 645,094 | 711,020 | 718,423 | |||||
| C&I: | ||||||||||
| Traditional C&I (includes PPP loans) | 3,155,851 | 2,917,721 | 2,918,285 | 3,041,352 | 3,394,023 | |||||
Asset-based lending3
| 876,377 | 751,861 | 713,428 | 686,904 | 711,706 | |||||
Payroll finance3
| 162,762 | 146,839 | 151,333 | 158,335 | 168,574 | |||||
Warehouse lending3
| 1,637,507 | 1,546,947 | 1,203,374 | 1,105,046 | 863,782 | |||||
Factored receivables3
| 214,021 | 224,845 | 215,590 | 216,964 | 232,454 | |||||
Equipment financing3
| 1,535,582 | 1,474,993 | 1,412,812 | 1,313,667 | 1,195,787 | |||||
Public sector finance3
| 1,532,899 | 1,583,066 | 1,654,370 | 1,738,537 | 1,909,050 | |||||
| Total C&I | 9,114,999 | 8,646,272 | 8,269,192 | 8,260,805 | 8,475,376 | |||||
| Residential mortgage | 1,691,567 | 1,558,266 | 1,427,055 | 1,374,398 | 1,388,937 | |||||
| Consumer | 195,870 | 182,461 | 170,965 | 160,962 | 150,976 | |||||
Loans, total4
| 21,879,511 | 21,294,550 | 20,843,661 | 20,629,138 | 20,912,552 | |||||
| Securities (taxable) | 2,191,333 | 2,103,768 | 2,378,213 | 2,393,325 | 2,449,849 | |||||
| Securities (non-taxable) | 1,964,451 | 1,951,210 | 1,943,913 | 1,926,918 | 1,913,297 | |||||
| Other interest earning assets | 487,696 | 800,204 | 803,148 | 755,626 | 1,063,099 | |||||
| Total interest earning assets | 26,522,991 | 26,149,732 | 25,968,935 | 25,705,007 | 26,338,797 | |||||
| Deposits: | ||||||||||
| Non-interest bearing demand | 5,530,334 | 5,521,538 | 5,747,679 | 6,001,982 | 6,380,827 | |||||
| Interest bearing demand | 4,870,544 | 4,981,415 | 4,964,386 | 4,686,129 | 4,845,523 | |||||
| Savings (including mortgage escrow funds) | 2,712,041 | 2,717,622 | 2,777,651 | 2,721,327 | 2,716,053 | |||||
| Money market | 8,577,920 | 8,382,533 | 8,508,735 | 8,369,994 | 8,362,021 | |||||
| Certificates of deposit | 2,158,348 | 1,943,820 | 1,518,224 | 1,372,012 | 1,276,876 | |||||
| Total deposits and mortgage escrow | 23,849,187 | 23,546,928 | 23,516,675 | 23,151,444 | 23,581,300 | |||||
| Borrowings | 852,057 | 721,642 | 527,272 | 522,332 | 549,408 | |||||
| Stockholders' equity | 4,591,770 | 4,616,660 | 4,670,718 | 4,768,712 | 4,835,709 | |||||
Tangible common stockholders' equity 1
| 2,675,055 | 2,704,227 | 2,762,292 | 2,864,282 | 2,935,307 | |||||
1 See a reconciliation of non-GAAP financial measures beginning on page 19.
| ||||||||||
2 Loans held for sale mainly includes commercial syndication loans.
| ||||||||||
3 Asset-based lending, payroll finance, warehouse lending, factored receivables, equipment financing and public sector finance comprise our commercial finance loan portfolio.
| ||||||||||
4 Includes loans held for sale, but excludes allowance for credit losses.
|
13
Sterling Bancorp and Subsidiaries
SELECTED FINANCIAL DATA AND PERFORMANCE RATIOS
(unaudited, in thousands, except share and per share data)
| As of and for the Quarter Ended | ||||||||||
| Per Common Share Data | December 31, 2020 | March 31, 2021 | June 30, 2021 | September 30, 2021 | December 31, 2021 | |||||
| Basic earnings per share | $ | 0.39 | $ | 0.51 | $ | 0.50 | $ | 0.49 | $ | 0.57 |
| Diluted earnings per share | 0.38 | 0.50 | 0.50 | 0.49 | 0.57 | |||||
Adjusted diluted earnings per share, non-GAAP 1
| 0.49 | 0.51 | 0.52 | 0.52 | 0.64 | |||||
| Dividends declared per common share | 0.07 | 0.07 | 0.07 | 0.07 | 0.07 | |||||
| Book value per common share | 23.09 | 23.28 | 23.80 | 24.19 | 24.65 | |||||
Tangible book value per common share1
| 13.87 | 14.08 | 14.62 | 15.03 | 15.50 | |||||
| Shares of common stock o/s | 192,923,371 | 192,567,901 | 192,715,433 | 192,681,503 | 192,435,253 | |||||
Basic weighted average common shares o/s
| 193,036,678 | 191,890,512 | 191,436,885 | 191,508,071 | 191,548,887 | |||||
Diluted weighted average common shares o/s
| 193,530,930 | 192,621,907 | 192,292,989 | 192,340,487 | 191,942,078 | |||||
| Performance Ratios (annualized) | ||||||||||
| Return on average assets | 0.99 | % | 1.33 | % | 1.32 | % | 1.28 | % | 1.46 | % |
| Return on average equity | 6.45 | 8.54 | 8.28 | 7.80 | 8.99 | |||||
| Return on average tangible assets | 1.05 | 1.42 | 1.40 | 1.36 | 1.56 | |||||
| Return on average tangible common equity | 11.07 | 14.58 | 13.99 | 12.98 | 14.82 | |||||
Return on average tangible assets, adjusted 1
| 1.33 | 1.42 | 1.46 | 1.44 | 1.73 | |||||
Return on avg. tangible common equity, adjusted 1
| 14.03 | 14.64 | 14.58 | 13.79 | 16.48 | |||||
Operating efficiency ratio, as adjusted 1
| 43.0 | 44.3 | 44.1 | 45.4 | 44.6 | |||||
| Analysis of Net Interest Income | ||||||||||
| Accretion income on acquired loans | $ | 8,560 | $ | 8,272 | $ | 7,812 | $ | 6,197 | $ | 5,769 |
| Yield on loans | 3.90 | % | 3.92 | % | 3.88 | % | 3.79 | % | 3.80 | % |
Yield on investment securities - tax equivalent 2
| 2.94 | 3.02 | 2.84 | 2.77 | 2.74 | |||||
Yield on interest earning assets - tax equivalent 2
| 3.69 | 3.68 | 3.61 | 3.52 | 3.49 | |||||
| Cost of interest bearing deposits | 0.29 | 0.20 | 0.15 | 0.14 | 0.14 | |||||
| Cost of total deposits | 0.22 | 0.15 | 0.11 | 0.11 | 0.10 | |||||
| Cost of borrowings | 3.35 | 3.97 | 3.87 | 3.87 | 3.69 | |||||
| Cost of interest bearing liabilities | 0.43 | 0.34 | 0.26 | 0.25 | 0.25 | |||||
Net interest rate spread - tax equivalent basis 2
| 3.26 | 3.34 | 3.35 | 3.27 | 3.24 | |||||
| Net interest margin - GAAP basis | 3.33 | 3.38 | 3.38 | 3.30 | 3.27 | |||||
Net interest margin - tax equivalent basis 2
| 3.38 | 3.43 | 3.42 | 3.35 | 3.32 | |||||
| Capital | ||||||||||
Tier 1 leverage ratio - Company 3
| 10.14 | % | 10.50 | % | 10.91 | % | 11.35 | % | 11.42 | % |
Tier 1 leverage ratio - Bank only 3
| 11.33 | 11.76 | 12.10 | 12.60 | 12.75 | |||||
Tier 1 risk-based capital ratio - Bank only 3
| 13.38 | 14.04 | 14.44 | 14.52 | 15.00 | |||||
Total risk-based capital ratio - Bank only 3
| 14.73 | 15.42 | 15.22 | 15.26 | 15.65 | |||||
Tangible common equity - Company 1
| 9.55 | 9.63 | 10.29 | 10.25 | 10.69 | |||||
| Condensed Five Quarter Income Statement | ||||||||||
| Interest and dividend income | $ | 242,610 | $ | 233,847 | $ | 230,310 | $ | 225,089 | $ | 228,672 |
| Interest expense | 20,584 | 15,933 | 11,783 | 11,252 | 11,318 | |||||
| Net interest income | 222,026 | 217,914 | 218,527 | 213,837 | 217,354 | |||||
| Provision for credit losses | 27,500 | 10,000 | 5,250 | - | (20,399) | |||||
| Net interest income after provision for credit losses | 194,526 | 207,914 | 213,277 | 213,837 | 237,753 | |||||
| Non-interest income | 33,921 | 32,356 | 30,214 | 32,547 | 40,918 | |||||
| Non-interest expense | 133,473 | 118,165 | 120,629 | 124,968 | 132,089 | |||||
| Income before income tax expense | 94,974 | 122,105 | 122,862 | 121,416 | 146,582 | |||||
| Income tax expense | 18,551 | 22,955 | 24,523 | 25,745 | 35,005 | |||||
| Net income | $ | 76,423 | $ | 99,150 | $ | 98,339 | $ | 95,671 | $ | 111,577 |
1 See a reconciliation of non-GAAP financial measures beginning on page 19.
| ||||||||||
2 Tax equivalent basis represents interest income earned on tax exempt securities divided by the applicable federal tax rate of 21%.
| ||||||||||
3 Regulatory capital amounts and ratios are preliminary estimates pending filing of the Company's and Bank's regulatory reports.
|
14
Sterling Bancorp and Subsidiaries
ASSET QUALITY INFORMATION BY PORTFOLIO
(unaudited, in thousands, except share and per share data)
| As of and for the Quarter Ended | ||||||||||
| Allowance for Credit Losses Roll Forward | December 31, 2020 | March 31, 2021 | June 30, 2021 | September 30, 2021 | December 31, 2021 | |||||
| Balance, beginning of period | $ | 325,943 | $ | 326,100 | $ | 323,186 | $ | 314,873 | $ | 309,915 |
| Provision for credit losses - loans | 27,500 | 10,000 | 6,000 | - | (20,000) | |||||
Loan charge-offs1:
| ||||||||||
| Traditional C&I | (17,757) | (1,027) | (1,148) | (1,044) | (884) | |||||
| Asset-based lending | - | - | - | (7) | (162) | |||||
| Payroll finance | (730) | - | (86) | (8) | - | |||||
| Factored receivables | (2,099) | (4) | (761) | - | (6) | |||||
| Equipment financing | (3,445) | (2,408) | (3,004) | (968) | (873) | |||||
| Commercial real estate | (3,266) | (2,933) | (7,375) | (1,036) | (7,563) | |||||
| Multi-family | (430) | (3,230) | (4,982) | (418) | (1,861) | |||||
| ADC | (307) | (5,000) | - | (2,500) | - | |||||
| Residential mortgage | (23) | (267) | (237) | (13) | (3,352) | |||||
| Consumer | (62) | (391) | (231) | (110) | (40) | |||||
| Total charge-offs | (28,119) | (15,260) | (17,824) | (6,104) | (14,741) | |||||
Recoveries of loans previously charged-off1:
| ||||||||||
| Traditional C&I | 194 | 468 | 588 | 169 | 289 | |||||
| Asset-based lending | - | - | 1,998 | - | - | |||||
| Payroll finance | 38 | 2 | 4 | 3 | 3 | |||||
| Factored receivables | 122 | 406 | 52 | 108 | 75 | |||||
| Equipment financing | 217 | 854 | 719 | 525 | 1,713 | |||||
| Commercial real estate | 174 | 487 | 97 | 265 | 571 | |||||
| Multi-family | - | - | 15 | - | 332 | |||||
| Acquisition development & construction | - | - | - | - | - | |||||
| Residential mortgage | 1 | 37 | - | 1 | - | |||||
| Consumer | 30 | 92 | 38 | 75 | 75 | |||||
| Total recoveries | 776 | 2,346 | 3,511 | 1,146 | 3,058 | |||||
| Net loan charge-offs | (27,343) | (12,914) | (14,313) | (4,958) | (11,683) | |||||
| Balance, end of period | $ | 326,100 | $ | 323,186 | $ | 314,873 | $ | 309,915 | $ | 278,232 |
| Asset Quality Data and Ratios | ||||||||||
| Non-performing loans ("NPLs") non-accrual | $ | 166,889 | $ | 168,555 | $ | 173,319 | $ | 202,082 | $ | 156,878 |
| NPLs still accruing | 170 | 2 | - | 3,371 | - | |||||
| Total NPLs | 167,059 | 168,557 | 173,319 | 205,453 | 156,878 | |||||
| Other real estate owned | 5,347 | 5,227 | 816 | 816 | 197 | |||||
| Non-performing assets ("NPAs") | $ | 172,406 | $ | 173,784 | $ | 174,135 | $ | 206,269 | $ | 157,075 |
Loans 30 to 89 days past due
| $ | 72,912 | $ | 42,165 | $ | 39,476 | $ | 68,719 | $ | 46,402 |
| Net charge-offs as a % of average loans (annualized) | 0.50 | % | 0.25 | % | 0.28 | % | 0.10 | % | 0.22 | % |
| NPLs as a % of total loans | 0.76 | 0.80 | 0.84 | 0.97 | 0.73 | |||||
| NPAs as a % of total assets | 0.58 | 0.58 | 0.60 | 0.69 | 0.53 | |||||
| ACL as a % of NPLs | 195.2 | 191.7 | 181.7 | 150.8 | 177.4 | |||||
| ACL as a % of total loans | 1.49 | 1.53 | 1.52 | 1.46 | 1.30 | |||||
| Special mention loans | $ | 461,458 | $ | 494,452 | $ | 388,535 | $ | 351,692 | $ | 343,200 |
| Substandard loans | 528,760 | 590,109 | 611,805 | 621,901 | 524,316 | |||||
| Doubtful loans | 304 | 295 | 4,600 | 4,353 | 4,206 | |||||
1 There were no charge-offs or recoveries on warehouse lending or public sector finance loans during the periods presented. There were no asset-based lending recoveries during the periods presented.
|
15
Sterling Bancorp and Subsidiaries
ASSET QUALITY INFORMATION BY PORTFOLIO
(unaudited, in thousands, except share and per share data)
| At or for the three months ended December 31, 2021 | CECL ACL | |||||||||||||
| Total loans | Crit/Class | 30-89 Days Delinquent | NPLs | NCOs | ACL $ | % of Portfolio | ||||||||
| Traditional C&I | $ | 3,560,460 | $ | 110,260 | $ | 3,494 | $ | 37,320 | $ | (595) | $ | 62,701 | 1.76 | % |
| Asset Based Lending | 689,636 | 31,171 | - | 3,788 | (162) | 10,594 | 1.54 | |||||||
| Payroll Finance | 181,852 | 535 | - | - | 3 | 1,898 | 1.04 | |||||||
| Mortgage Warehouse | 1,052,378 | - | - | - | - | 929 | 0.09 | |||||||
| Factored Receivables | 222,246 | - | - | - | 69 | 3,071 | 1.38 | |||||||
| Equipment Finance | 1,139,283 | 64,756 | 21,375 | 19,666 | 840 | 23,658 | 2.08 | |||||||
| Public Sector Finance | 1,990,232 | 13,710 | - | - | - | 6,594 | 0.33 | |||||||
| Commercial Real Estate | 6,025,735 | 460,070 | - | 54,577 | (6,992) | 120,085 | 1.99 | |||||||
| Multi-family | 4,287,764 | 129,560 | 13,958 | 327 | (1,529) | 22,717 | 0.53 | |||||||
| ADC | 704,670 | 42,580 | - | 22,500 | - | 10,314 | 1.46 | |||||||
| Total commercial loans | 19,854,256 | 852,642 | 38,827 | 138,178 | (8,366) | 262,561 | 1.32 | |||||||
| Residential | 1,357,622 | 8,802 | 5,023 | 8,507 | (3,352) | 12,218 | 0.90 | |||||||
| Consumer | 145,078 | 10,278 | 2,552 | 10,193 | 35 | 3,453 | 2.38 | |||||||
| Total portfolio loans | $ | 21,356,956 | $ | 871,722 | $ | 46,402 | $ | 156,878 | $ | (11,683) | $ | 278,232 | 1.30 |
| At or for the three months ended September 30, 2021 | CECL ACL | |||||||||||||
| Total loans | Crit/Class | 30-89 Days Delinquent | NPLs | NCOs | ACL $ | % of Portfolio | ||||||||
| Traditional C&I | $ | 3,342,356 | $ | 146,650 | $ | 1,127 | $ | 44,818 | $ | (875) | $ | 61,483 | 1.84 | % |
| Asset Based Lending | 673,679 | 37,543 | - | 3,790 | (7) | 10,051 | 1.49 | |||||||
| Payroll Finance | 166,999 | - | - | - | (5) | 1,691 | 1.01 | |||||||
| Mortgage Warehouse | 1,301,639 | - | - | - | - | 1,150 | 0.09 | |||||||
| Factored Receivables | 228,834 | - | - | - | 108 | 3,145 | 1.37 | |||||||
| Equipment Finance | 1,254,846 | 55,164 | 41,046 | 21,478 | (443) | 25,474 | 2.03 | |||||||
| Public Sector Finance | 1,825,976 | - | - | - | - | 5,534 | 0.30 | |||||||
| Commercial Real Estate | 5,941,508 | 479,002 | 11,016 | 87,014 | (771) | 147,604 | 2.48 | |||||||
| Multi-family | 4,296,829 | 171,820 | 10,072 | 327 | (418) | 29,379 | 0.68 | |||||||
| ADC | 694,443 | 61,768 | - | 22,500 | (2,500) | 10,380 | 1.49 | |||||||
| Total commercial loans | 19,727,109 | 951,947 | 63,261 | 179,927 | (4,911) | 295,891 | 1.50 | |||||||
| Residential | 1,395,248 | 17,358 | 4,015 | 16,976 | (12) | 10,874 | 0.78 | |||||||
| Consumer | 154,192 | 8,641 | 1,443 | 8,550 | (35) | 3,150 | 2.04 | |||||||
| Total portfolio loans | $ | 21,276,549 | $ | 977,946 | $ | 68,719 | $ | 205,453 | $ | (4,958) | $ | 309,915 | 1.46 |
16
Sterling Bancorp and Subsidiaries
Non-GAAP Financial Measures
(unaudited, in thousands, except share and per share data)
| For the Quarter Ended | ||||||||||||
| September 30, 2021 | December 31, 2021 | |||||||||||
|
Average balance | Interest | Yield/Rate |
Average balance | Interest | Yield/Rate | |||||||
| (Dollars in thousands) | ||||||||||||
| Interest earning assets: | ||||||||||||
| Traditional C&I and commercial finance loans | $ | 8,260,805 | $ | 76,340 | 3.67 | % | $ | 8,475,376 | $ | 77,090 | 3.61 | % |
| Commercial real estate (includes multi-family) | 10,121,953 | 100,038 | 3.92 | 10,178,840 | 101,940 | 3.97 | ||||||
| ADC | 711,020 | 7,798 | 4.35 | 718,423 | 7,850 | 4.34 | ||||||
| Commercial loans | 19,093,778 | 184,176 | 3.83 | 19,372,639 | 186,880 | 3.83 | ||||||
| Consumer loans | 160,962 | 1,752 | 4.32 | 150,976 | 1,427 | 3.75 | ||||||
| Residential mortgage loans | 1,374,398 | 11,229 | 3.27 | 1,388,937 | 12,156 | 3.50 | ||||||
Total gross loans 1
| 20,629,138 | 197,157 | 3.79 | 20,912,552 | 200,463 | 3.80 | ||||||
| Securities taxable | 2,393,325 | 15,433 | 2.56 | 2,449,849 | 15,547 | 2.52 | ||||||
| Securities non-taxable | 1,926,918 | 14,692 | 3.05 | 1,913,297 | 14,601 | 3.05 | ||||||
| Interest earning deposits | 604,396 | 216 | 0.14 | 911,674 | 355 | 0.15 | ||||||
| FHLB and Federal Reserve Bank Stock | 151,230 | 676 | 1.77 | 151,425 | 772 | 2.02 | ||||||
| Total securities and other earning assets | 5,075,869 | 31,017 | 2.42 | 5,426,245 | 31,275 | 2.29 | ||||||
| Total interest earning assets | 25,705,007 | 228,174 | 3.52 | 26,338,797 | 231,738 | 3.49 | ||||||
| Non-interest earning assets | 3,442,325 | 3,389,639 | ||||||||||
| Total assets | $ | 29,147,332 | $ | 29,728,436 | ||||||||
| Interest bearing liabilities: | ||||||||||||
Demand and savings 2 deposits
| $ | 7,407,456 | $ | 1,794 | 0.10 | % | $ | 7,561,576 | $ | 1,830 | 0.10 | % |
| Money market deposits | 8,369,994 | 3,222 | 0.15 | 8,362,021 | 3,341 | 0.16 | ||||||
| Certificates of deposit | 1,372,012 | 1,145 | 0.33 | 1,276,876 | 1,036 | 0.32 | ||||||
| Total interest bearing deposits | 17,149,462 | 6,161 | 0.14 | 17,200,473 | 6,207 | 0.14 | ||||||
| Other borrowings | 30,057 | 7 | 0.09 | 56,969 | 29 | 0.20 | ||||||
| Subordinated notes - Company | 492,275 | 5,084 | 4.13 | 492,439 | 5,082 | 4.13 | ||||||
| Total borrowings | 522,332 | 5,091 | 3.87 | 549,408 | 5,111 | 3.69 | ||||||
| Total interest bearing liabilities | 17,671,794 | 11,252 | 0.25 | 17,749,881 | 11,318 | 0.25 | ||||||
| Non-interest bearing deposits | 6,001,982 | 6,380,827 | ||||||||||
| Other non-interest bearing liabilities | 704,844 | 762,019 | ||||||||||
| Total liabilities | 24,378,620 | 24,892,727 | ||||||||||
| Stockholders' equity | 4,768,712 | 4,835,709 | ||||||||||
| Total liabilities and stockholders' equity | $ | 29,147,332 | $ | 29,728,436 | ||||||||
Net interest rate spread 3
| 3.27 | % | 3.24 | % | ||||||||
Net interest earning assets 4
| $ | 8,033,213 | $ | 8,588,916 | ||||||||
| Net interest margin - tax equivalent | 216,922 | 3.35 | % | 220,420 | 3.32 | % | ||||||
| Less tax equivalent adjustment | (3,085) | (3,066) | ||||||||||
| Net interest income | 213,837 | 217,354 | ||||||||||
| Accretion income on acquired loans | 6,197 | 5,769 | ||||||||||
Tax equivalent net interest margin excluding accretion income on acquired loans
| $ | 210,725 | 3.25 | % | $ | 214,651 | 3.23 | % | ||||
Ratio of interest earning assets to interest bearing liabilities
| 145.5 | % | 148.4 | % | ||||||||
1 Average balances include loans held for sale and non-accrual loans. Interest includes prepayment fees and late charges.
2 Includes club accounts and interest bearing mortgage escrow balances.
3 Net interest rate spread represents the difference between the tax equivalent yield on average interest earning assets and the cost of average interest bearing liabilities.
4 Net interest earning assets represents total interest earning assets less total interest bearing liabilities.
17
Sterling Bancorp and Subsidiaries
Non-GAAP Financial Measures
(unaudited, in thousands, except share and per share data)
| For the Quarter Ended | ||||||||||||
| December 31, 2020 | December 31, 2021 | |||||||||||
|
Average balance | Interest | Yield/Rate |
Average balance | Interest | Yield/Rate | |||||||
| (Dollars in thousands) | ||||||||||||
| Interest earning assets: | ||||||||||||
| Traditional C&I and commercial finance loans | $ | 9,114,999 | $ | 83,429 | 3.64 | % | $ | 8,475,376 | $ | 77,090 | 3.61 | % |
| Commercial real estate (includes multi-family) | 10,191,707 | 105,193 | 4.11 | 10,178,840 | 101,940 | 3.97 | ||||||
| ADC | 685,368 | 6,500 | 3.77 | 718,423 | 7,850 | 4.34 | ||||||
| Commercial loans | 19,992,074 | 195,122 | 3.88 | 19,372,639 | 186,880 | 3.83 | ||||||
| Consumer loans | 195,870 | 2,028 | 4.12 | 150,976 | 1,427 | 3.75 | ||||||
| Residential mortgage loans | 1,691,567 | 17,372 | 4.11 | 1,388,937 | 12,156 | 3.50 | ||||||
Total gross loans 1
| 21,879,511 | 214,522 | 3.90 | 20,912,552 | 200,463 | 3.80 | ||||||
| Securities taxable | 2,191,333 | 15,679 | 2.85 | 2,449,849 | 15,547 | 2.52 | ||||||
| Securities non-taxable | 1,964,451 | 14,985 | 3.05 | 1,913,297 | 14,601 | 3.05 | ||||||
| Interest earning deposits | 331,587 | 105 | 0.13 | 911,674 | 355 | 0.15 | ||||||
| FHLB and Federal Reserve Bank stock | 156,109 | 465 | 1.18 | 151,425 | 772 | 2.02 | ||||||
| Total securities and other earning assets | 4,643,480 | 31,234 | 2.68 | 5,426,245 | 31,275 | 2.29 | ||||||
| Total interest earning assets | 26,522,991 | 245,756 | 3.69 | 26,338,797 | 231,738 | 3.49 | ||||||
| Non-interest earning assets | 3,501,174 | 3,389,639 | ||||||||||
| Total assets | $ | 30,024,165 | $ | 29,728,436 | ||||||||
| Interest bearing liabilities: | ||||||||||||
Demand and savings 2 deposits
| $ | 7,582,585 | $ | 3,230 | 0.17 | % | $ | 7,561,576 | $ | 1,830 | 0.10 | % |
| Money market deposits | 8,577,920 | 6,065 | 0.28 | 8,362,021 | 3,341 | 0.16 | ||||||
| Certificates of deposit | 2,158,348 | 4,122 | 0.76 | 1,276,876 | 1,036 | 0.32 | ||||||
| Total interest bearing deposits | 18,318,853 | 13,417 | 0.29 | 17,200,473 | 6,207 | 0.14 | ||||||
| Other borrowings | 261,787 | 518 | 0.79 | 56,969 | 29 | 0.20 | ||||||
| Subordinated notes - Bank | 168,222 | 2,293 | 5.45 | - | - | - | ||||||
| Subordinated notes - Company | 422,048 | 4,356 | 4.13 | 492,439 | 5,082 | 4.13 | ||||||
| Total borrowings | 852,057 | 7,167 | 3.35 | 549,408 | 5,111 | 3.69 | ||||||
| Total interest bearing liabilities | 19,170,910 | 20,584 | 0.43 | 17,749,881 | 11,318 | 0.25 | ||||||
| Non-interest bearing deposits | 5,530,334 | 6,380,827 | ||||||||||
| Other non-interest bearing liabilities | 731,151 | 762,019 | ||||||||||
| Total liabilities | 25,432,395 | 24,892,727 | ||||||||||
| Stockholders' equity | 4,591,770 | 4,835,709 | ||||||||||
| Total liabilities and stockholders' equity | $ | 30,024,165 | $ | 29,728,436 | ||||||||
Net interest rate spread 3
| 3.26 | % | 3.24 | % | ||||||||
Net interest earning assets 4
| $ | 7,352,081 | $ | 8,588,916 | ||||||||
| Net interest margin - tax equivalent | 225,172 | 3.38 | % | 220,420 | 3.32 | % | ||||||
| Less tax equivalent adjustment | (3,146) | (3,066) | ||||||||||
| Net interest income | 222,026 | 217,354 | ||||||||||
| Accretion income on acquired loans | 8,560 | 5,769 | ||||||||||
Tax equivalent net interest margin excluding accretion income on acquired loans
| $ | 216,612 | 3.25 | % | $ | 214,651 | 3.23 | % | ||||
Ratio of interest earning assets to interest bearing liabilities
| 138.4 | % | 148.4 | % | ||||||||
1 Average balances include loans held for sale and non-accrual loans. Interest includes prepayment fees and late charges.
2 Includes club accounts and interest bearing mortgage escrow balances.
3 Net interest rate spread represents the difference between the tax equivalent yield on average interest earning assets and the cost of average interest bearing liabilities.
4 Net interest earning assets represents total interest earning assets less total interest bearing liabilities.
18
Sterling Bancorp and Subsidiaries
Non-GAAP Financial Measures
(unaudited, in thousands, except share and per share data)
The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors. See legend beginning on page 24.
| ||||||||||
| As of and for the Quarter Ended | ||||||||||
| December 31, 2020 | March 31, 2021 | June 30, 2021 | September 30, 2021 | December 31, 2021 | ||||||
The following table shows the reconciliation of pretax pre-provision net revenue to adjusted pretax pre-provision net revenue1:
| ||||||||||
| Net interest income | $ | 222,026 | $ | 217,914 | $ | 218,527 | $ | 213,837 | $ | 217,354 |
| Non-interest income | 33,921 | 32,356 | 30,214 | 32,547 | 40,918 | |||||
| Total net revenue | 255,947 | 250,270 | 248,741 | 246,384 | 258,272 | |||||
| Non-interest expense | 133,473 | 118,165 | 120,629 | 124,968 | 132,089 | |||||
| PPNR | 122,474 | 132,105 | 128,112 | 121,416 | 126,183 | |||||
| Adjustments: | ||||||||||
| Accretion income | (8,560) | (8,272) | (7,812) | (6,197) | (5,769) | |||||
| Net loss (gain) on sale of securities | 111 | (719) | - | (1,656) | - | |||||
| Litigation accrual | - | - | - | 2,000 | - | |||||
| Loss on sale of mortgage servicing rights | - | - | - | 324 | - | |||||
| Loss on extinguishment of debt | 2,749 | - | 1,243 | - | - | |||||
| Impairment related to financial centers and real estate consolidation strategy | 13,311 | 633 | 475 | 118 | 2,571 | |||||
| Merger related expense | - | - | 2,481 | 4,581 | 7,688 | |||||
| Amortization of non-compete agreements and acquired customer list intangible assets | 172 | 148 | 148 | 148 | 148 | |||||
| Adjusted PPNR | $ | 130,257 | $ | 123,895 | $ | 124,647 | $ | 120,734 | $ | 130,821 |
19
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors. See legend beginning on page 24.
| ||||||||||
| As of and for the Quarter Ended | ||||||||||
| December 31, 2020 | March 31, 2021 | June 30, 2021 | September 30, 2021 | December 31, 2021 | ||||||
The following table shows the reconciliation of stockholders' equity to tangible common equity and the tangible common equity ratio2:
| ||||||||||
| Total assets | $ | 29,820,138 | $ | 29,914,282 | $ | 29,143,918 | $ | 30,028,425 | $ | 29,659,471 |
| Goodwill and other intangibles | (1,777,046) | (1,773,270) | (1,769,494) | (1,765,718) | (1,761,942) | |||||
| Tangible assets | 28,043,092 | 28,141,012 | 27,374,424 | 28,262,707 | 27,897,529 | |||||
| Stockholders' equity | 4,590,514 | 4,620,164 | 4,722,856 | 4,797,629 | 4,880,149 | |||||
| Preferred stock | (136,689) | (136,458) | (136,224) | (135,986) | (135,745) | |||||
| Goodwill and other intangibles | (1,777,046) | (1,773,270) | (1,769,494) | (1,765,718) | (1,761,942) | |||||
| Tangible common stockholders' equity | 2,676,779 | 2,710,436 | 2,817,138 | 2,895,925 | 2,982,462 | |||||
| Common stock outstanding at period end | 192,923,371 | 192,567,901 | 192,715,433 | 192,681,503 | 192,435,253 | |||||
| Common stockholders' equity as a % of total assets | 14.94 | % | 14.99 | % | 15.74 | % | 15.52 | % | 16.00 | % |
| Book value per common share | $ | 23.09 | $ | 23.28 | $ | 23.80 | $ | 24.19 | $ | 24.65 |
| Tangible common equity as a % of tangible assets | 9.55 | % | 9.63 | % | 10.29 | % | 10.25 | % | 10.69 | % |
| Tangible book value per common share | $ | 13.87 | $ | 14.08 | $ | 14.62 | $ | 15.03 | $ | 15.50 |
The following table shows the reconciliation of reported return on average tangible common equity and adjusted return on average tangible common equity3:
| ||||||||||
| Average stockholders' equity | $ | 4,591,770 | $ | 4,616,660 | $ | 4,670,718 | $ | 4,768,712 | $ | 4,835,709 |
| Average preferred stock | (136,914) | (136,687) | (136,455) | (136,221) | (135,983) | |||||
| Average goodwill and other intangibles | (1,779,801) | (1,775,746) | (1,771,971) | (1,768,209) | (1,764,419) | |||||
| Average tangible common stockholders' equity | 2,675,055 | 2,704,227 | 2,762,292 | 2,864,282 | 2,935,307 | |||||
| Net income available to common | 74,457 | 97,187 | 96,380 | 93,715 | 109,625 | |||||
| Net income, if annualized | 296,209 | 394,147 | 386,579 | 371,804 | 434,925 | |||||
| Reported return on avg tangible common equity | 11.07 | % | 14.58 | % | 13.99 | % | 12.98 | % | 14.82 | % |
Adjusted net income (see reconciliation on page 21)
| $ | 94,323 | $ | 97,603 | $ | 100,444 | $ | 99,589 | $ | 121,912 |
| Annualized adjusted net income | 375,242 | 395,834 | 402,880 | 395,109 | 483,673 | |||||
| Adjusted return on average tangible common equity | 14.03 | % | 14.64 | % | 14.58 | % | 13.79 | % | 16.48 | % |
The following table shows the reconciliation of reported return on average tangible assets and adjusted return on average tangible assets4:
| ||||||||||
| Average assets | $ | 30,024,165 | $ | 29,582,605 | $ | 29,390,977 | $ | 29,147,332 | $ | 29,728,436 |
| Average goodwill and other intangibles | (1,779,801) | (1,775,746) | (1,771,971) | (1,768,209) | (1,764,419) | |||||
| Average tangible assets | 28,244,364 | 27,806,859 | 27,619,006 | 27,379,123 | 27,964,017 | |||||
| Net income available to common | 74,457 | 97,187 | 96,380 | 93,715 | 109,625 | |||||
| Net income, if annualized | 296,209 | 394,147 | 386,579 | 371,804 | 434,925 | |||||
| Reported return on average tangible assets | 1.05 | % | 1.42 | % | 1.40 | % | 1.36 | % | 1.56 | % |
Adjusted net income (see reconciliation on page 21)
| $ | 94,323 | $ | 97,603 | $ | 100,444 | $ | 99,589 | $ | 121,912 |
| Annualized adjusted net income | 375,242 | 395,834 | 402,880 | 395,109 | 483,673 | |||||
| Adjusted return on average tangible assets | 1.33 | % | 1.42 | % | 1.46 | % | 1.44 | % | 1.73 | % |
20
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors. See legend beginning on page 24.
| ||||||||||
| As of and for the Quarter Ended | ||||||||||
| December 31, 2020 | March 31, 2021 | June 30, 2021 | September 30, 2021 | December 31, 2021 | ||||||
The following table shows the reconciliation of the reported operating efficiency ratio and adjusted operating efficiency ratio5:
| ||||||||||
| Net interest income | $ | 222,026 | $ | 217,914 | $ | 218,527 | $ | 213,837 | $ | 217,354 |
| Non-interest income | 33,921 | 32,356 | 30,214 | 32,547 | 40,918 | |||||
| Total revenue | 255,947 | 250,270 | 248,741 | 246,384 | 258,272 | |||||
| Tax equivalent adjustment on securities | 3,146 | 3,120 | 3,115 | 3,085 | 3,066 | |||||
| Net loss (gain) on sale of securities | 111 | (719) | - | (1,656) | - | |||||
| Depreciation of operating leases | (3,130) | (3,124) | (2,917) | (2,846) | (2,771) | |||||
| Adjusted total revenue | 256,074 | 249,547 | 248,939 | 244,967 | 258,567 | |||||
| Non-interest expense | 133,473 | 118,165 | 120,629 | 124,968 | 132,089 | |||||
| Merger related expense | - | - | (2,481) | (4,581) | (7,688) | |||||
| Loss on sale of mortgage servicing rights | - | - | - | (324) | - | |||||
| Accrual for legal settlements | - | - | - | (2,000) | - | |||||
| Impairment related to financial centers and real estate consolidation strategy | (13,311) | (633) | (475) | (118) | (2,571) | |||||
| Loss on extinguishment of borrowings | (2,749) | - | (1,243) | - | - | |||||
| Depreciation of operating leases | (3,130) | (3,124) | (2,917) | (2,846) | (2,771) | |||||
| Amortization of intangible assets | (4,200) | (3,776) | (3,776) | (3,776) | (3,776) | |||||
| Adjusted non-interest expense | 110,083 | 110,632 | 109,737 | 111,323 | 115,283 | |||||
| Reported operating efficiency ratio | 52.1 | % | 47.2 | % | 48.5 | % | 50.7 | % | 51.1 | % |
| Adjusted operating efficiency ratio | 43.0 | 44.3 | 44.1 | 45.4 | 44.6 | |||||
The following table shows the reconciliation of reported net income (GAAP) and earnings per share to adjusted net income available to common stockholders (non-GAAP) and adjusted diluted earnings per share (non-GAAP)6:
| ||||||||||
| Income before income tax expense | $ | 94,974 | $ | 122,105 | $ | 122,862 | $ | 121,416 | $ | 146,582 |
| Income tax expense | 18,551 | 22,955 | 24,523 | 25,745 | 35,005 | |||||
| Net income (GAAP) | 76,423 | 99,150 | 98,339 | 95,671 | 111,577 | |||||
| Adjustments: | ||||||||||
| Net loss (gain) on sale of securities | 111 | (719) | - | (1,656) | - | |||||
| Loss on extinguishment of debt | 2,749 | - | 1,243 | - | - | |||||
| Accrual for legal settlements | - | - | - | 2,000 | - | |||||
| Loss on sale of mortgage servicing rights | - | - | - | 324 | - | |||||
| Impairment related to financial centers and real estate consolidation strategy. | 13,311 | 633 | 475 | 118 | 2,571 | |||||
| Merger related expenses | - | - | 2,481 | 4,581 | 7,688 | |||||
| Amortization of non-compete agreements and acquired customer list intangible assets | 172 | 148 | 148 | 148 | 148 | |||||
| Total pre-tax adjustments | 16,343 | 62 | 4,347 | 5,515 | 10,407 | |||||
| Adjusted pre-tax income | 111,317 | 122,167 | 127,209 | 126,931 | 156,989 | |||||
| Adjusted income tax expense | 15,028 | 22,601 | 24,806 | 25,386 | 33,125 | |||||
| Adjusted net income (non-GAAP) | 96,289 | 99,566 | 102,403 | 101,545 | 123,864 | |||||
| Preferred stock dividend | 1,966 | 1,963 | 1,959 | 1,956 | 1,952 | |||||
| Adjusted net income available to common stockholders (non-GAAP) | $ | 94,323 | $ | 97,603 | $ | 100,444 | $ | 99,589 | $ | 121,912 |
| Weighted average diluted shares | 193,530,930 | 192,621,907 | 192,292,989 | 192,340,487 | 191,942,078 | |||||
| Reported diluted EPS (GAAP) | $ | 0.38 | $ | 0.50 | $ | 0.50 | $ | 0.49 | $ | 0.57 |
| Adjusted diluted EPS (non-GAAP) | 0.49 | 0.51 | 0.52 | 0.52 | 0.64 |
21
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors. See legend beginning on page 24.
| ||||
| For the Year Ended December 31, | ||||
| 2020 | 2021 | |||
The following table shows the reconciliation of reported net income (GAAP) and earnings per share to adjusted net income available to common stockholders (non-GAAP) and adjusted diluted earnings per share (non-GAAP)6:
| ||||
| Income before income tax expense | $ | 255,668 | $ | 512,965 |
| Income tax expense | 29,899 | 108,228 | ||
| Net income (GAAP) | 225,769 | 404,737 | ||
| Adjustments: | ||||
| Net (gain) on sale of securities | (9,428) | (2,361) | ||
| Loss on extinguishment of borrowings | 19,462 | 1,243 | ||
| Accrual for legal settlements | - | 2,000 | ||
| Loss on sale of mortgage servicing rights | - | 324 | ||
| Impairment related to financial centers and real estate consolidation strategy | 13,311 | 3,797 | ||
| Merger-related expense | - | 14,750 | ||
| Amortization of non-compete agreements and acquired customer list intangible assets | 686 | 592 | ||
| Total pre-tax adjustments | 24,031 | 20,345 | ||
| Adjusted pre-tax income | 279,699 | 533,310 | ||
| Adjusted income tax expense | 37,759 | 106,662 | ||
| Adjusted net income (non-GAAP) | $ | 241,940 | $ | 426,648 |
| Preferred stock dividend | 7,883 | 7,830 | ||
| Adjusted net income available to common stockholders (non-GAAP) | $ | 234,057 | $ | 418,818 |
| Weighted average diluted shares | 194,393,343 | 191,955,440 | ||
| Diluted EPS as reported (GAAP) | $ | 1.12 | $ | 2.07 |
| Adjusted diluted EPS (non-GAAP) | 1.20 | 2.18 |
22
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors. See legend beginning on page 24.
| ||||
| For the Year Ended December 31, | ||||
| 2020 | 2021 | |||
The following table shows the reconciliation of reported return on average tangible common equity and adjusted return on average tangible common equity3:
| ||||
| Average stockholders' equity | $ | 4,523,468 | $ | 4,723,675 |
| Average preferred stock | (137,247) | (136,334) | ||
| Average goodwill and other intangibles | (1,786,081) | (1,770,050) | ||
| Average tangible common stockholders' equity | 2,600,140 | 2,817,291 | ||
| Net income available to common stockholders | $ | 217,886 | $ | 396,907 |
| Reported return on average tangible common equity | 8.38 | % | 14.09 | % |
Adjusted net income available to common stockholders (see reconciliation on page 22)
| $ | 234,057 | $ | 418,818 |
| Adjusted return on average tangible common equity | 9.00 | % | 14.87 | % |
The following table shows the reconciliation of reported return on avg tangible assets and adjusted return on avg tangible assets4:
| ||||
| Average assets | $ | 30,472,854 | $ | 29,461,874 |
| Average goodwill and other intangibles | (1,786,081) | (1,770,050) | ||
| Average tangible assets | 28,686,773 | 27,691,824 | ||
| Net income available to common stockholders | 217,886 | 396,907 | ||
| Reported return on average tangible assets | 0.76 | % | 1.43 | % |
Adjusted net income available to common stockholders (see reconciliation on page 22)
| $ | 234,057 | $ | 418,818 |
| Adjusted return on average tangible assets | 0.82 | % | 1.51 | % |
The following table shows the reconciliation of the reported operating efficiency ratio and adjusted operating efficiency ratio5:
| ||||
| Net interest income | $ | 864,921 | $ | 867,632 |
| Non-interest income | 135,562 | 136,035 | ||
| Total revenues | 1,000,483 | 1,003,667 | ||
| Tax equivalent adjustment on securities | 13,271 | 12,387 | ||
| Net (gain) on sale of securities | (9,428) | (2,361) | ||
| Depreciation of operating leases | (12,888) | (11,660) | ||
| Adjusted total net revenue | 991,438 | 1,002,033 | ||
| Non-interest expense | 492,429 | 495,851 | ||
| Merger-related expense | - | (14,750) | ||
| Accrual for legal settlements | - | (2,000) | ||
| Loss on sale of mortgage servicing rights | - | (324) | ||
| Impairment related to financial centers and real estate consolidation strategy | (13,311) | (3,797) | ||
| Loss on extinguishment of borrowings | (19,462) | (1,243) | ||
| Depreciation of operating leases | (12,888) | (11,660) | ||
| Amortization of intangible assets | (16,800) | (15,104) | ||
| Adjusted non-interest expense | $ | 429,968 | $ | 446,973 |
| Reported operating efficiency ratio | 49.2 | % | 49.4 | % |
| Adjusted operating efficiency ratio | 43.4 | % | 44.6 | % |
23
Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
The non-GAAP/as adjusted measures presented above are used by our management and the Company's Board of Directors on a regular basis in addition to our GAAP results to facilitate the assessment of our financial performance and to assess our performance compared to our annual budget and strategic plans. These non-GAAP/adjusted financial measures complement our GAAP reporting and are presented above to provide investors, analysts, regulators and others information that we use to manage and evaluate our performance each period. This information supplements our GAAP reported results, and should not be viewed in isolation from, or as a substitute for, our GAAP results. When non-GAAP/adjusted measures are impacted by income tax expense, we present the pre-tax amount for the income and expense items that result in the non-GAAP adjustments and present the income tax expense impact at the effective tax rate in effect for the period presented.
1 PPNR is a non-GAAP financial measure calculated by summing our GAAP net interest income plus GAAP non-interest income minus our GAAP non-interest expense and eliminating provision for credit losses and income taxes. We believe the use of PPNR provides useful information to readers of our financial statements because it enables an assessment of our ability to generate earnings to cover credit losses through a credit cycle. Adjusted PPNR includes the adjustments we make for adjusted earnings and excludes accretion income. We believe adjusted PPNR supplements our PPNR calculation. We use this calculation to assess our performance in the current operating environment.
2 Stockholders' equity as a percentage of total assets, book value per common share, tangible common equity as a percentage of tangible assets and tangible book common value per share provides information to help assess our capital position and financial strength. We believe tangible book measures improve comparability to other banking organizations that have not engaged in acquisitions that have resulted in the accumulation of goodwill and other intangible assets.
3 Reported return on average tangible common equity and adjusted return on average tangible common equity measures provide information to evaluate the use of our tangible common equity.
4 Reported return on average tangible assets and adjusted return on average tangible assets measures provide information to help assess our profitability.
5 The reported operating efficiency ratio is a non-GAAP measure calculated by dividing our GAAP non-interest expense by the sum of our GAAP net interest income plus GAAP non-interest income. The adjusted operating efficiency ratio is a non-GAAP measure calculated by dividing non-interest expense adjusted for intangible asset amortization and certain expenses generally associated with discrete merger transactions and non-recurring strategic plans by the sum of net interest income plus non-interest income plus the tax equivalent adjustment on securities income and elimination of the impact of gain or loss on sale of securities. The adjusted operating efficiency ratio is a measure we use to assess our operating performance.
6 Adjusted net income available to common stockholders and adjusted diluted earnings per share present a summary of our earnings, which includes adjustments to exclude certain revenues and expenses (generally associated with discrete merger transactions and non-recurring strategic plans) to help in assessing our profitability.
24
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Sterling Bancorp published this content on 19 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 January 2022 21:14:14 UTC.
