Sterling Bancorp announces results for the first quarter of 2020. Higher provision for credit losses resulted in diluted income per share available to common stockholders of $0.06 (as reported) and a loss of $0.02 (as adjusted).

Company Release - 4/27/2020 4:15 PM ET

Key Performance Highlights for the Three Months ended March 31, 2020 vs. March 31, 2019

($ in thousands except per share amounts)GAAP / As Reported Non-GAAP / As Adjusted1
 3/31/2019 3/31/2020 Change 3/31/2019 3/31/2020 Change
Total assets$29,956,607  $30,335,036  1.3% $29,956,607  $30,335,036  1.3%
Total portfolio loans, gross19,908,473  21,709,957  9.0  19,908,473  21,709,957  9.0 
Total deposits21,225,639  22,558,280  6.3  21,225,639  22,558,280  6.3 
Pretax pre-provision net revenue2140,111  144,385  3.1  122,942  126,203  2.7 
Net income (loss) available to common99,448  12,171  (87.8) 105,902  (3,124) (102.9)
Diluted EPS available to common0.47  0.06  (87.2) 0.50  (0.02) (103.4)
Net interest margin33.48% 3.16% (32) 3.54% 3.21% (33)
Operating efficiency ratio45.1% 44.3% (80) 40.5% 42.4% 190 
Allowance for credit losses (“ACL”) - loans$98,960  $326,444  229.9% $98,960  $326,444  229.9%
ACL to portfolio loans0.50% 1.50% 100  0.50% 1.50% 100 
Tangible book value per common share1$11.92  $12.83  7.7  $11.92  $12.83  7.7 
  • Proactively working with clients to provide support and relief in response to the COVID-19 pandemic.
    • Modified $1.1 billion in loans (5.1% of total portfolio) for consumer and commercial clients through April 22, 2020.
    • Provided $400 thousand in commitments to our Charitable Foundation to support local charities.
    • Received over 2,000 applications for total funding of $650 million under the SBA Payroll Protection Program (“PPP”).
  • Modified our operations to promote social distancing and stay-at-home orders through reduced financial center hours and remote working for the majority of our colleagues.
  • Pretax pre-provision net revenue was $144.4 million, an increase of 3.1% relative to the same period a year ago.
  • Total commercial loans were $19.4 billion, an increase of 13.7% over a year ago.
  • Total deposits were $22.6 billion at a weighted average cost of 81 basis points. Spot cost of total deposits at quarter end was 64 basis points.
  • Cost of total funding liabilities was 0.98%. Spot cost of total funding liabilities at quarter end was 0.81%.
  • Net interest margin declined 32 basis points in the first quarter of 2020 compared to a year ago; accretion income on acquired loans was $10.7 million, a decrease of $14.9 million or 21 basis points on our net interest margin.
  • ACL - loans increased to 1.50% of portfolio loans at March 31, 2020.
  • Provision for credit losses - loans was $136.6 million and $129.6 million greater than net-charge offs for the quarter.
  • Net charge-offs on loans were $7.0 million, or 13 basis points annualized.
  • Capital levels remain strong with tangible common equity to tangible assets of 8.74% and Tier 1 leverage ratio of 9.41%.
  • Common shares outstanding at March 31, 2020 of 194.5 million, a decrease of 4.0 million in the first quarter of 2020.
  • 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. With the adoption of the current expected credit loss standard (“CECL”) and the impact of the novel coronavirus (“COVID-19”), we are providing this information so readers may make comparison of our results to prior periods.
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 assumes a 21% federal tax rate in all periods presented.
4.Operating efficiency ratio is a non-GAAP measure. See page 20 for an explanation of the operating efficiency ratio.

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MONTEBELLO, N.Y., April 27, 2020 (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, 2020. Net income available to common stockholders for the quarter ended March 31, 2020 was $12.2 million, or $0.06 per diluted share, compared to net income available to common stockholders of $104.7 million, or $0.52 per diluted share, for the linked quarter ended December 31, 2019, and net income available to common stockholders of $99.4 million, or $0.47 per diluted share, for the three months ended March 31, 2019.

President’s Comments
Jack Kopnisky, President and Chief Executive Officer, commented: “The COVID-19 pandemic has created significant challenges for our industry and caused substantial disruption to the global economy and the communities we serve. We began 2020 continuing to focus on executing our strategy of building a high performing regional bank that delivers superior service and value to middle market commercial and consumer clients. We are confident that our sound financial condition and response to this rapidly changing environment will allow us to emerge and continue our trajectory of growth and profitability.

“Our highest priority has been to implement our contingency plans to ensure the health and safety of our colleagues and clients, while continuing to provide our clients access to our full suite of banking services and products. Although we reduced our financial center operating hours, over 85% of our financial centers have remained open. We modified workplace access to promote social distancing and stay-at-home mandates, with over 1,000 of our employees working remotely. We are supporting our colleagues through special bonus compensation, increasing wages for in-office employees, increasing paid time-off and re-opening health insurance enrollment options.

“We are also providing relief to our clients and our communities. In the first quarter of 2020, we provided $400 thousand to the Sterling National Bank Charitable Foundation for grants and donations to various local charities. We are participating in the PPP, having received over 2,000 loan applications for $650 million in total funding requests. Through our relationship-based, single point of contact operating model, we have remained in close contact with our clients, providing working capital relief under various payment deferral programs on $1.1 billion of loan balances.

“On an adjusted basis, we incurred a net loss available to common stockholders of $3.1 million and an adjusted loss per share of two cents for the quarter. We adopted the CECL accounting standard on January 1, 2020, and our provision for credit losses was $138.3 million, which included the impact of the economic deterioration related to the COVID-19 pandemic in our forecast assumptions. As of March 31, 2020, our allowance for credit losses stood at 1.50% of total loans.

“We generated solid growth in our businesses, with total deposits of $22.6 billion and core deposit growth of $155.6 million over the linked quarter. Our loans to deposits ratio was 96.2% at quarter end. Our cost of total deposits declined eight basis points relative to the prior quarter. We anticipate the current interest rate environment and our pricing strategies will meaningfully reduce the cost of our funding liabilities, as our spot cost at quarter end was 0.81% relative to an average cost of 0.98% during the quarter.  Our commercial loan portfolio grew $412.2 million over the fourth quarter of 2019, or 8.7% on an annualized basis. Most of this growth was related to new client relationships in our commercial and industrial and commercial real estate portfolios.

“Our pretax pre-provision net revenue was $144.4 million, an increase of 3.1% over a year ago. Our net interest margin and net interest income were pressured by the significant decrease in interest rates. Our tax equivalent net interest margin excluding accretion income on acquired loans was 3.05%, and our reported tax equivalent net interest margin was 3.21%. Our net interest income was $211.8 million, which was down from $228.3 million in the linked quarter, due to a decrease in accretion income on acquired loans of $8.8 million and a decrease in yields on our floating rate loans. We anticipate that the lagged repricing of our deposits and other funding liabilities should generate stability in net interest margin.

“Our adjusted non-interest expenses were $106.3 million, an increase of $745 thousand over the linked quarter which was mainly due to seasonal fluctuations in compensation and benefits and an increase in professional fees associated with strategic initiatives and a legal settlement.  Our reported efficiency ratio was 44.3% and our adjusted operating efficiency ratio was 42.4%. Given the current operating environment and impact of the COVID-19 pandemic in the greater New York metropolitan area, we anticipate our operating expenses may increase temporarily in the second quarter of 2020.

“We have a strong capital position, as our tangible common equity to tangible assets ratio remained at 8.74% and our Tier 1 leverage ratio was 9.41%. The company repurchased 4,900,759 shares in the quarter; however, we have decided to temporarily suspend our share repurchase activity until the long-term impact of the pandemic becomes more clear. We declared our regular dividend of $0.07 on our common stock, payable on May 22, 2020 to holders of record as of May 8, 2020.

“Finally, I would like to thank our clients, shareholders, and colleagues, and in particular recognize our colleagues that 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.”

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Reconciliation of GAAP Results to Adjusted Results (non-GAAP)
The Company’s GAAP net income available to common stockholders of $12.2 million, or $0.06 per diluted share, for the first quarter of 2020, included the following items:

  • a pre-tax gain of $8.4 million on the sale of available for sale securities;
  • a net pre-tax loss of $744 thousand related to early redemption of Federal Home Loan Bank (“FHLB”) borrowings and repurchase of senior notes assumed in the merger (the “Astoria Merger”) with Astoria Financial Corporation (“Astoria”);
  • the pre-tax amortization of non-compete agreements and acquired customer list intangible assets of $172 thousand; and
  • a net operating loss (“NOL”) income tax carryback benefit of $9.8 million.

Excluding the impact of these items, adjusted net loss available to common stockholders was $3.1 million, or $0.02 per diluted share, for the three months ended March 31, 2020. For purposes of calculating our adjusted results, we use our estimated annual effective income tax rate for 2020 of 17.5%.

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

($ in thousands)For the three months ended Change % / bps
 3/31/2019 12/31/2019 3/31/2020 Y-o-Y Linked Qtr
Interest and dividend income$309,400   $295,474   $273,527   (11.6 %) (7.4)%
Interest expense73,894   67,217   61,755   (16.4) (8.1)
Net interest income$235,506   $228,257   $211,772   (10.1) (7.2)
          
Accretion income on acquired loans$25,580   $19,497   $10,686   (58.2)% (45.2)%
Yield on loans5.17 % 4.84 % 4.47 % (70) (37)
Tax equivalent yield on investment securities52.99   2.89   2.96   (3)  
Tax equivalent yield on interest earning assets54.64   4.41   4.13   (51) (28)
Cost of total deposits0.88   0.89   0.81   (7) (8)
Cost of interest bearing deposits1.09   1.10   1.00   (9) (10)
Cost of borrowings2.53   2.38   2.49   (4) 11  
Cost of interest bearing liabilities1.39   1.28   1.19   (20) (9)
Total cost of funding liabilities61.16   1.06   0.98   (18) (8)
Tax equivalent net interest margin73.54   3.42   3.21   (33) (21)
          
Average commercial loans$16,237,855   $18,473,473   $18,820,094   15.9 % 1.9 %
Average loans, including loans held for sale20,412,274   21,000,949   21,206,177   3.9   1.0  
Average cash balances331,954   573,861   489,691   47.5   (14.7)
Average investment securities6,334,694   5,064,936   5,046,573   (20.3) (0.4)
Average total interest earning assets27,414,224   26,901,439   26,980,261   (1.6) 0.3  
Average deposits and mortgage escrow21,316,126   22,289,097   22,692,568   6.5   1.8  


5.Tax equivalent basis represents interest income earned on tax exempt securities divided by the applicable federal tax rate of 21%.
6.Includes interest bearing liabilities and non-interest bearing deposits.
7.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.

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First quarter 2020 compared with first quarter 2019
Net interest income was $211.8 million for the quarter ended March 31, 2020, a decrease of $23.7 million compared to the first quarter of 2019. This was mainly due to a decrease in the yield on interest earning assets as yields on floating rate loans have declined with market rates of interest, and accretion income on acquired loans decreased by $14.9 million. Other key components of changes were the following:

  • The yield on loans was 4.47% compared to 5.17% for the three months ended March 31, 2019. The decrease in yield on loans was mainly due to the decline in accretion income on acquired loans, which was $10.7 million in the first quarter of 2020, compared to $25.6 million in the first quarter of 2019. The decrease in yield on loans was also due to the decline in market interest rates.
  • The tax equivalent yield on investment securities was 2.96% compared to 2.99% for the three months ended March 31, 2019. Average investment securities were $5.0 billion, or 18.7%, of average total interest earning assets for the first quarter of 2020 compared to $6.3 billion, or 23.1%, of average total interest earning assets for the first quarter of 2019. The decline  was mainly due to the balance sheet transition strategy we executed in 2019.
  • In the first quarter of 2020, average cash balances were $489.7 million compared to $332.0 million in the first quarter of 2019. We maintained higher cash balances in the first quarter of 2020 mainly due to higher than expected municipal deposit inflows.
  • The tax equivalent yield on interest earning assets decreased 51 basis points to 4.13%.
  • The cost of total deposits was 81 basis points for the first quarter of 2020 compared to 88 basis points for the same period a year ago.
  • The cost of borrowings was 2.49% for the first quarter of 2020 compared to 2.53% 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 1.19% for the first quarter of 2020 compared to 1.39% for the same period a year ago.
  • Average interest bearing deposits increased by $1.3 billion due to growth from our commercial banking teams and on-line channels, and as a result average borrowings decreased $1.9 billion compared to the first quarter of 2019.
  • Total interest expense decreased by $12.1 million compared to the first quarter of 2019, due to the change in liability mix and decrease in market rates of interest.

The tax equivalent net interest margin was 3.21% for the first quarter of 2020 compared to 3.54% for the first quarter of 2019. The decrease was mainly due to the decrease in accretion income on acquired loans and changes in market rates of interest. Excluding accretion income, tax equivalent net interest margin was 3.05% for the first quarter of 2020 compared to 3.16% for the first quarter of 2019.

First quarter 2020 compared with linked quarter ended December 31, 2019
Net interest income decreased $16.5 million for the quarter ended March 31, 2020 compared to the linked quarter. The decrease was mainly due to a decrease in accretion income on acquired loans. Other key components of the changes were the following:

  • The yield on loans was 4.47% compared to 4.84% for the linked quarter. The decrease in the yield on loans was mainly due to the decline in market interest rates and the repricing of our floating rate loans. Accretion income on acquired loans decreased $8.8 million to $10.7 million for the first quarter of 2020 compared to $19.5 million in the linked quarter.
  • The average balance of commercial loans increased by $346.6 million and the average balance of residential mortgage loans declined by $132.0 million.
  • The tax equivalent yield on investment securities was 2.96% compared to 2.89% for the linked quarter. The increase in yield was mainly due to sales of lower yielding securities in the linked quarter.
  • The tax equivalent yield on interest earning assets was 4.13% compared to 4.41% in the linked quarter.
  • The cost of total deposits decreased eight basis points to 81 basis points, mainly due to improving conditions in our deposit markets and our deposit pricing strategies.
  • The total cost of borrowings increased 11 basis points to 2.49%, mainly due to the issuance of our subordinated notes in December 2019. We expect a portion of the proceeds will be used to redeem the senior notes we assumed in the Astoria Merger that mature in June 2020, which is expected to reduce our total borrowings cost.
  • Average interest bearing deposits increased by $418.6 million and average borrowings decreased by $309.5 million relative to the linked quarter. The increase in average deposits was due to growth in on-line deposits of $170.4 million, growth in municipal deposits of $168.0 million, growth of wholesale deposits of $86.3 million and growth of $28.1 million in commercial and consumer deposits.

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  • Total interest expense decreased $5.5 million from the linked quarter due to the change in funding mix and decrease in market rates of interest.

The tax equivalent net interest margin was 3.21% in the quarter, compared to 3.42% in the linked quarter. Excluding accretion income on acquired loans, tax equivalent net interest margin was 3.05% compared to 3.13% in the linked quarter.

Non-interest Income

($ in thousands)For the three months ended Change %
 3/31/2019 12/31/2019 3/31/2020 Y-o-Y Linked Qtr
Total non-interest income$19,597  $32,381  $47,326 141.5% 46.2%
Net (loss) gain on sale of securities(13,184) (76) 8,412 NM  NM 
Loss on termination of pension plan  (280)  NM  NM 
Net gain on sale of residential mortgage loans8,313     NM  NM 
Adjusted non-interest income$24,468  $32,737  $38,914 59.0  18.9 

First quarter 2020 compared with first quarter 2019
Adjusted non-interest income increased $14.4 million in the first quarter of 2020 to $38.9 million, compared to $24.5 million in the same quarter last year. The change was mainly due to an increase in loan commissions and fees and net gain from securities called prior to maturity. The increase in loan commissions and fees was mainly due to income received on operating leases that were acquired in the Santander equipment portfolio transaction in the fourth quarter of 2019, and gain on sale of small business equipment finance loans.  In the first quarter of 2020, securities totaling $139.8 million were called, generating a gain of $4.9 million compared to our carrying value.

In the first quarter of 2020, we realized a gain of $8.4 million on the sale of available for sale securities compared to a $13.2 million loss in the year earlier period. In the first quarter of 2019, we sold securities as part of our strategy of repositioning our balance sheet and interest earning assets to a more optimal mix. In the first quarter of 2020, we sold available for sale securities to fund commercial loan growth. We will continue to manage our securities balances to our longer-term target of 15% of earning assets over time.

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 2020 compared with linked quarter ended December 31, 2019
Adjusted non-interest income increased approximately $6.2 million from $32.7 million in the linked quarter to $38.9 million in the first quarter of 2020. The increase was due to the net gain from securities called prior to maturity and an increase in loan commissions and fees. Loan commissions and loan fees increased by $2.3 million in the first quarter of 2020, due to the same factors discussed above.

In the fourth quarter of 2019, we incurred professional and administrative fees associated with the termination of the Astoria defined benefit pension plan which reduced income by $280 thousand.

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Non-interest Expense

($ in thousands)For the three months ended Change % / bps
 3/31/2019 12/31/2019 3/31/2020 Y-o-Y Linked Qtr
Compensation and benefits$55,990  $52,453  $54,876  (2.0)% 4.6%
Stock-based compensation plans5,123  5,180  6,006  17.2  15.9 
Occupancy and office operations16,535  15,886  15,199  (8.1) (4.3)
Information technology8,675  9,313  8,018  (7.6) (13.9)
Amortization of intangible assets4,826  4,785  4,200  (13.0) (12.2)
FDIC insurance and regulatory assessments3,338  3,134  3,206  (4.0) 2.3 
Other real estate owned (“OREO”), net217  (132) 52  (76.0) (139.4)
Charge for asset write-downs, systems integration, retention and severance3,344  5,133    NM  NM 
Other expenses16,944  19,698  23,156  36.7  17.6 
Total non-interest expense$114,992  $115,450  $114,713  (0.2) (0.6)
Full time equivalent employees (“FTEs”) at period end1,855  1,639  1,639  (11.6)  
Financial centers at period end99  82  79  (20.2) (3.7)
Operating efficiency ratio, as reported845.1% 44.3% 44.3% (80)  
Operating efficiency ratio, as adjusted840.5  39.9  42.4  190  250 
               
See a reconciliation of non-GAAP financial measures beginning on page 18.

First quarter 2020 compared with first quarter 2019
Total non-interest expense decreased $0.3 million relative to the first quarter of 2019. Key components of the change in non-interest expense between the periods were the following:

  • Compensation and benefits decreased $1.1 million, mainly due to a decline in total FTEs between the periods. Total FTEs declined to 1,639 from 1,855, which was mainly due to our ongoing financial center consolidation strategy following the Astoria Merger. This was partially offset by the hiring of commercial bankers, business development officers, information technology, and risk management personnel.
  • Occupancy and office operations expense decreased $1.3 million, mainly due to the consolidation of financial centers and other back-office locations. We consolidated 20 financial centers in the past twelve months.
  • Information technology expense declined $657 thousand, mainly due to a decrease in data processing expenses.
  • In the first quarter of 2019, we incurred a charge for asset write-downs, systems integration, retention and severance of $3.3 million in connection with our acquisition of equipment finance and asset-based lending portfolios from Woodforest National Bank. This expense did not recur in the first quarter of 2020.
  • Other expenses increased $6.2 million to $23.2 million, which was mainly due to depreciation expense of $3.5 million recorded on operating leases acquired in the fourth quarter of 2019. The balance of the increase was mainly due to higher marketing expense associated with our deposit gathering strategies and higher professional fees associated with loan collection matters.

First quarter 2020 compared with linked quarter ended December 31, 2019
Total non-interest expense decreased $0.7 million to $114.7 million in the first quarter of 2020. In the fourth quarter of 2019, we recorded a charge for asset write-downs, systems integration, retention and severance of $5.1 million related to the equipment finance loan portfolio acquisition from Santander. Excluding the charge, non-interest expense increased $4.4 million in the first quarter compared to the linked quarter. Key components of the change in non-interest expense were the following:

  • Compensation and benefits increased $2.4 million to $54.9 million in the first quarter of 2020. The increase was mainly due to payroll taxes and benefit plan contributions, which are usually higher in the first quarter of the year compared to other quarters.
  • The increase in other expenses was associated with higher net costs related to retirement plans assumed in prior mergers and depreciation expense recorded on operating leases.

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We anticipate that our operating expense may be impacted temporarily in the second quarter of 2020 due to COVID-19, which may result in higher compensation and benefits and costs associated with maintaining and operating our financial center locations.

Taxes
We recorded an income tax benefit of $8.0 million in the first quarter of 2020. The components of income tax benefit included income tax expense at our estimated effective tax rate for 2020 of 17.5% and discrete items as follows:

  • Income tax expense of $1.1 million; 
  • Based on provisions under the CARES Act, we recorded an NOL carryback that resulted in a net income tax benefit of $9.8 million.
  • We recorded income tax expense of $723 thousand due to vesting of stock-based compensation.

For the three months ended December 31, 2019 and March 31, 2019, we recorded income tax expense at an estimated effective income tax rate of 20.7% and 21.9%, respectively. 

Key Balance Sheet Highlights as of March 31, 2020

($ in thousands)As of  Change % / bps
 3/31/2019 12/31/2019 3/31/2020 Y-o-Y Linked Qtr
Total assets$29,956,607  $30,586,497  $30,335,036  1.3% (0.8)%
Total portfolio loans, gross19,908,473  21,440,212  21,709,957  9.0  1.3 
Commercial & industrial (“C&I”) loans7,265,187  8,232,719  8,483,474  16.8  3.0 
Commercial real estate loans (including multi-family)9,516,013  10,295,518  10,399,566  9.3  1.0 
Acquisition, development and construction (“ADC”) loans290,875  467,331  524,714  80.4  12.3 
Total commercial loans17,072,075  18,995,568  19,407,754  13.7  2.2 
Residential mortgage loans2,549,284  2,210,112  2,077,534  (18.5) (6.0)
BOLI657,504  613,848  616,648  (6.2) 0.5 
Core deposits920,160,733  20,548,459  20,704,023  2.7  0.8 
Total deposits21,225,639  22,418,658  22,558,280  6.3  0.6 
Municipal deposits (included in core deposits)2,027,563  1,988,047  2,091,259  3.1  5.2 
Investment securities, net5,915,050  5,075,309  4,617,012  (21.9) (9.0)
Total borrowings3,633,480  2,885,958  2,598,698  (28.5) (10.0)
Loans to deposits93.8% 95.6% 96.2% 240  60 
Core deposits to total deposits95.0  91.7  91.8  (320) 10 
Investment securities to earning assets22.5  18.8  17.2  (530) (160)
               
Core 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 March 31, 2020 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 39.1% of total portfolio loans; commercial real estate loans (which include multi-family loans) represented 47.9% of total portfolio loans; consumer and residential mortgage loans combined represented 10.6% of total portfolio loans; and ADC loans represented 2.4% of total portfolio loans, respectively. At March 31, 2019, C&I loans represented 36.5%; commercial real estate loans represented 47.8%; consumer and residential mortgage loans combined represented 14.2%; and ADC loans represented 1.5% of total portfolio loans, respectively. We continued 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 and ADC loans, increased by $412.2 million over the linked quarter and $2.3 billion since March 31, 2019. Traditional C&I loans increased $390.8 million in the linked quarter, which included draw downs on revolving lines of credit. Equipment finance loans declined $133.0 million in the first quarter of 2020, mainly due to a loan sale of $95.2 million of small business loans. The growth at March 31, 2020 compared to March 31, 2019 was mainly from loans originated by our commercial banking teams, and included the equipment finance portfolio acquired from Santander.

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  • ADC loans increased $57.4 million over the linked quarter and $233.8 million since March 31, 2019. The increases were mainly related to construction loans associated with our investments in affordable housing tax credits.
  • Residential mortgage loans held in our loan portfolio were $2.1 billion at March 31, 2020, a decline of $132.6 million from the linked quarter and a decline of $471.8 million from the same period a year ago. The declines were mainly due to  repayments.
  • The balance of BOLI increased by $2.8 million relative to the prior quarter and was $616.6 million at March 31, 2020. BOLI declined $40.9 million in 2019, mainly due to the partial redemption of $60.5 million of legacy Astoria BOLI assets related to the BOLI restructuring executed in the third quarter of 2019.
  • Core deposits at March 31, 2020 were $20.7 billion and increased $155.6 million compared to December 31, 2019, and increased $543.3 million compared to March 31, 2019. The growth was mainly due to successful commercial and digital deposit gathering efforts and seasonal municipal deposits.
  • Total deposits at March 31, 2020 increased $139.6 million compared to December 31, 2019, and total deposits increased $1.3 billion compared to March 31, 2019.
  • Municipal deposits at March 31, 2020 were $2.1 billion, an increase of $103.2 million relative to December 31, 2019. The increase was associated with tax collections by local municipalities.
  • Investment securities decreased by $458.3 million from December 31, 2019 and $1.3 billion from March 31, 2019, and represented 17.2% of earning assets at March 31, 2020. In 2019, we sold securities to fund commercial loan growth including loan portfolio acquisitions. We also sold securities to reduce the proportion of lower yielding assets as a percentage of total assets. 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 and resulted in a gain of $4.9 million.
  • Total borrowings at March 31, 2020 were $2.6 billion, a decrease of $287.3 million relative to December 31, 2019 and $1.0 billion relative to March 31, 2019. The sale of securities and deposit inflows allowed us to reduce borrowings.

Credit Quality

($ in thousands)For the three months ended Change % / bps
 3/31/2019 12/31/2019 3/31/2020 Y-o-Y Linked Qtr
Provision for credit losses$10,200  $10,585  $138,280  1,255.7% 1,206.4%
Net charge-offs6,917  9,082  6,955  0.5  (23.4)
Allowance for credit losses (“ACL”) - loans98,960  106,238  326,444  229.9  207.3 
Loans 30 to 89 days past due accruing64,260  52,880  69,769  8.6  31.9 
Non-performing loans170,415  179,161  253,750  48.9  41.6 
Annualized net charge-offs to average loans0.14% 0.17% 0.13% (1) (4)
Special mention loans128,054  159,976  132,356  3.4  (17.3)
Substandard loans288,694  295,428  402,393  39.4  36.2 
ACL - loans to total loans0.50  0.50  1.50  100  100 
ACL - loans to non-performing loans58.1  59.3  128.6  7,050  6,930 

Our ACL balance includes the provision for credit losses and transition adjustment recorded related to the adoption of CECL. Provision for credit losses was $138.3 million, which included $1.7 million for held to maturity securities. Provision for credit losses on portfolio loans was $136.6 million, which was $129.6 million greater than net charge-offs for the period. The provision for credit losses was based on our reasonable and supportable forecasts of future macroeconomic scenarios used in the estimation of expected credit losses, which was significantly impacted by the occurrence of COVID-19.

Net charge-offs of $7.0 million mainly included charge-offs on smaller balance equipment finance loans and the work-out of two asset-based lending relationships and one commercial real estate relationship. Net charge-offs were 13 basis points of total loans on an annualized basis.

ACL - loans increased to $326.4 million, or 1.50% of total portfolio loans and 128.6% of non-performing loans, at March 31, 2020.

Non-performing loans increased by $74.6 million to $253.8 million at March 31, 2020 compared to the linked quarter. The increase was mainly due to relationships in asset-based lending, CRE, ADC and small business equipment finance loans. Loans 30 to 89 days past due increased by $16.9 million.

8

In connection with implementing the CECL accounting standard, we established an ACL on held to maturity (“HTM”) securities of $796 thousand which was increased to $2.5 million at March 31, 2020, which is applied to our corporate, state and municipal securities. Upon implementing the CECL accounting standard we also increased our ACL for loan commitments to $6.7 million.  

Capital

($ in thousands, except share and per share data)As of Change % / bps
 3/31/2019 12/31/2019 3/31/2020 Y-o-Y Linked Qtr
Total stockholders’ equity$4,419,223  $4,530,113  $4,422,424  0.1% (2.4)%
Preferred stock138,218  137,581  137,363  (0.6) (0.2)
Goodwill and other intangible assets1,782,533  1,793,846  1,789,646  0.4  (0.2)
Tangible common stockholders’ equity 10$2,498,472  $2,598,686  $2,495,415  (0.1) (4.0)
Common shares outstanding209,560,824  198,455,324  194,460,656  (7.2) (2.0)
Book value per common share$20.43  $22.13  $22.04  7.9  (0.4)
Tangible book value per common share 1011.92  13.09  12.83  7.7  (2.0)
Tangible common equity to tangible assets 108.87% 9.03% 8.74% (13) (29)
Estimated Tier 1 leverage ratio - Company9.21  9.55  9.41  20  (14)
Est. Tier 1 leverage ratio - Company fully implemented    9.06  N/A  N/A 
Estimated Tier 1 leverage ratio - Bank9.58  10.11  9.99  41  (12)
Est. Tier 1 leverage ratio - Bank fully implemented    9.65  N/A  N/A 
          
10 See a reconciliation of non-GAAP financial measures beginning on page 18.

Total stockholders’ equity decreased $107.7 million to $4.4 billion as of March 31, 2020 compared to December 31, 2019. For the first quarter of 2020, net income available to common stockholders of $12.2 million was offset by a decrease in accumulated other comprehensive income of $27.4 million, common dividends of $13.8 million, preferred dividends of $2.2 million, common stock repurchases of $81.0 million and the day one effect of the adoption of the CECL accounting standard of $54.3 million. 

We elected the five-year transition provision effective March 31, 2020 to delay for two years the full impact of CECL on regulatory capital, followed by a three-year transition period. The March 31, 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 March 31, 2020, a decrease of $4.2 million compared to December 31, 2019, which was due to amortization.

Basic and diluted weighted average common shares outstanding declined relative to the linked quarter by approximately 3.4 million shares and were 196.3 million shares and 196.7 million shares, respectively. Total common shares outstanding at March 31, 2020 were approximately 194.5 million. In the first quarter of 2020, we repurchased 4,900,759 shares of common stock at a weighted average price of $16.53 per share. We also granted 1,181,673 shares under our stock-based compensation plans in the quarter.

Tangible book value per common share was $12.83 at March 31, 2020, which represented an increase of 7.7% compared to  a year ago.

Conference Call Information
Sterling Bancorp will host a teleconference and webcast on Tuesday, April 28, 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) 239-9838, Conference ID #1395665. A replay of the teleconference can be accessed through the Company’s website.

9

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, 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 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 months ended March 31, 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.

10

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

      
 3/31/2019 12/31/2019 3/31/2020
Assets:     
Cash and cash equivalents$314,255  $329,151  $348,636 
Investment securities, net5,915,050  5,075,309  4,614,513 
Loans held for sale248,972  8,125  8,124 
Portfolio loans:     
Commercial and industrial (“C&I”)7,265,187  8,232,719  8,483,474 
Commercial real estate (including multi-family)9,516,013  10,295,518  10,399,566 
ADC290,875  467,331  524,714 
Residential mortgage2,549,284  2,210,112  2,077,534 
Consumer287,114  234,532  224,669 
Total portfolio loans, gross19,908,473  21,440,212  21,709,957 
Allowance for credit losses(98,960) (106,238) (326,444)
Total portfolio loans, net19,809,513  21,333,974  21,383,513 
FHLB and Federal Reserve Bank Stock, at cost298,455  251,805  240,722 
Accrued interest receivable115,764  100,312  102,101 
Premises and equipment, net262,744  227,070  228,526 
Goodwill1,657,814  1,683,482  1,683,482 
Other intangibles124,719  110,364  106,164 
BOLI657,504  613,848  616,648 
Other real estate owned16,502  12,189  11,815 
Other assets535,315  840,868  990,792 
Total assets$29,956,607  $30,586,497  $30,335,036 
Liabilities:     
Deposits$21,225,639  $22,418,658  $22,558,280 
FHLB borrowings3,259,507  2,245,653  1,955,451 
Other borrowings27,020  22,678  27,562 
Senior notes173,952  173,504  171,422 
Subordinated notes - Company  270,941  271,019 
Subordinated notes - Bank173,001  173,182  173,244 
Mortgage escrow funds102,036  58,316  96,491 
Other liabilities576,229  693,452  659,143 
Total liabilities25,537,384  26,056,384  25,912,612 
Stockholders’ equity:     
Preferred stock138,218  137,581  137,363 
Common stock2,299  2,299  2,299 
Additional paid-in capital3,751,835  3,766,716  3,749,508 
Treasury stock(355,357) (583,408) (660,069)
Retained earnings888,838  1,166,709  1,125,702 
Accumulated other comprehensive (loss) income(6,610) 40,216  67,621 
Total stockholders’ equity4,419,223  4,530,113  4,422,424 
Total liabilities and stockholders’ equity$29,956,607  $30,586,497  $30,335,036 
      
Shares of common stock outstanding at period end209,560,824  198,455,324  194,460,656 
Book value per common share$20.43  $22.13  $22.04 
Tangible book value per common share111.92  13.09  12.83 
1 See reconciliation of non-GAAP financial measures beginning on page 19.
 


11

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

  
  For the Quarter Ended
 3/31/2019 12/31/2019 3/31/2020
Interest and dividend income:     
Loans and loan fees$260,295  $256,377  $235,439 
Securities taxable27,847  20,367  20,629 
Securities non-taxable14,857  13,031  12,997 
Other earning assets6,401  5,699  4,462 
Total interest and dividend income309,400  295,474  273,527 
Interest expense:     
Deposits45,995  49,907  45,781 
Borrowings27,899  17,310  15,974 
Total interest expense73,894  67,217  61,755 
Net interest income235,506  228,257  211,772 
Provision for credit losses10,200  10,585  138,280 
Net interest income after provision for credit losses225,306  217,672  73,492 
Non-interest income:     
Deposit fees and service charges6,212  6,506  6,622 
Accounts receivable management / factoring commissions and other related fees5,423  6,572  5,538 
BOLI3,641  4,770  5,018 
Loan commissions and fees3,838  8,698  11,024 
Investment management fees1,900  1,597  1,847 
Net (loss) gain on sale of securities(13,184) (76) 8,412 
Net gain on security calls    4,880 
Gain on sale of residential mortgage loans8,313     
Loss on termination of pension plan  (280)  
Other3,454  4,594  3,985 
Total non-interest income19,597  32,381  47,326 
Non-interest expense:     
Compensation and benefits55,990  52,453  54,876 
Stock-based compensation plans5,123  5,180  6,006 
Occupancy and office operations16,535  15,886  15,199 
Information technology8,675  9,313  8,018 
Amortization of intangible assets4,826  4,785  4,200 
FDIC insurance and regulatory assessments3,338  3,134  3,206 
Other real estate owned, net217  (132) 52 
Charge for asset write-downs, systems integration, retention and severance3,344  5,133   
Other16,944  19,698  23,156 
Total non-interest expense114,992  115,450  114,713 
Income before income tax expense (benefit)129,911  134,603  6,105 
Income tax expense (benefit)28,474  27,905  (8,042)
Net income101,437  106,698  14,147 
Preferred stock dividend1,989  1,976  1,976 
Net income available to common stockholders$99,448  $104,722  $12,171 
Weighted average common shares:     
Basic213,157,090  199,719,747  196,344,061 
Diluted213,505,842  200,252,542  196,709,038 
Earnings per common share:     
Basic earnings per share$0.47  $0.52  $0.06 
Diluted earnings per share0.47  0.52  0.06 
Dividends declared per share0.07  0.07  0.07 


12

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 Period3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020
Total assets$29,956,607  $30,237,545  $30,077,665  $30,586,497  $30,335,036 
Tangible assets 128,174,074  28,459,797  28,304,702  28,792,651  28,545,390 
Securities available for sale3,847,799  3,843,112  3,061,419  3,095,648  2,660,835 
Securities held to maturity, net2,067,251  2,015,753  1,985,592  1,979,661  1,956,177 
Loans held for sale2248,972  27,221  4,627  8,125  8,124 
Portfolio loans19,908,473  20,370,306  20,830,163  21,440,212  21,709,957 
Goodwill1,657,814  1,657,814  1,657,814  1,683,482  1,683,482 
Other intangibles124,719  119,934  115,149  110,364  106,164 
Deposits21,225,639  20,948,464  21,579,324  22,418,658  22,558,280 
Municipal deposits (included above)2,027,563  1,699,824  2,234,630  1,988,047  2,091,259 
Borrowings3,633,480  4,133,986  3,174,224  2,885,958  2,598,698 
Stockholders’ equity4,419,223  4,459,158  4,520,967  4,530,113  4,422,424 
Tangible common equity 12,498,472  2,543,399  2,610,205  2,598,686  2,495,415 
Quarterly Average Balances         
Total assets30,742,943  29,666,951  29,747,603  30,349,691  30,484,433 
Tangible assets 128,986,437  27,886,066  27,971,485  28,569,589  28,692,033 
Loans, gross:         
Commercial real estate (includes multi-family)9,385,420  9,486,333  9,711,619  10,061,625  10,288,977 
ADC284,299  307,290  387,072  459,372  497,009 
C&I:         
Traditional C&I2,418,027  2,446,676  2,435,644  2,399,901  2,470,570 
Asset-based lending3876,218  1,070,841  1,151,793  1,137,719  1,107,542 
Payroll finance3197,809  196,160  202,771  228,501  217,952 
Warehouse lending3710,776  990,843  1,180,132  1,307,645  1,089,576 
Factored receivables3250,426  246,382  248,150  258,892  229,126 
Equipment financing31,245,051  1,285,095  1,191,944  1,430,715  1,703,016 
Public sector finance3869,829  967,218  1,087,427  1,189,103  1,216,326 
Total C&I6,568,136  7,203,215  7,497,861  7,952,476  8,034,108 
Residential mortgage3,878,991  2,635,903  2,444,101  2,284,419  2,152,440 
Consumer295,428  280,098  262,234  243,057  233,643 
Loans, total420,412,274  19,912,839  20,302,887  21,000,949  21,206,177 
Securities (taxable)3,833,690  3,453,858  3,189,027  2,905,545  2,883,367 
Securities (non-taxable)2,501,004  2,429,411  2,250,859  2,159,391  2,163,206 
Other interest earning assets667,256  580,945  611,621  835,554  727,511 
Total interest earning assets27,414,224  26,377,053  26,354,394  26,901,439  26,980,261 
Deposits:         
Non-interest bearing demand4,247,389  4,218,000  4,225,258  4,361,642  4,346,518 
Interest bearing demand4,334,266  4,399,296  4,096,744  4,359,767  4,616,658 
Savings (including mortgage escrow funds)2,460,247  2,448,132  2,375,882  2,614,523  2,800,021 
Money market7,776,501  7,538,890  7,341,822  7,681,491  7,691,381 
Certificates of deposit2,497,723  2,544,554  2,710,179  3,271,674  3,237,990 
Total deposits and mortgage escrow21,316,126  21,148,872  20,749,885  22,289,097  22,692,568 
Borrowings4,466,172  3,544,661  3,872,840  2,890,407  2,580,922 
Stockholders’ equity4,415,449  4,423,910  4,489,167  4,524,417  4,506,537 
Tangible common stockholders’ equity 12,520,595  2,504,883  2,575,199  2,606,617  2,576,558 
          
1 See a reconciliation of non-GAAP financial measures beginning on page 19.
2 At March 31, 2019, loans held for sale included $222 million of residential mortgage loans. The other balances 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 credit losses.


13

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 Data3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020
Basic earnings per share$0.47  $0.46  $0.59  $0.52  $0.06 
Diluted earnings per share0.47  0.46  0.59  0.52  0.06 
Adjusted diluted earnings per share, non-GAAP 10.50  0.51  0.52  0.54  (0.02)
Dividends declared per common share0.07  0.07  0.07  0.07  0.07 
Book value per common share20.43  21.06  21.66  22.13  22.04 
Tangible book value per common share111.92  12.40  12.90  13.09  12.83 
Shares of common stock o/s209,560,824  205,187,243  202,392,884  198,455,324  194,460,656 
Basic weighted average common shares o/s213,157,090  206,932,114  203,090,365  199,719,747  196,344,061 
Diluted weighted average common shares o/s213,505,842  207,376,239  203,566,582  200,252,542  196,709,038 
Performance Ratios (annualized)         
Return on average assets1.31% 1.28% 1.61% 1.37% 0.16%
Return on average equity9.13  8.57  10.65  9.18  1.09 
Return on average tangible assets1.39  1.36  1.71  1.45  0.17 
Return on average tangible common equity16.00  15.13  18.56  15.94  1.90 
Return on average tangible assets, adjusted 11.48  1.51  1.50  1.51  (0.04)
Return on avg. tangible common equity, adjusted 117.04  16.83  16.27  16.57  (0.49)
Operating efficiency ratio, as adjusted 140.5  40.9  39.1  39.9  42.4 
Analysis of Net Interest Income         
Accretion income on acquired loans$25,580  $23,745  $17,973  $19,497  $10,686 
Yield on loans5.17% 5.20% 4.97% 4.84% 4.47%
Yield on investment securities - tax equivalent 22.99  2.92  2.85  2.89  2.96 
Yield on interest earning assets - tax equivalent 24.64  4.66  4.50  4.41  4.13 
Cost of interest bearing deposits1.09  1.14  1.16  1.10  1.00 
Cost of total deposits0.88  0.91  0.92  0.89  0.81 
Cost of borrowings2.53  2.54  2.41  2.38  2.49 
Cost of interest bearing liabilities1.39  1.38  1.40  1.28  1.19 
Net interest rate spread - tax equivalent basis 23.25  3.28  3.10  3.13  2.94 
Net interest margin - GAAP basis3.48  3.53  3.36  3.37  3.16 
Net interest margin - tax equivalent basis 23.54  3.58  3.42  3.42  3.21 
Capital         
Tier 1 leverage ratio - Company 39.21% 9.57% 9.78% 9.55% 9.41%
Tier 1 leverage ratio - Bank only 39.58  9.98  10.08  10.11  9.99 
Tier 1 risk-based capital ratio - Bank only 313.10  12.67  12.74  12.32  12.27 
Total risk-based capital ratio - Bank only 314.39  13.94  13.99  13.63  13.89 
Tangible common equity - Company 18.87  8.94  9.22  9.03  8.74 
Condensed Five Quarter Income Statement         
Interest and dividend income$309,400  $302,457  $295,209  $295,474  $273,527 
Interest expense73,894  70,618  71,888  67,217  61,755 
Net interest income235,506  231,839  223,321  228,257  211,772 
Provision for credit losses10,200  11,500  13,700  10,585  138,280 
Net interest income after provision for credit losses225,306  220,339  209,621  217,672  73,492 
Non-interest income19,597  27,058  51,830  32,381  47,326 
Non-interest expense114,992  126,940  106,455  115,450  114,713 
Income before income tax expense129,911  120,457  154,996  134,603  6,105 
Income tax expense (benefit)28,474  23,997  32,549  27,905  (8,042)
Net income$101,437  $96,460  $122,447  $106,698  $14,147 
          
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%.
3 Regulatory capital amounts and ratios are preliminary estimates pending filing of the Company’s and Bank’s regulatory reports.


14

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 Credit Losses Roll Forward3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020
Balance, beginning of period$95,677  $98,960  $104,664  $104,735  $106,238 
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 - loans10,200  11,500  13,700  10,585  136,577 
Loan charge-offs1:         
Traditional C&I(4,839) (754) (123) (470) (298)
Asset-based lending  (3,551) (9,577) (5,856) (985)
Payroll finance  (84)   (168)  
Warehouse lending         
Factored receivables(32) (27) (14) (68) (7)
Equipment financing(1,249) (1,335) (2,711) (1,739) (4,793)
Public Sector Finance         
Commercial real estate(17) (238) (53) (583) (1,275)
Multi-family         
ADC    (6)   (3)
Residential mortgage(1,085) (689) (1,984) (334) (1,072)
Consumer(443) (467) (241) (401) (1,405)
Total charge-offs(7,665) (7,145) (14,709)