Sterling Bancorp, Inc. (NASDAQ: SBT) (“Sterling” or the
“Company”), the holding company of Sterling Bank and Trust, F.S.B.
(the “Bank”), today reported its unaudited financial results for
the second quarter ended June 30, 2023.
Second Quarter 2023
Highlights
- Net income of $2.5 million, or $0.05 per diluted
share
- Net interest margin of 2.64%
- Completed the sale of all loans held for sale, primarily
consisting of nonperforming and chronically delinquent residential
real estate loans; gain on sale of such loans of $1.7
million
- Recorded provision for (recovery of) credit losses of $(2.9)
million; ratio of allowance for credit losses to total loans of
2.43%
- Nonperforming assets of $2.1 million, 0.08% of total
assets
- Total gross loans of $1.5 billion
- Total deposits of $2.0 billion
- Non-interest expense of $17.3 million
- Shareholders’ equity of $317.7 million
- Company’s consolidated and Bank’s leverage ratio of 13.44%
and 12.91%, respectively
- Redeemed Subordinated Notes bearing interest at 11.08% on
July 15, 2023 at par for aggregate cash payment of $66.8
million
- Conclusion of SEC investigation
The Company reported net income of $2.5 million, or $0.05 per
diluted share, for the quarter ended June 30, 2023, compared to a
net loss of $(0.5) million, or $(0.01) per diluted share, for the
quarter ended March 31, 2023.
In the second quarter of 2023, the Company completed its
previously disclosed plan to sell nonperforming and chronically
delinquent residential real estate loans, primarily consisting of
Advantage Loan Program loans with an aggregate unpaid principal
balance of approximately $43.5 million. The Company received net
proceeds of $36.1 million which was modestly better than the
carrying value of the loans on the date of sale. In addition, the
Company completed the sale of the last remaining commercial real
estate loan held for sale. With the successful disposition of all
loans held for sale, nonperforming assets decreased to $2.1
million, or 0.08% of total assets, at June 30, 2023, from $26.3
million, or 1.09% of total assets, at March 31, 2023. Total
criticized and classified loans were $52.9 million at June 30, 2023
compared to $71.7 million at March 31, 2023.
In June 2023, the Company received a letter from the Division of
Enforcement of the U.S. Securities and Exchange Commission (the
“SEC”) informing the Company that the Division of Enforcement had
concluded its investigation of the Company and does not intend to
recommend an enforcement action by the SEC against the Company.
On July 19, 2023, the United States District Court for the
Eastern District of Michigan approved the Plea Agreement previously
entered into by the Company with the U.S. Department of Justice,
Criminal Division, Fraud Section. Under the Plea Agreement, the
Company pleaded guilty to one count of securities fraud primarily
relating to disclosures in the Company’s SEC filings with respect
to the Company’s former Advantage Loan Program. This court action,
together with the June 2023 letter from the SEC and the Consent
Order entered into with the OCC in September 2022, marks the end of
the government investigations into the Company and the Bank with
respect to the former Advantage Loan Program.
On July 15, 2023, the Company redeemed its outstanding 7% Fixed
to Floating Subordinated Notes due April 2026 (the “Subordinated
Notes”), with an aggregate outstanding principal amount of $65.0
million, at par plus accrued interest for a total cash payment of
$66.8 million. The Subordinated Notes accrued interest at a
variable interest rate based on the three-month London Interbank
Offered Rate (“LIBOR”) rate plus a margin of 5.82%, payable
quarterly in arrears. The interest rate was 11.08% at June 30,
2023. The Bank declared and paid a $65.0 million dividend to the
Company in June 2023 to fund the bulk of the redemption. Following
the Bank dividend and the redemption of the Subordinated Notes, the
capital ratios of the Company and the Bank exceeded all regulatory
requirements to be considered “well capitalized.”
“The second quarter results reflect several remedial steps we
have undertaken to finish the job of repairing Sterling and the
impact from poor decisions made in years past. We believe that the
strategic actions we have taken serve to substantially reduce
Sterling’s elevated credit risk profile and the excessive interest
expense from the Subordinated Notes. These actions were designed to
create a pathway to long-term and sustainable profitability. The
Subordinated Notes alone accounted for approximately 23 basis
points of margin pressure this quarter. The credit risk picture has
been a cause for our concern over the last three years. It is worth
remembering that the level of problem credit exposure was $236.3
million of criticized and classified loans at the peak of June 30,
2021. The quarter included some NIM pressure (excluding the impact
from the Subordinated Notes) as deposits have repriced consistently
over the course of this increasing interest rate cycle as our
funding costs have grown. The Bank continues to enjoy robust
liquidity levels, and we currently have no reliance on non-core
funding,” said Thomas M. O’Brien, Chairman, President, and Chief
Executive Officer.
Balance Sheet
Total Assets – Total assets were $2.5 billion at June 30,
2023, reflecting an increase of $120.5 million, or 5%, from $2.4
billion at March 31, 2023.
Cash and due from banks increased $236.2 million, or 56%, to
$655.4 million at June 30, 2023 compared to $419.2 million at March
31, 2023. Debt securities, all of which are available for sale, are
of relatively short duration and which we consider part of our
liquid assets, were $334.5 million at June 30, 2023 compared to
$342.5 million at March 31, 2023.
Total gross loans held for investment of $1.5 billion at June
30, 2023 declined $66.2 million, or 4%, from $1.6 billion at March
31, 2023. The $38.0 million of loans held for sale at March 31,
2023 were sold or paid off in the second quarter of 2023, resulting
in no loans held for sale at June 30, 2023.
Total Deposits – Total deposits were $2.0 billion at June
30, 2023, an increase of $119.7 million, or 6%, from March 31,
2023. Money market, savings and NOW deposits were $1.0 billion, an
increase of $57.2 million, or 6%, from March 31, 2023. Time
deposits were $981.3 million, an increase of $64.1 million, or 7%,
compared to $917.2 million at March 31, 2023. Noninterest-bearing
deposits were $44.8 million at June 30, 2023 compared to $46.5
million at March 31, 2023. Total estimated uninsured deposits to
total deposits were 24.2%, 20.2% and 20.8% at June 30, 2023, March
31, 2023 and December 31, 2022, respectively. Our current strategy
is to continue to offer competitive interest rates on our deposit
products to maintain our existing customer deposit base and
maintain our liquidity.
Capital – Total shareholders’ equity was $317.7 million
at June 30, 2023 compared to $315.5 million at March 31, 2023. The
increase in shareholders’ equity is primarily attributable to $2.5
million of net income in the present quarter and $1.0 million
issuance of shares of common stock relating to the Sterling Bank
& Trust 401(k) Plan company matching contribution, partially
offset by a modest $(1.6) million increase in the unrealized loss
on our investment securities portfolio included in accumulated
other comprehensive loss.
The Company and the Bank have elected to opt into the Community
Bank Leverage Ratio framework, effective January 1, 2023. As such,
the Company and the Bank are not required to meet minimum standards
under the risk-based capital rules. Instead, each of the Company
and the Bank is required to maintain a Tier 1 leverage ratio of
greater than 9.0% to be considered to have satisfied the risk-based
and leverage capital requirements in the regulatory agencies’
generally applicable capital rules and to have met the capital
requirements required to be considered well capitalized. At June
30, 2023, the Company’s consolidated and the Bank’s leverage ratio
were 13.44% and 12.91%, respectively.
Asset Quality and Provision for (Recovery of) Credit
Losses – A provision for (recovery of) credit losses of $(2.9)
million was recorded for the second quarter of 2023 compared to a
provision for credit losses of $0.6 million for the first quarter
of 2023. The allowance for credit losses was $36.2 million at June
30, 2023, or 2.43% of total loans held for investment, compared to
$38.6 million, or 2.48% of total loans held for investment, at
March 31, 2023.
Net recoveries during the second quarter of 2023 were $(0.4)
million compared to net charge offs of $6.4 million in the first
quarter of 2023. Net charge offs in the first quarter of 2023
primarily reflects the $6.5 million in charge offs of our recorded
investment of those residential loans reclassified as held for
sale.
Nonperforming assets at June 30, 2023 totaled $2.1 million, or
0.08% of total assets, consisting almost entirely of nonaccrual
loans held for investment, compared to $26.3 million, or 1.09% of
total assets, at March 31, 2023, consisting almost entirely of
nonaccrual loans held for sale. This decrease is primarily due to
the sale of all loans held for sale, consisting of nonperforming
and chronically delinquent residential real estate held for sale
loans in the second quarter of 2023.
Results of Operations
Net Interest Income and Net Interest Margin – Net
interest income for the second quarter of 2023 was $16.2 million
compared to $17.7 million for the first quarter of 2023 and $19.5
million for the second quarter of 2022. The decrease in net
interest income during the second quarter of 2023 compared to the
prior quarter was primarily due to an increase in interest expense
on our average balance of interest-bearing deposits since the
average rate paid during the second quarter of 2023 increased 65
basis points, partially offset by an increase in interest income
earned on our average balance of interest-bearing assets primarily
reflecting an increase in the average yield for the second quarter
of 2023 of 27 basis points.
The decrease in net interest income during the second quarter of
2023 compared to the second quarter of 2022 was primarily due to an
increase in interest expense on our average balance of
interest-bearing liabilities since the average rate paid increased
237 basis points. This was partially offset by an increase in
interest income as the average yield on our average balance of
interest-bearing assets increased 168 basis points. The average
balance in our loan portfolio declined $301.9 million, or 16%, from
$1.8 billion in the second quarter of 2022 to $1.5 billion in the
second quarter of 2023. Loan repayments, as well as loan sales of
higher risk commercial real estate loans and nonperforming
residential real estate loans completed during this time period,
continue to outpace new loan production, as we previously
discontinued originating construction loans and have not yet
replaced our third-party service provider for our residential loan
origination function, and we continue to work on initiatives to
diversify our overall loan production and review new residential
loan products.
The net interest margin of 2.64% for the second quarter of 2023
decreased from the net interest margin of 2.93% for the first
quarter of 2023 and decreased from the net interest margin of 2.95%
for the second quarter of 2022.
Non-Interest Income – Non-interest income for the second
quarter of 2023 increased by $1.6 million compared to the first
quarter of 2023, primarily due to the gain on the sale of all loans
held for sale, consisting primarily of nonperforming and
chronically delinquent residential real estate held for sale loans,
in the second quarter of 2023.
Non-Interest Expense – Non-interest expense of $17.3
million for the second quarter of 2023 reflected a decrease of $0.5
million, or 3%, compared to $17.8 million for the first quarter of
2023 with all expense categories either decreasing or slightly
increasing except professional fees and other expenses.
Professional fees were $0.3 million higher in the second quarter of
2023 compared to the prior quarter, which was primarily due to $2.2
million of reimbursements received from an insurance carrier during
the first quarter of 2023 for previously incurred direct and third
party legal expenses related to the government investigations. No
similar reimbursements were received from the insurance carrier in
the second quarter of 2023. Excluding the insurance reimbursements,
professional fees declined $1.9 million in the second quarter of
2023 compared to the first quarter of 2023 as legal services
related to the government investigations declined substantially.
(See “Non-GAAP Financial Measures” below.)
Income Tax Expense (Benefit) – For the three months ended
June 30, 2023, the Company recorded income tax expense of $1.1
million, or an effective tax rate of 30.6%. For the three months
ended March 31, 2023, the Company recorded an income tax benefit of
($54) thousand. Our effective tax rate in 2023 varies from the
statutory tax rate primarily due to the impact of non-deductible
compensation.
Mr. O’Brien said, “With the redemption of the Subordinated
Notes, I believe we have accomplished all the corrective elements
we intended for Sterling’s turnaround. From the perspective of the
multiple financial, regulatory, and internal control deficiencies,
we believe we have built an entirely new bank that is both
transparently governed and well positioned for future
opportunity.
Although we anticipate that there will continue to be some
ongoing news with respect to government enforcement actions against
certain individuals, we believe that the Company is finally beyond
those concerns. We do anticipate some additional future costs
related to selected individual defense costs and our ongoing
obligations to cooperate with the government investigations with
respect to individuals. As of today’s date, the court has approved
Sterling’s settlement with the Department of Justice, and that will
move into the hands of a special master to be appointed by the
court to make appropriate arrangements for the distribution of the
proceeds of the restitution funds to non-insider
victim-shareholders.
We believe Sterling has ample liquidity, strong capital levels
and a low-risk balance sheet. We have several years of herculean
efforts behind us needed to bring Sterling to the point where it is
today. From this perspective, the board and management can finally
get down to the business of looking at our strategic opportunities
and develop business plans designed to meet the best long-term
interests of Sterling and its shareholders.”
Non-GAAP Financial Measures
The Company’s disclosure of professional fees exclusive of
insurance reimbursements is a non-GAAP financial measure and has
been included to provide greater clarity to investors and
comparability of actual professional expenses incurred due to the
significant disconnect in timing of the identification of those
expenses for which insurance reimbursements will be received and
the incurrence of the expenses. Our use of non-GAAP financial
measures has limitations as an analytical tool, and these measures
should not be considered in isolation or as a substitute for
analysis of financial results as reported under U.S. GAAP. The
table that follows provides a reconciliation of this non-GAAP
information to our U.S. GAAP financials.
Three Months Ended
(dollars in thousands)
June 30, 2023
March 31, 2023
June 30, 2022
Professional Fees
$
3,521
$
3,221
$
7,066
Insurance Reimbursements
—
2,203
79
Adjusted Professional Fees
$
3,521
$
5,424
$
7,145
Conference Call and Webcast
Management will host a conference call on Wednesday, July 26,
2023 at 11:00 a.m. Eastern Time to discuss the Company’s unaudited
financial results for the quarter ended June 30, 2023. The
conference call number for U.S. participants is (833) 535-2201 and
the conference call number for participants outside the United
States is (412) 902-6744. Additionally, interested parties can
listen to a live webcast of the call in the “Investor Relations”
section of the Company’s website at www.sterlingbank.com. An
archived version of the webcast will be available in the same
location shortly after the live call has ended.
A replay of the conference call may be accessed through August
2, 2023 by U.S callers dialing (877) 344-7529 and international
callers dialing (412) 317-0088, using conference ID number
5834919.
About Sterling Bancorp, Inc.
Sterling Bancorp, Inc. is a unitary thrift holding company. Its
wholly owned subsidiary, Sterling Bank and Trust, F.S.B., has
primary branch operations in San Francisco and Los Angeles,
California and New York City. Sterling offers a range of loan
products as well as retail and business banking services. Sterling
also has an operations center and a branch in Southfield, Michigan.
For additional information, please visit the Company’s website at
http://www.sterlingbank.com.
Forward-Looking Statements
This Press Release contains certain statements that are, or may
be deemed to be, “forward-looking statements” regarding the
Company’s plans, expectations, thoughts, beliefs, estimates, goals
and outlook for the future. These forward-looking statements
reflect our current views with respect to, among other things,
future events and our financial performance, including any
statements that refer to projections, forecasts or other
characterizations of future events or circumstances, including any
underlying assumptions. These statements are often, but not always,
made through the use of words or phrases such as “may,” “might,”
“should,” “could,” “predict,” “potential,” “believe,” “expect,”
“attribute,” “continue,” “will,” “anticipate,” “seek,” “estimate,”
“intend,” “plan,” “projection,” “goal,” “target,” “outlook,” “aim,”
“would,” “annualized” and “perspective,” or the negative versions
of those words or other comparable words or phrases of a future or
forward-looking nature, though the absence of these words does not
mean a statement is not forward-looking. All statements other than
statements of historical facts, including but not limited to
statements regarding, the economy and financial markets, government
investigations, credit quality, the regulatory scheme governing our
industry, competition in our industry, interest rates, our
liquidity, our business and our governance, are forward-looking
statements. We have based the forward-looking statements in this
Press Release primarily on our current expectations and projections
about future events and trends that we believe may affect our
business, financial condition, results of operations, prospects,
business strategy and financial needs. These forward-looking
statements are not historical facts, and they are based on current
expectations, estimates and projections about our industry,
management's beliefs and certain assumptions made by management,
many of which, by their nature, are inherently uncertain and beyond
our control. There can be no assurance that future developments
will be those that have been anticipated. We may not actually
achieve the plans, intentions or expectations disclosed in our
forward-looking statements. Our statements should not be read to
indicate that we have conducted an exhaustive inquiry into, or
review of, all potentially available relevant information.
Accordingly, we caution you that any such forward-looking
statements are not guarantees of future performance and are subject
to risks, assumptions, estimates and uncertainties that are
difficult to predict. The risks, uncertainties and other factors
detailed from time to time in our public filings, including those
included in the disclosures under the headings “Cautionary Note
Regarding Forward-Looking Statements” and “Risk Factors” in our
Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 16, 2023, subsequent periodic reports and
future periodic reports, could affect future results and events,
causing those results and events to differ materially from those
views expressed or implied in the Company’s forward-looking
statements. These risks are not exhaustive. Other sections of this
Press Release and our filings with the Securities and Exchange
Commission include additional factors that could adversely impact
our business and financial performance. Moreover, we operate in
very competitive and rapidly changing environment. New risks and
uncertainties emerge from time to time, and it is not possible for
us to predict all risks and uncertainties that could have an impact
on the forward-looking statements contained in this Press Release.
Should one or more of the foregoing risks materialize, or should
underlying assumptions prove incorrect, actual results or outcomes
may vary materially from those projected in, or implied by, such
forward-looking statements. Accordingly, you should not place undue
reliance on any such forward-looking statements. The Company
disclaims any obligation to update, revise, or correct any
forward-looking statements based on the occurrence of future
events, the receipt of new information or otherwise.
Sterling Bancorp, Inc. Consolidated Financial Highlights
(Unaudited) At and for the Three Months Ended
June 30, March 31, June 30, (dollars in
thousands, except per share data)
2023
2023
2022
Net income (loss)
$
2,539
$
(503
)
$
(2,197
)
Income (loss) per share, diluted
$
0.05
$
(0.01
)
$
(0.04
)
Net interest income
$
16,184
$
17,676
$
19,470
Net interest margin
2.64
%
2.93
%
2.95
%
Non-interest income
$
1,911
$
278
$
45
Non-interest expense
$
17,341
$
17,837
$
19,494
Loans, net of allowance for credit losses
$
1,449,709
$
1,513,481
$
1,726,366
Total deposits
$
2,041,491
$
1,921,822
$
2,004,247
Asset Quality Nonperforming loans
$
2,095
$
34
$
48,385
Allowance for credit losses to total loans
2.43
%
2.48
%
2.91
%
Allowance for credit losses to nonaccrual loans
1753
%
—
107
%
Nonaccrual loans to total loans outstanding
0.14
%
—
2.72
%
Net charge offs (recoveries) to average loans outstanding during
the period
(0.03
)%
0.39
%
(0.02
)%
Provision for (recovery of) credit losses
$
(2,902
)
$
674
$
(1,109
)
Net charge offs (recoveries)
$
(402
)
$
6,412
$
(420
)
Performance Ratios Return on average assets
0.41
%
(0.08
)%
(0.33
)%
Return on average shareholders' equity
3.24
%
(0.65
)%
(2.57
)%
Efficiency ratio (1)
95.83
%
99.35
%
99.89
%
Yield on average interest-earning assets
5.15
%
4.88
%
3.47
%
Cost of average interest-bearing liabilities
2.99
%
2.36
%
0.62
%
Net interest spread
2.16
%
2.52
%
2.85
%
Capital Ratios(2)(3) Regulatory and Other Capital Ratios
— Consolidated: Tier 1 (core) capital to average total assets
(leverage ratio)
13.44
%
13.49
%
12.91
%
Regulatory and Other Capital Ratios — Bank: Tier 1 (core)
capital to average total assets (leverage ratio)
12.91
%
16.52
%
14.44
%
(1) Efficiency ratio is computed as the ratio of
non-interest expense divided by the sum of net interest income and
non-interest income. (2) June 30, 2023 capital ratios are
estimated. (3) Effective January 1, 2023, the Company and Bank
elected to opt into the community bank leverage ratio framework.
Sterling Bancorp, Inc. Condensed Consolidated
Balance Sheets (Unaudited) June 30, March
31, % December 31, % June 30,
% (dollars in thousands)
2023
2023
change
2022
change
2022
change Assets Cash and due from banks
$
655,391
$
419,219
56
%
$
379,798
73
%
$
285,165
N/M
Interest-bearing time deposits with other banks
934
934
0
%
934
0
%
1,183
(21
)%
Debt securities available for sale
334,508
342,534
(2
)%
343,558
(3
)%
377,492
(11
)%
Equity securities
4,640
4,712
(2
)%
4,642
(0
)%
4,817
(4
)%
Loans held for sale
—
37,979
(100
)%
7,725
(100
)%
8,964
(100
)%
Loans, net of allowance for credit losses of $36,153, $38,565,
$45,464 and $51,766
1,449,709
1,513,481
(4
)%
1,613,385
(10
)%
1,726,366
(16
)%
Accrued interest receivable
7,489
7,617
(2
)%
7,829
(4
)%
6,721
11
%
Mortgage servicing rights, net
1,658
1,703
(3
)%
1,794
(8
)%
2,453
(32
)%
Leasehold improvements and equipment, net
5,850
6,139
(5
)%
6,301
(7
)%
6,848
(15
)%
Operating lease right-of-use assets
13,025
13,916
(6
)%
14,800
(12
)%
16,332
(20
)%
Federal Home Loan Bank stock, at cost
20,288
20,288
0
%
20,288
0
%
20,288
0
%
Company-owned life insurance
8,605
8,553
1
%
8,501
1
%
8,396
2
%
Deferred tax asset, net
18,538
20,065
(8
)%
23,704
(22
)%
22,028
(16
)%
Other assets
11,375
14,408
(21
)%
11,476
(1
)%
16,767
(32
)%
Total assets
$
2,532,010
$
2,411,548
5
%
$
2,444,735
4
%
$
2,503,820
1
%
Liabilities Noninterest-bearing deposits
$
44,799
$
46,496
(4
)%
$
53,041
(16
)%
$
82,387
(46
)%
Interest-bearing deposits
1,996,692
1,875,326
6
%
1,900,996
5
%
1,921,860
4
%
Total deposits
2,041,491
1,921,822
6
%
1,954,037
4
%
2,004,247
2
%
Federal Home Loan Bank borrowings
50,000
50,000
0
%
50,000
0
%
50,000
0
%
Subordinated notes, net
65,234
65,253
(0
)%
65,271
(0
)%
65,308
(0
)%
Operating lease liabilities
14,176
15,089
(6
)%
15,990
(11
)%
17,540
(19
)%
Accrued expenses and other liabilities
43,433
43,874
(1
)%
46,810
(7
)%
31,393
38
%
Total liabilities
2,214,334
2,096,038
6
%
2,132,108
4
%
2,168,488
2
%
Shareholders’ Equity Preferred stock, authorized
10,000,000 shares; no shares issued and outstanding
—
—
—
—
—
—
—
Common stock, no par value, authorized 500,000,000 shares; shares
issued and outstanding 52,081,886 at June 30, 2023, 50,808,116 at
March 31, 2023, 50,795,871 at December 31, 2022 and 50,818,212 at
June 30, 2022
84,323
83,295
1
%
83,295
1
%
83,295
1
%
Additional paid-in capital
15,098
14,906
1
%
14,808
2
%
14,313
5
%
Retained earnings
236,587
234,048
1
%
234,049
1
%
251,306
(6
)%
Accumulated other comprehensive loss
(18,332
)
(16,739
)
(10
)%
(19,525
)
6
%
(13,582
)
(35
)%
Total shareholders’ equity
317,676
315,510
1
%
312,627
2
%
335,332
(5
)%
Total liabilities and shareholders’ equity
$
2,532,010
$
2,411,548
5
%
$
2,444,735
4
%
$
2,503,820
1
%
N/M - Not Meaningful
Sterling Bancorp, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended Six Months Ended June
30, March 31, % June 30, % June
30, June 30, % (dollars in thousands, except
per share amounts)
2023
2023
change
2022
change
2023
2022
change Interest income Interest and fees on loans
$
21,892
$
22,160
(1
)%
$
20,746
6
%
$
44,052
$
44,614
(1
)%
Interest and dividends on investment securities and restricted
stock
2,666
2,456
9
%
1,353
97
%
5,122
2,188
N/M
Other interest
7,002
4,807
46
%
791
N/M
11,809
1,006
N/M
Total interest income
31,560
29,423
7
%
22,890
38
%
60,983
47,808
28
%
Interest expense Interest on deposits
13,337
9,809
36
%
2,016
N/M
23,146
4,346
N/M
Interest on Federal Home Loan Bank borrowings
248
245
1
%
314
(21
)%
493
666
(26
)%
Interest on subordinated notes
1,791
1,693
6
%
1,090
64
%
3,484
2,054
70
%
Total interest expense
15,376
11,747
31
%
3,420
N/M
27,123
7,066
N/M
Net interest income
16,184
17,676
(8
)%
19,470
(17
)%
33,860
40,742
(17
)%
Provision for (recovery of) credit losses
(2,902
)
674
N/M
(1,109
)
N/M
(2,228
)
(5,398
)
59
%
Net interest income after provision for (recovery of) credit losses
19,086
17,002
12
%
20,579
(7
)%
36,088
46,140
(22
)%
Non-interest income Service charges and fees
78
94
(17
)%
105
(26
)%
172
227
(24
)%
Loss on sale of investment securities
—
(2
)
100
%
—
N/M
(2
)
—
N/M
Gain (loss) on sale of loans held for sale
1,720
(25
)
N/M
3
N/M
1,695
200
N/M
Unrealized gain (loss) on equity securities
(71
)
71
N/M
(170
)
58
%
—
(406
)
100
%
Net servicing income (loss)
102
59
73
%
(177
)
N/M
161
266
(39
)%
Income earned on company-owned life insurance
81
80
1
%
255
(68
)%
161
583
(72
)%
Other
1
1
0
%
29
(97
)%
2
586
(100
)%
Total non-interest income
1,911
278
N/M
45
N/M
2,189
1,456
50
%
Non-interest expense Salaries and employee benefits
9,274
9,410
(1
)%
5,569
67
%
18,684
15,186
23
%
Occupancy and equipment
2,051
2,112
(3
)%
2,187
(6
)%
4,163
4,329
(4
)%
Professional fees
3,521
3,221
9
%
7,066
(50
)%
6,742
12,223
(45
)%
FDIC assessments
263
257
2
%
346
(24
)%
520
715
(27
)%
Data processing
754
738
2
%
762
(1
)%
1,492
1,567
(5
)%
Net provision for (recovery of) mortgage repurchase liability
(59
)
120
N/M
(312
)
81
%
61
(525
)
N/M
Other
1,537
1,979
(22
)%
3,876
(60
)%
3,516
5,422
(35
)%
Total non-interest expense
17,341
17,837
(3
)%
19,494
(11
)%
35,178
38,917
(10
)%
Income (loss) before income taxes
3,656
(557
)
N/M
1,130
N/M
3,099
8,679
(64
)%
Income tax expense (benefit)
1,117
(54
)
N/M
3,327
(66
)%
1,063
5,616
(81
)%
Net income (loss)
$
2,539
$
(503
)
N/M
$
(2,197
)
N/M
$
2,036
$
3,063
(34
)%
Income (loss) per share, basic and diluted
$
0.05
$
(0.01
)
$
(0.04
)
$
0.04
$
0.06
Weighted average common shares outstanding: Basic
50,672,461
50,444,463
50,386,856
50,559,092
50,289,612
Diluted
50,778,213
50,444,463
50,386,856
50,705,998
50,496,487
N/M - Not Meaningful Net income
2,539
(503
)
(2,197
)
2,036
3,063
Check
-
-
-
-
-
Sterling Bancorp, Inc. Yield Analysis and Net Interest
Income (Unaudited) Three Months Ended June 30,
2023 March 31, 2023 June 30, 2022 (dollars in
thousands) Average Balance Interest
AverageYield/Rate Average Balance Interest
AverageYield Rate Average Balance Interest
AverageYield/Rate Interest-earning assets Loans(1)
Residential real estate and other consumer
$
1,277,408
$
18,250
5.71
%
$
1,366,872
$
18,514
5.42
%
$
1,554,077
$
17,310
4.46
%
Commercial real estate
224,836
2,787
4.96
%
223,929
2,596
4.64
%
221,435
2,547
4.60
%
Construction
31,819
820
10.31
%
41,436
1,034
9.98
%
62,354
883
5.66
%
Commercial and industrial
2,255
35
6.21
%
1,382
16
4.63
%
355
6
6.76
%
Total loans
1,536,318
21,892
5.70
%
1,633,619
22,160
5.43
%
1,838,221
20,746
4.51
%
Securities, includes restricted stock(2)
375,094
2,666
2.84
%
366,346
2,456
2.68
%
396,315
1,353
1.37
%
Other interest-earning assets
541,887
7,002
5.17
%
411,766
4,807
4.67
%
406,740
791
0.78
%
Total interest-earning assets
2,453,299
31,560
5.15
%
2,411,731
29,423
4.88
%
2,641,276
22,890
3.47
%
Noninterest-earning assets Cash and due from banks
4,233
4,475
3,811
Other assets
27,645
28,398
46,390
Total assets
$
2,485,177
$
2,444,604
$
2,691,477
Interest-bearing liabilities Money market, savings and NOW
$
980,359
$
6,270
2.57
%
$
1,001,505
$
4,614
1.87
%
$
1,288,796
$
756
0.24
%
Time deposits
969,938
7,067
2.92
%
900,890
5,195
2.34
%
760,017
1,260
0.66
%
Total interest-bearing deposits
1,950,297
13,337
2.74
%
1,902,395
9,809
2.09
%
2,048,813
2,016
0.39
%
FHLB borrowings
50,000
248
1.96
%
50,000
245
1.96
%
110,440
314
1.12
%
Subordinated notes, net
65,245
1,791
10.86
%
65,264
1,693
10.38
%
65,319
1,090
6.60
%
Total borrowings
115,245
2,039
7.00
%
115,264
1,938
6.73
%
175,759
1,404
3.16
%
Total interest-bearing liabilities
2,065,542
15,376
2.99
%
2,017,659
11,747
2.36
%
2,224,572
3,420
0.62
%
Noninterest-bearing liabilities Demand deposits
44,005
50,284
72,496
Other liabilities
61,487
63,308
52,075
Shareholders' equity
314,143
313,353
342,334
Total liabilities and shareholders' equity
$
2,485,177
$
2,444,604
$
2,691,477
Net interest income and spread(2)
$
16,184
2.16
%
$
17,676
2.52
%
$
19,470
2.85
%
Net interest margin(2)
2.64
%
2.93
%
2.95
%
(1) Nonaccrual loans are included in the respective average
loan balances. Income, if any, on such loans is recognized on a
cash basis. (2) Interest income does not include taxable
equivalence adjustments.
Six Months Ended June 30,
2023 June 30, 2022 (dollars in thousands)
Average Balance Interest AverageYield/Rate
Average Balance Interest
Average Yield/Rate
Interest-earning assets Loans(1) Residential real estate and
other consumer
$
1,321,858
$
36,764
5.56
%
$
1,607,090
$
35,588
4.43
%
Commercial real estate
224,383
5,383
4.80
%
234,169
5,983
5.11
%
Construction
36,601
1,854
10.13
%
78,762
3,032
7.70
%
Commercial and industrial
1,821
51
5.60
%
352
11
6.25
%
Total loans
1,584,663
44,052
5.56
%
1,920,373
44,614
4.65
%
Securities, includes restricted stock(2)
370,744
5,122
2.76
%
373,360
2,188
1.17
%
Other interest-earning assets
477,186
11,809
4.95
%
429,569
1,006
0.47
%
Total interest-earning assets
2,432,593
60,983
5.01
%
2,723,302
47,808
3.51
%
Noninterest-earning assets Cash and due from banks
4,353
3,728
Other assets
27,349
45,918
Total assets
$
2,464,295
$
2,772,948
Interest-bearing liabilities Money market, savings and NOW
$
990,874
$
10,884
2.22
%
$
1,299,761
$
1,463
0.23
%
Time deposits
935,605
12,262
2.64
%
810,620
2,883
0.72
%
Total interest-bearing deposits
1,926,479
23,146
2.42
%
2,110,381
4,346
0.42
%
FHLB borrowings
50,000
493
1.99
%
130,111
666
1.03
%
Subordinated notes, net
65,255
3,484
10.62
%
65,328
2,054
6.25
%
Total borrowings
115,255
3,977
6.86
%
195,439
2,720
2.77
%
Total interest-bearing liabilities
2,041,734
27,123
2.68
%
2,305,820
7,066
0.62
%
Noninterest-bearing liabilities Demand deposits
47,127
68,331
Other liabilities
61,892
54,752
Shareholders' equity
313,542
344,045
Total liabilities and shareholders' equity
$
2,464,295
$
2,772,948
Net interest income and spread(2)
$
33,860
2.33
%
$
40,742
2.89
%
Net interest margin(2)
2.78
%
2.99
%
(1) Nonaccrual loans are included in the respective average
loan balances. Income, if any, on such loans is recognized on a
cash basis. (2) Interest income does not include taxable
equivalence adjustments.
Sterling Bancorp, Inc. Loan
Composition (Unaudited) June 30, March 31,
% December 31, % June 30, %
(dollars in thousands)
2023
2023
change
2022
change
2022
change Residential real estate
$
1,214,439
$
1,289,554
(6
)%
$
1,391,276
(13
)%
$
1,506,852
(19
)%
Commercial real estate
221,658
224,792
(1
)%
221,669
(0
)%
214,494
3
%
Construction
31,978
36,255
(12
)%
44,503
(28
)%
55,150
(42
)%
Commercial and industrial
17,772
1,368
N/M
1,396
N/M
1,418
N/M
Other consumer
15
77
(81
)%
5
N/M
218
(93
)%
Total loans held for investment
1,485,862
1,552,046
(4
)%
1,658,849
(10
)%
1,778,132
(16
)%
Less: allowance for credit losses
(36,153
)
(38,565
)
(6
)%
(45,464
)
(20
)%
(51,766
)
30
%
Loans, net
$
1,449,709
$
1,513,481
(4
)%
$
1,613,385
(10
)%
$
1,726,366
(16
)%
Loans held for sale
$
-
$
37,979
(100
)%
$
7,725
(100
)%
$
8,964
(100
)%
Total gross loans
$
1,485,862
$
1,590,025
(7
)%
$
1,666,574
(11
)%
$
1,787,096
(17
)%
N/M - Not Meaningful
Sterling Bancorp,
Inc. Allowance for Credit Losses (Unaudited) Three
Months Ended June 30, March 31, December
31, June 30, (dollars in thousands)
2023
2023
2022
2022
Balance at beginning of period
$
38,565
$
45,464
$
45,362
$
52,455
Adjustment to adopt ASU 2016-13
—
(1,651
)
—
—
Adjustment to adopt ASU 2022-02
—
380
—
—
Balance after adoption
$
38,565
$
44,193
$
45,362
$
52,455
Provision for (recovery of) credit losses
(2,814
)
784
(179
)
(1,109
)
Charge offs
-
(6,478
)
—
(197
)
Recoveries
402
66
281
617
Balance at end of period
$
36,153
$
38,565
$
45,464
$
51,766
Sterling Bancorp, Inc. Deposit Composition
(Unaudited) June 30, March 31, %
December 31, % June 30, % (dollars
in thousands)
2023
2023
change
2022
change
2022
change Noninterest-bearing deposits
$
44,799
$
46,496
(4
)%
$
53,041
(16
)%
$
82,387
(46
)%
Money Market, Savings and NOW
1,015,394
958,165
6
%
1,039,263
(2
)%
1,252,279
(19
)%
Time deposits
981,298
917,161
7
%
861,733
14
%
669,581
47
%
Total deposits
$
2,041,491
$
1,921,822
6
%
$
1,954,037
4
%
$
2,004,247
2
%
Sterling Bancorp, Inc. Credit Quality Data
(Unaudited) At and for the Three Months Ended
June 30, March 31, December 31, June
30, (dollars in thousands)
2023
2023
2022
2022
Nonaccrual loans(1): Residential real estate
$
2,062
$
-
$
33,690
$
42,567
Construction
—
—
—
5,781
Total nonaccrual loans(2)
2,062
—
33,690
48,348
Loans past due 90 days or more and still accruing interest
33
34
35
37
Nonperforming loans
2,095
34
33,725
48,385
Other troubled debt restructurings(3)
—
—
2,637
2,646
Nonaccrual loans held for sale
—
26,270
1,942
3,999
Nonperforming assets
$
2,095
$
26,304
$
38,304
$
55,030
Total loans (1)
$
1,485,862
$
1,552,046
$
1,658,849
$
1,778,132
Total assets
$
2,532,010
$
2,411,548
$
2,444,735
$
2,503,820
Nonaccrual loans to total loans outstanding (2)
0.14%
—
2.03%
2.72%
Nonperforming assets to total assets
0.08%
1.09%
1.57%
2.20%
Allowance for credit losses to total loans
2.43%
2.48%
2.74%
2.91%
Allowance for credit losses to nonaccrual loans
1753%
—
135%
107%
Net charge offs (recoveries) to average loans outstanding during
the period
(0.03)%
0.39%
(0.02)%
(0.02)%
(1) Loans are classified as held for investment and are
presented before the allowance for credit losses. (2) Total
nonaccrual loans exclude nonaccrual loans held for sale. If
nonaccrual loans held for sale are included, the ratio of total
nonaccrual loans to total gross loans would be 0.14%, 1.65%, 2.14%
and 2.93% at June 30, 2023, March 31, 2023, December 31, 2022 and
June 30, 2022, respectively. (3) Other troubled debt restructurings
at December 31, 2022 and June 30, 2022 exclude those loans
presented above as nonaccrual or past due 90 days or more and still
accruing interest. Effective January 1, 2023, loan modifications
involving borrowers experiencing financial difficulty are evaluated
under the new credit loss model. There were no such loan
modifications during the three months ended June 30, 2023 and March
31, 2023.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230726738650/en/
Investor Contact: Sterling Bancorp, Inc. Karen Knott
Executive Vice President and Chief Financial Officer (248) 359-6624
kzaborney@sterlingbank.com
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