Sterling Bancorp announces results for the second quarter of 2020 with diluted income per share available to common stockholders of $0.25 (as reported) and $0.29 (as adjusted)

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Sterling Bancorp (STL) reported a net income of $48.8 million, or $0.25 per diluted share, for Q2 2020, a significant increase from $12.2 million in Q1 2020. However, this reflects a 48.3% decrease year-over-year. Total assets rose 2% to $30.8 billion, and total deposits increased 12.7% to $23.6 billion. The allowance for credit losses surged 249.2% to $365.5 million, highlighting increased provisions amidst economic uncertainty. The bank funded about 3,300 PPP loans totaling $649.4 million aimed at supporting clients during the pandemic.

Positive

Total deposits increased 12.7% to $23.6 billion year-over-year.
Net income increased significantly by 301.1% compared to the previous quarter.
Tangible book value per share grew 6.2% to $13.17 over the past year.
Successfully funded $649.4 million under the PPP, aiding client liquidity.

Negative

Net income dropped 48.3% year-over-year.
Net interest income decreased by $18.5 million compared to Q2 2019.
Adjusted PPNR fell 9.8% relative to the linked quarter.
Provision for credit losses rose to $56.6 million, exceeding net charge-offs significantly.

07/22/2020 - 04:10 PM

Key Performance Highlights for the Three Months ended June 30, 2020 vs. June 30, 2019

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($ in thousands except per share amounts)	GAAP / As Reported		Non-GAAP / As Adjusted¹
	6/30/2019		6/30/2020		Change % / bps		6/30/2019		6/30/2020		Change % / bps
43%; width:43%; min-width:43%;">Total assets	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">30,237,545	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">30,839,893	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	5%; width:5%; min-width:5%;">2.0	1%; width:1%; min-width:1%;">%	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">30,237,545	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">30,839,893	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	5%; width:5%; min-width:5%;">2.0	1%; width:1%; min-width:1%;">%
Total portfolio loans, gross	20,370,306			22,295,267			9.4			20,370,306			22,295,267			9.4
Total deposits	20,948,464			23,600,621			12.7			20,948,464			23,600,621			12.7
Pretax pre-provision net revenue (“PPNR”)²	131,957			114,508			(13.2	)		123,338			113,832			(7.7	)
Net income available to common	94,473			48,820			(48.3	)		105,124			56,926			(45.8	)
Diluted EPS available to common	0.46			0.25			(45.7	)		0.51			0.29			(43.1	)
Net interest margin	3.53	%		3.15	%		(38	)		3.58	%		3.20	%		(38	)
Allowance for credit losses (“ACL”) - loans	$	104,664			$	365,489			249.2	%		$	104,664			$	365,489			249.2	%
ACL to portfolio loans	0.51	%		1.64	%		113			0.51	%		1.64	%		113
Tangible book value per common share¹	$	12.40			$	13.17			6.2			$	12.40			$	13.17			6.2

Adjusted PPNR excluding accretion income was $113.8 million and including accretion income was $123.9 million.
Net interest income was $213.3 million and net interest margin excluding accretion income was 3.05%.
Non-interest income was $26.1 million and was impacted by decreases in gain on securities, securities call income, deposit service charges and commercial loan fee income due to lower transaction volumes.
Total deposits were $23.6 billion, an increase of 11.8% year-over-year. Cost of total deposits was 48 basis points and cost of total funding liabilities was 63 basis points.
Used excess deposit liquidity to redeem $500.0 million of FHLB borrowings.
Funded nearly 3,300 clients and $649.4 million under the SBA Payroll Protection Program (“PPP”).
Increased tangible book value per common share 6.2% to $13.17 over past 12 months.
Capital levels remain strong with tangible common equity to tangible assets of 8.82% and Tier 1 leverage ratio of 9.51%.

Key Performance Highlights for the Three Months ended June 30, 2020 vs. March 31, 2020

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($ in thousands except per share amounts)	GAAP / As Reported		Non-GAAP / As Adjusted¹
	3/31/2020		6/30/2020		Change % / bps		3/31/2020		6/30/2020		Change % / bps
43%; width:43%; min-width:43%;">PPNR²	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">144,385	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">114,508	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	5%; width:5%; min-width:5%;">(20.7	1%; width:1%; min-width:1%;">)	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">126,203	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">113,832	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	5%; width:5%; min-width:5%;">(9.8	1%; width:1%; min-width:1%;">)
Net income available to common	12,171			48,820			301.1			(3,124	)		56,926			NA
Diluted EPS available to common	0.06			0.25			316.7			(0.02	)		0.29			NA
Net interest margin	3.16	%		3.15	%		(1	)		3.21	%		3.20	%		(1	)
Operating efficiency³	44.27			52.17			790			42.40			45.08			268
ACL to portfolio loans	1.50			1.64			14			1.50			1.64			14
Tangible book value per common share¹	$	12.83			$	13.17			2.7			$	12.83			$	13.17			2.7

Continued build of credit reserves; ACL - loans was $365.5 million which represented 1.64% of total portfolio loans.
Net charge-offs were $17.6 million, or 0.32% annualized to average loans.
Loan payment deferrals were $1.7 billion, or 7.7% of portfolio loans.
Total operating expense was $124.9 million; included FHLB prepayment penalty of $9.7 million and $5.1 million of COVID-related expenses for charitable contributions, compensation, occupancy and foreclosed property expense.
Declared dividend per common share of $0.07.

1. Non-GAAP / as adjusted measures are defined in the non-GAAP tables beginning on page 18.
2. Pretax pre-provision net revenue represents our net interest income plus non-interest income less operating expenses before tax.
3. Operating efficiency ratio is a non-GAAP measure. See page 20 for an explanation of the operating efficiency ratio.

MONTEBELLO, N.Y., July 22, 2020 (GLOBE NEWSWIRE) -- Sterling Bancorp (NYSE: STL) (the “Company”), the parent company of Sterling National Bank (the “Bank”), today announced results for the three and six months ended June 30, 2020. Net income available to common stockholders for the quarter ended June 30, 2020 was $48.8 million, or $0.25 per diluted share, compared to net income available to common stockholders of $12.2 million, or $0.06 per diluted share, for the linked quarter ended March 31, 2020, and net income available to common stockholders of $94.5 million, or $0.46 per diluted share, for the three months ended June 30, 2019.

Net income available to common stockholders for the six months ended June 30, 2020 was $61.0 million, or $0.31 per diluted share, compared to net income available to common stockholders of $193.9 million, or $0.92 per diluted share, for the six months ended June 30, 2019.

President’s Comments
Jack Kopnisky, President and Chief Executive Officer, commented: “We have continued to work through this challenging operating environment, focusing on our top priorities of providing superior service to our clients and growing our business, while ensuring a safe and healthy working environment for all of our clients and colleagues. We have a strong and growing balance sheet, a diverse mix of lending and deposit businesses, ample liquidity and funding sources, and robust capital and credit reserves. We are well-positioned to continue building a high performing commercial bank that delivers long-term growth and profitability.

“We continue to provide relief to our clients and communities. In the second quarter of 2020, we contributed $1.5 million to the Sterling National Bank Charitable Foundation for grants and donations to various local charities. We funded nearly 3,300 loans under the PPP, which totaled $649.4 million. We are now working with clients on forgiveness of these loans. Through our relationship-based, single point of contact operating model, we have remained in close contact with our clients, providing working capital relief through loan payment deferral programs on $1.7 billion of loan balances.

“On an adjusted basis, we generated net income available to common stockholders of $56.9 million, or $0.29 per diluted share, while continuing to build our allowance for credit losses given the economic uncertainty. For the quarter ended June 30, 2020, provision for credit losses was $56.6 million, or $39.0 million greater than net-charge offs. As of June 30, 2020, our allowance for credit losses was $365.5 million, or 1.64% of total loans.

“Our total deposits were $23.6 billion and core deposit growth was $1.2 billion over the linked quarter. We substantially reduced our funding costs, as our cost of total deposits declined 33 basis points and our cost of total funding liabilities declined 35 basis points. Although we continued to experience pressure on our earning asset yields given decreasing interest rates, our balance sheet actions allowed us to grow our net interest income relative to the linked quarter and maintain our tax equivalent net interest margin excluding accretion income at 3.05%.

“Our adjusted PPNR, which excludes accretion income on acquired loans, was $113.8 million, a decrease of 9.8% relative to the linked quarter. This decline was mainly due to lower transaction activity in our commercial and consumer businesses because of the pandemic. This resulted in lower deposit service charges, wealth management fees and commercial loan fees. We are confident these fees will rebound as the economy and transaction activity normalize, which should allow us to maintain and grow adjusted PPNR.

“Our adjusted non-interest expenses were $107.8 million. Direct expenses related to the pandemic were $5.1 million, which included incremental expenses related to compensation and other special awards, occupancy expense, foreclosed property expense and our contribution to the Sterling National Bank Charitable Foundation. We expect we will reduce expenses in the second half of 2020 as these items are not anticipated will recur.

“We have a strong capital position, as our tangible common equity to tangible assets ratio increased eight basis points in the second quarter and was 8.82% and our Tier 1 leverage ratio was 9.51%. We declared our regular dividend of $0.07 on our common stock, payable on August 17, 2020 to holders of record as of August 3, 2020.

“Finally, I would like to thank our clients, shareholders, and colleagues, and in particular recognize our colleagues who operate and maintain our financial centers, call centers, and other essential operations, all of whom have exhibited extraordinary resilience through these events. The dedication and hard work of our colleagues will position us well to emerge from this as a better company.”

Reconciliation of GAAP Results to Adjusted Results (non-GAAP)
The Company’s GAAP net income available to common stockholders of $48.8 million, or $0.25 per diluted share, for the second quarter of 2020, included the following items:

a pre-tax gain of $485 thousand on the sale of available for sale securities;
a net pre-tax loss of $9.7 million related to the early redemption of $500.0 million of Federal Home Loan Bank (“FHLB”) borrowings; and

the pre-tax amortization of non-compete agreements and acquired customer list intangible assets of $172 thousand.

Excluding the impact of these items, adjusted net income available to common stockholders was $56.9 million, or $0.29 per diluted share, for the three months ended June 30, 2020. For purposes of calculating our adjusted results, we use our estimated annual effective income tax rate for 2020, which declined at June 30, 2020 to 12.5% compared to 17.5% in the first quarter.

Non-GAAP financial measures include references to the terms “adjusted” or “excluding”. See the reconciliation of the Company’s non-GAAP financial measures beginning on page 18.

Net Interest Income and Margin

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($ in thousands)	For the three months ended		Change % / bps
	6/30/2019		3/31/2020		6/30/2020		Y-o-Y		Linked Qtr
51%; width:51%; min-width:51%;">Interest and dividend income	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">302,457	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">273,527	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">253,226	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">(16.3	1%; width:1%; min-width:1%;">%)	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">(7.4	1%; width:1%; min-width:1%;">)%
Interest expense	70,618			61,755			39,927			(43.5	)			(35.3	)
Net interest income	$	231,839			$	211,772			$	213,299			(8.0	)			0.7

Accretion income on acquired loans	$	23,745			$	10,686			$	10,086			(57.5	)%			(5.6	)%
Yield on loans	5.20	%		4.47	%		4.03	%		(117	)			(44	)
Tax equivalent yield on investment securities⁴	2.92			2.96			3.05			13				9
Tax equivalent yield on interest earning assets⁴	4.66			4.13			3.79			(87	)			(34	)
Cost of total deposits	0.91			0.81			0.48			(43	)			(33	)
Cost of interest bearing deposits	1.14			1.00			0.61			(53	)			(39	)
Cost of borrowings	2.54			2.49			2.26			(28	)			(23	)
Cost of interest bearing liabilities	1.38			1.19			0.78			(60	)			(41	)
Total cost of funding liabilities⁵	1.15			0.98			0.63			(52	)			(35	)
Tax equivalent net interest margin⁶	3.58			3.21			3.20			(38	)			(1	)

Average commercial loans	$	16,996,838			$	18,820,094			$	19,715,184			16.0	%			4.8	%
Average loans, including loans held for sale	19,912,839			21,206,177			21,940,636			10.2				3.5
Average cash balances	289,208			489,691			455,626			57.5				(7.0	)
Average investment securities	5,883,269			5,046,573			4,630,056			(21.3	)			(8.3	)
Average total interest earning assets	26,377,053			26,980,261			27,240,114			3.3				1.0
Average deposits and mortgage escrow	21,148,872			22,692,568			23,463,937			10.9				3.4

4. Tax equivalent basis represents interest income earned on tax exempt securities divided by the applicable federal tax rate of 21%.
5. Includes interest bearing liabilities and non-interest bearing deposits.
6. Tax equivalent net interest margin is equal to net interest income plus the tax equivalent adjustment for tax exempt securities divided by average interest earning assets. The tax equivalent adjustment is assumed at a 21% federal tax rate in all periods presented.

Second quarter 2020 compared with second quarter 2019

Net interest income was $213.3 million for the quarter ended June 30, 2020, a decrease of $18.5 million compared to the second quarter of 2019. This was mainly due to decreases in the yield on floating rate loans and accretion income on acquired loans. Other key components of changes were the following:

The yield on loans was 4.03% compared to 5.20% for the three months ended June 30, 2019. The decrease in yield on loans was mainly due to the decline in market interest rates. Accretion income on acquired loans was $10.1 million in the second quarter of 2020, compared to $23.7 million in the second quarter of 2019.
The tax equivalent yield on investment securities was 3.05% compared to 2.92% for the three months ended June 30, 2019. Average investment securities were $4.6 billion, or 17.0%, of average total interest earning assets for the second quarter of 2020 compared to $5.9 billion, or 22.3%, of average total interest earning assets for the second quarter of 2019. The increase in yield was mainly due to the sale of lower yielding securities in 2019.
In the second quarter of 2020, average cash balances were $455.6 million compared to $289.2 million in the second quarter of 2019. We have experienced higher levels of deposit inflows as a result of the pandemic. We used a portion of this excess liquidity to reduce FHLB borrowings.

The tax equivalent yield on interest earning assets decreased 87 basis points to 3.79%.
The cost of total deposits was 48 basis points for the second quarter of 2020 compared to 91 basis points for the same period a year ago. The decrease was due to deposit pricing strategies we implemented in response to the declining interest rate environment.
The cost of borrowings was 2.26% for the second quarter of 2020 compared to 2.54% for the same period a year ago. The decrease was mainly due to the maturity and repayment of higher cost FHLB borrowings.
The total cost of interest bearing liabilities was 0.78% for the second quarter of 2020 compared to 1.38% for the same period a year ago.
Average interest bearing deposits increased $1.5 billion during the second quarter of 2020 compared to the same period a year ago, due to growth from our commercial banking teams, financial centers and on-line channels. Average borrowings decreased $1.4 billion compared to the second quarter of 2019.
Total interest expense decreased by $30.7 million compared to the second quarter of 2019.

The tax equivalent net interest margin was 3.20% for the second quarter of 2020 compared to 3.58% for the second quarter of 2019. Excluding accretion income, tax equivalent net interest margin was 3.05% for the second quarter of 2020 compared to 3.22% for the second quarter of 2019.

Second quarter 2020 compared with linked quarter ended March 31, 2020

Net interest income increased $1.5 million for the quarter ended June 30, 2020 compared to the linked quarter. The increase was mainly due to the reduction in interest expense. Other key components of the changes were the following:

The yield on loans was 4.03% compared to 4.47% for the linked quarter. The decrease was mainly due to the decline in market interest rates and the repricing of floating rate loans. Accretion income on acquired loans decreased $600 thousand to $10.1 million for the second quarter of 2020.
The average balance of commercial loans increased $895.1 million and the average balance of residential mortgage loans declined $146.0 million. The average balance of SBA PPP loans for the period was $377.7 million.
The tax equivalent yield on investment securities was 3.05% compared to 2.96% for the linked quarter. The increase in yield was mainly due to the mix of securities.
The tax equivalent yield on interest earning assets was 3.79% compared to 4.13% in the linked quarter.
The cost of total deposits decreased 33 basis points to 48 basis points, mainly due to improving conditions in our deposit markets and our deposit pricing strategies.
The total cost of borrowings decreased 23 basis points to 2.26%, due to the repayment of higher cost FHLB borrowings and the redemption of our senior notes.
Average deposits and mortgage escrow increased by $771.4 million and average borrowings decreased by $479.9 million relative to the linked quarter. Average municipal deposits declined $404.7 million, average wholesale deposits declined $69.3 million and average on-line deposits declined $6.8 million.
Total interest expense decreased $21.8 million from the linked quarter.

The tax equivalent net interest margin was 3.20% compared to 3.21% in the linked quarter. Excluding accretion income on acquired loans, tax equivalent net interest margin was unchanged at 3.05%.

We originated $649.4 million of PPP loans in the second quarter. We anticipate net fees generated under the program will be $16.4 million, of which $4.3 million was recognized as interest income in the second quarter of 2020. We expect a significant portion of these loans will be forgiven in the third quarter of 2020.

Non-interest Income

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($ in thousands)	For the three months ended		Change %
	6/30/2019		3/31/2020		6/30/2020		Y-o-Y		Linked Qtr
51%; width:51%; min-width:51%;">Deposit fees and service charges	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">7,098	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">6,622	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">5,345	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">(24.7	1%; width:1%; min-width:1%;">)%	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">(19.3	1%; width:1%; min-width:1%;">)%
Accounts receivable management / factoring commissions and other related fees	5,794				5,538			4,419			(23.7	)%		(20.2	)%
Bank owned life insurance (“BOLI”)	4,192				5,018			4,950			18.1	%		(1.4	)%
Loan commissions and fees	5,308				11,024			8,003			50.8	%		(27.4	)%
Investment management fees	2,050				1,847			1,379			(32.7	)%		(25.3	)%
Net (loss) gain on sale of securities	(528	)			8,412			485			(191.9	)%		(94.2	)%
Net gain on security calls	—				4,880			—			NM			NM
Other	3,144				3,985			1,509			(52.0	)%		(62.1	)%
Total non-interest income	27,058				47,326			26,090			(3.6	)%		(44.9	)%
Net (loss) gain on sale of securities	(528	)			8,412			485			(191.9	)%		(94.2	)%
Adjusted non-interest income	$	27,586				$	38,914			$	25,605			(7.2	)%		(34.2	)%

Second quarter 2020 compared with second quarter 2019
Adjusted non-interest income decreased $2.0 million in the second quarter of 2020 to $25.6 million, compared to $27.6 million in the same quarter last year. The change was mainly due to lower transaction activity as a result of the pandemic as deposit service charges declined $1.8 million, factoring commissions and fee income declined $1.4 million and swap fee income, which is included in other income, declined $1.7 million.

In the second quarter of 2020, we realized a gain of $485 thousand on the sale of available for sale securities compared to a $528 thousand loss in the year earlier period.

Second quarter 2020 compared with linked quarter ended March 31, 2020
Adjusted non-interest income decreased approximately $13.3 million relative to the linked quarter to $25.6 million. In the first quarter, we realized a gain on called securities of $4.9 million, which did not recur in the second quarter. Other commissions and loan fees declined $3.0 million, other income declined $2.5 million, mainly due to lower swap fees, and service charges on deposits declined $1.3 million as a result of lower transaction activity in our consumer and commercial businesses.

Non-interest Expense

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($ in thousands)	For the three months ended		Change % / bps
	6/30/2019		3/31/2020		6/30/2020		Y-o-Y		Linked Qtr
52%; width:52%; min-width:52%;">Compensation and benefits	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">54,473	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">54,876	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">54,668	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">0.4	1%; width:1%; min-width:1%;">%	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">(0.4	1%; width:1%; min-width:1%;">)%
Stock-based compensation plans	4,605			6,006			5,913			28.4			(1.5	)
Occupancy and office operations	16,106			15,199			14,695			(8.8	)		(3.3	)
Information technology	9,047			8,018			7,312			(19.2	)		(8.8	)
Amortization of intangible assets	4,785			4,200			4,200			(12.2	)		—
FDIC insurance and regulatory assessments	2,994			3,206			3,638			21.5			13.5
Other real estate owned (“OREO”), net	458			52			1,233			169.2			2,271.2
Impairment related to financial centers and real estate consolidation strategy	14,398			—			—			NM			NM
Other expenses	20,074			23,156			33,222			65.5			43.5
Total non-interest expense	$	126,940			$	114,713			$	124,881			(1.6	)		8.9
Full time equivalent employees (“FTEs”) at period end	1,820			1,619			1,617			(11.2	)		(0.1	)
Financial centers at period end	97			79			79			(18.6	)		—
Operating efficiency ratio, as reported⁸	49.0	%		44.3	%		52.2	%		320			790
Operating efficiency ratio, as adjusted⁸	40.9			42.4			45.1			420			270

⁸See a reconciliation of non-GAAP financial measures beginning on page 18.

Second quarter 2020 compared with second quarter 2019
Total non-interest expense decreased $2.1 million relative to the second quarter of 2019. Key components of the change in non-interest expense between the periods were the following:

Compensation and benefits increased $195 thousand between the periods. Total FTEs declined to 1,617 from 1,820, which was mainly due to our ongoing financial center consolidation strategy. The increase in compensation was mainly due to the hiring of commercial bankers, business development officers, information technology, and risk management personnel, which was partially offset by the reduction of financial center personnel.
Occupancy and office operations expense decreased $1.4 million, mainly due to the consolidation of financial centers and other back-office locations. We consolidated 18 financial centers in the past twelve months.
Information technology expense declined $1.7 million, mainly due to a decrease in data processing expenses.
OREO expense increased $775 thousand due to write-downs on properties to fair value based on updated appraisals.
In the second quarter of 2019, we incurred an impairment charge related to financial centers and real estate consolidation strategy of $14.4 million.
Other expenses increased $13.1 million to $33.2 million, which was mainly due to an early termination charge of $9.7 million associated with the repayment of $500.0 million of FHLB advances. We incurred approximately $3.7 million of operating expenses associated with the pandemic including a donation to the Sterling National Bank Charitable Foundation, compensation for financial center and back-office personnel, and occupancy expense. Depreciation expense of $3.1 million was recorded on operating leases acquired in the fourth quarter of 2019. These increases were partially offset by declines in professional fees, advertising and promotion and other expense.

Second quarter 2020 compared with linked quarter ended March 31, 2020
Total non-interest expense increased $10.2 million to $124.9 million in the second quarter of 2020. Key components of the change in non-interest expense were the following:

Compensation and benefits decreased $208 thousand to $54.7 million in the second quarter of 2020. The decrease was mainly due to a decline in payroll taxes.
The remaining fluctuations in operating expense are due to the same factors described above for the 2019 second quarter comparison.

Taxes
We recorded income tax expense of $7.1 million in the second quarter of 2020, compared to an income tax benefit of $8.0 million in the linked quarter and income tax expense of $24.0 million in the year earlier period. For the three months ended June 30, 2020 and June 30, 2019, we recorded income tax expense at an estimated effective income tax rate of 12.5% and 19.9%, respectively. In the second quarter of 2020, we reduced our estimated effective tax rate from 17.5% to 12.5% based on earnings performance and an increase in tax exempt income to total income.

Key Balance Sheet Highlights as of June 30, 2020

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($ in thousands)	As of		Change % / bps
	6/30/2019		3/31/2020		6/30/2020		Y-o-Y		Linked Qtr
52%; width:52%; min-width:52%;">Total assets	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">30,237,545	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">30,335,036	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">30,839,893	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">2.0	1%; width:1%; min-width:1%;">%	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">1.7	1%; width:1%; min-width:1%;">%
Total portfolio loans, gross	20,370,306			21,709,957			22,295,267			9.4			2.7
Commercial & industrial (“C&I”) loans	7,514,834			8,483,474			9,166,744			22.0			8.1
Commercial real estate loans (including multi-family)	9,714,037			10,399,566			10,402,897			7.1			—
Acquisition, development and construction (“ADC”) loans	338,973			524,714			572,558			68.9			9.1
Total commercial loans	17,567,844			19,407,754			20,142,199			14.7			3.8
Residential mortgage loans	2,535,667			2,077,534			1,938,212			(23.6	)		(6.7	)
BOLI	598,880			616,648			620,908			3.7			0.7
Core deposits⁹	19,893,875			20,704,023			21,904,429			10.1			5.8
Total deposits	20,948,464			22,558,280			23,600,621			12.7			4.6
Municipal deposits (included in core deposits)	1,699,824			2,091,259			1,724,049			1.4			(17.6	)
Investment securities, net	5,858,865			4,614,513			4,545,579			(22.4	)		(1.5	)
Total borrowings	4,133,986			2,598,698			1,445,909			(65.0	)		(44.4	)
Loans to deposits	97.2	%		96.2	%		94.5	%		(270	)		(170	)
Core deposits to total deposits	95.0			91.8			92.8			(220	)		100
Investment securities, net to earning assets	21.9			17.2			16.7			(520	)		(50	)

⁹Core deposits include retail, commercial and municipal transaction, money market, savings accounts and certificates of deposit accounts, and reciprocal Certificate of Deposit Account Registry balances and exclude brokered and wholesale deposits.

Highlights in balance sheet items as of June 30, 2020 were the following:

C&I loans (which includes traditional C&I, PPP, asset-based lending, payroll finance, warehouse lending, factored receivables, equipment financing and public sector finance loans) represented 41.1% of total portfolio loans; commercial real estate loans (which include multi-family loans) represented 46.6% of total portfolio loans; consumer and residential mortgage loans combined represented 9.7% of total portfolio loans; and ADC loans represented 2.6% of total portfolio loans, respectively. At June 30, 2019, C&I loans represented 36.9%; commercial real estate loans represented 47.7%; consumer and residential mortgage loans combined represented 13.7%; and ADC loans represented 1.7% of total portfolio loans, respectively.
Total commercial loans, which include all C&I loans, commercial real estate and ADC loans, increased by $734.4 million over the linked quarter and $2.6 billion since June 30, 2019. As compared to the linked quarter, C&I loans increased $683.3 million, which was mainly due to PPP loans. Mortgage warehouse loans increased $210.9 million, public sector finance loans increased $165.1 million, and ADC loans increased $47.8 million. ABL loans declined $219.1 million, factored receivables declined $66.6 million and payroll finance loans declined $55.2 million compared to March 31, 2020.
Residential mortgage loans were $1.9 billion at June 30, 2020, a decline of $139.3 million from the linked quarter and a decline of $597.5 million from the same period a year ago. The declines were mainly due to repayments.
The balance of BOLI increased by $4.3 million relative to the prior quarter and was $620.9 million at June 30, 2020.
Core deposits at June 30, 2020 were $21.9 billion and increased $1.2 billion compared to March 31, 2020, and increased $2.0 billion compared to June 30, 2019. The growth was mainly due to successful commercial and digital deposit gathering and the increase in deposits that has occurred since the pandemic.
Total deposits at June 30, 2020 increased $1.0 billion compared to March 31, 2020, and total deposits increased $2.7 billion compared to June 30, 2019.

Municipal deposits at June 30, 2020 were $1.7 billion, a decrease of $367.2 million relative to March 31, 2020. The decrease was associated with seasonal withdrawals by local municipalities.
Investment securities decreased by $68.9 million from March 31, 2020 and $1.3 billion from June 30, 2019, and represented 16.7% of earning assets at June 30, 2020. In 2019, we sold securities to fund commercial loan growth including loan portfolio acquisitions. In the first quarter of 2020, we sold $400.2 million of lower yielding available for sale securities and realized a gain of $8.4 million. In addition, $139.8 million of securities were called prior to maturity.
Total borrowings at June 30, 2020 were $1.4 billion, a decrease of $1.2 billion relative to March 31, 2020 and $2.7 billion relative to June 30, 2019. The sale of securities and deposit inflows allowed us to reduce borrowings. Included in total borrowings at June 30, 2020 was $568.3 million from the Federal Reserve Bank PPP Liquidity Facility. These borrowings have a two year maturity and a rate of 35 basis points. We anticipate these borrowings will be repaid as the PPP loans are redeemed by the SBA.

Credit Quality

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($ in thousands)	For the three months ended		Change % / bps
	6/30/2019		3/31/2020		6/30/2020		Y-o-Y		Linked Qtr
52%; width:52%; min-width:52%;">Provision for credit losses	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">11,500	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">138,280	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">56,606	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">392.2	1%; width:1%; min-width:1%;">%	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">(59.1	1%; width:1%; min-width:1%;">)%
Net charge-offs	5,796			6,955			17,561			203.0			152.5
Allowance for credit losses (“ACL”) - loans	104,664			326,444			365,489			249.2			12.0
Loans 30 to 89 days past due accruing	76,364			69,769			66,268			(13.2	)		(5.0	)
Non-performing loans	192,647			253,750			260,605			35.3			2.7
Annualized net charge-offs to average loans	0.12	%		0.13	%		0.32	%		20			19
Special mention loans	118,940			132,356			141,805			19.2			7.1
Substandard loans	311,418			402,393			415,917			33.6			3.4
ACL - loans to total loans	0.51			1.50			1.64			113			14
ACL - loans to non-performing loans	54.3			128.6			140.2			8,590			1,160

For the three months ended June 30, 2020, provision for credit losses on portfolio loans was $56.6 million, which was $39.0 million greater than net charge-offs. The provision for credit losses was based on our reasonable and supportable forecasts of future macroeconomic scenarios used to estimate of expected credit losses. ACL - loans increased to $365.5 million, or 1.64% of total portfolio loans and 140.2% of non-performing loans.

Net charge-offs of $17.6 million were recorded mainly on small business equipment finance loans, asset-based lending loans, one commercial real estate loan and taxi medallion loans. Net charge-offs were 32 basis points of total loans on an annualized basis.

Non-performing loans increased by $6.9 million to $260.6 million at June 30, 2020 compared to the linked quarter. The increase was mainly due to relationships in asset-based lending, commercial real estate, ADC and small business equipment finance loans. Loans 30 to 89 days past due increased by $3.5 million.

As of June 30, 2020, we had provided loan payment deferrals on loans with outstanding balances of $1.7 billion, or 7.7% of portfolio loans, most of which were for an initial 90-day period, which may be extended for an additional 90-day period at the Bank’s option.

Capital

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($ in thousands, except share and per share data)	As of		Change % / bps
	6/30/2019		3/31/2020		6/30/2020		Y-o-Y		Linked Qtr
52%; width:52%; min-width:52%;">Total stockholders’ equity	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">4,459,158	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">4,422,424	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">4,484,187	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">0.6	1%; width:1%; min-width:1%;">%	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">1.4	1%; width:1%; min-width:1%;">%
Preferred stock	138,011			137,363			137,142			(0.6	)		(0.2	)
Goodwill and other intangible assets	1,777,748			1,789,646			1,785,446			0.4			(0.2	)
Tangible common stockholders’ equity ¹⁰	$	2,543,399			$	2,495,415			$	2,561,599			0.7			2.7
Common shares outstanding	205,187,243			194,460,656			194,458,805			(5.2	)		—
Book value per common share	$	21.06			$	22.04			$	22.35			6.1			1.4
Tangible book value per common share¹⁰	12.40			12.83			13.17			6.2			2.7
Tangible common equity to tangible assets ¹⁰	8.94	%		8.74	%		8.82	%		(12	)		8
Est. Tier 1 leverage ratio - Company	9.57			9.41			9.51			(6	)		10
Est. Tier 1 leverage ratio - Company fully implemented	—			9.06			9.14			N/A			8
Est. Tier 1 leverage ratio - Bank	9.98			9.99			10.09			11			10
Est. Tier 1 leverage ratio - Bank fully implemented	—			9.65			9.69			N/A			4

¹⁰See a reconciliation of non-GAAP financial measures beginning on page 18.

Total stockholders’ equity increased $61.8 million to $4.5 billion as of June 30, 2020 compared to March 31, 2020. For the second quarter of 2020, net income available to common stockholders of $48.8 million and an increase in accumulated other comprehensive income of $21.0 million was partially offset by common dividends of $13.8 million and preferred dividends of $2.2 million.

We elected the five-year transition provision to delay for two years the full impact of CECL on regulatory capital, followed by a three-year transition period. The June 30, 2020 fully implemented ratio data reflects the full impact of CECL and excludes the benefits of phase-ins.

Total goodwill and other intangible assets were $1.8 billion at June 30, 2020, a decrease of $4.2 million compared to March 31, 2020, which was due to amortization.

Basic and diluted weighted average common shares outstanding declined relative to the linked quarter by approximately 2.9 million shares and were 193.5 million shares and 193.6 million shares, respectively. Total common shares outstanding at June 30, 2020 were approximately 194.5 million.

Tangible book value per common share was $13.17 at June 30, 2020, which represented an increase of 6.2% compared to a year ago.

Conference Call Information
Sterling Bancorp will host a teleconference and webcast on Thursday, July 23, 2020 at 8:00 AM Eastern Time to discuss the Company’s results. Analysts, investors and interested parties are invited to listen to the webcast and view accompanying slides on the Company’s website at www.sterlingbancorp.com or by dialing (800) 367-2403 Conference ID 7783050. A replay of the teleconference can be accessed through the Company’s website.

About Sterling Bancorp
Sterling Bancorp, whose principal subsidiary is Sterling National Bank, specializes in the delivery of services and solutions to business owners, their families and consumers within the communities it serves through teams of dedicated and experienced relationship managers. Sterling National Bank offers a complete line of commercial, business, and consumer banking products and services. For more information, visit the Sterling Bancorp website at www.sterlingbancorp.com.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This release may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may concern Sterling Bancorp’s current expectations about its future results, revenues, expenses, tax rates, capital and liquidity levels and ratios, asset levels, asset quality, financial position, plans, operations and prospects. Forward-looking statements involve certain risks, including the effects of the novel coronavirus disease (COVID-19), which include, but are not limited to, the federal, state and local government actions and reactions to COVID-19, the health of our staff and that of our clients, the continuity of our, our clients’ and our third party providers’ operations, the increased likelihood of cyber and payment fraud risk, the continued ability of our borrowers to repay their loans throughout and following the pandemic, the potential decline in collateral values resulting from COVID-19 and its effects, and the resulting impact upon our financial position, results of operations, cash flows and our outlook, as well as the following: business disruption; a failure to grow revenues faster than we grow expenses; a deterioration in general economic conditions, either nationally, internationally, or in our market areas, including extended declines in the real estate market and constrained financial markets; inflation; the effects of, and changes in, trade; changes in asset quality and credit risk; introduction, withdrawal, success and timing of business initiatives; capital management activities; customer disintermediation; and the success of Sterling Bancorp in managing those risks. Other factors that could cause Sterling Bancorp’s actual results to differ from those indicated in forward-looking statements are included in the “Risk Factors” section of Sterling Bancorp’s filings with the Securities and Exchange Commission. The forward-looking statements speak only as of the date they are made and we undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.

Financial information contained in this release should be considered to be an estimate pending the filing with the Securities and Exchange Commission of the Company’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2020. While the Company is not aware of any need to revise the results disclosed in this release, accounting literature may require information received by management between the date of this release and the filing of the Quarterly Report on Form 10-Q to be reflected in the results of the fiscal period, even though the new information was received by management subsequent to the date of this release.

Sterling Bancorp and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(unaudited, in thousands, except share and per share data)

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	6/30/2019		12/31/2019		6/30/2020
Assets:
62%; width:62%; min-width:62%;">Cash and cash equivalents	1%; width:1%; min-width:1%;">$	10%; width:10%; min-width:10%;">343,368	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	10%; width:10%; min-width:10%;">329,151	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	10%; width:10%; min-width:10%;">324,729	1%; width:1%; min-width:1%;">
Investment securities, net	5,858,865			5,075,309			4,545,579
Loans held for sale	27,221			8,125			44,437
Portfolio loans:
Commercial and industrial (“C&I”)	7,514,834			8,232,719			9,166,744
Commercial real estate (including multi-family)	9,714,037			10,295,518			10,402,897
ADC	338,973			467,331			572,558
Residential mortgage	2,535,667			2,210,112			1,938,212
Consumer	266,795			234,532			214,856
Total portfolio loans, gross	20,370,306			21,440,212			22,295,267
Allowance for credit losses	(104,664	)		(106,238	)		(365,489	)
Total portfolio loans, net	20,265,642			21,333,974			21,929,778
FHLB and Federal Reserve Bank Stock, at cost	320,560			251,805			193,666
Accrued interest receivable	106,317			100,312			101,296
Premises and equipment, net	250,155			227,070			226,728
Goodwill	1,657,814			1,683,482			1,683,482
Other intangibles	119,934			110,364			101,964
BOLI	598,880			613,848			620,908
Other real estate owned	13,628			12,189			8,665
Other assets	675,161			840,868			1,058,661
Total assets	$	30,237,545			$	30,586,497			$	30,839,893
Liabilities:
Deposits	$	20,948,464			$	22,418,658			$	23,600,621
FHLB borrowings	3,766,224			2,245,653			975,058
Paycheck Protection Program Lending Facility	—			—			568,350
Other borrowings	20,901			22,678			26,448
Senior notes	173,800			173,504			—
Subordinated notes - Company	—			270,941			271,096
Subordinated notes - Bank	173,061			173,182			173,307
Mortgage escrow funds	73,176			58,316			69,686
Other liabilities	622,761			693,452			671,140
Total liabilities	25,778,387			26,056,384			26,355,706
Stockholders’ equity:
Preferred stock	138,011			137,581			137,142
Common stock	2,299			2,299			2,299
Additional paid-in capital	3,757,126			3,766,716			3,755,474
Treasury stock	(447,748	)		(583,408	)		(660,223	)
Retained earnings	969,124			1,166,709			1,160,885
Accumulated other comprehensive income	40,346			40,216			88,610
Total stockholders’ equity	4,459,158			4,530,113			4,484,187
Total liabilities and stockholders’ equity	$	30,237,545			$	30,586,497			$	30,839,893

Shares of common stock outstanding at period end	205,187,243			198,455,324			194,458,805
Book value per common share	$	21.06			$	22.13			$	22.35
Tangible book value per common share¹	12.40			13.09			13.17
¹ See reconciliation of non-GAAP financial measures beginning on page 18.

Sterling Bancorp and Subsidiaries
CONSOLIDATED INCOME STATEMENTS
(unaudited, in thousands, except share and per share data)

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	For the Quarter Ended		For the Six Months Ended
	6/30/2019		3/31/2020		6/30/2020		6/30/2019		6/30/2020
Interest and dividend income:
46%; width:46%; min-width:46%;">Loans and loan fees	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">258,283	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">235,439	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">219,904	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">518,578	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">455,343	1%; width:1%; min-width:1%;">
Securities taxable	24,632			20,629			18,855			52,479			39,484
Securities non-taxable	14,423			12,997			12,831			29,280			25,828
Other earning assets	5,119			4,462			1,636			11,520			6,098
Total interest and dividend income	302,457			273,527			253,226			611,857			526,753
Interest expense:
Deposits	48,129			45,781			28,110			94,124			73,891
Borrowings	22,489			15,974			11,817			50,388			27,791
Total interest expense	70,618			61,755			39,927			144,512			101,682
Net interest income	231,839			211,772			213,299			467,345			425,071
Provision for credit losses - loans	11,500			136,577			56,606			21,700			193,183
Provision for credit losses - held to maturity securities	—			1,703			—			—			1,703
Net interest income after provision for credit losses	220,339			73,492			156,693			445,645			230,185
Non-interest income:
Deposit fees and service charges	7,098			6,622			5,345			13,310			11,968
Accounts receivable management / factoring commissions and other related fees	5,794			5,538			4,419			11,217			9,956
BOLI	4,192			5,018			4,950			7,833			9,967
Loan commissions and fees	5,308			11,024			8,003			9,146			19,028
Investment management fees	2,050			1,847			1,379			3,950			3,225
Net (loss) gain on sale of securities	(528	)		8,412			485			(13,712	)		8,896
Net gain on security calls	—			4,880			—			—			4,880
Gain on sale of residential mortgage loans	—			—			—			8,313			—
Other	3,144			3,985			1,509			6,598			5,496
Total non-interest income	27,058			47,326			26,090			46,655			73,416
Non-interest expense:
Compensation and benefits	54,473			54,876			54,668			110,463			109,544
Stock-based compensation plans	4,605			6,006			5,913			9,728			11,919
Occupancy and office operations	16,106			15,199			14,695			32,641			29,894
Information technology	9,047			8,018			7,312			17,722			15,330
Amortization of intangible assets	4,785			4,200			4,200			9,611			8,400
FDIC insurance and regulatory assessments	2,994			3,206			3,638			6,332			6,844
Other real estate owned, net	458			52			1,233			675			1,285
Impairment related to financial centers and real estate consolidation strategy	14,398			—			—			14,398			—
Charge for asset write-downs, systems integration, retention and severance	—			—			—			3,344			—
Other	20,074			23,156			33,222			37,018			56,378
Total non-interest expense	126,940			114,713			124,881			241,932			239,594
Income before income tax expense (benefit)	120,457			6,105			57,902			250,368			64,007
Income tax expense (benefit)	23,997			(8,042	)		7,110			52,471			(932	)
Net income	96,460			14,147			50,792			197,897			64,939
Preferred stock dividend	1,987			1,976			1,972			3,976			3,948
Net income available to common stockholders	$	94,473			$	12,171			$	48,820			$	193,921			$	60,991
Weighted average common shares:
Basic	206,932,114			196,344,061			193,479,757			210,022,967			194,909,498
Diluted	207,376,239			196,709,038			193,604,431			210,419,425			195,168,557
Earnings per common share:
Basic earnings per share	$	0.46			$	0.06			$	0.25			$	0.92			$	0.31
Diluted earnings per share	0.46			0.06			0.25			0.92			0.31
Dividends declared per share	0.07			0.07			0.07			0.14			0.14

Sterling Bancorp and Subsidiaries
SELECTED FINANCIAL DATA
(unaudited, in thousands, except share and per share data)

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	As of and for the Quarter Ended
End of Period	6/30/2019		9/30/2019		12/31/2019		3/31/2020		6/30/2020
46%; width:46%; min-width:46%;">Total assets	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">30,237,545	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">30,077,665	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">30,586,497	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">30,335,036	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">30,839,893	1%; width:1%; min-width:1%;">
Tangible assets¹	28,459,797			28,304,702			28,792,651			28,545,390			29,054,447
Securities available for sale	3,843,112			3,061,419			3,095,648			2,660,835			2,620,624
Securities held to maturity, net	2,015,753			1,985,592			1,979,661			1,956,177			1,924,955
Loans held for sale²	27,221			4,627			8,125			8,124			44,437
Portfolio loans	20,370,306			20,830,163			21,440,212			21,709,957			22,295,267
Goodwill	1,657,814			1,657,814			1,683,482			1,683,482			1,683,482
Other intangibles	119,934			115,149			110,364			106,164			101,964
Deposits	20,948,464			21,579,324			22,418,658			22,558,280			23,600,621
Municipal deposits (included above)	1,699,824			2,234,630			1,988,047			2,091,259			1,724,049
Borrowings	4,133,986			3,174,224			2,885,958			2,598,698			1,445,909
Stockholders’ equity	4,459,158			4,520,967			4,530,113			4,422,424			4,484,187
Tangible common equity¹	2,543,399			2,610,205			2,598,686			2,495,415			2,561,599
Quarterly Average Balances
Total assets	29,666,951			29,747,603			30,349,691			30,484,433			30,732,914
Tangible assets¹	27,886,066			27,971,485			28,569,589			28,692,033			28,944,714
Loans, gross:
Commercial real estate (includes multi-family)	9,486,333			9,711,619			10,061,625			10,288,977			10,404,643
ADC	307,290			387,072			459,372			497,009			519,517
C&I:
Traditional C&I	2,446,676			2,435,644			2,399,901			2,470,570			3,130,248
Asset-based lending³	1,070,841			1,151,793			1,137,719			1,107,542			981,518
Payroll finance³	196,160			202,771			228,501			217,952			173,175
Warehouse lending³	990,843			1,180,132			1,307,645			1,089,576			1,353,885
Factored receivables³	246,382			248,150			258,892			229,126			188,660
Equipment financing³	1,285,095			1,191,944			1,430,715			1,703,016			1,677,273
Public sector finance³	967,218			1,087,427			1,189,103			1,216,326			1,286,265
Total C&I	7,203,215			7,497,861			7,952,476			8,034,108			8,791,024
Residential mortgage	2,635,903			2,444,101			2,284,419			2,152,440			2,006,400
Consumer	280,098			262,234			243,057			233,643			219,052
Loans, total⁴	19,912,839			20,302,887			21,000,949			21,206,177			21,940,636
Securities (taxable)	3,453,858			3,189,027			2,905,545			2,883,367			2,507,384
Securities (non-taxable)	2,429,411			2,250,859			2,159,391			2,163,206			2,122,672
Other interest earning assets	580,945			611,621			835,554			727,511			669,422
Total interest earning assets	26,377,053			26,354,394			26,901,439			26,980,261			27,240,114
Deposits:
Non-interest bearing demand	4,218,000			4,225,258			4,361,642			4,346,518			5,004,907
Interest bearing demand	4,399,296			4,096,744			4,359,767			4,616,658			4,766,298
Savings (including mortgage escrow funds)	2,448,132			2,375,882			2,614,523			2,800,021			2,890,402
Money market	7,538,890			7,341,822			7,681,491			7,691,381			8,035,750
Certificates of deposit	2,544,554			2,710,179			3,271,674			3,237,990			2,766,580
Total deposits and mortgage escrow	21,148,872			20,749,885			22,289,097			22,692,568			23,463,937
Borrowings	3,544,661			3,872,840			2,890,407			2,580,922			2,101,016
Stockholders’ equity	4,423,910			4,489,167			4,524,417			4,506,537			4,464,403
Tangible common stockholders’ equity ¹	2,504,883			2,575,199			2,606,617			2,576,558			2,538,842

¹ See a reconciliation of non-GAAP financial measures beginning on page 18.
²Loans held for sale mainly includes commercial syndication loans.
³Asset-based lending, payroll finance, warehouse lending, factored receivables, equipment finance and public sector finance comprise our commercial finance loan portfolio.
⁴Includes loans held for sale, but excludes allowance for credit losses.

Sterling Bancorp and Subsidiaries
SELECTED FINANCIAL DATA AND PERFORMANCE RATIOS
(unaudited, in thousands, except share and per share data)

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	As of and for the Quarter Ended
Per Common Share Data	6/30/2019		9/30/2019		12/31/2019		3/31/2020		6/30/2020
46%; width:46%; min-width:46%;">Basic earnings per share	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">0.46	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">0.59	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">0.52	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">0.06	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">0.25	1%; width:1%; min-width:1%;">
Diluted earnings per share	0.46			0.59			0.52			0.06			0.25
Adjusted diluted earnings per share, non-GAAP ¹	0.51			0.52			0.54			(0.02	)		0.29
Dividends declared per common share	0.07			0.07			0.07			0.07			0.07
Book value per common share	21.06			21.66			22.13			22.04			22.35
Tangible book value per common share¹	12.40			12.90			13.09			12.83			13.17
Shares of common stock o/s	205,187,243			202,392,884			198,455,324			194,460,656			194,458,805
Basic weighted average common shares o/s	206,932,114			203,090,365			199,719,747			196,344,061			193,479,757
Diluted weighted average common shares o/s	207,376,239			203,566,582			200,252,542			196,709,038			193,604,431
Performance Ratios (annualized)
Return on average assets	1.28	%		1.61	%		1.37	%		0.16	%		0.64	%
Return on average equity	8.57			10.65			9.18			1.09			4.40
Return on average tangible assets	1.36			1.71			1.45			0.17			0.68
Return on average tangible common equity	15.13			18.56			15.94			1.90			7.73
Return on average tangible assets, adjusted ¹	1.51			1.50			1.51			(0.04	)		0.79
Return on avg. tangible common equity, adjusted ¹	16.83			16.27			16.57			(0.49	)		9.02
Operating efficiency ratio, as adjusted ¹	40.9			39.1			39.9			42.4			45.1
Analysis of Net Interest Income
Accretion income on acquired loans	$	23,745			$	17,973			$	19,497			$	10,686			$	10,086
Yield on loans	5.20	%		4.97	%		4.84	%		4.47	%		4.03	%
Yield on investment securities - tax equivalent ²	2.92			2.85			2.89			2.96			3.05
Yield on interest earning assets - tax equivalent ²	4.66			4.50			4.41			4.13			3.79
Cost of interest bearing deposits	1.14			1.16			1.10			1.00			0.61
Cost of total deposits	0.91			0.92			0.89			0.81			0.48
Cost of borrowings	2.54			2.41			2.38			2.49			2.26
Cost of interest bearing liabilities	1.38			1.40			1.28			1.19			0.78
Net interest rate spread - tax equivalent basis ²	3.28			3.10			3.13			2.94			3.01
Net interest margin - GAAP basis	3.53			3.36			3.37			3.16			3.15
Net interest margin - tax equivalent basis ²	3.58			3.42			3.42			3.21			3.20
Capital
Tier 1 leverage ratio - Company ³	9.57	%		9.78	%		9.55	%		9.41	%		9.51	%
Tier 1 leverage ratio - Bank only ³	9.98			10.08			10.11			9.99			10.09
Tier 1 risk-based capital ratio - Bank only ³	12.67			12.74			12.32			12.19			12.24
Total risk-based capital ratio - Bank only ³	13.94			13.99			13.63			13.80			13.85
Tangible common equity - Company¹	8.94			9.22			9.03			8.74			8.82
Condensed Five Quarter Income Statement
Interest and dividend income	$	302,457			$	295,209			$	295,474			$	273,527			$	253,226
Interest expense	70,618			71,888			67,217			61,755			39,927
Net interest income	231,839			223,321			228,257			211,772			213,299
Provision for credit losses	11,500			13,700			10,585			138,280			56,606
Net interest income after provision for credit losses	220,339			209,621			217,672			73,492			156,693
Non-interest income	27,058			51,830			32,381			47,326			26,090
Non-interest expense	126,940			106,455			115,450			114,713			124,881
Income before income tax expense	120,457			154,996			134,603			6,105			57,902
Income tax expense (benefit)	23,997			32,549			27,905			(8,042	)		7,110
Net income	$	96,460			$	122,447			$	106,698			$	14,147			$	50,792

¹ See a reconciliation of non-GAAP financial measures beginning on page 19.
² Tax equivalent basis represents interest income earned on tax exempt securities divided by the applicable federal tax rate of 21%.
³Regulatory capital amounts and ratios are preliminary estimates pending filing of the Company’s and Bank’s regulatory reports.

Sterling Bancorp and Subsidiaries
ASSET QUALITY INFORMATION
(unaudited, in thousands, except share and per share data)

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	As of and for the Quarter Ended
Allowance for Credit Losses Roll Forward	6/30/2019		9/30/2019		12/31/2019		3/31/2020		6/30/2020
46%; width:46%; min-width:46%;">Balance, beginning of period	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">98,960	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">104,664	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">104,735	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">106,238	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">326,444	1%; width:1%; min-width:1%;">
Implementation of CECL accounting standard:
Gross up from purchase credit impaired loans	—			—			—			22,496			—
Transition amount charged to equity	—			—			—			68,088			—
Provision for credit losses - loans	11,500			13,700			10,585			136,577			56,606
Loan charge-offs¹:
Traditional C&I	(754	)		(123	)		(470	)		(298	)		(3,988	)
Asset-based lending	(3,551	)		(9,577	)		(5,856	)		(985	)		(1,500	)
Payroll finance	(84	)		—			(168	)		—			(560	)
Warehouse lending	—			—			—			—			—
Factored receivables	(27	)		(14	)		(68	)		(7	)		(3,731	)
Equipment financing	(1,335	)		(2,711	)		(1,739	)		(4,793	)		(7,863	)
Public Sector Finance	—			—			—			—			—
Commercial real estate	(238	)		(53	)		(583	)		(1,275	)		(11	)
Multi-family	—			—			—			—			(154	)
ADC	—			(6	)		—			(3	)		(1	)
Residential mortgage	(689	)		(1,984	)		(334	)		(1,072	)		(702	)
Consumer	(467	)		(241	)		(401	)		(1,405	)		(172	)
Total charge-offs	(7,145	)		(14,709	)		(9,619	)		(9,838	)		(18,682	)
Recoveries of loans previously charged-off¹:
Traditional C&I	445			136			232			475			116
Payroll finance	3			8			5			9			1
Factored receivables	4			3			9			4			1
Equipment financing	79			422			91			1,105			387
Commercial real estate	649			187			—			60			584
Multi-family	6			90			105			—			1
Acquisition development & construction	—			—			—			105			—
Residential mortgage	1			126			5			—			—
Consumer	162			108			90			1,125			31
Total recoveries	1,349			1,080			537			2,883			1,121
Net loan charge-offs	(5,796	)		(13,629	)		(9,082	)		(6,955	)		(17,561	)
Balance, end of period	$	104,664			$	104,735			$	106,238			$	326,444			$	365,489
Asset Quality Data and Ratios
Non-performing loans (“NPLs”) non-accrual	$	192,109			$	190,011			$	179,051			$	252,205			$	260,333
NPLs still accruing	538			955			110			1,545			272
Total NPLs	192,647			190,966			179,161			253,750			260,605
Other real estate owned	13,628			13,006			12,189			11,815			8,665
Non-performing assets (“NPAs”)	$	206,275			$	203,972			$	191,350			$	265,565			$	269,270
Loans 30 to 89 days past due	$	76,364			$	64,756			$	52,880			$	69,769			$	66,268
Net charge-offs as a % of average loans (annualized)	0.12	%		0.27	%		0.17	%		0.13	%		0.32	%
NPLs as a % of total loans	0.95			0.92			0.84			1.17			1.17
NPAs as a % of total assets	0.68			0.68			0.63			0.88			0.87
Allowance for credit losses as a % of NPLs	54.3			54.8			59.3			128.6			140.2
Allowance for credit losses as a % of total loans	0.51			0.50			0.50			1.50			1.64
Special mention loans	$	118,940			$	136,972			$	159,976			$	132,356			$	141,805
Substandard loans	311,418			277,975			295,428			402,393			415,917
Doubtful loans	—			—			—			—			—

¹There were no charge-offs or recoveries on warehouse lending or public sector finance loans during the periods presented. There were no asset-based lending or ADC during the periods presented.

Sterling Bancorp and Subsidiaries
Non-GAAP Financial Measures
(unaudited, in thousands, except share and per share data)

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	For the Quarter Ended
	March 31, 2020		June 30, 2020
	Average balance		Interest		Yield/Rate		Average balance		Interest		Yield/Rate
	(Dollars in thousands)
Interest earning assets:
44%; width:44%; min-width:44%;">Traditional C&I and commercial finance loans	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">8,034,108	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	6%; width:6%; min-width:6%;">89,150	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">4.46	1%; width:1%; min-width:1%;">%	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">8,791,024	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	6%; width:6%; min-width:6%;">84,192	1%; width:1%; min-width:1%;">	2%; width:2%; min-width:2%;">	6%; width:6%; min-width:6%;">3.85	1%; width:1%; min-width:1%;">%
Commercial real estate (includes multi-family)	10,288,977			110,742			4.33			10,404,643			106,408			4.11
ADC	497,009			6,320			5.11			519,517			5,762			4.46
Commercial loans	18,820,094			206,212			4.41			19,715,184			196,362			4.01
Consumer loans	233,643			2,939			5.06			219,052			2,233			4.10
Residential mortgage loans	2,152,440			26,288			4.89			2,006,400			21,309			4.25
Total gross loans ¹	21,206,177			235,439			4.47			21,940,636			219,904			4.03
Securities taxable	2,883,367			20,629			2.88			2,507,384			18,855			3.02
Securities non-taxable	2,163,206			16,451			3.04			2,122,672			16,242			3.06
Interest earning deposits	489,691			1,832			1.50			455,626			146			0.13
FHLB and Federal Reserve Bank Stock	237,820			2,630			4.45			213,796			1,490			2.80
Total securities and other earning assets	5,774,084			41,542			2.89			5,299,478			36,733			2.79
Total interest earning assets	26,980,261			276,981			4.13			27,240,114			256,637			3.79
Non-interest earning assets	3,504,172							3,492,800
Total assets	$	30,484,433							$	30,732,914
Interest bearing liabilities:
Demand and savings ² deposits	$	7,416,679			$	13,064			0.71	%		$	7,656,700			$	7,224			0.38	%
Money market deposits	7,691,381			18,396			0.96			8,035,750			11,711			0.59
Certificates of deposit	3,237,990			14,321			1.78			2,766,580			9,175			1.33
Total interest bearing deposits	18,346,050			45,781			1.00			18,459,030			28,110			0.61
Senior notes	173,323			1,434			3.31			127,862			944			2.95
Other borrowings	1,963,428			9,353			1.92			1,528,844			5,684			1.50
Subordinated debentures - Bank	173,203			2,360			5.45			173,265			2,361			5.45
Subordinated debentures - Company	270,968			2,827			4.17			271,045			2,828			4.17
Total borrowings	2,580,922			15,974			2.49			2,101,016			11,817			2.26
Total interest bearing liabilities	20,926,972			61,755			1.19			20,560,046			39,927			0.78
Non-interest bearing deposits	4,346,518							5,004,907
Other non-interest bearing liabilities	704,406							703,558
Total liabilities	25,977,896							26,268,511
Stockholders’ equity	4,506,537							4,464,403
Total liabilities and stockholders’ equity	$	30,484,433							$	30,732,914
Net interest rate spread ³					2.94	%						3.01	%
Net interest earning assets ⁴	$	6,053,289							$	6,680,068
Net interest margin - tax equivalent			215,226			3.21	%				216,710			3.20	%
Less tax equivalent adjustment			(3,454	)						(3,411	)
Net interest income			211,772							213,299
Accretion income on acquired loans			10,686							10,086
Tax equivalent net interest margin excluding accretion income on acquired loans			$	204,540			3.05	%				$	206,624			3.05	%
Ratio of interest earning assets to interest bearing liabilities	128.9	%						132.5	%

¹Average balances include loans held for sale and non-accrual loans. Interest includes prepayment fees and late charges.
² Includes club accounts and interest bearing mortgage escrow balances.
³ Net interest rate spread represents the difference between the tax equivalent yield on average interest earning assets and the cost of average interest bearing liabilities.
⁴ Net interest earning assets represents total interest earning assets less total interest bearing liabilities.

Sterling Bancorp and Subsidiaries
Non-GAAP Financial Measures
(unaudited, in thousands, except share and per share data)

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	For the Quarter Ended
	June 30, 2019		June 30, 2020
	Average balance		Interest		Yield/Rate		Average balance		Interest		Yield/Rate
	(Dollars in thousands)
Interest earning assets:
45%; width:45%; min-width:45%;">Traditional C&I and commercial finance loans	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">7,203,215	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	6%; width:6%; min-width:6%;">97,260	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">5.42	1%; width:1%; min-width:1%;">%	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">8,791,024	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	6%; width:6%; min-width:6%;">84,192	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">3.85	1%; width:1%; min-width:1%;">%
Commercial real estate (includes multi-family)	9,486,333			115,759			4.89			10,404,643			106,408			4.11
ADC	307,290			4,664			6.09			519,517			5,762			4.46
Commercial loans	16,996,838			217,683			5.14			19,715,184			196,362			4.01
Consumer loans	280,098			4,013			5.75			219,052			2,233			4.10
Residential mortgage loans	2,635,903			36,587			5.55			2,006,400			21,309			4.25
Total gross loans ¹	19,912,839			258,283			5.20			21,940,636			219,904			4.03
Securities taxable	3,453,858			24,632			2.86			2,507,384			18,855			3.02
Securities non-taxable	2,429,411			18,257			3.01			2,122,672			16,242			3.06
Interest earning deposits	289,208			1,295			1.80			455,626			146			0.13
FHLB and Federal Reserve Bank stock	291,737			3,824			5.26			213,796			1,490			2.80
Total securities and other earning assets	6,464,214			48,008			2.98			5,299,478			36,733			2.79
Total interest earning assets	26,377,053			306,291			4.66			27,240,114			256,637			3.79
Non-interest earning assets	3,289,898							3,492,800
Total assets	$	29,666,951							$	30,732,914
Interest bearing liabilities:
Demand and savings ² deposits	$	6,847,428			$	13,767			0.81	%		$	7,656,700			$	7,224			0.38	%
Money market deposits	7,538,890			23,020			1.22			8,035,750			11,711			0.59
Certificates of deposit	2,544,554			11,342			1.79			2,766,580			9,175			1.33
Total interest bearing deposits	16,930,872			48,129			1.14			18,459,030			28,110			0.61
Senior notes	173,901			1,365			3.14			127,862			944			2.95
Other borrowings	3,197,738			18,768			2.35			1,528,844			5,684			1.50
Subordinated debentures - Bank	173,022			2,356			5.45			173,265			2,361			5.45
Subordinated debentures - Company	—			—			—			271,045			2,828			4.17
Total borrowings	3,544,661			22,489			2.54			2,101,016			11,817			2.26
Total interest bearing liabilities	20,475,533			70,618			1.38			20,560,046			39,927			0.78
Non-interest bearing deposits	4,218,000							5,004,907
Other non-interest bearing liabilities	549,508							703,558
Total liabilities	25,243,041							26,268,511
Stockholders’ equity	4,423,910							4,464,403
Total liabilities and stockholders’ equity	$	29,666,951							$	30,732,914
Net interest rate spread ³					3.28	%						3.01	%
Net interest earning assets ⁴	$	5,901,520							$	6,680,068
Net interest margin - tax equivalent			235,673			3.58	%				216,710			3.20	%
Less tax equivalent adjustment			(3,834	)						(3,411	)
Net interest income			231,839							213,299
Accretion income on acquired loans			23,745							10,086
Tax equivalent net interest margin excluding accretion income on acquired loans			$	211,928			3.22	%				$	206,624			3.05	%
Ratio of interest earning assets to interest bearing liabilities	128.8	%						132.5	%

Sterling Bancorp and Subsidiaries
Non-GAAP Financial Measures
(unaudited, in thousands, except share and per share data)

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The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors. See legend beginning on page 23.
	As of and for the Quarter Ended
	6/30/2019		9/30/2019		12/31/2019		3/31/2020		6/30/2020

The following table shows the reconciliation of pretax pre-provision net revenue to adjusted pretax pre-provision net revenue¹:

46%; width:46%; min-width:46%;">Net interest income	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">231,839	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">223,321	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">228,257	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">211,772	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">213,299	1%; width:1%; min-width:1%;">
Non-interest income	27,058			51,830			32,381			47,326			26,090
Total net interest income and non-interest income	258,897			275,151			260,638			259,098			239,389
Non-interest expense	126,940			106,455			115,450			114,713			124,881
Pretax pre-provision net revenue	131,957			168,696			145,188			144,385			114,508

Adjustments:
Accretion income	(23,745	)		(17,973	)		(19,497	)		(10,686	)		(10,086	)
Net loss (gain) on sale of securities	528			(6,882	)		76			(8,412	)		(485	)
Net (gain) loss on termination of Astoria defined benefit pension plan	—			(12,097	)		280			—			—
Loss on extinguishment of debt	—			—			—			744			9,723
Impairment related to financial centers and real estate consolidation strategy	14,398			—			—			—			—
Charge for asset write-downs, systems integration, retention and severance	—			—			5,133			—			—
Amortization of non-compete agreements and acquired customer list intangible assets	200			200			200			172			172
Adjusted pretax pre-provision net revenue	$	123,338			$	131,944			$	131,380			$	126,203			$	113,832

Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)

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The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors. See legend beginning on page 23.
	As of and for the Quarter Ended
	6/30/2019		9/30/2019		12/31/2019		3/31/2020		6/30/2020

The following table shows the reconciliation of stockholders’ equity to tangible common equity and the tangible common equity ratio^2:

46%; width:46%; min-width:46%;">Total assets	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">30,237,545	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">30,077,665	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">30,586,497	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">30,335,036	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">30,839,893	1%; width:1%; min-width:1%;">
Goodwill and other intangibles	(1,777,748	)		(1,772,963	)		(1,793,846	)		(1,789,646	)		(1,785,446	)
Tangible assets	28,459,797			28,304,702			28,792,651			28,545,390			29,054,447
Stockholders’ equity	4,459,158			4,520,967			4,530,113			4,422,424			4,484,187
Preferred stock	(138,011	)		(137,799	)		(137,581	)		(137,363	)		(137,142	)
Goodwill and other intangibles	(1,777,748	)		(1,772,963	)		(1,793,846	)		(1,789,646	)		(1,785,446	)
Tangible common stockholders’ equity	2,543,399			2,610,205			2,598,686			2,495,415			2,561,599
Common stock outstanding at period end	205,187,243			202,392,884			198,455,324			194,460,656			194,458,805
Common stockholders’ equity as a % of total assets	14.29	%		14.57	%		14.36	%		14.13	%		14.10	%
Book value per common share	$	21.06			$	21.66			$	22.13			$	22.04			$	22.35
Tangible common equity as a % of tangible assets	8.94	%		9.22	%		9.03	%		8.74	%		8.82	%
Tangible book value per common share	$	12.40			$	12.90			$	13.09			$	12.83			$	13.17

The following table shows the reconciliation of reported return on average tangible common equity and adjusted return on average tangible common equity³:

Average stockholders’ equity	$	4,423,910			$	4,489,167			$	4,524,417			$	4,506,537			$	4,464,403
Average preferred stock	(138,142	)		(137,850	)		(137,698	)		(137,579	)		(137,361	)
Average goodwill and other intangibles	(1,780,885	)		(1,776,118	)		(1,780,102	)		(1,792,400	)		(1,788,200	)
Average tangible common stockholders’ equity	2,504,883			2,575,199			2,606,617			2,576,558			2,538,842
Net income available to common	94,473			120,465			104,722			12,171			48,820
Net income, if annualized	378,930			477,932			415,473			48,951			196,353
Reported return on avg tangible common equity	15.13	%		18.56	%		15.94	%		1.90	%		7.73	%
Adjusted net income (loss) (see reconciliation on page 20)	$	105,124			$	105,629			$	108,855			$	(3,124	)		$	56,926
Annualized adjusted net income (loss)	421,651			419,072			431,870			(12,565	)		228,955
Adjusted return on average tangible common equity	16.83	%		16.27	%		16.57	%		(0.49	)%		9.02	%

The following table shows the reconciliation of reported return on average tangible assets and adjusted return on average tangible assets⁴:

Average assets	$	29,666,951			$	29,747,603			$	30,349,691			$	30,484,433			$	30,732,914
Average goodwill and other intangibles	(1,780,885	)		(1,776,118	)		(1,780,102	)		(1,792,400	)		(1,788,200	)
Average tangible assets	27,886,066			27,971,485			28,569,589			28,692,033			28,944,714
Net income available to common	94,473			120,465			104,722			12,171			48,820
Net income, if annualized	378,930			477,932			415,473			48,951			196,353
Reported return on average tangible assets	1.36	%		1.71	%		1.45	%		0.17	%		0.68	%
Adjusted net income (loss) (see reconciliation on page 20)	$	105,124			$	105,629			$	108,855			$	(3,124	)		$	56,926
Annualized adjusted net income (loss)	421,651			419,072			431,870			(12,565	)		228,955
Adjusted return on average tangible assets	1.51	%		1.50	%		1.51	%		(0.04	)%		0.79	%

Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)

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The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors. See legend beginning on page 24.
	As of and for the Quarter Ended
	6/30/2019		9/30/2019		12/31/2019		3/31/2020		6/30/2020
The following table shows the reconciliation of the reported operating efficiency ratio and adjusted operating efficiency ratio⁵:

46%; width:46%; min-width:46%;">Net interest income	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">231,839	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">223,321	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">228,257	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">211,772	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">213,299	1%; width:1%; min-width:1%;">
Non-interest income	27,058			51,830			32,381			47,326			26,090
Total revenue	258,897			275,151			260,638			259,098			239,389
Tax equivalent adjustment on securities	3,834			3,586			3,463			3,454			3,411
Net loss (gain) on sale of securities	528			(6,882	)		76			(8,412	)		(485	)
(Gain) loss on termination of pension plan	—			(12,097	)		280			—			—
Depreciation of operating leases	—			—			—			(3,492	)		(3,136	)
Adjusted total revenue	263,259			259,758			264,457			250,648			239,179
Non-interest expense	126,940			106,455			115,450			114,713			124,881
Charge for asset write-downs, systems integration, retention and severance	—			—			(5,133	)		—			—
Impairment related to financial centers and real estate consolidation strategy	(14,398	)		—			—			—			—
Gain (loss) on extinguishment of borrowings	—			—			—			(744	)		(9,723	)
Depreciation of operating leases	—			—			—			(3,492	)		(3,136	)
Amortization of intangible assets	(4,785	)		(4,785	)		(4,785	)		(4,200	)		(4,200	)
Adjusted non-interest expense	107,757			101,670			105,532			106,277			107,822
Reported operating efficiency ratio	49.0	%		38.7	%		44.3	%		44.3	%		52.2	%
Adjusted operating efficiency ratio	40.9			39.1			39.9			42.4			45.1

The following table shows the reconciliation of reported net income (GAAP) and earnings per share to adjusted net income available to common stockholders (non-GAAP) and adjusted diluted earnings per share(non-GAAP)⁶:

Income before income tax expense	$	120,457			$	154,996			$	134,603			$	6,105			$	57,902
Income tax expense (benefit)	23,997			32,549			27,905			(8,042	)		7,110
Net income (GAAP)	96,460			122,447			106,698			14,147			50,792
Adjustments:
Net loss (gain) on sale of securities	528			(6,882	)		76			(8,412	)		(485	)
(Gain) loss on termination of pension plan	—			(12,097	)		280			—			—
(Gain) loss on extinguishment of debt	—			—			—			744			9,723
Impairment related to financial centers and real estate consolidation strategy	14,398			—			—			—			—
Charge for asset write-downs, systems integration, retention and severance	—			—			5,133			—			—
Amortization of non-compete agreements and acquired customer list intangible assets	200			200			200			172			172
Total pre-tax adjustments	15,126			(18,779	)		5,689			(7,496	)		9,410
Adjusted pre-tax income (loss)	135,583			136,217			140,292			(1,391	)		67,312
Adjusted income tax expense (benefit)	28,472			28,606			29,461			(243	)		8,414
Adjusted net income (loss) (non-GAAP)	107,111			107,611			110,831			(1,148	)		58,898
Preferred stock dividend	1,987			1,982			1,976			1,976			1,972
Adjusted net income (loss) available to common stockholders (non-GAAP)	$	105,124			$	105,629			$	108,855			$	(3,124	)		$	56,926

Weighted average diluted shares	207,376,239			203,566,582			200,252,542			196,709,038			193,604,431
Reported diluted EPS (GAAP)	$	0.46			$	0.59			$	0.52			$	0.06			$	0.25
Adjusted diluted EPS (non-GAAP)	0.51			0.52			0.54			(0.02	)		0.29

Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)

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The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors. See legend beginning on page 24.

		For the Six Months Ended June 30,
		2019		2020
The following table shows the reconciliation of reported net income (GAAP) and earnings per share to adjusted net income available to common stockholders (non-GAAP) and adjusted diluted earnings per share (non-GAAP)⁵:
74%; width:74%; min-width:74%;">Income before income tax expense	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	10%; width:10%; min-width:10%;">250,368	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	10%; width:10%; min-width:10%;">64,007	1%; width:1%; min-width:1%;">
Income tax expense (benefit)		52,471			(932	)
Net income (GAAP)		197,897			64,939

Adjustments:
Net loss (gain) on sale of securities		13,712			(8,896	)
Net (gain) on sale or residential mortgage loans		(8,313	)		—
Impairment related to financial centers and real estate consolidation strategy		14,398			—
(Gain) loss on extinguishment of borrowings		3,344			—
(Gain) on extinguishment of borrowings		(46	)		10,467
Amortization of non-compete agreements and acquired customer list intangible assets		441			343
Total pre-tax adjustments		23,536			1,914
Adjusted pre-tax income		273,904			65,921
Adjusted income tax expense		57,520			8,240
Adjusted net income (non-GAAP)		$	216,384			$	57,681
Preferred stock dividend		3,976			3,948
Adjusted net income available to common stockholders (non-GAAP)		$	212,408			$	53,733

Weighted average diluted shares		210,419,425			195,168,557
Diluted EPS as reported (GAAP)		$	0.92			$	0.31
Adjusted diluted EPS (non-GAAP)		1.01			0.28

Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)

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The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors. See legend below.
		For the Six Months Ended June 30,
		2019		2020
The following table shows the reconciliation of reported return on average tangible common equity and adjusted return on average tangible common equity²:
74%; width:74%; min-width:74%;">Average stockholders’ equity	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	10%; width:10%; min-width:10%;">4,419,703	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	10%; width:10%; min-width:10%;">4,485,470	1%; width:1%; min-width:1%;">
Average preferred stock		(138,245	)		(137,470	)
Average goodwill and other intangibles		(1,768,763	)		(1,790,300	)
Average tangible common stockholders’ equity		2,512,695			2,557,700
Net income available to common stockholders		$	193,921			$	60,991
Net income available to common stockholders, if annualized		391,056			122,317
Reported return on average tangible common equity		15.56	%		4.78	%
Adjusted net income available to common stockholders (see reconciliation on page 21)		$	212,408			$	53,733
Adjusted net income available to common stockholders, if annualized		428,337			107,761
Adjusted return on average tangible common equity		17.05	%		4.21	%
The following table shows the reconciliation of reported return on avg tangible assets and adjusted return on avg tangible assets³:
Average assets		$	30,201,974			$	30,608,673
Average goodwill and other intangibles		(1,768,763	)		(1,790,300	)
Average tangible assets		28,433,211			28,818,373
Net income available to common stockholders		193,921			60,991
Net income available to common stockholders, if annualized		391,056			122,317
Reported return on average tangible assets		1.38	%		0.42	%
Adjusted net income available to common stockholders (see reconciliation on page 21)		$	212,408			$	53,733
Adjusted net income available to common stockholders, if annualized		428,337			107,761
Adjusted return on average tangible assets		1.51	%		0.38	%
The following table shows the reconciliation of the reported operating efficiency ratio and adjusted operating efficiency ratio⁴:
Net interest income		$	467,345			$	425,071
Non-interest income		46,655			73,416
Total revenues		514,000			498,487
Tax equivalent adjustment on securities		7,781			6,865
Net loss on sale of securities		13,712			(8,896	)
(Gain) on sale of residential mortgage loans		(8,313	)		—
Depreciation of operating leases	—			(6,628	)
Adjusted total net revenue		527,180			489,828
Non-interest expense		241,932			239,594
Charge for asset write-downs, retention and severance		(3,344	)		—
Impairment related to financial centers and real estate consolidation strategy		(14,398	)		—
Gain on extinguishment of borrowings		46			(10,467	)
Depreciation of operating leases		—			(6,628	)
Amortization of intangible assets		(9,611	)		(8,400	)
Adjusted non-interest expense		$	214,625			$	214,099
Reported operating efficiency ratio		47.1	%		48.1	%
Adjusted operating efficiency ratio		40.7	%		43.7	%

The non-GAAP/as adjusted measures presented above are used by our management and the Company’s Board of Directors on a regular basis in addition to our GAAP results to facilitate the assessment of our financial performance and to assess our performance compared to our annual budget and strategic plans. These non-GAAP/adjusted financial measures complement our GAAP reporting and are presented above to provide investors, analysts, regulators and others information that we use to manage and evaluate our performance each period. This information supplements our GAAP reported results, and should not be viewed in isolation from, or as a substitute for, our GAAP results. When non-GAAP/adjusted measures are impacted by income tax expense, we present the pre-tax amount for the income and expense items that result in the non-GAAP adjustments and present the income tax expense impact at the effective tax rate in effect for the period presented.

¹ Pretax pre-provision net revenue is a financial measure calculated by adjusting pretax income and eliminating provision for credit losses. We believe the use of pretax pre-provision net revenue provides useful information to readers of our financial statements because it enables an assessment of our ability to generate earnings to cover credit losses through a credit cycle.

²Stockholders’ equity as a percentage of total assets, book value per common share, tangible common equity as a percentage of tangible assets and tangible book common value per share provides information to help assess our capital position and financial strength. We believe tangible book measures improve comparability to other banking organizations that have not engaged in acquisitions that have resulted in the accumulation of goodwill and other intangible assets.

³ Reported return on average tangible common equity and adjusted return on average tangible common equity measures provide information to evaluate the use of our tangible common equity.

⁴ Reported return on average tangible assets and adjusted return on average tangible assets measures provide information to help assess our profitability.

⁵ The reported operating efficiency ratio is a non-GAAP measure calculated by dividing our GAAP non-interest expense by the sum of our GAAP net interest income plus GAAP non-interest income. The adjusted operating efficiency ratio is a non-GAAP measure calculated by dividing non-interest expense adjusted for intangible asset amortization and certain expenses generally associated with discrete merger transactions and non-recurring strategic plans by the sum of net interest income plus non-interest income plus the tax equivalent adjustment on securities income and elimination of the impact of gain or loss on sale of securities. The adjusted operating efficiency ratio is a measure we use to assess our operating performance.

⁶ Adjusted net income available to common stockholders and adjusted diluted earnings per share present a summary of our earnings, which includes adjustments to exclude certain revenues and expenses (generally associated with discrete merger transactions and non-recurring strategic plans) to help in assessing our profitability.

STERLING BANCORP CONTACT:
Emlen Harmon, SVP - Director of Investor Relations
212.309.7646
http://www.sterlingbancorp.com

FAQ

What were Sterling Bancorp's Q2 2020 net income results?

Sterling Bancorp reported a net income of $48.8 million, or $0.25 per diluted share for Q2 2020.

How did Sterling Bancorp perform in terms of total deposits for Q2 2020?

Total deposits for Sterling Bancorp increased by 12.7% to $23.6 billion compared to Q2 2019.

What is the significance of the allowance for credit losses for STL?

As of Q2 2020, the allowance for credit losses surged 249.2% to $365.5 million, reflecting increased provisions due to economic uncertainties.

How many PPP loans did Sterling Bancorp fund in Q2 2020?

Sterling Bancorp funded approximately 3,300 PPP loans, totaling $649.4 million in Q2 2020.

What was the change in net income available to common shareholders for Sterling Bancorp?

Net income available to common shareholders decreased by 48.3% from $94.5 million in Q2 2019 to $48.8 million in Q2 2020.

Sterling Bancorp announces results for the second quarter of 2020 with diluted income per share available to common stockholders of $0.25 (as reported) and $0.29 (as adjusted)

FAQ

What were Sterling Bancorp's Q2 2020 net income results?

How did Sterling Bancorp perform in terms of total deposits for Q2 2020?

What is the significance of the allowance for credit losses for STL?

How many PPP loans did Sterling Bancorp fund in Q2 2020?

What was the change in net income available to common shareholders for Sterling Bancorp?

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Sterling Bancorp announces results for the second quarter of 2020 with diluted income per share available to common stockholders of $0.25 (as reported) and $0.29 (as adjusted)

FAQ

What were Sterling Bancorp's Q2 2020 net income results?

How did Sterling Bancorp perform in terms of total deposits for Q2 2020?

What is the significance of the allowance for credit losses for STL?

How many PPP loans did Sterling Bancorp fund in Q2 2020?

What was the change in net income available to common shareholders for Sterling Bancorp?

NYSE:STL

STL Rankings

STL Latest News

STL Stock Data