Sterling Bancorp Reports First Quarter 2021 Financial Results
Sterling Bancorp reported a net income of $2.3 million, or $0.05 per diluted share, for Q1 2021, a recovery from a net loss of $11.7 million in Q4 2020. The bank's net interest margin decreased to 2.45%, while non-performing loans slightly improved to 3.71% of total loans. Total assets decreased by 6% to $3.694 billion. The company continues to exceed regulatory capital requirements, with a leverage ratio of 9.60%. A $12.5 million settlement for a securities class action lawsuit is in place, with costs covered by insurance.
- Net income increased to $2.3 million from a loss of $11.7 million in the previous quarter.
- Total shareholders’ equity rose to $321.9 million, exceeding regulatory capital requirements.
- Non-performing loans decreased slightly to 3.71% of total loans held for investment.
- Net interest margin decreased to 2.45% from 2.51% in the prior quarter.
- Total assets decreased by $220 million, or 6%, from the previous quarter.
- Total deposits decreased by $209.7 million, or 7%, from the previous quarter.
Sterling Bancorp, Inc. (NASDAQ: SBT) (“Sterling” or the “Company”), the holding company of Sterling Bank and Trust, F.S.B. (the “Bank”), today reported unaudited financial results for its first quarter ended March 31, 2021.
First Quarter Highlights
-
Net income of
$2.3 million , or$0.05 per diluted share -
Net interest margin of
2.45% -
Non-interest expense of
$21.3 million , including$8.8 million of professional fees -
Recovery for loan losses of
$0.7 million ; ratio of allowance for loan losses to total loans held for investment of2.92% -
Shareholders’ equity of
$321.9 million -
Bank capital ratios continue to be in excess of minimum ratios required to be considered “well-capitalized” with a leverage ratio of
9.60% , a total risk-based capital ratio of22.66% and a common equity tier one ratio of21.37% -
The Company’s consolidated leverage ratio of
8.34% , total risk-based capital ratio of23.52% and common equity tier one ratio of18.48% continue to exceed minimum regulatory capital requirements -
Total deposits of
$2.88 9 billion -
Total loans held for investment of
$2.46 1 billion -
Total loan originations of
$46.9 million -
Nonperforming loans and troubled debt restructurings were
$91.2 million (or3.71% of total loans held for investment) compared to$94.7 million (or3.78% of total loans held for investment) at December 31, 2020
The Company reported net income of
Thomas M. O’Brien, Chairman, President, and Chief Executive Officer commented on the Company’s results, “We begin 2021 still facing some legacy headwinds including previously disclosed investigations. There has been some recent activity in that area which mostly centers around individuals who are no longer with Sterling. We anticipate that in the coming months we will see additional such activity, and, in all such cases, the Company continues to offer its full cooperation to the governmental authorities. We will continue to experience the impact of these conditions through elevated expenses for various professional services. Notwithstanding the foregoing, the Company is making meaningful progress in remediating the many regulatory and internal control challenges that it has faced. I anticipate continued progress throughout the remainder of 2021 in each of the key areas of concern.”
As disclosed on April 19, 2021, the Company entered into the final settlement agreement settling the securities class action lawsuit related to our disclosures regarding our residential lending practices that were made in connection with our initial public offering and subsequent filings and releases. The agreement provides for a single
Mr. O’Brien said, “Litigation is always time-consuming and expensive. The final settlement agreement represents a favorable conclusion to the securities action and puts one more impediment into the rearview mirror.”
Balance Sheet
Total Assets – Total assets of
Liquid assets, comprising cash and due from banks and investment securities, decreased
Total loans held for investment of
Total Deposits – Total deposits of
Capital – Total shareholders’ equity was
Adequately Capitalized |
|
Company Actual at March 31, 2021 |
|||
| Total adjusted capital to risk-weighted assets |
|
|
|||
| Tier 1 (core) capital to risk-weighted assets |
|
|
|||
| Common Tier 1 (CET 1) |
|
|
|||
| Tier 1 (core) capital to adjusted tangible assets |
|
|
|||
Adequately Capitalized |
|
Bank Actual at March 31, 2021 |
|||
| Total adjusted capital to risk-weighted assets |
|
|
|||
| Tier 1 (core) capital to risk-weighted assets |
|
|
|||
| Common Tier 1 (CET 1) |
|
|
|||
| Tier 1 (core) capital to adjusted tangible assets |
|
|
Asset Quality and Provision for Loan Losses – A recovery for loan losses of
Net recoveries during the first quarter of 2021 were
Nonperforming assets at March 31, 2021 totaled
“Our concerns around credit quality remain centered in the commercial and construction portfolios. We continue to work with borrowers in these categories to protect the interests of the Bank and to find commercially reasonable solutions. In several of the construction loan cases, we are dealing with recently completed projects where the property is now being marketed for sale. As noted in previous earnings reports, we are generally dealing with a legacy of risk acceptance levels that have since been brought in line with our risk appetite. While the Bank experienced recoveries to the allowance in the first quarter of 2021, I continue to anticipate some elevated level of charge-offs in the future. We believe that, at this time, management has reviewed and properly risk rated the bulk of the commercial portfolio and identified areas of weakness that require heightened oversight,” said O’Brien.
While the principal balance of loans modified due to the economic effects of the COVID-19 pandemic and still in forbearance declined from peak levels in 2020, we continue to work together with our borrowers as circumstances permit. Residential real estate forbearances increased
| Forbearance Composition | March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
|||
| Residential real estate | $ |
20,298 |
$ |
10,729 |
$ |
70,288 |
||
| Commercial real estate |
|
14,129 |
|
5,056 |
|
- |
||
| Construction |
|
7,428 |
|
- |
|
- |
||
| Total loans in forbearance | $ |
41,855 |
$ |
15,785 |
$ |
70,288 |
||
| Loans in forbearance to total loans held for investment |
|
|
|
|
|
|
||
Results of Operations
Net Interest Income and Net Interest Margin – Net interest income during the first quarter of 2021 was
Non-Interest Income – Non-interest income for the first quarter of 2021 was
Non-Interest Expense – Non-interest expense of
Non-interest expense increased
Mr. O’Brien said, “While non-interest expense remains elevated for the first quarter of 2021, there is a decline when one parses the numbers from the fourth quarter of 2020. Our fourth quarter included a
Agreement to Sell Bellevue, Washington Branch
On March 19, 2021, the Company entered into an agreement to sell its Bellevue, Washington branch office, including all deposit accounts, branch premises and equipment, and the agreement provides that the buyer intends to offer employment to all associated staff. The closing of the transaction, subject to applicable regulatory approvals and other customary closing conditions, is expected to occur in the second quarter of 2021.
Mr. O’Brien said, “We were particularly pleased to announce the agreement for the sale of our branch in the state of Washington to First Federal. Sterling was stretched too far geographically here. The scale and effort required to grow in that market was not a strategy appropriate for Sterling, yet in First Federal we have the ideal partner for our valued employees and customers.”
Conference Call and Webcast
Management will host a conference call on Monday, May 3, 2021 at 11:00 a.m. Eastern Time to discuss the Company’s unaudited financial results for the quarter ended March 31, 2021. 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 May 10, 2021 by dialing (877) 344-7529, using conference ID number 10153452.
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, New York City and Bellevue, Washington. Sterling offers loan products to the residential and commercial markets, 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” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding the Company’s plans, expectations, thoughts, beliefs, estimates, goals and outlook for the future that are intended to be covered by the protections provided under the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. 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 “outlook,” or the negative versions of those words or other comparable words or phrases of a future or forward-looking nature. 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. 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 26, 2021, 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. 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 |
|||||||||||||
| (dollars in thousands, except per share data) | March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
||||||||
| Net income (loss) | $ |
2,325 |
|
$ |
(11,693 |
) |
$ |
(4,030 |
) |
||||
| Income (loss) per share, diluted | $ |
0.05 |
|
$ |
(0.23 |
) |
$ |
(0.08 |
) |
||||
| Net interest income | $ |
23,227 |
|
$ |
24,370 |
|
$ |
28,642 |
|
||||
| Net interest margin |
|
2.45 |
% |
|
2.51 |
% |
|
3.57 |
% |
||||
| Non-interest income | $ |
453 |
|
$ |
1,373 |
|
$ |
529 |
|
||||
| Non-interest expense | $ |
21,334 |
|
$ |
14,856 |
|
$ |
14,235 |
|
||||
| Loans, net of allowance for loan losses | $ |
2,389,599 |
|
$ |
2,434,356 |
|
$ |
2,799,645 |
|
||||
| Total deposits | $ |
2,889,232 |
|
$ |
3,098,966 |
|
$ |
2,645,293 |
|
||||
| Nonperforming loans | $ |
83,578 |
|
$ |
86,470 |
|
$ |
16,356 |
|
||||
| Allowance for loan losses to total loans |
|
2.92 |
% |
|
2.89 |
% |
|
1.50 |
% |
||||
| Allowance for loan losses to nonperforming loans |
|
86 |
% |
|
84 |
% |
|
261 |
% |
||||
| Provision (recovery) for loan losses | $ |
(737 |
) |
$ |
27,592 |
|
$ |
20,853 |
|
||||
| Net charge offs (recoveries) | $ |
(221 |
) |
$ |
3,463 |
|
$ |
(30 |
) |
||||
| Return on average assets |
|
0.24 |
% |
|
(1.19 |
)% |
|
(0.49 |
)% |
||||
| Return on average shareholders' equity |
|
2.87 |
% |
|
(13.92 |
)% |
|
(4.73 |
)% |
||||
| Efficiency ratio |
|
90.09 |
% |
|
57.71 |
% |
|
48.80 |
% |
||||
| Capital Ratios | |||||||||||||
| Regulatory and Other Capital Ratios— Consolidated: | |||||||||||||
| Total adjusted capital to risk-weighted assets |
|
23.52 |
% |
|
22.58 |
% |
|
21.15 |
% |
||||
| Tier 1 (core) capital to risk-weighted assets |
|
18.48 |
% |
|
17.68 |
% |
|
16.76 |
% |
||||
| Common Tier 1 (CET 1) |
|
18.48 |
% |
|
17.68 |
% |
|
16.76 |
% |
||||
| Tier 1 (core) capital to adjusted tangible assets |
|
8.34 |
% |
|
8.08 |
% |
|
9.95 |
% |
||||
| Regulatory and Other Capital Ratios—Bank: | |||||||||||||
| Total adjusted capital to risk-weighted assets |
|
22.66 |
% |
|
21.56 |
% |
|
20.37 |
% |
||||
| Tier 1 (core) capital to risk-weighted assets |
|
21.37 |
% |
|
20.27 |
% |
|
19.10 |
% |
||||
| Common Tier 1 (CET 1) |
|
21.37 |
% |
|
20.27 |
% |
|
19.10 |
% |
||||
| Tier 1 (core) capital to adjusted tangible assets |
|
9.60 |
% |
|
9.20 |
% |
|
11.31 |
% |
||||
| Sterling Bancorp, Inc. | |||||||||||||||||
| Condensed Consolidated Balance Sheets (Unaudited) | |||||||||||||||||
| (dollars in thousands) | March 31, 2021 |
|
December 31, 2020 |
|
% change |
|
March 31, 2020 |
|
% change |
||||||||
| Assets | |||||||||||||||||
| Cash and due from banks | $ |
873,223 |
$ |
998,497 |
(13 |
)% |
$ |
389,984 |
124 |
% |
|||||||
| Interest-bearing time deposits with other banks |
|
5,528 |
|
7,021 |
(21 |
)% |
|
1,025 |
439 |
% |
|||||||
| Investment securities |
|
259,686 |
|
304,958 |
(15 |
)% |
|
159,168 |
63 |
% |
|||||||
| Mortgage loans held for sale |
|
19,848 |
|
22,284 |
(11 |
)% |
|
3,776 |
426 |
% |
|||||||
| Loans, net of allowance for loan losses of |
|
2,389,599 |
|
2,434,356 |
(2 |
)% |
|
2,799,645 |
(15 |
)% |
|||||||
| Accrued interest receivable |
|
10,439 |
|
10,990 |
(5 |
)% |
|
13,221 |
(21 |
)% |
|||||||
| Mortgage servicing rights, net |
|
4,626 |
|
5,688 |
(19 |
)% |
|
7,976 |
(42 |
)% |
|||||||
| Leasehold improvements and equipment, net |
|
9,085 |
|
8,512 |
7 |
% |
|
9,081 |
0 |
% |
|||||||
| Operating lease right-of-use assets |
|
18,791 |
|
19,232 |
(2 |
)% |
|
17,802 |
6 |
% |
|||||||
| Federal Home Loan Bank stock, at cost |
|
22,950 |
|
22,950 |
0 |
% |
|
22,950 |
0 |
% |
|||||||
| Cash surrender value of bank-owned life insurance |
|
32,631 |
|
32,495 |
0 |
% |
|
32,070 |
2 |
% |
|||||||
| Deferred tax asset, net |
|
24,104 |
|
24,326 |
(1 |
)% |
|
18,113 |
33 |
% |
|||||||
| Other assets |
|
23,517 |
|
22,736 |
3 |
% |
|
2,564 |
817 |
% |
|||||||
| Total assets | $ |
3,694,027 |
$ |
3,914,045 |
(6 |
)% |
$ |
3,477,375 |
6 |
% |
|||||||
| Liabilities | |||||||||||||||||
| Noninterest-bearing deposits | $ |
61,329 |
$ |
58,458 |
5 |
% |
$ |
68,650 |
(11 |
)% |
|||||||
| Interest-bearing deposits |
|
2,749,868 |
|
3,040,508 |
(10 |
)% |
|
2,576,643 |
7 |
% |
|||||||
| Deposits held for sale |
|
78,035 |
|
— |
N/M |
|
|
— |
N/M |
|
|||||||
| Total deposits |
|
2,889,232 |
|
3,098,966 |
(7 |
)% |
|
2,645,293 |
9 |
% |
|||||||
| Federal Home Loan Bank borrowings |
|
318,000 |
|
318,000 |
0 |
% |
|
329,000 |
(3 |
)% |
|||||||
| Subordinated notes, net |
|
65,384 |
|
65,341 |
0 |
% |
|
65,218 |
0 |
% |
|||||||
| Operating lease liabilities |
|
20,056 |
|
20,497 |
(2 |
)% |
|
18,959 |
6 |
% |
|||||||
| Accrued expenses and other liabilities |
|
79,439 |
|
91,650 |
(13 |
)% |
|
90,230 |
(12 |
)% |
|||||||
| Total liabilities |
|
3,372,111 |
|
3,594,454 |
(6 |
)% |
|
3,148,700 |
7 |
% |
|||||||
| Shareholders’ Equity | |||||||||||||||||
| Preferred stock, authorized 10,000,000 shares; no shares issued and outstanding |
|
— |
|
— |
|
— |
— |
|
|||||||||
| Common stock, no par value, authorized 500,000,000 shares; issued and outstanding 50,009,407 shares at March 31, 2021, 49,981,861 shares at December 31, 2020, and 50,067,738 shares at March 31, 2020 |
|
80,807 |
|
80,807 |
0 |
% |
|
80,807 |
0 |
% |
|||||||
| Additional paid-in capital |
|
13,603 |
|
13,544 |
0 |
% |
|
13,319 |
2 |
% |
|||||||
| Retained earnings |
|
227,178 |
|
224,853 |
1 |
% |
|
233,790 |
(3 |
)% |
|||||||
| Accumulated other comprehensive income |
|
328 |
|
387 |
(15 |
)% |
|
759 |
(57 |
)% |
|||||||
| Total shareholders’ equity |
|
321,916 |
|
319,591 |
1 |
% |
|
328,675 |
(2 |
)% |
|||||||
| Total liabilities and shareholders’ equity | $ |
3,694,027 |
$ |
3,914,045 |
(6 |
)% |
$ |
3,477,375 |
6 |
% |
|||||||
| N/M- not meaningful | |||||||||||||||||
| Sterling Bancorp, Inc. | |||||||||||||||||||
| Condensed Consolidated Statements of Operations (Unaudited) | |||||||||||||||||||
Three Months Ended |
|||||||||||||||||||
March 31, |
|
December 31, |
|
% |
|
March 31, |
|
% |
|||||||||||
| (dollars in thousands, except per share amounts) |
|
2021 |
|
|
|
2020 |
|
|
change |
|
|
2020 |
|
|
change |
||||
| Interest income: | |||||||||||||||||||
| Interest and fees on loans | $ |
31,294 |
|
$ |
33,758 |
|
(7 |
)% |
$ |
39,525 |
|
(21 |
)% |
||||||
| Interest and dividends on investment securities and restricted stock |
|
390 |
|
|
646 |
|
(40 |
)% |
|
1,034 |
|
(62 |
)% |
||||||
| Other interest |
|
263 |
|
|
257 |
|
2 |
% |
|
434 |
|
(39 |
)% |
||||||
| Total interest income |
|
31,947 |
|
|
34,661 |
|
(8 |
)% |
|
40,993 |
|
(22 |
)% |
||||||
| Interest expense: | |||||||||||||||||||
| Interest on deposits |
|
6,702 |
|
|
8,254 |
|
(19 |
)% |
|
10,364 |
|
(35 |
)% |
||||||
| Interest on Federal Home Loan Bank borrowings |
|
838 |
|
|
857 |
|
(2 |
)% |
|
810 |
|
3 |
% |
||||||
| Interest on subordinated notes |
|
1,180 |
|
|
1,180 |
|
0 |
% |
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FAQ
What were Sterling Bancorp's earnings for Q1 2021?
Sterling Bancorp reported a net income of $2.3 million, or $0.05 per diluted share, for Q1 2021.
How did Sterling Bancorp's net interest margin change in Q1 2021?
The net interest margin decreased to 2.45% from 2.51% in the previous quarter.
What is Sterling Bancorp's capital status as of March 31, 2021?
Sterling Bancorp continues to exceed regulatory capital requirements, with a leverage ratio of 9.60%.
What settlement did Sterling Bancorp announce in relation to a securities class-action lawsuit?
Sterling Bancorp entered a settlement agreement for $12.5 million, which will be covered by its insurance carriers.
How much did Sterling Bancorp's total assets decrease by in Q1 2021?
Total assets decreased by $220 million, or 6%, to $3.694 billion as of March 31, 2021.
Sterling Bancorp, Inc.
NASDAQ:SBTSBT RankingsSBT Latest NewsSBT Stock Data
247.96M
18.11M
66.98%
27.45%
0.6%
Banks - Regional
Savings Institution, Federally Chartered
United States of America
SOUTHFIELD
| ||||||||||