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 third quarter ended September 30, 2023.
Third Quarter 2023
Highlights
- Net income of $0.3 million, or $0.01 per diluted
share
- Net interest margin of 2.62%
- Recorded provision for (recovery of) credit losses of $(1.9)
million; ratio of allowance for credit losses to total loans of
2.42%
- Nonperforming assets of $6.2 million, 0.25% of total
assets
- Total gross loans of $1.4 billion
- Total deposits of $2.0 billion
- Non-interest expense of $17.7 million
- Shareholders’ equity of $316.1 million
- Company’s consolidated and Bank’s leverage ratio of 13.41%
and 12.93%, respectively
- Completed redemption of all subordinated notes with an
aggregate outstanding principal balance of $65.0 million
The Company reported net income of $0.3 million, or $0.01 per
diluted share, for the quarter ended September 30, 2023, compared
to net income of $2.5 million, or $0.05 per diluted share, for the
quarter ended June 30, 2023. The decrease in our net income for the
quarter ended September 30, 2023 is primarily attributable to a
decrease in our recovery of credit losses, the absence of any gains
on the sale of loans during the quarter, and an increase in our
professional fees. As previously disclosed, we have engaged both a
consulting firm and an investment bank to help us develop a
comprehensive range of viable strategic options available to us.
The new plan will be prepared in light of our election to be a
“covered savings association” under applicable law, which became
effective this quarter and generally allows us to operate as a
commercial bank without the constraints applicable to a thrift
institution. We expect these engagements may, among other
alternatives, consider the build-out of our presence in California
and the relocation of certain operational and executive oversight
functions. In that scenario, we expect that repositioning the Bank
in this fashion will take significant time and expense.
Thomas M. O’Brien, Chairman, President, and Chief Executive
Officer commented:
“Sterling’s third quarter reflects the lingering impacts from
the long running government investigations. We continue to bear
expenses from certain indemnified individuals who are responding to
government inquiries. In this quarter, those expenses were
approximately $1.7 million. While we anticipate receiving insurance
reimbursements for certain prior invoices, our directors and
officers insurance was ultimately exhausted during this quarter,
and we do not expect any future defense costs to be covered by
insurance.
Margins remain tight, and we anticipate that continued upward
pressure on interest rates and deposit prices will not likely
improve in the near-term. I believe the most prudent course of
action for us, at this time, remains protecting our strengths,
namely: strong capital, strong liquidity and solid credit quality.
There continues to be some ominous signs in certain real estate
sectors and geographies. We believe that we have positioned
Sterling well to confront those challenges should conditions
deteriorate. Nonetheless, the capital markets remain very cautious
with many smaller and regional banks trading at discounts to
tangible book value.”
Balance Sheet
Total Assets – Total assets were $2.4 billion at
September 30, 2023, reflecting a decrease of $85.3 million, or 3%,
from $2.5 billion at June 30, 2023.
Cash and due from banks decreased $91.8 million, or 14%, to
$563.6 million at September 30, 2023 compared to $655.4 million at
June 30, 2023. In the third quarter of 2023, we made cash payments
of $66.8 million to redeem the subordinated notes including accrued
interest and $27.2 million as restitution for the benefit of
non-insider victim shareholders pursuant to the Company’s Plea
Agreement with the United States Department of Justice (the “DOJ”).
The Plea Agreement was approved by the United States District Court
for the Eastern District of Michigan in the third quarter of 2023,
which resolution releases the Company, as well as the Bank, from
further prosecution for securities fraud and underlying mortgage
fraud in the Advantage Loan Program.
Debt securities, all of which are available for sale, which we
consider part of our liquid assets, were $398.3 million at
September 30, 2023 compared to $334.5 million at June 30, 2023, an
increase of $63.8 million, or 19%. During the third quarter of
2023, the Bank purchased $9.0 million of capital stock of the
Federal Reserve Bank of Chicago in connection with becoming a
member of the Federal Reserve System.
Total gross loans held for investment of $1.4 billion at
September 30, 2023 declined $68.7 million, or 5%, from $1.5 billion
at June 30, 2023.
Total Deposits – Total deposits were $2.0 billion at
September 30, 2023, virtually unchanged from June 30, 2023. Money
market, savings and NOW deposits were $1.1 billion, an increase of
$112.3 million, or 11%, from June 30, 2023. Time deposits were
$872.1 million, a decrease of $109.2 million, or 11%, compared to
$981.3 million at June 30, 2023. Noninterest-bearing deposits were
$40.8 million and $44.8 million at September 30, 2023 and June 30,
2023, respectively. Total estimated uninsured deposits to total
deposits were 21.4%, 24.2%, and 20.8% at September 30, 2023, June
30, 2023, and December 31, 2022, respectively. Our current strategy
is to continue to offer market interest rates on our deposit
products to maintain our existing customer base and our liquidity
position.
Capital – Total shareholders’ equity was $316.1 million
at September 30, 2023 compared to $317.7 million at June 30, 2023.
The decrease in shareholders’ equity is primarily attributable to a
$(2.7) million increase in the unrealized loss on our investment
securities portfolio included in accumulated other comprehensive
loss, partially offset by $0.8 million of stock-based compensation
expense and $0.3 million of net income in the present quarter.
The Company and the Bank elected to opt into the Community Bank
Leverage Ratio framework, effective January 1, 2023. As such, 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 minimum regulatory capital requirements as well as
the capital ratio requirements to be considered “well capitalized”
under applicable prompt corrective action requirements. At
September 30, 2023, the Company’s consolidated and the Bank’s
leverage ratio were 13.41% and 12.93%, respectively.
Asset Quality and Recovery of Credit Losses – A recovery
of credit losses of $(1.9) million was recorded for the third
quarter of 2023 compared to a recovery of credit losses of $(2.9)
million for the second quarter of 2023. The recovery of credit
losses during the third quarter reflects the decline in our loan
portfolio over the period. In addition, we moderated the severe
economic forecast component of our economic outlook. The allowance
for credit losses was $34.3 million at September 30, 2023, or 2.42%
of total loans held for investment, compared to $36.2 million, or
2.43% of total loans held for investment, at June 30, 2023.
Recoveries during the third and second quarter of 2023 were $(1)
thousand and $(402) thousand, respectively, with no charge offs in
either quarter.
Nonperforming assets at September 30, 2023 totaled $6.2 million,
or 0.25% of total assets, compared to $2.1 million, or 0.08% of
total assets, at June 30, 2023 due to an increase of $3.0 million
in nonaccrual residential real estate loans and a $1.1 million
matured construction loan, which was extended subsequent to
September 30, 2023.
Results of Operations
Net Interest Income and Net Interest Margin – Net
interest income for the third quarter of 2023 was $16.0 million
compared to $16.2 million for the second quarter of 2023. The
decrease in net interest income during the third 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 third quarter of
2023 increased 50 basis points as deposits continued to reprice
upward in the prevailing high interest rate environment. The impact
of the increased rates on deposits was partially offset by a
decrease in interest expense on the subordinated notes of $1.5
million due to the redemption of the notes early in the third
quarter of 2023. Interest income earned on our average balance of
interest-bearing assets increased 24 basis points during the third
quarter of 2023 from the prior quarter.
The net interest margin of 2.62% for the third quarter of 2023
decreased slightly from the net interest margin of 2.64% for the
second quarter of 2023.
Non-Interest Income – Non-interest income for the third
quarter of 2023 decreased by $1.5 million compared to the second
quarter of 2023, primarily due to the $1.7 million gain on the sale
of all loans held for sale in the second quarter of 2023,
consisting primarily of nonperforming and chronically delinquent
residential real estate loans and the $0.2 million gain on the
extinguishment of the subordinated notes in the third quarter of
2023.
Non-Interest Expense – Non-interest expense of $17.7
million for the third quarter of 2023 reflected an increase of $0.4
million, or 2%, compared to the second quarter of 2023.
Professional fees were $0.7 million higher in the third quarter of
2023 compared to the prior quarter, which was primarily due to
ongoing government investigations against selected individuals and
our decision to cover defense costs with respect to these
individuals. We were recently informed that our directors and
officers insurance for these matters was exhausted based on
invoices submitted prior to and during the third quarter of 2023.
Therefore any future costs will not be reimbursed by our insurance
carriers. We expect to receive our final insurance reimbursement
payment in the fourth quarter of 2023. The increase in professional
fees was partially offset by a decrease in salaries and employee
benefits of $0.5 million in the third quarter of 2023 as compared
to the prior quarter reflecting revisions in compensation programs,
including the restructuring of our chief executive officer’s
compensation that took effect during the third quarter of 2023, as
well as continued staff reductions in various support
functions.
Income Tax Expense – For the three months ended September
30, 2023, the Company recorded income tax expense of $0.3 million,
or an effective tax rate of 49.2%, and an effective tax rate of
36.8% for the nine months ended September 30, 2023. For the three
months ended June 30, 2023, the Company recorded an income tax
expense of $1.1 million, or an effective rate of 30.6%. 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, “The uncertainty that continues to cloud the
economy, coupled with the recent tragedies in Israel and the
ensuing escalation of armed conflict in the Middle East along with
the continuing conflict in Ukraine, will likely cause volatility in
commodity prices, especially oil, and further strain fiscal and
monetary policy in the U.S. and among its allies. We believe the
level of regional armed conflicts along with flashpoints in other
high tension geographies are a cause for very serious concern. The
risk of contagion appears to be very high. Taken together these
conditions will likely exert further pressures in many capital
market sectors. At some point, I believe the markets stabilize
around whatever the new normal might be and activity returns. In
the coming quarters, I expect to see credit weakness in many office
backed mortgage bonds and, in selected markets, growing instability
in multi-family loans. While never immune, those conditions are not
expected to have noticeable impact on Sterling since we disposed of
many higher risk commercial and residential product in prior
periods.”
Conference Call and Webcast
Management will host a conference call on Wednesday, October 25,
2023 at 11:00 a.m. Eastern Time to discuss the Company’s unaudited
financial results for the quarter ended September 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 November
1, 2023 by U.S callers dialing (877) 344-7529 and international
callers dialing (412) 317-0088, using conference ID number
1707057.
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,” “believe,” “expect,” “continue,” “will,” “seek,”
“estimate,” “intend,” “plan,” “anticipate,” “appear” and “would,”
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” in our Quarterly Report
on Form 10-Q filed with the Securities and Exchange Commission on
August 9, 2023 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
September 30, June 30, September 30,
(dollars in thousands, except per share data)
2023
2023
2022
Net income
$
314
$
2,539
$
1,176
Income per share, diluted
$
0.01
$
0.05
$
0.02
Net interest income
$
15,994
$
16,184
$
19,539
Net interest margin
2.62
%
2.64
%
3.19
%
Non-interest income
$
384
$
1,911
$
(357
)
Non-interest expense
$
17,702
$
17,341
$
21,621
Loans, net of allowance for credit losses
$
1,382,860
$
1,449,709
$
1,636,266
Total deposits
$
2,040,658
$
2,041,491
$
1,951,014
Asset Quality Nonperforming loans
$
6,182
$
2,095
$
35,879
Allowance for credit losses to total loans
2.42
%
2.43
%
2.70
%
Allowance for credit losses to nonaccrual loans
681
%
1753
%
127
%
Nonaccrual loans to total loans outstanding
0.36
%
0.14
%
2.13
%
Net charge offs (recoveries) to average loans outstanding during
the period
0.00
%
(0.03
)%
0.12
%
Recovery of credit losses
$
(1,942
)
$
(2,902
)
$
(4,357
)
Net charge offs (recoveries)
$
(1
)
$
(402
)
$
2,047
Performance Ratios Return on average assets
0.05
%
0.41
%
0.19
%
Return on average shareholders' equity
0.39
%
3.24
%
1.39
%
Efficiency ratio (1)
108.08
%
95.83
%
112.72
%
Yield on average interest-earning assets
5.39
%
5.15
%
4.06
%
Cost of average interest-bearing liabilities
3.24
%
2.99
%
1.05
%
Net interest spread
2.15
%
2.16
%
3.01
%
Capital Ratios(2)(3) Regulatory and Other Capital Ratios
— Consolidated: Tier 1 (core) capital to average total assets
(leverage ratio)
13.41
%
13.44
%
14.09
%
Regulatory and Other Capital Ratios — Bank: Tier 1 (core)
capital to average total assets (leverage ratio)
12.93
%
12.91
%
15.88
%
(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) September 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) September 30, June 30,
% December 31, % September 30, %
(dollars in thousands)
2023
2023
change
2022
change
2022
change Assets Cash and due from banks
$
563,622
$
655,391
(14
)%
$
379,798
48
%
$
352,404
60
%
Interest-bearing time deposits with other banks
1,174
934
26
%
934
26
%
1,183
(1
)%
Debt securities available for sale
398,302
334,508
19
%
343,558
16
%
348,587
14
%
Equity securities
4,505
4,640
(3
)%
4,642
(3
)%
4,632
(3
)%
Loans held for sale
—
—
N/M
7,725
(100
)%
8,833
(100
)%
Loans, net of allowance for credit losses of $34,267, $36,153,
$45,464 and $45,362
1,382,860
1,449,709
(5
)%
1,613,385
(14
)%
1,636,266
(15
)%
Accrued interest receivable
8,854
7,489
18
%
7,829
13
%
7,061
25
%
Mortgage servicing rights, net
1,631
1,658
(2
)%
1,794
(9
)%
1,842
(11
)%
Leasehold improvements and equipment, net
5,583
5,850
(5
)%
6,301
(11
)%
6,585
(15
)%
Operating lease right-of-use assets
12,197
13,025
(6
)%
14,800
(18
)%
15,467
(21
)%
Federal Home Loan Bank stock, at cost
18,923
20,288
(7
)%
20,288
(7
)%
20,288
(7
)%
Federal Reserve Bank stock, at cost
9,001
—
N/M
—
N/M
—
N/M
Company-owned life insurance
8,658
8,605
1
%
8,501
2
%
8,448
2
%
Deferred tax asset, net
22,475
18,538
21
%
23,704
(5
)%
23,907
(6
)%
Other assets
8,888
11,375
(22
)%
11,476
(23
)%
12,401
(28
)%
Total assets
$
2,446,673
$
2,532,010
(3
)%
$
2,444,735
0
%
$
2,447,904
(0
)%
Liabilities Noninterest-bearing deposits
$
40,780
$
44,799
(9
)%
$
53,041
(23
)%
$
70,063
(42
)%
Interest-bearing deposits
1,999,878
1,996,692
0
%
1,900,996
5
%
1,880,951
6
%
Total deposits
2,040,658
2,041,491
(0
)%
1,954,037
4
%
1,951,014
5
%
Federal Home Loan Bank borrowings
50,000
50,000
0
%
50,000
0
%
50,000
0
%
Subordinated notes, net
—
65,234
(100
)%
65,271
(100
)%
65,290
(100
)%
Operating lease liabilities
13,317
14,176
(6
)%
15,990
(17
)%
16,664
(20
)%
Accrued expenses and other liabilities
26,595
43,433
(39
)%
46,810
(43
)%
35,335
(25
)%
Total liabilities
2,130,570
2,214,334
(4
)%
2,132,108
(0
)%
2,118,303
1
%
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 52,072,631 at September 30, 2023, 52,081,886
at June 30, 2023, 50,795,871 at December 31, 2022 and 50,800,012 at
September 30, 2022
84,323
84,323
0
%
83,295
1
%
83,295
1
%
Additional paid-in capital
15,882
15,098
5
%
14,808
7
%
14,560
9
%
Retained earnings
236,901
236,587
0
%
234,049
1
%
252,482
(6
)%
Accumulated other comprehensive loss
(21,003
)
(18,332
)
(15
)%
(19,525
)
(8
)%
(20,736
)
(1
)%
Total shareholders’ equity
316,103
317,676
(0
)%
312,627
1
%
329,601
(4
)%
Total liabilities and shareholders’ equity
$
2,446,673
$
2,532,010
(3
)%
$
2,444,735
0
%
$
2,447,904
(0
)%
N/M - Not Meaningful
Sterling Bancorp, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended Nine Months Ended
(dollars in thousands, except per share amounts)
September 30, 2023
June 30, 2023
% change
September 30, 2022
% change
September 30, 2023
September 30, 2022
% change
Interest income Interest and fees on loans
$
21,663
$
21,892
(1
)%
$
20,975
3
%
$
65,715
$
65,589
0
%
Interest and dividends on investment securities and restricted
stock
3,134
2,666
18
%
1,945
61
%
8,256
4,133
100
%
Interest on interest-bearing cash deposits
8,081
7,002
15
%
1,925
N/M
19,890
2,931
N/M
Total interest income
32,878
31,560
4
%
24,845
32
%
93,861
72,653
29
%
Interest expense Interest on deposits
16,391
13,337
23
%
3,724
N/M
39,537
8,070
N/M
Interest on Federal Home Loan Bank borrowings
250
248
1
%
253
(1
)%
743
919
(19
)%
Interest on subordinated notes
243
1,791
(86
)%
1,329
(82
)%
3,727
3,383
10
%
Total interest expense
16,884
15,376
10
%
5,306
N/M
44,007
12,372
N/M
Net interest income
15,994
16,184
(1
)%
19,539
(18
)%
49,854
60,281
(17
)%
Recovery of credit losses
(1,942
)
(2,902
)
33
%
(4,357
)
55
%
(4,170
)
(9,755
)
57
%
Net interest income after recovery of credit losses
17,936
19,086
(6
)%
23,896
(25
)%
54,024
70,036
(23
)%
Non-interest income Service charges and fees
97
78
24
%
124
(22
)%
269
351
(23
)%
Loss on sale of investment securities
—
—
N/M
—
N/M
(2
)
—
N/M
Gain on sale of loans held for sale
—
1,720
(100
)%
—
N/M
1,695
200
N/M
Unrealized loss on equity securities
(137
)
(71
)
(93
)%
(184
)
26
%
(137
)
(590
)
77
%
Net servicing income (loss)
107
102
5
%
(384
)
N/M
268
(118
)
N/M
Income earned on company-owned life insurance
83
81
2
%
87
(5
)%
244
670
(64
)%
Other
234
1
N/M
—
N/M
236
586
(60
)%
Total non-interest income
384
1,911
(80
)%
(357
)
N/M
2,573
1,099
N/M
Non-interest expense Salaries and employee benefits
8,753
9,274
(6
)%
9,336
(6
)%
27,437
24,522
12
%
Occupancy and equipment
2,110
2,051
3
%
2,112
(0
)%
6,273
6,441
(3
)%
Professional fees
4,242
3,521
20
%
5,756
(26
)%
10,984
17,979
(39
)%
FDIC insurance
274
263
4
%
316
(13
)%
794
1,031
(23
)%
Data processing
745
754
(1
)%
725
3
%
2,237
2,292
(2
)%
Net provision for (recovery of) mortgage repurchase liability
(80
)
(59
)
(36
)%
(145
)
45
%
(19
)
(670
)
97
%
Other
1,658
1,537
8
%
3,521
(53
)%
5,174
8,943
(42
)%
Total non-interest expense
17,702
17,341
2
%
21,621
(18
)%
52,880
60,538
(13
)%
Income before income taxes
618
3,656
(83
)%
1,918
(68
)%
3,717
10,597
(65
)%
Income tax expense
304
1,117
(73
)%
742
(59
)%
1,367
6,358
(78
)%
Net income
$
314
$
2,539
(88
)%
$
1,176
(73
)%
$
2,350
$
4,239
(45
)%
Income per share, basic and diluted
$
0.01
$
0.05
$
0.02
$
0.05
$
0.08
Weighted average common shares outstanding: Basic
50,699,967
50,672,461
50,400,412
50,606,566
50,326,951
Diluted
51,069,683
50,778,213
50,572,931
50,749,879
50,523,076
N/M - Not Meaningful
Sterling Bancorp, Inc.
Yield Analysis and Net
Interest Income (Unaudited)
Three Months Ended September 30, 2023
June 30, 2023 September 30, 2022 (dollars in
thousands) AverageBalance Interest
AverageYield/Rate AverageBalance
Interest AverageYield/Rate
AverageBalance Interest
AverageYield/Rate Interest-earning assets
Loans(1)
Residential real estate and other consumer
$
1,174,075
$
17,546
5.98
%
$
1,277,408
$
18,250
5.71
%
$
1,457,171
$
17,310
4.75
%
Commercial real estate
228,939
2,953
5.16
%
224,836
2,787
4.96
%
214,453
2,458
4.58
%
Construction
29,337
786
10.72
%
31,819
820
10.31
%
52,843
1,190
9.01
%
Commercial and industrial
17,796
378
8.50
%
2,255
35
6.21
%
1,404
17
4.84
%
Total loans
1,450,147
21,663
5.98
%
1,536,318
21,892
5.70
%
1,725,871
20,975
4.86
%
Securities, includes restricted stock(2)
400,838
3,134
3.13
%
375,094
2,666
2.84
%
394,503
1,945
1.97
%
Other interest-earning assets
589,267
8,081
5.49
%
541,887
7,002
5.17
%
328,177
1,925
2.35
%
Total interest-earning assets
2,440,252
32,878
5.39
%
2,453,299
31,560
5.15
%
2,448,551
24,845
4.06
%
Noninterest-earning assets
Cash and due from banks
4,780
4,233
4,083
Other assets
29,535
27,645
20,238
Total assets
$
2,474,567
$
2,485,177
$
2,472,872
Interest-bearing liabilities
Money market, savings and NOW
$
1,099,070
$
8,930
3.22
%
$
980,359
$
6,270
2.57
%
$
1,184,601
$
2,053
0.69
%
Time deposits
907,466
7,461
3.26
%
969,938
7,067
2.92
%
711,184
1,671
0.93
%
Total interest-bearing deposits
2,006,536
16,391
3.24
%
1,950,297
13,337
2.74
%
1,895,785
3,724
0.78
%
FHLB borrowings
50,000
250
1.96
%
50,000
248
1.96
%
50,380
253
1.97
%
Subordinated notes, net
9,218
243
10.32
%
65,245
1,791
10.86
%
65,301
1,329
7.96
%
Total borrowings
59,218
493
3.26
%
115,245
2,039
7.00
%
115,681
1,582
5.35
%
Total interest-bearing liabilities
2,065,754
16,884
3.24
%
2,065,542
15,376
2.99
%
2,011,466
5,306
1.05
%
Noninterest-bearing liabilities
Demand deposits
42,355
44,005
74,550
Other liabilities
48,640
61,487
50,476
Shareholders' equity
317,818
314,143
336,380
Total liabilities and shareholders' equity
$
2,474,567
$
2,485,177
$
2,472,872
Net interest income and spread(2)
$
15,994
2.15
%
$
16,184
2.16
%
$
19,539
3.01
%
Net interest margin(2)
2.62
%
2.64
%
3.19
%
(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.
Nine Months Ended
September 30, 2023 September 30, 2022
(dollars in thousands) AverageBalance
Interest AverageYield/Rate
AverageBalance Interest
AverageYield/Rate Interest-earning
assets Loans(1)
Residential real estate
and other consumer
$
1,272,056
$
54,310
5.69
%
$
1,556,569
$
52,898
4.53
%
Commercial real estate
225,919
8,336
4.92
%
227,524
8,441
4.95
%
Construction
34,153
2,640
10.31
%
70,027
4,222
8.04
%
Commercial and industrial
7,204
429
7.94
%
707
28
5.28
%
Total loans
1,539,332
65,715
5.69
%
1,854,827
65,589
4.71
%
Securities, includes restricted stock(2)
380,886
8,256
2.89
%
380,485
4,133
1.45
%
Other interest-earning assets
514,957
19,890
5.15
%
395,400
2,931
0.99
%
Total interest-earning assets
2,435,175
93,861
5.14
%
2,630,712
72,653
3.68
%
Noninterest-earning assets
Cash and due from banks
4,497
3,848
Other assets
28,085
35,269
Total assets
$
2,467,757
$
2,669,829
Interest-bearing liabilities
Money market, savings and
NOW
$
1,027,336
$
19,814
2.58
%
$
1,260,953
$
3,516
0.37
%
Time deposits
926,122
19,723
2.85
%
777,110
4,554
0.78
%
Total interest-bearing deposits
1,953,458
39,537
2.71
%
2,038,063
8,070
0.53
%
FHLB borrowings
50,000
743
1.99
%
103,242
919
1.19
%
Subordinated notes, net
46,370
3,727
10.60
%
65,319
3,383
6.83
%
Total borrowings
96,370
4,470
6.12
%
168,561
4,302
3.37
%
Total interest-bearing liabilities
2,049,828
44,007
2.87
%
2,206,624
12,372
0.75
%
Noninterest-bearing liabilities
Demand deposits
45,519
70,427
Other liabilities
57,426
51,314
Shareholders' equity
314,983
341,464
Total liabilities and shareholders'
equity
$
2,467,756
$
2,669,829
Net interest income and spread(2)
$
49,854
2.27
%
$
60,281
2.93
%
Net interest margin(2)
2.73
%
3.06
%
(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) September 30, June 30,
% December 31, % September 30, %
(dollars in thousands)
2023
2023
change
2022
change
2022
change Residential real estate
$
1,139,205
$
1,214,439
(6
)%
$
1,391,276
(18
)%
$
1,430,472
(20
)%
Commercial real estate
237,812
221,658
7
%
221,669
7
%
199,446
19
%
Construction
22,292
31,978
(30
)%
44,503
(50
)%
50,320
(56
)%
Commercial and industrial
17,809
17,772
0
%
1,396
N/M
1,389
N/M
Other consumer
9
15
(40
)%
5
80
%
1
N/M
Total loans held for investment
1,417,127
1,485,862
(5
)%
1,658,849
(15
)%
1,681,628
(16
)%
Less: allowance for credit losses
(34,267
)
(36,153
)
(5
)%
(45,464
)
(25
)%
(45,362
)
24
%
Loans, net
$
1,382,860
$
1,449,709
(5
)%
$
1,613,385
(14
)%
$
1,636,266
(15
)%
Loans held for sale
$
-
$
-
N/M
$
7,725
(100
)%
$
8,833
(100
)%
Total gross loans
$
1,417,127
$
1,485,862
(5
)%
$
1,666,574
(15
)%
$
1,690,461
(16
)%
N/M - Not Meaningful
Sterling
Bancorp, Inc. Allowance for Credit Losses (Unaudited)
Three Months Ended September 30, June
30, March 31, December 31, September 30,
(dollars in thousands)
2023
2023
2023
2022
2022
Balance at beginning of period
$
36,153
$
38,565
$
45,464
$
45,362
$
51,766
Adjustment to adopt ASU 2016-13
—
—
(1,651
)
—
—
Adjustment to adopt ASU 2022-02
—
—
380
—
—
Balance after adoption
$
36,153
$
38,565
$
44,193
$
45,362
$
51,766
Provision for (recovery of) credit losses
(1,887
)
(2,814
)
784
(179
)
(4,357
)
Charge offs
—
—
(6,478
)
—
(4,064
)
Recoveries
1
402
66
281
2,017
Balance at end of period
$
34,267
$
36,153
$
38,565
$
45,464
$
45,362
Sterling Bancorp, Inc. Deposit
Composition (Unaudited) September 30, June
30, % December 31, % September 30,
% (dollars in thousands)
2023
2023
change
2022
change
2022
change Noninterest-bearing deposits
$
40,780
$
44,799
(9
)%
$
53,041
(23
)%
$
70,063
(42
)%
Money Market, Savings and NOW
1,127,735
1,015,394
11
%
1,039,263
9
%
1,123,375
0
%
Time deposits
872,143
981,298
(11
)%
861,733
1
%
757,576
15
%
Total deposits
$
2,040,658
$
2,041,491
(0
)%
$
1,954,037
4
%
$
1,951,014
5
%
Sterling Bancorp, Inc. Credit Quality Data
(Unaudited) At and for the Three Months Ended
September 30, June 30, December 31,
September 30, (dollars in thousands)
2023
2023
2022
2022
Nonaccrual loans(1)(2) Residential real estate
$
5,035
$
2,062
$
33,690
$
35,843
Loans past due 90 days or more and still accruing interest
1,147
33
35
36
Nonperforming loans
6,182
2,095
33,725
35,879
Other troubled debt restructurings(3)
—
—
2,637
2,643
Nonaccrual loans held for sale
—
—
1,942
3,657
Nonperforming assets
$
6,182
$
2,095
$
38,304
$
42,179
Total loans (1)
$
1,417,127
$
1,485,862
$
1,658,849
$
1,681,628
Total assets
$
2,446,673
$
2,532,010
$
2,444,735
$
2,447,904
Nonaccrual loans to total loans outstanding (2)
0.36
%
0.14
%
2.03
%
2.13
%
Nonperforming assets to total assets
0.25
%
0.08
%
1.57
%
1.72
%
Allowance for credit losses to total loans
2.42
%
2.43
%
2.74
%
2.70
%
Allowance for credit losses to nonaccrual loans
681
%
1753
%
135
%
127
%
Net charge offs (recoveries) to average loans outstanding during
the period
0.00
%
(0.03
)%
(0.02
)%
0.12
%
(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 0.36%, 0.14%, 2.14%,
and 2.34% at September 30, 2023, June 30, 2023, December 31, 2022
and September 30, 2022, respectively. (3) Other troubled debt
restructurings at December 31, 2022 and September 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 September 30, 2023
and June 30, 2023.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231025243222/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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