Sterling Bancorp announces results for the first quarter of 2019; strong operating momentum with diluted earnings per share available to common stockholders of $0.47 (as reported) and $0.50 (as adjusted), and significant progress in balance sheet transition strategy

Company Release - 4/24/2019 4:10 PM ET

Key Performance Highlights for the Three Months ended March 31, 2019 vs. March 31, 2018

($ in thousands except per share amounts)GAAP / As Reported Non-GAAP / As Adjusted1
 3/31/2018 3/31/2019 Change
% / bps
 3/31/2018 3/31/2019 Change
% / bps
Total revenue2$253,077  $255,103  0.8% $262,568  $263,923  0.5%
Net income available to common96,873  99,450  2.7  100,880  105,902  5.0 
Diluted EPS available to common0.43  0.47  9.3  0.45  0.50  11.1 
Net interest margin33.54% 3.48% (6) 3.60% 3.54% (6)
Return on average tangible common equity16.55  16.00  (55) 17.24  17.04  (20)
Return on average tangible assets1.39  1.39    1.45  1.48  3 
Operating efficiency ratio444.2  45.1  90  40.3  40.5  20 
                  
  • Net income available to common stockholders of $99.5 million (as reported) and $105.9 million (as adjusted).
  • Total commercial loans of $17.1 billion at March 31, 2019; growth of 16.1% over March 31, 2018.
  • Operating efficiency ratio of 45.1% (as reported) and 40.5% (as adjusted).
  • Repurchased 8,002,595 common shares in the first quarter of  2019.
  • Tangible book value per common share1 of $11.92; growth of 11.6% over March 31, 2018.

Key Performance Highlights for the Three Months ended March 31, 2019 vs. December 31, 2018

($ in thousands except per share amounts)GAAP / As Reported Non-GAAP / As Adjusted1
 12/31/2018 3/31/2019 Change
% / bps
 12/31/2018 3/31/2019 Change
% / bps
Total revenue2$265,346  $255,103  (3.9)% $274,247  $263,923  (3.8)%
Net income available to common112,501  99,450  (11.6) 116,458  105,902  (9.1)
Diluted EPS available to common0.51  0.47  (7.8) 0.52  0.50  (3.8)
Net interest margin33.48% 3.48%   3.53% 3.54% 1 
Return on average tangible common equity17.56  16.00  (156) 18.17  17.04  (113)
Return on average tangible assets1.53  1.39  (14) 1.58  1.48  (10)
Operating efficiency ratio441.4  45.1  370  38.0  40.5  250 
                  
  • Growth in commercial loan balances of $864.4 million over linked quarter; 21.6% annualized growth rate.
  • Acquired $497 million (par value) asset-based and equipment finance loan portfolio and origination platform.
  • Completed sale of $1.3 billion of residential mortgage loans; realized a gain of $8.3 million.
  • As adjusted net interest margin remained stable at 3.54%; balance sheet transition and improving deposit environment is anticipated will result in margin expansion in 2019.
  • Adjusted operating expenses were $106.9 million1; continued rationalization of real estate and financial center network is anticipated will reduce expenses in 2019.

1. Non-GAAP / as adjusted measures are defined in the non-GAAP tables beginning on page 4.
2. Total revenue is equal to net interest income plus non-interest income. Total revenue as adjusted is equal to tax equivalent net interest income   plus non-interest income excluding securities gains and losses.
3. Net interest margin is equal to net interest income divided by average interest earning assets. Net interest margin as adjusted, or 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.
4. Operating efficiency ratio is a non-GAAP measure. See page 4 for an explanation of the operating efficiency ratio.

1

MONTEBELLO, N.Y., April 24, 2019 (GLOBE NEWSWIRE) -- Sterling Bancorp (NYSE: STL) (the “Company”), the parent company of Sterling National Bank (the “Bank”), today announced results for the three months ended March 31, 2019. Net income available to common stockholders for the quarter ended March 31, 2019 was $99.4 million, or $0.47 per diluted share, compared to net income available to common stockholders of $112.5 million, or $0.51 per diluted share, for the linked quarter ended December 31, 2018, and net income available to common stockholders of $96.9 million, or $0.43 per diluted share, for the three months ended March 31, 2018.

President’s Comments
Jack Kopnisky, President and Chief Executive Officer, commented: “We started 2019 with strong operating momentum, executing several strategic actions in-line with our objective of creating a diversified commercial bank with superior levels of growth and profitability. In the first quarter of 2019, our adjusted net income available to common stockholders was $105.9 million and our adjusted diluted earnings per share available to common stockholders was $0.50, representing growth of 5.0% and 11.1%, respectively, over the first quarter of 2018. Our profitability metrics remained strong, including adjusted return on average tangible assets of 1.48% and adjusted return on average tangible common equity of 17.04%.

“We made significant progress in our balance sheet transition strategy and generated strong commercial loan growth in the first quarter of 2019. Organically, we grew spot commercial loan balances by $392.5 million since December 31, 2018, which was offset by substantial run-off of residential mortgage loans of $155.9 million. We will remain disciplined on new loan originations and portfolio acquisitions, focusing on diversified commercial asset classes where we can achieve our target risk-adjusted returns. To that end, we completed the following actions during the quarter:

  • We sold $1.3 billion of residential mortgage loans and realized a gain on sale of $8.3 million. We anticipate selling an additional $200 million in loans in the second quarter of 2019.
  • On February 28, 2019, we acquired $497 million (par value) of commercial loans and a national origination platform from Woodforest National Bank. These loans are complementary to our existing asset-based lending and equipment finance businesses and have a weighted average interest rate of approximately 5.5%. Combined with our organic commercial loan volume, total commercial loans increased by $864.4 million relative to the prior quarter end.
  • We reduced our securities portfolio, shifting our proportion of securities to total earning assets closer to our long-term target of 20-22%. In total, we sold $738.8 million of securities with a yield of 2.72% and realized a loss on sale of $13.2 million.

“Our average total deposit balances have increased by $628.0 million since the first quarter of  2018. Total deposits were $21.2 billion and the cost of total deposits was 0.88% in the first quarter of 2019.  Our net interest margin excluding accretion income on acquired loans remained stable at 3.16%. We anticipate that our loan portfolio transition, lower FHLB borrowing balances and improving deposit market competitive dynamics will result in higher tax equivalent net interest margin excluding accretion income on acquired loans in 2019.

“We continue to focus on maintaining discipline and controls over operating expenses.  Our adjusted operating expenses were $106.9 million in the first quarter of 2019, and are anticipated to decrease throughout 2019 as we further consolidate back-office locations, rationalize our financial network and reduce total FTE count.  We are confident that our operating expenses will be lower in 2019 than in 2018.

“Our tangible common equity ratio was 8.87% and our estimated Tier 1 Leverage ratio was 9.21% at March 31, 2019. Our tangible book value per common share was $11.92, which represented an increase of 11.6% from a year ago. Our ample capital position and strong internal capital generation will support our growth strategy and allow us to return capital to stockholders. In the first quarter of 2019, we repurchased 8,002,595 common shares. We anticipate completing our approved stock repurchase program in the second quarter of 2019 and our Board of Directors has authorized an increase to our program of an additional 10 million shares.

“We have created a Company with significant operating flexibility and are confident that our business mix, growth strategy and strong capital position will allow us to continue generating superior returns and earnings per share growth. We would like to thank our clients, colleagues and shareholders for your support and look forward to working with all of our partners as we continue to build a great company.

“Lastly, we have declared a dividend on our common stock of $0.07 per share payable on May 20, 2019 to holders of record as of May 6, 2019.”

2

Reconciliation of GAAP Results to Adjusted Results (non-GAAP)
The Company’s GAAP net income available to common stockholders of $99.4 million, or $0.47 per diluted share, for the first quarter of 2019, included the following items:

  • a pre-tax loss of $13.2 million on the sale of available for sale securities;
  • a pre-tax gain of $8.3 million on the sale of residential mortgage loans held for sale;
  • a pre-tax charge of $3.3 million related to the acquisition of the commercial loan portfolio and origination platform of Woodforest National Bank, which was related to professional fees, severance, retention, systems integration expense and facilities consolidation;
  • a gain of $46 thousand on the early extinguishment of $7.0 million of senior notes assumed in the Astoria Financial Corporation merger ( “Astoria” and the “Astoria Merger”); and
  • the pre-tax amortization of non-compete agreements and acquired customer list intangible assets of $242 thousand.

Excluding the impact of these items, adjusted net income available to common stockholders was $105.9 million, or $0.50 per diluted share, for the three months ended March 31, 2019.

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 17.

Net Interest Income and Margin

($ in thousands)For the three months ended Change % / bps
 3/31/2018 12/31/2018 3/31/2019 Y-o-Y Linked Qtr
Interest and dividend income$281,346  $313,197  $309,400  10.0% (1.2)%
Interest expense46,976  70,326  73,894  57.3  5.1 
Net interest income$234,370  $242,871  $235,506  0.5  (3.0)
          
Accretion income on acquired loans$30,340  $27,016  $25,580  (15.7)% (5.3)%
Yield on loans4.85% 5.07% 5.17% 32  10 
Tax equivalent yield on investment securities2.85  2.92  2.99  14  7 
Tax equivalent yield on interest earning assets4.31  4.54  4.64  33  10 
Cost of total deposits0.47  0.77  0.88  41  11 
Cost of interest bearing deposits0.59  0.97  1.09  50  12 
Cost of borrowings2.01  2.43  2.53  52  10 
Cost of interest bearing liabilities0.89  1.28  1.39  50  11 
Tax equivalent net interest margin53.60  3.53  3.54  (6) 1 
          
Average loans, including loans held for sale$19,635,900  $20,389,223  $20,412,274  4.0% 0.1%
Average investment securities6,602,175  6,685,989  6,334,694  (4.1) (5.3)
Average total interest earning assets26,833,922  27,710,655  27,414,224  2.2  (1.1)
Average deposits and mortgage escrow20,688,147  21,352,428  21,316,126  3.0  (0.2)

5 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.

3

First quarter 2019 compared with first quarter 2018
Net interest income was $235.5 million, an increase of $1.1 million compared to the first quarter of 2018.  This was mainly due to an increase in average loans outstanding originated through our commercial banking teams and acquisitions, which was partially offset by an increase in interest expense paid to depositors and on borrowings. Other key components of the changes in net interest income and net interest margin were the following:

  • The yield on loans was 5.17% compared to 4.85% for the three months ended March 31, 2018.  The increase in yield on loans was mainly due to the change in portfolio composition, as we continued to add commercial loans while the proportion of lower yielding residential mortgage and multi-family loans decreased due to run-off and sales. Accretion income on acquired loans was $25.6 million in the first quarter of 2019 compared to $30.3 million in the first quarter of 2018.
  • Average commercial loans, which includes all commercial and industrial loans, commercial real estate loans (including multi-family) and acquisition development and construction loans, were $16.2 billion compared to $14.3 billion in the first quarter of 2018, an increase of $1.9 billion or 13.6%.
  • The tax equivalent yield on investment securities was 2.99% compared to 2.85% for the three months ended March 31, 2018.  Average investment securities were $6.3 billion, or 23.1%, of average total interest earning assets for the first quarter of 2019 compared to $6.6 billion, or 24.6%, of average earning assets for the first quarter of 2018. In the first quarter of 2019 we sold lower yielding securities as part of our balance sheet transition strategy.
  • The tax equivalent yield on interest earning assets increased 33 basis points between the periods to 4.64%.
  • The cost of total deposits was 88 basis points and the cost of borrowings was 2.53%, compared to 47 basis points and 2.01%, respectively, for the same period a year ago. The increase was mainly due to increases in market rates of interest. The cost of total deposits has also been impacted by the competitive environment in the Greater New York metropolitan area, as higher interest rates have been required to attract and retain higher balance commercial and consumer deposits.
  • The total cost of interest bearing liabilities increased 50 basis points to 1.39% for the first quarter of 2019 compared to 0.89% for the first quarter of 2018, which was mainly due to the increase in market interest rates and the competitive factors discussed above.
  • Average interest bearing deposits increased by $351.7 million and average borrowings decreased $131.7 million compared to the first quarter of 2018. Total interest expense increased by $26.9 million compared to the first quarter of 2018.

The tax equivalent net interest margin was 3.54% for the first quarter of 2019 compared to 3.60% for the first quarter of 2018. The decrease in tax equivalent net interest margin was mainly due to the increase in the cost of interest bearing liabilities and the decrease in accretion income on acquired loans.  Excluding accretion income, tax equivalent net interest margin was 3.16% for the first quarter of 2019 compared to 3.15% in the first quarter of 2018.

First quarter 2019 compared with linked quarter ended December 31, 2018

Net interest income declined $7.4 million compared to the linked quarter. The decrease in net interest income was mainly due to the loss of two days between the periods, a decline of $296.4 million in the average balance of interest-earning assets, higher interest expense paid on interest bearing liabilities and lower accretion income on acquired loans. Other key components of the changes in net interest income compared to the linked quarter were the following:

  • The yield on loans was 5.17% compared to 5.07% for the linked quarter. The increase in the yield on loans was mainly driven by the change in composition of the loan portfolio as average residential loans declined by $457.1 million while average commercial loans increased by $496.2 million. The average balance of total portfolio loans increased by $23.1 million. Accretion income on acquired loans was $25.6 million, a decrease of $1.4 million relative to the linked quarter.
  • The tax equivalent yield on investment securities was 2.99% compared to 2.92% for the linked quarter. The increase in yield was related to the decline in average investment securities balances of $351.3 million, as we sold lower yielding securities.
  • The tax equivalent yield on interest earning assets was 4.64% compared to 4.54% in the linked quarter.
  • The cost of total deposits increased 11 basis points to 88 basis points and the total cost of borrowings increased 10 basis points to 2.53%, for the same reasons as discussed above.
  • Average interest bearing deposits increased by $40.6 million and average borrowings decreased by $250.4 million relative to the linked quarter. Total interest expense increased by $3.6 million over the linked quarter.

The tax equivalent net interest margin was 3.54% compared to 3.53% in the linked quarter. Excluding accretion income on acquired loans, tax equivalent net interest margin was 3.16% compared to 3.15% in the liked quarter. We anticipate that our loan portfolio transition, lower FHLB borrowing balances and improving deposit market dynamics will result in higher net interest margin in 2019.

4

Non-interest Income

($ in thousands)For the three months ended Change %
 3/31/2018 12/31/2018 3/31/2019 Y-o-Y Linked Qtr
Total non-interest income$18,707  $22,475  $19,597  4.8% (12.8)%
Net (loss) on sale of securities(5,421) (4,886) (13,184) 143.2  169.8 
Net gain on sale of residential mortgage loans    8,313  NM  NM 
Adjusted non-interest income$24,128  $27,361  $24,468  1.4  (10.6)

First quarter 2019 compared with first quarter 2018
Excluding net (loss) on sale of securities and net gain on sale of residential mortgage loans, adjusted non-interest income increased $340 thousand in the first quarter of 2019 to $24.5 million, compared to $24.1 million in the same quarter last year.  The change was mainly due to higher loan commissions and fees and higher loan swap fees, which are included in other non-interest income. These increases were partially offset by a decline of $791 thousand in deposit service charges, which was mainly due to a client retention strategy executed for six months following the Astoria deposit systems conversion in August 2018.

In the first quarter of 2019, we sold $738.8 million of available for sale securities and realized a loss of $13.2 million. The securities were sold as we execute our strategy of repositioning our balance sheet and interest earning assets to a more optimal mix.

In the first quarter of 2019, we sold $1.3 billion of residential mortgage loans and realized a gain of $8.3 million.

First quarter 2019 compared with linked quarter ended December 31, 2018
Excluding net (loss) on sale of securities and net gain on sale of residential mortgage loans, adjusted non-interest income decreased approximately $2.9 million from $27.4 million in the linked quarter to $24.5 million in the first quarter of 2019. The decrease was mainly due to a seasonal decline in accounts receivable management / factoring commissions and other related fees of $1.1 million, as these businesses typically have peak volumes in the fourth quarter, and a decrease in loan swap fees, which are included in other non-interest income, of $1.0 million. Loan swap fees are usually connected to new loan originations, which may result in fluctuations in swap fee volume on a linked quarter basis based on loan origination volumes.

Non-interest Expense

($ in thousands)For the three months ended Change % / bps
 3/31/2018 12/31/2018 3/31/2019 Y-o-Y Linked Qtr
Compensation and benefits$54,680  $54,677  $55,990  2.4% 2.4%
Stock-based compensation plans2,854  3,679  5,123  79.5  39.2 
Occupancy and office operations17,460  16,579  16,535  (5.3) (0.3)
Information technology11,718  8,761  8,675  (26.0) (1.0)
Amortization of intangible assets6,052  5,865  4,826  (20.3) (17.7)
FDIC insurance and regulatory assessments5,347  3,608  3,338  (37.6) (7.5)
Other real estate owned (“OREO”), net364  15  217  (40.4) 1,346.7 
Charge for asset write-downs, systems integration, retention and severance    3,344  NM  NM 
Other expenses13,274  16,737  16,944  27.6  1.2 
Total non-interest expense$111,749  $109,921  $114,992  2.9  4.6 
Full time equivalent employees (“FTEs”) at period end2,016  1,907  1,855  (8.0) (2.7)
Financial centers at period end127  106  99  (22.0) (6.6)
Operating efficiency ratio, as reported44.2% 41.4% 45.1% (90) (370)
Operating efficiency ratio, as adjusted40.3  38.0  40.5  (20) (250)

First quarter 2019 compared with first quarter 2018
Total non-interest expense increased $3.2 million relative to the first quarter of 2018. Key components of the change in non-interest expense between the periods were the following:

5

  • Compensation and benefits increased $1.3 million, as the composition of our employees has shifted to a higher proportion of commercial banking and relationship management personnel. Total FTEs declined to 1,855 from 2,016, which was mainly due to the completion of the Astoria Merger integration and ongoing financial center consolidation strategy, and was partially offset by additions in FTEs from acquisitions, commercial bankers and risk management personnel.
  • Occupancy and office operations decreased $925 thousand mainly due to the consolidation of financial centers and other locations acquired in the Astoria Merger. We have consolidated 28 financial centers and two back office locations over the past twelve months. We anticipate consolidating 10 additional financial centers over the balance of 2019 and are targeting a total count of 80 financial centers by mid-2020.
  • Information technology expense decreased $3.0 million, mainly due to the completion of the conversion of Astoria’s legacy deposit systems in the third quarter of 2018.
  • Amortization of intangible assets decreased $1.2 million. The decrease is mainly due to the accelerated amortization of the core deposit intangible assets that were recorded in the Astoria Merger and other acquisitions.
  • FDIC insurance and regulatory assessments decreased $2.0 million to $3.3 million in the first quarter of 2019, compared to $5.3 million in the first quarter of 2018.  This was mainly due to a decrease in FDIC deposit insurance expense.
  • OREO, net, decreased $147 thousand to $217 thousand, compared to $364 thousand for the first quarter of 2018.  In the first quarter of 2019, OREO, net, included gain on sale of $457 thousand, which was offset by $141 thousand of write-downs and $573 thousand of operating costs.
  • Charge for asset write-downs, systems integration, retention and severance was incurred in the first quarter of 2019 in connection with the commercial loan portfolio and origination platform acquisition from Woodforest National Bank.  As the acquisition included personnel and facilities, we accounted for this transaction as a business combination.
  • Other expenses increased $3.7 million to $16.9 million, mainly due to an increase in defined benefit pension plan expense.  We anticipate terminating the legacy Astoria defined benefit pension plan in late 2019 or 2020, once regulatory approvals are received.

First quarter 2019 compared with linked quarter ended December 31, 2018
Total non-interest expense increased $5.1 million to $115.0 million in the first quarter of 2019. Key components of the change in non-interest expense were the following:

  • Compensation and benefits increased $1.3 million and was $56.0 million. The increase was mainly due to an increase in payroll taxes and benefits expense. Total FTEs declined to 1,855 at March 31, 2019 from 1,907 at December 31, 2018.
  • Stock-based compensation plans increased $1.4 million and was $5.1 million. The increase was mainly due to higher expenses associated with the vesting of performance-based awards granted in February 2016, which had a three-year performance measurement period.  The awards vested at 150% of the target amount granted.
  • Amortization of intangible assets decreased $1.0 million for the same reasons as discussed above.

Taxes
For the three months ended March 31, 2018, December 31, 2018 and March 31, 2019, the Company recorded income tax expense at an estimated effective income tax rate of 23.25%, 21.0% and 22.0%, respectively.  Due to stock-based compensation activity in the periods, a discrete income tax item was recorded that reduced income tax expense in the quarters ended March 31, 2018 and 2019 by $380 thousand and $106 thousand, respectively.

6

Key Balance Sheet Highlights as of March 31, 2019

($ in thousands)As of Change % / bps
 3/31/2018 12/31/2018 3/31/2019 Y-o-Y Linked Qtr
Total assets$30,468,780  $31,383,307  $29,956,607  (1.7)% (4.5)%
Total portfolio loans, gross19,939,245  19,218,530  19,908,473  (0.2) 3.6 
Commercial & industrial (“C&I”) loans5,341,548  6,533,386  7,265,187  36.0  11.2 
Commercial real estate loans (including multi-family)9,099,606  9,406,541  9,516,013  4.6  1.2 
Acquisition, development and construction loans262,591  267,754  290,875  10.8  8.6 
Total commercial loans14,703,745  16,207,681  17,072,075  16.1  5.3 
Residential mortgage loans4,883,452  2,705,226  2,549,284  (47.8) (5.8)
Total deposits20,623,233  21,214,148  21,225,639  2.9  0.1 
Core deposits619,538,410  19,998,967  20,160,733  3.2  0.8 
Municipal deposits (included in core deposits)1,775,472  1,751,670  2,027,563  14.2  15.8 
Investment securities6,635,286  6,667,180  5,915,050  (10.9) (11.3)
Total borrowings4,927,594  5,214,183  3,633,480  (26.3) (30.3)
Loans to deposits696.7% 90.6% 93.8% (290) 320 
Core deposits to total deposits94.7  94.3  95.0  30  70 
Investment securities to total assets21.8  21.2  19.7  (210) (150)

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

Highlights in balance sheet items as of March 31, 2019 were the following:

  • C&I loans (which include traditional C&I, asset-based lending, payroll finance, warehouse lending, factored receivables, equipment financing and public sector finance loans) represented 36.5% of total portfolio loans, commercial real estate loans (which include multi-family loans) represented 47.8%, consumer and residential mortgage loans combined represented 14.2%, and acquisition, development and construction loans represented 1.5% of total portfolio loans. At March 31, 2018, C&I loans represented 26.8% of total portfolio loans, commercial real estate loans (which include multi-family loans) represented 45.6%, consumer and residential mortgage loans combined represented 26.2%, and acquisition, development and construction loans represented 1.3% of total portfolio loans. We are making progress towards our goal of a loan mix comprised of 45% for each of C&I and commercial real estate loans and 10% other loans.
  • Total commercial loans, which include all C&I loans, commercial real estate (including multi-family) and acquisition, development and construction loans, increased by $864.4 million over the linked quarter and $2.4 billion since March 31, 2018.
  • Residential mortgage loans were $2.5 billion at March 31, 2019, compared to $2.7 billion at December 31, 2018 and $4.9 billion at March 31, 2018.  The decline was mainly due to repayments of loans acquired in the Astoria Merger and the reclassification of $1.6 billion in loans to loans held for sale at December 31, 2018, of which $1.3 billion were sold in the first quarter of 2019.
  • Total deposits at March 31, 2019 increased $11.5 million compared to December 31 and total deposits increased $602.4 million over March 31, 2018.
  • Core deposits at March 31, 2019 were $20.2 billion and increased $161.8 million compared to December 31, 2018 and $622.3 million over March 31, 2018.
  • Municipal deposits at March 31, 2019 were $2.0 billion, and increased $275.9 million relative to December 31, 2018 and $252.1 million relative to March 31, 2018.
  • Investment securities decreased by $720.2 million from March 31, 2018, and represented 19.7% of total assets at March 31, 2019. In connection with the adoption of a new accounting standard, effective January 1, 2019, we transferred held-to-maturity securities with a fair value of $708,627 to available for sale. We sold securities with a book value of $751,935 to fund the commercial loan portfolio acquired from Woodforest National Bank, and to reduce lower yielding securities as a percentage of total assets.
  • Total borrowings at March 31, 2019 were $3.6 billion and declined $1.6 billion relative to December 31, 2018.

7

Credit Quality

($ in thousands)For the three months ended Change % / bps
 3/31/2018 12/31/2018 3/31/2019 Y-o-Y Linked Qtr
Provision for loan losses$13,000  $10,500  $10,200  (21.5)% (2.9)%
Net charge-offs8,815  6,188  6,917  (21.5) 11.8 
Allowance for loan losses82,092  95,677  98,960  20.5  3.4 
Non-performing loans182,046  168,822  170,415  (6.4) 0.9 
Loans 30 to 89 days past due59,818  97,201  64,260  7.4  (33.9)
Annualized net charge-offs to average loans0.18% 0.12% 0.14% (4) 2 
Special mention loans101,904  113,180  128,054  25.7  13.1 
Substandard loans245,910  266,047  288,694  17.4  8.5 
Allowance for loan losses to total loans0.41  0.50  0.50  9   
Allowance for loan losses to non-performing loans45.1  56.7  58.1  1,300  140 

Provision for loan losses was $10.2 million and was $3.3 million in excess of net charge-offs of $6.9 million.  Allowance coverage ratios were 0.50% of total loans and 58.1% of non-performing loans at March 31, 2019. Strong organic commercial loan growth increased the total allowance for loan losses requirement.  The commercial loan acquisition from Woodforest National Bank is subject to a purchase accounting fair value adjustment and as a result, did not increase the allowance for loan losses. Note that due to our various acquisitions and mergers, a significant portion of the Company’s loan portfolio does not carry an allowance for loan losses, as the acquired loans are recorded at their estimated fair value on the acquisition date.

Non-performing loans increased by $1.6 million to $170.4 million at March 31, 2019 compared to the linked quarter, and net charge-offs remained stable at 14 basis points of total loans on an annualized basis. Loans 30 to 89 days past due decreased $32.9 million from the linked quarter, which was mainly due to loans that were in the process of renewal.

Special mention loans increased $14.9 million and substandard loans increased $22.6 million in the first quarter of 2019 compared to the linked quarter. At March 31, 2019, in the population of commercial loans acquired from Woodforest National Bank, there were $36.0 million of special mention loans and $6.6 million of substandard loans; as part of the acquisition agreement, certain of these loans include a credit loss share provision between us and Woodforest National Bank. In addition, two loans with an aggregate balance of $18.9 million transitioned from special mention at December 31, 2018 to substandard at March 31, 2019.

Capital

($ in thousands, except share and per share data)As of Change % / bps
 3/31/2018 12/31/2018 3/31/2019 Y-o-Y Linked Qtr
Total stockholders’ equity$4,273,755  $4,428,853  $4,419,223  3.4% (0.2)%
Preferred stock139,025  138,423  138,218  (0.6) (0.1)
Goodwill and other intangible assets1,727,030  1,742,578  1,782,533  3.2  2.3 
Tangible common stockholders’ equity$2,407,700  $2,547,852  $2,498,472  3.8  (1.9)
Common shares outstanding225,466,266  216,227,852  209,560,824  (7.1) (3.1)
Book value per common share$18.34  $19.84  $20.43  11.4  3.0 
Tangible book value per common share 710.68  11.78  11.92  11.6  1.2 
Tangible common equity to tangible assets 78.38% 8.60% 8.87% 49  27 
Estimated Tier 1 leverage ratio - Company9.39  9.50  9.21  (18) (29)
Estimated Tier 1 leverage ratio - Bank10.00  9.94  9.58  (42) (36)
 7See a reconciliation of non-GAAP financial measures beginning on page 17.

Total stockholders’ equity declined $9.6 million to $4.4 billion as of March 31, 2019 compared to December 31, 2018 and increased $145.5 million compared to March 31, 2018. For the first quarter of 2019, net income available to common stockholders of $99.4 million and an increase in the fair value of our available for sale investment securities of $59.3 million was offset by common dividends of $15.1 million, preferred dividends of $2.2 million and common stock repurchases of $154.3 million.

8

Total goodwill and other intangible assets were $1.8 billion at March 31, 2019, an increase of $40.0 million compared to December 31, 2018, which was mainly due to the commercial loan portfolio and origination platform acquisition from Woodforest National Bank as the transaction was recorded as a business combination.

Basic and diluted weighted average common shares outstanding declined relative to the linked quarter by approximately 9.2 million and were 213.2 million and 213.5 million, respectively. Total common shares outstanding at March 31, 2019 were approximately 209.6 million.  In the first quarter of 2019, we repurchased 8,002,595 shares of common stock at a weighted average price of $19.28 per share, for total consideration of $154.3 million. On April 24, 2019, our board of directors approved an increase to the stock repurchase program of 10 million shares.

Tangible book value per common share was $11.92 at March 31, 2019, which represented an increase of 11.6% over a year ago and an increase of 1.2% over December 31, 2018.

Conference Call Information
Sterling Bancorp will host a teleconference and webcast on Thursday, April 25, 2019 at 10:30 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 (888) 220-8451, Conference ID #6223029.  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, plans, operations and prospects and involve certain risks, including 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 months ended March 31, 2019. 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.

9

Sterling Bancorp and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(unaudited, in thousands, except share and per share data)
      
 3/31/2018 12/31/2018 3/31/2019
Assets:     
Cash and cash equivalents$364,331  $438,110  $314,255 
Investment securities6,635,286  6,667,180  5,915,050 
Loans held for sale44,440  1,565,979  248,972 
Portfolio loans:     
Commercial and industrial (“C&I”)5,341,548  6,533,386  7,265,187 
Commercial real estate (including multi-family)9,099,606  9,406,541  9,516,013 
Acquisition, development and construction262,591  267,754  290,875 
Residential mortgage4,883,452  2,705,226  2,549,284 
Consumer352,048  305,623  287,114 
Total portfolio loans, gross19,939,245  19,218,530  19,908,473 
Allowance for loan losses(82,092) (95,677) (98,960)
Total portfolio loans, net19,857,153  19,122,853  19,809,513 
Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank Stock, at cost354,832  369,690  298,455 
Accrued interest receivable102,129  107,111  115,764 
Premises and equipment, net318,267  264,194  262,744 
Goodwill1,579,891  1,613,033  1,657,814 
Other intangibles147,139  129,545  124,719 
Bank owned life insurance655,278  653,995  657,504 
Other real estate owned24,493  19,377  16,502 
Other assets385,541  432,240  535,315 
Total assets$30,468,780  $31,383,307  $29,956,607 
Liabilities:     
Deposits$20,623,233  $21,214,148  $21,225,639 
FHLB borrowings4,449,829  4,838,772  3,259,507 
Other borrowings26,850  21,338  27,020 
Senior notes278,144  181,130  173,952 
Subordinated notes172,771  172,943  173,001 
Mortgage escrow funds161,724  72,891  102,036 
Other liabilities482,474  453,232  576,229 
Total liabilities26,195,025  26,954,454  25,537,384 
Stockholders’ equity:     
Preferred stock139,025  138,423  138,218 
Common stock2,299  2,299  2,299 
Additional paid-in capital3,766,280  3,776,461  3,751,835 
Treasury stock(51,102) (213,935) (355,357)
Retained earnings496,297  791,550  888,838 
Accumulated other comprehensive (loss)(79,044) (65,945) (6,610)
Total stockholders’ equity4,273,755  4,428,853  4,419,223 
Total liabilities and stockholders’ equity$30,468,780  $31,383,307  $29,956,607 
      
Shares of common stock outstanding at period end225,466,266  216,227,852  209,560,824 
Book value per common share$18.34  $19.84  $20.43 
Tangible book value per common share110.68  11.78  11.92 
1 See reconciliation of non-GAAP financial measures beginning on page 17.

10

Sterling Bancorp and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share data)
  
  For the Quarter Ended
 3/31/2018 12/31/2018 3/31/2019
Interest and dividend income:           
Loans and loan fees$234,615  $260,417  $260,295 
Securities taxable27,061  30,114  27,847 
Securities non-taxable15,312  15,104  14,857 
Other earning assets4,358  7,562  6,401 
Total interest and dividend income281,346  313,197  309,400 
Interest expense:     
Deposits24,206  41,450  45,995 
Borrowings22,770  28,876  27,899 
Total interest expense46,976  70,326  73,894 
Net interest income234,370  242,871  235,506 
Provision for loan losses13,000  10,500  10,200 
Net interest income after provision for loan losses221,370  232,371  225,306 
Non-interest income:     
Deposit fees and service charges7,003  6,511  6,212 
Accounts receivable management / factoring commissions and other related fees5,360  6,480  5,423 
Bank owned life insurance3,614  4,060  3,641 
Loan commissions and fees3,406  4,066  3,838 
Investment management fees1,825  1,901  1,900 
Net (loss) on sale of securities(5,421) (4,886) (13,184)
Gain on sale of residential mortgage loans    8,313 
Other2,920  4,343  3,454 
Total non-interest income18,707  22,475  19,597 
Non-interest expense:     
Compensation and benefits54,680  54,677  55,990 
Stock-based compensation plans2,854  3,679  5,123 
Occupancy and office operations17,460  16,579  16,535 
Information technology11,718  8,761  8,675 
Amortization of intangible assets6,052  5,865  4,826 
FDIC insurance and regulatory assessments5,347  3,608  3,338 
Other real estate owned, net364  15  217 
Charge for asset write-downs, systems integration, retention and severance    3,344 
Other13,274  16,737  16,944 
Total non-interest expense111,749  109,921  114,992 
Income before income tax expense128,328  144,925  129,911 
Income tax expense29,456  30,434  28,474 
Net income98,872  114,491  101,437 
Preferred stock dividend1,999  1,990  1,989 
Net income available to common stockholders$96,873  $112,501  $99,448 
Weighted average common shares:     
Basic224,730,686  222,319,682  213,157,090 
Diluted225,264,147  222,769,369  213,505,842 
Earnings per common share:     
Basic earnings per share$0.43  $0.51  $0.47 
Diluted earnings per share0.43  0.51  0.47 
Dividends declared per share0.07  0.07  0.07 

11

Sterling Bancorp and Subsidiaries
SELECTED FINANCIAL DATA
(unaudited, in thousands, except share and per share data)
  
 As of and for the Quarter Ended
End of Period3/31/2018 6/30/2018 9/30/2018 12/31/2018 3/31/2019
Total assets$30,468,780 $31,463,077 $31,261,265 $31,383,307 $29,956,607 
Tangible assets 128,741,750 29,708,659 29,516,084 29,640,729 28,174,074 
Securities available for sale3,760,338 3,929,386 3,843,244 3,870,563 3,847,799 
Securities held to maturity2,874,948 2,859,860 2,842,728 2,796,617 2,067,251 
Loans held for sale244,440 30,626 31,042 1,565,979 248,972 
Portfolio loans19,939,245 20,674,493 20,533,214 19,218,530 19,908,473 
Goodwill1,579,891 1,613,144 1,609,772 1,613,033 1,657,814 
Other intangibles147,139 141,274 135,409 129,545 124,719 
Deposits20,623,233 20,965,889 21,456,057 21,214,148 21,225,639 
Municipal deposits (included above)1,775,472 1,652,733 2,019,893 1,751,670 2,027,563 
Borrowings4,927,594 5,537,537 4,825,855 5,214,183 3,633,480 
Stockholders’ equity4,273,755 4,352,735 4,438,303 4,428,853 4,419,223 
Tangible common equity 12,407,700 2,459,489 2,554,495 2,547,852 2,498,472 
Quarterly Average Balances         
Total assets30,018,289 30,994,904 31,036,026 30,925,281 30,742,943 
Tangible assets 128,287,337 29,237,608 29,283,093 29,179,942 28,986,437 
Loans, gross:         
Commercial real estate (includes multi-family)9,028,849 9,100,098 9,170,117 9,341,579 9,385,420 
Acquisition, development and construction267,638 247,500 252,710 279,793 284,299 
Commercial and industrial:         
Traditional commercial and industrial1,933,323 2,026,313 2,037,195 2,150,644 2,418,027 
Asset-based lending3781,392 778,708 820,060 812,903 876,218 
Payroll finance3229,920 219,545 223,636 223,061 197,809 
Warehouse lending3495,133 731,385 857,280 690,277 710,776 
Factored receivables3217,865 224,159 220,808 267,986 250,426 
Equipment financing3689,493 1,140,803 1,158,945 1,147,269 1,245,051 
Public sector finance3653,344 725,675 784,260 828,153 869,829 
Total commercial and industrial5,000,470 5,846,588 6,102,184 6,120,293 6,568,136 
Residential mortgage4,977,191 4,801,595 4,531,922 4,336,083 3,878,991 
Consumer361,752 344,183 330,061 311,475 295,428 
Loans, total419,635,900 20,339,964 20,386,994 20,389,223 20,412,274 
Securities (taxable)3,997,542 4,130,949 4,193,910 4,133,456 3,833,690 
Securities (non-taxable)2,604,633 2,620,579 2,580,802 2,552,533 2,501,004 
Other interest earning assets595,847 665,888 638,227 635,443 667,256 
Total earning assets26,833,922 27,757,380 27,799,933 27,710,655 27,414,224 
Deposits:         
Non-interest bearing demand3,971,079 3,960,683 4,174,908 4,324,247 4,247,389 
Interest bearing demand3,941,749 4,024,972 4,286,278 4,082,526 4,334,266 
Savings (including mortgage escrow funds)2,917,624 2,916,755 2,678,662 2,535,098 2,460,247 
Money market7,393,335 7,337,904 7,404,208 7,880,331 7,776,501 
Certificates of deposit2,464,360 2,528,355 2,571,298 2,530,226 2,497,723 
Total deposits and mortgage escrow20,688,147 20,768,669 21,115,354 21,352,428 21,316,126 
Borrowings4,597,903 5,432,582 5,052,752 4,716,522 4,466,172 
Stockholders’ equity4,243,897 4,305,928 4,397,823 4,426,118 4,415,449 
Tangible common equity 12,373,794 2,409,674 2,506,198 2,542,256 2,520,595 
          
1 See a reconciliation of non-GAAP financial measures beginning on page 17.
At December 31, 2018 and March 31, 2018 loans held for sale included $1.54 billion and $222 million of residential mortgage loans, balance of loans held for sale are commercial syndication loans.
3 Asset-based lending, payroll finance, warehouse lending, factored receivables, equipment finance and public sector finance comprise our commercial finance loan portfolio.
4 Includes loans held for sale, but excludes allowance for loan losses.

12

Sterling Bancorp and Subsidiaries
SELECTED FINANCIAL DATA AND PERFORMANCE RATIOS
(unaudited, in thousands, except share and per share data)
  
 As of and for the Quarter Ended
Per Common Share Data3/31/2018 6/30/2018 9/30/2018 12/31/2018 3/31/2019
Basic earnings per share$0.43  $0.50  $0.52  $0.51  $0.47 
Diluted earnings per share0.43  0.50  0.52  0.51  0.47 
Adjusted diluted earnings per share, non-GAAP 10.45  0.50  0.51  0.52  0.50 
Dividends declared per common share0.07  0.07  0.07  0.07  0.07 
Book value per common share18.34  18.69  19.07  19.84  20.43 
Tangible book value per common share110.68  10.91  11.33  11.78  11.92 
Shares of common stock o/s225,466,266  225,470,254  225,446,089  216,227,852  209,560,824 
Basic weighted average common shares o/s224,730,686  225,084,232  225,088,511  222,319,682  213,157,090 
Diluted weighted average common shares o/s225,264,147  225,621,856  225,622,895  222,769,369  213,505,842 
Performance Ratios (annualized)         
Return on average assets1.31% 1.45% 1.50% 1.44% 1.31%
Return on average equity9.26  10.46  10.61  10.08  9.13 
Return on average tangible assets1.39  1.54  1.59  1.53  1.39 
Return on average tangible common equity16.55  18.68  18.63  17.56  16.00 
Return on average tangible assets, adjusted 11.45  1.55  1.55  1.58  1.48 
Return on avg. tangible common equity, adjusted 117.24  18.79  18.09  18.17  17.04 
Operating efficiency ratio, as adjusted 140.3  38.3  38.9  38.0  40.5 
Analysis of Net Interest Income         
Accretion income on acquired loans$30,340  $28,010  $26,574  $27,016  $25,580 
Yield on loans4.85% 5.01% 5.01% 5.07% 5.17%
Yield on investment securities - tax equivalent 22.85  2.88  2.87  2.92  2.99 
Yield on interest earning assets - tax equivalent 24.31  4.47  4.47  4.54  4.64 
Cost of interest bearing deposits0.59  0.68  0.84  0.97  1.09 
Cost of total deposits0.47  0.55  0.68  0.77  0.88 
Cost of borrowings2.01  2.23  2.29  2.43  2.53 
Cost of interest bearing liabilities0.89  1.06  1.17  1.28  1.39 
Net interest rate spread - tax equivalent basis 23.42  3.41  3.30  3.26  3.25 
Net interest margin - GAAP basis3.54  3.56  3.48  3.48  3.48 
Net interest margin - tax equivalent basis 23.60  3.62  3.54  3.53  3.54 
Capital         
Tier 1 leverage ratio - Company 39.39% 9.32% 9.68% 9.50% 9.21%
Tier 1 leverage ratio - Bank only 310.00  9.84  10.10  9.94  9.58 
Tier 1 risk-based capital ratio - Bank only 314.23  13.71  14.23  13.55  13.13 
Total risk-based capital ratio - Bank only 315.51  14.94  15.50  14.06  14.41 
Tangible common equity - Company 18.38  8.28  8.65  8.60  8.87 
Condensed Five Quarter Income Statement         
Interest and dividend income$281,346  $304,906  $309,025  $313,197  $309,400 
Interest expense46,976  58,690  65,076  70,326  73,894 
Net interest income234,370  246,216  243,949  242,871  235,506 
Provision for loan losses13,000  13,000  9,500  10,500  10,200 
Net interest income after provision for loan losses221,370  233,216  234,449  232,371  225,306 
Non-interest income18,707  37,868  24,145  22,475  19,597 
Non-interest expense111,749  124,928  111,773  109,921  114,992 
Income before income tax expense128,328  146,156  146,821  144,925  129,911 
Income tax expense29,456  31,915  27,171  30,434  28,474 
Net income$98,872  $114,241  $119,650  $114,491  $101,437 
          
1 See a reconciliation of non-GAAP financial measures beginning on page 17.
2 Tax equivalent basis represents interest income earned on tax exempt securities divided by the applicable Federal tax rate of 21%.
3 Regulatory capital amounts and ratios are preliminary estimates pending filing of the Company’s and Bank’s regulatory reports.

13

Sterling Bancorp and Subsidiaries
ASSET QUALITY INFORMATION
(unaudited, in thousands, except share and per share data)
  
 As of and for the Quarter Ended
Allowance for Loan Losses Roll Forward3/31/2018 6/30/2018 9/30/2018 12/31/2018 3/31/2019
Balance, beginning of period$77,907  $82,092  $86,026  $91,365  $95,677 
Provision for loan losses13,000  13,000  9,500  10,500  10,200 
Loan charge-offs1:         
Traditional commercial & industrial(3,572) (1,831) (3,415) (452) (4,839)
Asset-based lending      (4,936)  
Payroll finance  (314) (2) (21)  
Factored receivables(3) (160) (18) (23) (32)
Equipment financing(4,199) (2,477) (829) (1,060) (1,249)
Commercial real estate(1,353) (3,166) (359) (56) (17)
Multi-family    (168) (140)  
Acquisition development & construction  (721)      
Residential mortgage(39) (544) (114) (694) (1,085)
Consumer(125) (491) (458) (335) (443)
Total charge offs(9,291) (9,704) (5,363) (7,717) (7,665)
Recoveries of loans previously charged-off1:         
Traditional commercial & industrial214  225  235  404  139 
Asset-based lending  9       
Payroll finance22  7  5  10  1 
Factored receivables3  2  2  7  121 
Equipment financing72  190  85  604  131 
Commercial real estate16  74  612  185  9 
Multi-family3    4  276  103 
Residential mortgage15  34  5  11  1 
Consumer131  97  254  32  243 
Total recoveries476  638  1,202  1,529  748 
Net loan charge-offs(8,815) (9,066) (4,161) (6,188) (6,917)
Balance, end of period$82,092  $86,026  $91,365  $95,677  $98,960 
Asset Quality Data and Ratios         
Non-performing loans (“NPLs”) non-accrual$181,745  $178,626  $177,876  $166,400  $166,746 
NPLs still accruing301  12,349  7,346  2,422  3,669 
Total NPLs182,046  190,975  185,222  168,822  170,415 
Other real estate owned24,493  20,264  22,735  19,377  16,502 
Non-performing assets (“NPAs”)$206,539  $211,239  $207,957  $188,199  $186,917 
Loans 30 to 89 days past due$59,818  $73,441  $50,084  $97,201  $64,260 
Net charge-offs as a % of average loans (annualized)0.18% 0.18% 0.08% 0.12% 0.14%
NPLs as a % of total loans0.91  0.92  0.90  0.88  0.86 
NPAs as a % of total assets0.68  0.67  0.67  0.60  0.62 
Allowance for loan losses as a % of NPLs45.1  45.0  49.3  56.7  58.1 
Allowance for loan losses as a % of total loans0.41  0.42  0.44  0.50  0.50 
Special mention loans$101,904  $119,718  $88,472  $113,180  $128,054 
Substandard loans245,910  251,840  280,358  266,047  288,694 
Doubtful loans968  856  2,219  59   
          
1 There were no charge-offs or recoveries on warehouse lending or public sector finance loans during the periods presented. There were no acquisition development and construction recoveries during the periods presented.

14

Sterling Bancorp and Subsidiaries
QUARTERLY YIELD TABLE
(unaudited, in thousands, except share and per share data)
  
 For the Quarter Ended
 December 31, 2018 March 31, 2019
            
 Average
balance
 Interest Yield/
Rate
 Average
balance
 Interest Yield/
Rate 
            
            
            
            
 (Dollars in thousands)
                      
Interest earning assets:                     
Traditional C&I and commercial finance loans$6,120,293  $82,992  5.38% $6,568,136  $88,908  5.49%
Commercial real estate (includes multi-family)9,341,579  112,266  4.77  9,385,420  114,853  4.96 
Acquisition, development and construction279,793  4,377  6.21  284,299  4,341  6.19 
Commercial loans15,741,665  199,635  5.03  16,237,855  208,102  5.20 
Consumer loans311,475  4,794  6.11  295,428  4,096  5.62 
Residential mortgage loans4,336,083  55,989  5.16  3,878,991  48,095  4.96 
Total gross loans 120,389,223  260,418  5.07  20,412,274  260,293  5.17 
Securities taxable4,133,456  30,114  2.89  3,833,690  27,847  2.95 
Securities non-taxable2,552,533  19,118  3.00  2,501,004  18,806  3.01 
Interest earning deposits291,460  1,063  1.45  331,954  1,501  1.83 
FHLB and Federal Reserve Bank Stock343,983  6,499  7.50  335,302  4,900  5.93 
Total securities and other earning assets7,321,432  56,794  3.08  7,001,950  53,054  3.07 
Total interest earning assets27,710,655  317,212  4.54  27,414,224  313,347  4.64 
Non-interest earning assets3,214,626      3,328,719     
Total assets$30,925,281      $30,742,943     
Interest bearing liabilities:           
Demand and savings 2 deposits$6,617,624  $11,513  0.69% $6,794,513  $13,427  0.80%
Money market deposits7,880,331  21,204  1.07  7,776,501  22,616  1.18 
Certificates of deposit2,530,226  8,733  1.37  2,497,723  9,952  1.62 
Total interest bearing deposits17,028,181  41,450  0.97  17,068,737  45,995  1.09 
Senior notes183,499  1,600  3.49  179,439  1,412  3.15 
Other borrowings4,360,118  24,921  2.27  4,113,770  24,132  2.38 
Subordinated notes172,905  2,355  5.45  172,963  2,355  5.45 
Total borrowings4,716,522  28,876  2.43  4,466,172  27,899  2.53 
Total interest bearing liabilities21,744,703  70,326  1.28  21,534,909  73,894  1.39 
Non-interest bearing deposits4,324,247      4,247,389     
Other non-interest bearing liabilities430,213      545,196     
Total liabilities26,499,163      26,327,494     
Stockholders’ equity4,426,118      4,415,449     
Total liabilities and stockholders’ equity$30,925,281      $30,742,943     
Net interest rate spread 3    3.26%     3.25%
Net interest earning assets 4$5,965,952      $5,879,315     
Net interest margin - tax equivalent  246,886  3.53%   239,453  3.54%
Less tax equivalent adjustment  (4,015)     (3,949)  
Net interest income  242,871      235,504   
Accretion income on acquired loans  27,016      25,580   
Tax equivalent net interest margin excluding accretion income on acquired loans  $219,870  3.15%   $213,873  3.16%
Ratio of interest earning assets to interest bearing liabilities127.4%     127.3%    
              
1 Average 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

15

Sterling Bancorp and Subsidiaries
QUARTERLY YIELD TABLE
(unaudited, in thousands, except share and per share data)
    
 For the Quarter Ended
 March 31, 2018
 March 31, 2019 
 Average
balance
 Interest Yield/
Rate
 Average
balance
 Interest Yield/
Rate 
            
            
            
            
 (Dollars in thousands)
                      
Interest earning assets:                     
Traditional C&I and commercial finance loans$5,000,470  $60,873  4.94% $6,568,136  $88,908  5.49%
Commercial real estate (includes multi-family)9,028,849  103,281  4.64  9,385,420  114,853  4.96 
Acquisition, development and construction267,638  3,671  5.56  284,299  4,341  6.19 
Commercial loans14,296,957  167,825  4.76  16,237,855  208,102  5.20 
Consumer loans361,752  4,411  4.95  295,428  4,096  5.62 
Residential mortgage loans4,977,191  62,379  5.01  3,878,991  48,095  4.96 
Total gross loans 119,635,900  234,615  4.85  20,412,274  260,293  5.17 
Securities taxable3,997,542  27,061  2.75  3,833,690  27,847  2.95 
Securities non-taxable2,604,633  19,382  2.98  2,501,004  18,806  3.01 
Interest earning deposits305,270  828  1.10  331,954  1,501  1.83 
FHLB and Federal Reserve Bank stock290,577  3,530  4.93  335,302  4,900  5.93 
Total securities and other earning assets7,198,022  50,801  2.86  7,001,950  53,054  3.07 
Total interest earning assets26,833,922  285,416  4.31  27,414,224  313,347  4.64 
Non-interest earning assets3,184,367      3,328,719     
Total assets$30,018,289      $30,742,943     
Interest bearing liabilities:           
Demand and savings 2 deposits$6,859,373  $7,173  0.42  $6,794,513  $13,427  0.80 
Money market deposits7,393,335  10,912  0.60  7,776,501  22,616  1.18 
Certificates of deposit2,464,360  6,121  1.01  2,497,723  9,952  1.62 
Total interest bearing deposits16,717,068  24,206  0.59  17,068,737  45,995  1.09 
Senior notes278,181  2,740  3.94  179,439  1,412  3.15 
Other borrowings4,146,987  17,678  1.73  4,113,770  24,132  2.38 
Subordinated notes172,735  2,352  5.45  172,963  2,355  5.45 
Total borrowings4,597,903  22,770  2.01  4,466,172  27,899  2.53 
Total interest bearing liabilities21,314,971  46,976  0.89  21,534,909  73,894  1.39 
Non-interest bearing deposits3,971,079      4,247,389     
Other non-interest bearing liabilities488,342      545,196     
Total liabilities25,774,392      26,327,494     
Stockholders’ equity4,243,897      4,415,449     
Total liabilities and stockholders’ equity$30,018,289      $30,742,943     
Net interest rate spread 3    3.42%     3.25%
Net interest earning assets 4$5,518,951      $5,879,315     
Net interest margin - tax equivalent  238,440  3.60%   239,453  3.54%
Less tax equivalent adjustment  (4,070)     (3,949)  
Net interest income  234,370      235,504   
Accretion income on acquired loans  30,340      25,580   
Tax equivalent net interest margin excluding accretion income on acquired loans  $208,100  3.15%   $213,873  3.16%
Ratio of interest earning assets to interest bearing liabilities125.9%     127.3%    
              
1 Average 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.

16

Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
 
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 19.
 
 As of or for the Quarter Ended 
 3/31/2018 6/30/2018 9/30/2018 12/31/2018 3/31/2019 
The following table shows the reconciliation of stockholders’ equity to tangible common equity and the tangible common equity ratio1:
                    
Total assets$30,468,780  $31,463,077  $31,261,265  $31,383,307  $29,956,607 
Goodwill and other intangibles(1,727,030) (1,754,418) (1,745,181) (1,742,578) (1,782,533)
Tangible assets28,741,750  29,708,659  29,516,084  29,640,729  28,174,074 
Stockholders’ equity4,273,755  4,352,735  4,438,303  4,428,853  4,419,223 
Preferred stock(139,025) (138,828) (138,627) (138,423) (138,218)
Goodwill and other intangibles(1,727,030) (1,754,418) (1,745,181) (1,742,578) (1,782,533)
Tangible common stockholders’ equity2,407,700  2,459,489  2,554,495  2,547,852  2,498,472 
Common stock outstanding at period end225,466,266  225,470,254  225,446,089  216,227,852  209,560,824 
Common stockholders’ equity as a % of total assets13.57% 13.39% 13.75% 13.67% 14.29%
Book value per common share$18.34  $18.69  $19.07  $19.84  $20.43 
Tangible common equity as a % of tangible assets8.38% 8.28% 8.65% 8.60% 8.87%
Tangible book value per common share$10.68  $10.91  $11.33  $11.78  $11.92 
 
The following table shows the reconciliation of reported return on average tangible common equity and adjusted return on average tangible common equity2:
          
Average stockholders’ equity$4,243,897  $4,305,928  $4,397,823  $4,426,118  $4,415,449 
Average preferred stock(139,151) (138,958) (138,692) (138,523) (138,348)
Average goodwill and other intangibles(1,730,952) (1,757,296) (1,752,933) (1,745,339) (1,756,506)
Average tangible common stockholders’ equity2,373,794  2,409,674  2,506,198  2,542,256  2,520,595 
Net income available to common96,873  112,245  117,657  112,501  99,448 
Net income, if annualized392,874  450,213  466,791  446,335  403,317 
Reported return on avg tangible common equity16.55% 18.68% 18.63% 17.56% 16.00%
Adjusted net income (see reconciliation on page 18)$100,880  $112,868  $114,273  $116,458  $105,902 
Annualized adjusted net income409,124  452,712  453,366  462,034  429,492 
Adjusted return on average tangible common equity17.24% 18.79% 18.09% 18.17% 17.04%
          
The following table shows the reconciliation of reported return on average tangible assets and adjusted return on average tangible assets3:
          
Average assets$30,018,289  $30,994,904  $31,036,026  $30,925,281  $30,742,943 
Average goodwill and other intangibles(1,730,952) (1,757,296) (1,752,933) (1,745,339) (1,756,506)
Average tangible assets28,287,337  29,237,608  29,283,093  29,179,942  28,986,437 
Net income available to common96,873  112,245  117,657  112,501  99,448 
Net income, if annualized392,874  450,213  466,791  446,335  403,317 
Reported return on average tangible assets1.39% 1.54% 1.59% 1.53% 1.39%
Adjusted net income (see reconciliation on page 18)$100,880  $112,868  $114,273  $116,458  $105,902 
Annualized adjusted net income409,124  452,712  453,366  462,034  429,492 
Adjusted return on average tangible assets1.45% 1.55% 1.55% 1.58% 1.48%
          

17

Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)
 
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 19.
  
 As of and for the Quarter Ended 
 3/31/2018 6/30/2018 9/30/2018 12/31/2018 3/31/2019 
The following table shows the reconciliation of the reported operating efficiency ratio and adjusted operating efficiency ratio4: 
Net interest income$234,370  $246,216  $243,949  $242,871  $235,506 
Non-interest income18,707  37,868  24,145  22,475  19,597 
Total revenue253,077  284,084  268,094  265,346  255,103 
Tax equivalent adjustment on securities4,070  4,094  4,052  4,015  3,949 
Net loss on sale of securities5,421