STERLING BANCORP EARNINGS GROWTH APPROACHES 40%

FOR 2012 FIRST QUARTER

 

EARNINGS PER SHARE RISE 25%

 

LOANS INCREASE 13%; DEPOSITS RISE 15%

 

 

 

New York, N.Y., April 23, 2012 — Sterling Bancorp (NYSE: STL), a financial holding company headquartered in New York City and the parent company of Sterling National Bank, today reported a strong increase in earnings for the first quarter ended March 31, 2012. The Company’s performance in the 2012 first quarter benefitted from growth in loans and deposits, a higher net interest margin and control of noninterest expenses.

 

Net income available to common shareholders was $4.6 million for the 2012 first quarter, up approximately 40% from the same period in 2011. Net income available to common shareholders per diluted share was $0.15 for the 2012 first quarter, increasing from $0.12 in the year-ago period, as the increase in net income available to common shareholders was partially offset by the impact of a higher share count.

 

Management Perspective

 

“Sterling delivered solid performance across virtually every key measure of our business in the 2012 first quarter, demonstrated by our approximately 40% rise in earnings, an increase in total revenues to $35.7 million, and continued double digit growth in loans and deposits compared to a year ago,” said Louis J. Cappelli, Sterling’s Chairman and Chief Executive Officer. “We have benefitted from our focus on maintaining a strong capital base and substantial liquidity, which positioned us to meet the continued robust demand for our lending products. Our successful strategy of redeploying assets from the investment portfolio into loans led to an improvement in yield, driving our net interest margin above 4.00%. Expenses were well-controlled and increased at a moderate pace as compared to the overall growth of our business, while asset quality metrics remained solid.”

 

“Building on our strong start to the year, Sterling is well positioned to continue our profitable growth and enhance shareholder value through the balance of 2012 and beyond,” Mr. Cappelli noted. “Our strategies are based on offering clients and customers a superior level of service, providing a portfolio of financial solutions, and pursuing a well-established focus on serving the needs of businesses, their owners and others. As a result of this consistent approach, we are continuing to gain market share and to capture opportunities in our marketplace.”

 

First Quarter 2012 Financial Results

 

Among the factors that had a positive effect on the 2012 first quarter results, net interest income rose 12.8% to $22.4 million, from $19.9 million for the 2011 first quarter. This primarily reflected the Company’s strategy of shifting its asset mix toward higher loan balances and lower investment securities balances, with a resulting increase in yields, while also taking a disciplined approach to reducing funding costs. Net interest margin increased to 4.07% for the 2012 first quarter, up 18 basis points compared to the year-ago period.

 

The provision for loan losses was $3.0 million for the 2012 first quarter, unchanged from the same 2011 period.

 

Total noninterest income was $10.4 million for the 2012 first quarter, compared to $11.0 million in the same 2011 period. This primarily reflected an increase in residential mortgage banking income principally due to increased volume of loan sales, which partially offset decreases in accounts receivable management and other related fees and lower securities gains. Noninterest income continued to be a significant contributor to Sterling’s financial performance, at approximately 29% of total revenue.

 

Noninterest expenses were $23.2 million for the 2012 first quarter, an increase of $744 thousand from the year-ago period. This principally reflected higher personnel expenses due to the growth in Sterling’s business, partially offset by lower deposit insurance premiums.

 

Net income available to common shareholders for the 2012 first quarter was $4.6 million, or $0.15 per diluted share, up from $3.3 million, or $0.12 per diluted share, for the same quarter of 2011. The 2011 results included dividends and accretion on preferred shares issued under the TARP Capital Purchase Program, which were redeemed in the second quarter of 2011. The 25% increase in diluted earnings per share in the 2012 first quarter included the impact of an additional 3.3 million average common shares outstanding, due to Sterling’s March 2011 common share offering, which partially offset the growth in net income.

 

Loans, Deposits and Total Assets  

 

Total loans held in portfolio approached $1.5 billion at March 31, 2012, rising 13% from a year earlier. The Company continues to have a robust loan pipeline. The ratio of portfolio loans to deposits was approximately 73.1% at March 31, 2012.

 

Total deposits approached $2.0 billion at March 31, 2012, an increase of 15% from $1.7 billion a year earlier. Noninterest-bearing demand deposits totaled $815.5 million at March 31, 2012, a $254 million increase from a year ago, and represented 41% of total deposits, among the highest ratios of demand to total deposits in the industry.

 

Total assets approached $2.5 billion at March 31, 2012, an increase of 4% from a year ago.

 

Asset Quality

 

Sterling continued to exhibit strong credit quality metrics during the 2012 first quarter. Net charge-offs were $2.9 million for the 2012 first quarter, compared to $3.2 million a year ago. The allowance for loan losses as a percentage of nonaccrual loans was 314% at March 31, 2012, versus 257% a year earlier. Nonperforming assets were $8.0 million or 0.32% of total assets at March 31, 2012, compared to $7.1 million or 0.30% a year ago.

 

Capital 

 

Sterling’s capital base has continued to exceed all regulatory requirements for well-capitalized institutions. At March 31, 2012, Sterling’s Tier 1 risk-based capital ratio was 12.08% (compared to a requirement of 6.00%), total risk-based capital was 13.15% (requirement of 10.00%), and the Tier 1 leverage ratio was 9.77% (requirement of 5.00%). The tangible common equity ratio was 8.17% at March 31, 2012.

 

Conference Call

 

Sterling Bancorp will host a teleconference call for the financial community on Monday, April 23, 2012, at 10:00 a.m. Eastern Time to discuss the financial results. To access the conference call live, interested parties may dial 800-288-8960 at least 10 minutes prior to the call.

 

A replay of the conference call will be available beginning at approximately 1:00 p.m. Eastern Time on April 23, 2012, until 11:59 p.m. Eastern Time on May 7, 2012. To access the replay by telephone, interested parties may dial 800-475-6701 and enter the Access Code 245048.

 

About Sterling Bancorp

 

Sterling Bancorp (NYSE: STL) is a New York City-based financial corporation with assets of $2.5 billion. Since 1929, Sterling National Bank, the Company’s principal banking subsidiary, has successfully served the needs of businesses, professionals and individuals in the NY metropolitan area and beyond. Sterling is well-known for its high-touch, hands-on approach to customer service and a special focus on serving the business community.

 

Sterling provides clients with a full range of depository and cash management services and a broad portfolio of financing solutions—including working capital lines, accounts receivable and inventory financing, factoring, trade financing, payroll funding and processing, equipment financing, commercial and residential mortgages and mortgage warehouse lines of credit.

 

Certain statements in this press release, including but not limited to, statements as to future events, future liquidity, future interest rate risk and operating expenses, statements concerning future results of operations, financial position or dividends, and plans and objectives for future operations, future capital, future liquidity and future growth, statements concerning the economic environment, asset quality and future levels of nonaccrual loans, charge-offs and provisions for loan losses, and our ability to maintain a strong capital base and substantial liquidity, the continued robust demand for our lending products, our ability to successfully implement our strategy of redeploying assets from the investment portfolio into loans, our ability to continue profitable growth and enhance shareholder value through the balance of 2012 and beyond, our ability to successfully implement our strategy of offering a superior level of service, providing a portfolio of financial solutions and serving the needs of our customers, our ability to continue to gain market share and capture opportunities in the marketplace, the continued availability of our robust loan pipeline, and other statements contained herein regarding matters that are not historical facts, are “forward-looking statements” as defined in the Securities Exchange Act of 1934. These statements are not historical facts but instead are subject to numerous assumptions, risks and uncertainties, and represent only the Company’s belief regarding future events, many of which, by their nature, are inherently uncertain and outside its control. Any forward-looking statements the Company may make speak only as of the date on which such statements are made. The Company’s actual results and financial position may differ materially from the anticipated results and financial condition indicated in or implied by these forward-looking statements, and the Company makes no commitment to update or revise forward-looking statements to reflect new information or subsequent events or changes in expectations. For a discussion of some of the risks and important factors that could affect the Company’s future results and financial condition, see “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Forward-Looking Statements and Factors that Could Affect Future Results” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

 

# # #

 

 

STERLING BANCORP

Consolidated Financial Highlights

(Unaudited)

(dollars in thousands, except per share data)

 

		Three Months Ended March 31,
		2012				2011
BALANCE SHEET HIGHLIGHTS
Period End Balances
Investment securities		$	802,386			$	892,466
Loans held for sale			27,864				24,102
Loans held in portfolio,       net of unearned discounts			1,452,675				1,288,649
Interest bearing deposits with other banks			26,938				7,932
Total earning assets			2,318,333				2,221,823
Allowance for loan losses			20,105				18,040
Total assets			2,498,644				2,392,545
Demand deposits			815,513				561,524
Savings, NOW and money market deposits			644,392				549,392
Time deposits			528,382				617,169
Customer repurchase agreements			40,602				21,107
Other short-term borrowings			35,890				84,916
Advances FHLB/Long-term borrowings			148,142				154,589
Shareholders’ equity			225,324				260,290
Average Balances
Investment securities		$	764,266			$	841,987
Loans held for sale			36,701				26,043
Loans held in portfolio,      net of unearned discounts			1,405,266				1,228,301
Interest bearing deposits with other banks			77,072				52,589
Total earning assets			2,291,781				2,158,062
Total assets			2,460,106				2,324,008
Demand deposits			759,002				538,136
Savings, NOW and money market deposits			621,527				567,926
Time deposits			588,641				613,586
Customer repurchase agreements			39,772				41,269
Other short-term borrowings			22,054				28,079
Advances FHLB/Long-term borrowings			148,266				164,989
Shareholders’ equity			221,684				231,413
ASSET QUALITY HIGHLIGHTS
Period End
Net charge-offs		$	2,882			$	3,198
Nonaccrual loans			6,412				7,016
Other real estate owned			1,563				132
Nonperforming assets			7,975				7,148
Nonaccrual loans/loans (1)			0.43	%			0.53	%
Nonperforming assets/assets			0.32	%			0.30	%
Allowance for loan losses/loans (2)			1.38	%			1.40	%
Allowance for loan losses/nonaccrual loans			313.55	%			257.13	%
CAPITAL RATIOS
Period End
Tier 1 risk-based			12.08	%			15.52	%
Total risk-based			13.15	%			16.58	%
Leverage			9.77	%			11.90	%
Tangible common equity			8.17	%			8.30	%
Book value per common share		$	7.29			$	7.10

 

(1) The term “loans” includes loans held for sale and loans held in portfolio.

(2) The term “loans” includes loans held in portfolio only.

 

 

STERLING BANCORP

Consolidated Balance Sheets

(Unaudited)

(dollars in thousands, except number of shares)

 

		March 31,
		2012				2011
ASSETS
Cash and due from banks		$	34,731			$	35,981
Interest-bearing deposits with other banks			26,938				7,932
Investment securities
Available for sale (at estimated fair value)			386,528				434,185
Held to maturity (at amortized cost)			415,858				458,281
Total investment securities			802,386				892,466
Loans held for sale			27,864				24,102
Loans held in portfolio, net of unearned discounts			1,452,675				1,288,649
Less allowance for loan losses			20,105				18,040
Loans held in portfolio, net			1,432,570				1,270,609
Federal Reserve Bank and Federal Home Loan Bank stock, at cost			8,470				8,674
Customers’ liability under acceptances			3				228
Goodwill			22,901				22,901
Premises and equipment, net			23,268				18,000
Other real estate			1,563				132
Accrued interest receivable			8,835				9,406
Cash surrender value of  life insurance policies			53,920				51,998
Other assets			55,195				50,116
		$	2,498,644			$	2,392,545
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Demand		$	815,513			$	561,524
Savings, NOW and money market			644,392				549,392
Time			528,382				617,169
Total deposits			1,988,287				1,728,085
Securities sold under agreements to repurchase - customers			40,602				21,107
Securities sold under agreements to repurchase - dealers			5,000				5,000
Short-term borrowings - other			30,890				79,916
Advances - FHLB			122,368				128,815
Long-term borrowings - subordinated debentures			25,774				25,774
Acceptances outstanding			3				228
Accrued interest payable			995				1,145
Due to factored clients			0				70,117
Accrued expenses and other liabilities			59,401				72,068
Total liabilities			2,273,320				2,132,255
Shareholders’ equity			225,324				260,290
		$	2,498,644			$	2,392,545
MEMORANDA
Available for sale securities - amortized cost		$	384,284			$	433,988
Held to maturity securities - estimated fair value			433,096				462,298
Shares outstanding
Common issued			35,225,110				35,225,110
Common in treasury			4,307,972				4,297,782

 

NOTE: Certain reclassifications have been made to prior period’s financial data to conform to current financial statement presentations.

 

 

STERLING BANCORP

Consolidated Statements of Income

(Unaudited)

(dollars in thousands, except per share data)

 

		Three Months Ended March 31,
		2012				2011
INTEREST INCOME
Loans		$	19,686			$	17,175
Investment securities - available for sale			2,377				2,554
Investment securities - held to maturity			3,030				3,397
FRB and FHLB stock			81				23
Deposits with other banks			46				35
Total interest income			25,220				23,184
INTEREST EXPENSE
Savings, NOW and money market deposits			644				700
Time deposits			1,063				1,360
Securities sold u/a/r - customers			36				48
Securities sold u/a/r - dealers			16				16
Short-term borrowings - other			12				14
Advances - FHLB			519				664
Long-term subordinated debentures			523				523
Total interest expense			2,813				3,325
Net interest income			22,407				19,859
Provision for loan losses			3,000				3,000
Net interest income after provision for loan losses			19,407				16,859
NONINTEREST INCOME
Accounts receivable management/
factoring commissions and other fees			4,868				5,069
Service charges on deposit accounts			1,413				1,371
Trade finance income			500				588
Other customer related service charges and fees			249				180
Mortgage banking income			2,336				2,175
Income from life insurance policies			256				275
Securities gains			879				1,124
Loss on sale of OREO			(66	)			0
Other income			4				230
Total noninterest income			10,439				11,012
NONINTEREST EXPENSES
Salaries			11,187				10,610
Employee benefits			3,724				3,650
Total personnel expense			14,911				14,260
Occupancy and equipment expenses, net			3,214				3,273
Advertising and marketing			643				425
Professional fees			903				818
Communications			470				410
Deposit insurance			584				933
Other expenses			2,472				2,334
Total noninterest expenses			23,197				22,453
Income  before income taxes			6,649				5,418
Provision  for income taxes			2,047				1,475
Net income			4,602				3,943
Dividends on preferred shares and accretion			0				644
Net income available to common
shareholders		$	4,602			$	3,299

 

 

 

STERLING BANCORP

Consolidated Statements of Income

(Unaudited)

(dollars in thousands, except per share data)

(continued)

 

		Three Months Ended March 31,
		2012				2011
Average number of common shares outstanding
Basic			30,659,856				27,351,584
Diluted			30,659,856				27,351,584
Net income available to common
shareholders per average common share
Basic		$	0.15			$	0.12
Diluted			0.15				0.12
Dividends per common share			0.09				0.09

 

 

STERLING BANCORP

Consolidated Statements of Comprehensive Income

(Unaudited)

(dollars in thousands)

 

		Three Months Ended March 31,
		2012				2011
Net income		$	4,602			$	3,943
Other comprehensive income, net of tax:
Unrealized holding gains on securities
arising during the period			2,685				379
Reclassification adjustment for securities
gains included in net income			(488	)			(398	)
Amortization of:
Prior service cost			5				9
Net actuarial losses			453				389
Comprehensive income		$	7,257			$	4,322

 

STERLING BANCORP

Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)

(dollars in thousands)

 

		Three Months Ended March 31,
		2012				2011
Balance, at beginning of period		$	220,821			$	222,742
Net income for period			4,602				3,943
Common shares issued			0				36,454
Stock option and restricted stock
compensation expense			103				73
Cash dividends-Common shares			(2,782	)			(2,776	)
Cash dividends-Preferred shares			0				(525	)
Surrender of shares issued under
incentive compensation plan			(75	)			0
Unrealized holding gains on securities
arising during the period			2,685				379
Reclassification adjustment for securities
gains included in net income			(488	)			(398	)
Amortization of:
Prior service cost			5				9
Net actuarial losses			453				389
Balance, at end of period		$	225,324			$	260,290

 

 

STERLING BANCORP

Average Balance Sheets [1]

(Unaudited)

(dollars in thousands)

 

	Three Months Ended
		March 31, 2012												March 31, 2011
		AVERAGE								AVERAGE				AVERAGE								AVERAGE
		BALANCE				INTEREST				RATE				BALANCE				INTEREST				RATE
Assets
Interest-bearing deposits with other banks		$	77,072			$	46				0.24	%		$	52,589			$	35				0.27	%
Investment Securities
Available for sale - taxable			325,871				2,170				2.66				369,002				2,188				2.37
Held to maturity - taxable			280,377				1,633				2.33				316,118				2,187				2.77
Tax-exempt [2]			158,018				2,468				6.25				156,867				2,425				6.18
Total investment securities			764,266				6,271				3.28				841,987				6,800				3.23
FRB and FHLB stock  [2]			8,476				81				3.82				9,142				23				1.02
Loans, net of unearned discount  [3]			1,441,967				19,686				5.56				1,254,344				17,175				5.69
Total Interest-Earning Assets [2]			2,291,781				26,084				4.58	%			2,158,062				24,033				4.54	%
Cash and due from banks			37,628												36,937
Allowance for loan losses			(21,584	)											(19,817	)
Goodwill			22,901												22,901
Other			129,380												125,925
Total Assets		$	2,460,106											$	2,324,008
Liabilities and Shareholders’ Equity
Interest-bearing deposits
Domestic
Savings		$	18,966				1				0.02	%		$	19,964				2				0.05	%
NOW			221,710				79				0.14				205,789				71				0.14
Money market			380,851				564				0.60				342,173				627				0.74
Time			588,641				1,063				0.73				613,586				1,360				0.90
Total Interest-Bearing Deposits			1,210,168				1,707				0.57				1,181,512				2,060				0.71
Borrowings
Securities sold u/a/r - customers			39,772				36				0.36				41,269				48				0.47
Securities sold u/a/r - dealers			5,001				16				1.30				5,000				16				1.29
Federal funds purchased			2,473				1				0.14				4,833				2				0.15
Commercial paper			14,580				11				0.29				15,656				12				0.30
Short-term borrowings - other			0				0				0.00				2,590				0				0.00
Advances - FHLB			122,492				519				1.70				139,215				664				1.93
Long-term borrowings - sub debt			25,774				523				8.38				25,774				523				8.38
Total Borrowings			210,092				1,106				2.12				234,337				1,265				2.18
Total Interest-Bearing Liabilities			1,420,260				2,813				0.80	%			1,415,849				3,325				0.95	%
Noninterest-bearing demand deposits			759,002												538,136
Total including noninterest-bearing
demand deposits			2,179,262				2,813				0.54	%			1,953,985				3,325				0.69	%
Other liabilities			59,160												138,610

 

 

 

STERLING BANCORP

Rate/Volume Analysis [1]

(Unaudited)

(dollars in thousands)

 

		Increase/(Decrease)
		Three Months Ended
		March 31, 2012
		Volume				Rate				Net  [2]
INTEREST INCOME
Interest-bearing deposits with other banks		$	15			$	(4	)		$	11
Investment Securities
Available for sale - taxable			(259	)			241				(18	)
Held to maturity - taxable			(216	)			(338	)			(554	)
Tax-exempt			27				16				43
Total investment securities			(448	)			(81	)			(529	)
FRB and FHLB stock			(2	)			60				58
Loans, net of unearned discounts [3]			2,910				(399	)			2,511
TOTAL INTEREST INCOME		$	2,475			$	(424	)		$	2,051
INTEREST EXPENSE
Interest-bearing deposits
Domestic
Savings		$	0			$	(1	)		$	(1	)
NOW			8				0				8
Money market			69				(132	)			(63	)
Time			(40	)			(257	)			(297	)
Total interest-bearing deposits			37				(390	)			(353	)
Borrowings
Securities sold under agreements to repurchase - customers			(1	)			(11	)			(12	)
Securities sold under agreements to repurchase - dealers			0				0				0
Federal funds purchased			(1	)			0				(1	)
Commercial paper			(1	)			0				(1	)
Short-term borrowings - other			0				0				0
Advances - FHLB			(69	)			(76	)			(145	)
Long-term borrowings - subordinated debentures			0				0				0
Total borrowings			(72	)			(87	)			(159	)
TOTAL INTEREST EXPENSE		$	(35	)		$	(477	)		$	(512	)
NET INTEREST INCOME		$	2,510			$	53			$	2,563

 

[1] This table is presented on a tax-equivalent basis.

[2] Changes in interest income and interest expense due to a combination of both volume and rate have been allocated to the change due to volume and the change due to rate in proportion to the relationship of change due solely to each. The effect of the extra day in 2012 has been allocated entirely to the volume variance.

[3] Includes loans held for sale and loans held in portfolio; all loans are domestic. Nonaccrual loans are included in amounts outstanding, and income has been included to the extent earned.

 

 

STERLING BANCORP

Reconciliation of Tangible Common Equity and Tangible Assets

 

(Unaudited)

(dollars in thousands)

 

This press release contains certain supplemental financial information, described in the following tables, which has been determined by methods other than U. S. generally accepted accounting principles (“GAAP”). Management believes that these non-GAAP financial measures provide useful supplemental information to both management and investors in evaluating Sterling’s capital position. Tangible common equity represents shareholders’ equity less preferred equity, goodwill and other intangibles. Tangible assets are equal to total assets less goodwill and other intangibles. Tangible common equity ratio is calculated by dividing tangible common equity by tangible assets. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results, and Sterling strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Non-GAAP financial measures are not standardized, and, therefore, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures that may have the same or similar names.

 

		March 31,
		2012				2011
Tangible common equity
Total shareholders’ equity		$	225,324			$	260,290
Less:
Preferred equity			0				40,721
Goodwill and other intangible assets			22,975				22,901
Total tangible common equity		$	202,349			$	196,668
Tangible assets
Total assets		$	2,498,644			$	2,392,545
Less: Goodwill and other intangible assets			22,975				22,901
Total tangible assets		$	2,475,669			$	2,369,644
Tangible common equity ratio			8.17	%			8.30	%