EX-99.1 2 a18-12472_1ex99d1.htm EX-99.1

Exhibit 99.1

Sterling Bancorp Reports First Quarter 2018 Financial Results

Q1 2018 Summary

· Net income of $15.7 million, a 51% increase from Q1 2017

· Fully diluted EPS of $0.30, a 30% increase from Q1 2017

· Total loan originations of $408 million, a 59% increase from Q1 2017

· Total gross loans, including loans held for investment and loans held for sale, of $2.80 billion, a 39% increase from Q1 2017

· Total deposits of $2.29 billion, a 33% increase from Q1 2017

· Net interest margin of 3.89%

· Named as the top performing community bank in the United States for 2017 with total assets between $1 billion and $10 billion by SNL/S&P Global Market Intelligence

Southfield, Michigan, April 30, 2018 — Sterling Bancorp, Inc. (NASDAQ: SBT), the holding company of Sterling Bank and Trust, F.S.B., today reported unaudited financial results for its first quarter ended March 31, 2018.

For the three months ended March 31, 2018, net income totaled $15.7 million, or $0.30 per diluted share, based on 53.0 million weighted average diluted shares outstanding. This compares to fourth quarter 2017 net income of $6.5 million, or $0.13 per diluted share, based on 49.0 million weighted average diluted shares outstanding. For the first quarter of 2017, net income totaled $10.4 million, or $0.23 per diluted share, based on 45.3 million weighted average diluted shares outstanding.

“We are very pleased with our strong start to 2018, as we delivered excellent growth in our revenue streams combined with well controlled expenses,” said Gary Judd, Chairman and CEO of Sterling Bancorp. “As a result, we generated a 30% year-over-year increase in earnings per share and continued to deliver the superior level of returns that made us the top performing community bank in the United States in 2017, as recognized by SNL/S&P Global Market Intelligence.

“We continue to see strong demand for residential mortgage loans in our target markets, and we increased the volume of loans sold into the secondary market as part of our balance sheet management strategy. Given our healthy loan pipeline, we expect to continue to strategically utilize loan sales to mitigate pressure on our net interest margin going forward, which we believe will enable us to continue to generate profitable growth for our shareholders,” said Mr. Judd.

Financial Highlights (Unaudited)

	At or for the Three Months Ended
(Dollars in thousands, except per share data)	3/31/2018			12/31/2017			3/31/2017
Net income	$	15,749		$	6,531		$	10,416
Diluted earnings per share	$	0.30		$	0.13		$	0.23
Net interest income before provision for loan losses	$	28,195		$	26,915		$	21,871
Net interest margin	3.89		%	3.97		%	4.07		%
Noninterest income	$	6,037		$	2,826		$	5,586
Noninterest expense	$	11,503		$	11,943		$	9,092
Loans held for investment, net	$	2,580,560		$	2,594,357		$	2,003,019
Deposits	$	2,291,165		$	2,245,110		$	1,722,148
Nonperforming loans	$	5,115		$	783		$	640
Allowance for loan losses to total loans	0.74		%	0.71		%	0.77		%
Allowance for loan losses to non-performing loans	374		%	2,357		%	2,432		%
Provision for loan losses	$	641		$	600		$	600
Net charge offs (recoveries)	$	(34	)	$	(668	)	$	(145	)
ROA	2.13		%	0.94		%	1.89		%
ROE	22.17		%	11.46		%	24.80		%
Efficiency ratio	33.6		%	40.2		%	33.1		%

Operating Results for the First Quarter 2018

Net Interest Income

Net interest income for the first quarter of 2018 was $28.2 million, an increase of 4.8% from $26.9 million for the fourth quarter of 2017. The increase in net interest income from the fourth quarter was primarily attributable to a $185 million increase in average interest earning assets, partially offset by the effects of an 8 basis point decrease in the net interest margin.

Relative to the first quarter of 2017, net interest income increased 28.9% from $21.9 million. The increase in net interest income from the first quarter of 2017 was primarily attributable to a $748 million increase in average interest earning assets, partially offset by the effects of an 18 basis point decrease in the net interest margin.

Net Interest Margin

Net interest margin for the first quarter of 2018 was 3.89%, compared to 3.97% for the fourth quarter of 2017. The decrease in net interest margin was primarily attributable to a 5 basis point decrease in the average yield on interest earning assets and a 10 basis point increase in the average cost of interest-bearing deposits.

Relative to the first quarter of 2017, the net interest margin decreased from 4.07%, primarily due to a 32 basis point increase in the average cost of interest-bearing deposits, partially offset by a 2 basis point increase in the average yield on interest earning assets.

Noninterest Income

Noninterest income for the first quarter of 2018 was $6.0 million, an increase from $2.8 million for the fourth quarter of 2017. The increase was primarily the result of a $3.1 million increase in the gain on sale of loans due to an increase in the amount of residential mortgages sold in the secondary market compared to the prior period.

Noninterest income increased from $5.6 million in the first quarter of 2017, primarily as a result of a $0.2 million increase in service charges and fees and a $0.2 million increase in other income.

Noninterest Expense

Noninterest expense for the first quarter of 2018 was $11.5 million, compared with $11.9 million for the fourth quarter of 2017. The decrease was primarily attributable to lower salary expense, as well as $0.2 million of expenses incurred during the fourth quarter of 2017 related to the Company’s initial public offering.

Relative to the first quarter of 2017, noninterest expense increased from $9.1 million. The increase was primarily due to an increase in personnel expenses and occupancy and equipment costs required to support the growth in the Company’s operations.

The Company’s operating efficiency ratio was 33.6% in the first quarter of 2018, compared with 40.2% in the fourth quarter of 2017 and 33.1% in the first quarter of 2017.

Income Taxes

The effective tax rate for the three months ended March 31, 2018 was 29%, compared with 62% and 41% for the three months ended December 31, 2017 and March 31, 2017, respectively. The decrease in the effective tax rate in the first quarter of 2018 as compared to first quarter of 2017 was attributable to the reduction in the federal corporate tax rate that was effective January 1, 2018. The effective tax rate for the fourth quarter of 2017 includes the effect of the re-measurement of our net deferred tax assets.

The Company continues to expect that its effective tax rate for 2018 will be in the range of 28% to 30%. The actual annual effective tax rate will vary depending upon the mix of our taxable income by state.

Loan Portfolio

Total loans, which includes those held for investment and held for sale, were $2.80 billion at March 31, 2018, compared with $2.73 billion at December 31, 2017. Contributing to the increase were an $88 million increase in residential real estate loans and a $6 million increase in commercial and industrial loans, partially offset by a $20 million decrease in the commercial real estate and construction loan portfolio, which decrease was driven by loan payoffs.

During the first quarter of 2018, the Company originated $408 million in loans, which included $349 million in residential mortgage loans, $5 million in commercial real estate loans, $44 million in construction loans and $10 million in commercial and industrial loans.

Deposits

Total deposits were $2.29 billion at March 31, 2018, compared with $2.25 billion at December 31, 2017. The increase was primarily attributable to a $123 million increase in retail deposits, partially offset by a $77 million decrease in brokered deposits.

Credit Quality

Nonperforming assets totaled $8.1 million, or 0.27% of total assets, at March 31, 2018, compared with $3.8 million, or 0.13% of total assets, at December 31, 2017. The increase was primarily due to a large residential real estate loan being placed on non-accrual. The Company believes that no impairment exists, as there is more than sufficient collateral value supporting the loan.

Net recoveries for the first quarter of 2018 were $34,000 and there were no charge-offs during the quarter.

With the lack of charge-offs and no specific reserves required for the large loan placed on non-accrual, the Company recorded a provision for loan losses of $641,000 for the first quarter of 2018, comparable with the provision for loan losses in the first quarter of 2017.

The Company’s allowance for loan losses was 0.74% of total loans and 374% of nonperforming loans at March 31, 2018, compared with 0.71% and 2,357%, respectively, at December 31, 2017.

Capital

At March 31, 2018, the Bank exceeded all regulatory capital requirements under Basel III and was considered to be a ‘‘well-capitalized’’ financial institution, as summarized in the following tables:

	Well	Company Actual at
	Capitalized	March 31, 2018
Total adjusted capital to risk-weighted assets	N/A	20.38	%
Tier 1 (core) capital to risk-weighted assets	N/A	15.77	%
Tier 1 (core) capital to adjusted tangible assets	N/A	9.73	%
Common Tier 1 (CET 1)	N/A	15.77	%

	Well		Sterling Bank Actual at
	Capitalized		March 31, 2018
Total adjusted capital to risk-weighted assets	10.00	%	15.07	%
Tier 1 (core) capital to risk-weighted assets	8.00	%	14.02	%
Tier 1 (core) capital to adjusted tangible assets	5.00	%	8.65	%
Common Tier 1 (CET 1)	6.50	%	14.02	%

Conference Call and Webcast

Management will host a conference call today at 5:00 p.m. Eastern Time to discuss the Company’s financial results. The conference call number for U.S. participants is (877) 270-2148 and the conference call number for participants outside the U.S. is (412) 902-6510. The conference ID number for both conference call numbers is 10118833. Additionally, interested parties can listen to a live webcast of the call in the “Investor Relations” section of the Company’s website at www.sterlingbank.com. An archived version of the webcast will be available in the same location shortly after the live call has ended.

A replay of the conference call may be accessed through May 14, 2018 by dialing (877) 344-7529, using conference ID number 10118833.

About Sterling Bancorp, Inc.

Sterling Bancorp, Inc. is a unitary thrift holding company. Its wholly owned subsidiary, Sterling Bank and Trust, F.S.B., has primary branch operations in San Francisco and Los Angeles, California and New York City, and a loan production office in Seattle, Washington. Sterling offers a broad range of loan products to the residential and commercial markets, as well as retail and business banking services. Sterling also has an operations center and a branch in Southfield, Michigan. In March 2018, Sterling was named as the top performing community bank in the United States with total assets between $1 billion and $10 billion in 2017 by SNL/S&P Global Market Intelligence. For additional information, please visit the Company’s website at www.sterlingbank.com.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures include “Average Tangible Common Equity,” and “Return on Average Tangible Common Equity,” each of which are common metrics in the banking industry. Our management uses these non-GAAP financial measures to assess the Company’s capital strength and business performance. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore this presentation may not be comparable to other similarly titled measures as presented by other companies. For further information see “Reconciliation of Non-GAAP Financial Measures” in the Financial Data section that follows.

Forward-Looking Statements

Readers should note that in addition to the historical information contained herein, this press release includes “forward-looking statements,” within the meeting of the federal securities laws, including but not limited to statements about the Company’s expected loan production, operating expenses and future earnings levels. These statements are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, including changes in the financial markets; changes in business plans as circumstances warrant; and other risks detailed from time to time in filings made by the Company with the Securities and Exchange Commission. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “will,” “propose,” “may,” “plan,” “seek,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue,” or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Contacts:

Financial Profiles, Inc.

Allyson Pooley

310-622-8230

Larry Clark

310-622-8223

SBT@finprofiles.com

Sterling Bancorp, Inc.

Consolidated Balance Sheets
Unaudited (dollars in thousands)

	3/31/2018			12/31/2017			% change		3/31/2017			% change
Assets
Cash and due from banks	$	37,541		$	40,147		(6	)%	$	30,598		23	%
Investment securities	124,956			126,848			(1	)%	87,121			43	%
Federal Home Loan Bank stock, at cost	22,950			22,950			0	%	18,360			25	%
Mortgage loans held for sale	200,467			112,866			78	%	1,468			N/M
Loans, net of allowance for loan losses of $19,132, $18,457 and $15,567	2,580,560			2,594,357			(1	)%	2,003,019			29	%
Accrued interest receivable	11,936			11,493			4	%	8,430			42	%
Mortgage servicing rights, net	7,780			6,496			20	%	5,424			43	%
Leasehold improvements and equipment, net	7,705			7,043			9	%	6,246			23	%
Cash surrender value of bank-owned life insurance	30,837			30,680			1	%	30,194			2	%
Deferred tax asset, net	7,234			6,847			6	%	9,189			(21	)%
Other assets	2,366			2,231			6	%	2,126			11	%
Total assets	$	3,034,332		$	2,961,958		2	%	$	2,202,175		38	%

Liabilities
Noninterest-bearing deposits	$	75,062		$	73,682		2	%	$	60,436		24	%
Interest-bearing deposits	2,216,103			2,171,428			2	%	1,661,712			33	%
Total deposits	2,291,165			2,245,110			2	%	1,722,148			33	%
Federal Home Loan Bank borrowings	342,937			338,000			1	%	222,115			54	%
Subordinated notes, net	64,923			64,889			0	%	49,371			32	%
Accrued expenses and other liabilities	46,795			40,661			15	%	37,431			25	%
Total liabilities	2,745,820			2,688,660			2	%	2,031,065			35	%

Shareholders’ Equity
Preferred stock, authorized 10,000,000 shares; no shares issued and outstanding	—			—			N/M		—			N/M
Common stock, voting, authorized 500,000,000 shares at March 31, 2018 and December 31, 2017 and 490,000,000 at March 31, 2017, issued and outstanding 53,002,963, 52,963,308 and 45,271,000 shares at March 31, 2018, December 31, 2017 and March 31,2017, respectively.	111,238			111,238			0	%	22,863			387	%
Common stock, non-voting, no par value, authorized 10,000,000 shares, issued and outstanding 5,072,000 shares at March 31, 2017.	—			—			—		2,885			—
Additional paid-in capital	12,425			12,416			0	%	15,336			(19	)%
Retained earnings	164,984			149,816			10	%	130,095			27	%
Accumulated other comprehensive loss	(135		)	(172		)	N/M		(69		)	N/M
Total shareholders’ equity	288,512			273,298			6	%	171,110			69	%
Total liabilities and shareholders’ equity	$	3,034,332		$	2,961,958		2	%	$	2,202,175		38	%

N/M- not meaningful

Sterling Bancorp, Inc.

Condensed Consolidated Statements of Income

Unaudited (dollars in thousands, except per share amounts)

	Three Months Ended
	3/31/2018		12/31/2017		% change		3/31/2017		% change
Interest Income:
Interest and fees on loans	$	35,856	$	34,095	5	%	$	26,759	34	%
Interest and dividends on investment securities	819		588		39	%	365		124	%
Other interest	114		54		110	%	19		500	%
Total interest income	36,789		34,737		6	%	27,143		36	%
Interest Expense:
Interest on deposits	6,589		5,884		12	%	3,534		86	%
Interest on Federal Home Loan Bank borrowings	833		751		11	%	830		0	%
Interest on subordinated notes and other	1,172		1,187		(1	)%	908		29	%
Total interest expense	8,594		7,822		10	%	5,272		63	%
Net interest income	28,195		26,915		5	%	21,871		29	%
Provision for loan losses	641		600		7	%	600		7	%
Net interest income after provision for loan losses	27,554		26,315		5	%	21,271		30	%
Non-interest income
Service charges and fees	618		629		(2	)%	409		51	%
Investment management and advisory fees	623		603		3	%	552		13	%
Net gain on sale of loans	4,006		868		362	%	4,052		(1	)%
Other income	790		726		9	%	573		38	%
Total non-interest income	6,037		2,826		114	%	5,586		8	%
Non-interest expense
Salaries and employee benefits	6,649		6,880		(3	)%	5,410		23	%
Occupancy and equipment	1,546		1,632		(5	)%	1,389		11	%
Professional fees	622		665		(7	)%	369		69	%
Advertising and marketing	349		370		(6	)%	192		82	%
FDIC assessments	543		455		19	%	242		124	%
Data processing	288		292		(1	)%	207		39	%
Other	1,506		1,649		(9	)%	1,283		17	%
Total non-interest expense	11,503		11,943		(4	)%	9,092		27	%
Income before income taxes	22,088		17,198		28	%	17,765		24	%
Income tax expense	6,339		10,667		(41	)%	7,349		(14	)%
Net income	$	15,749	$	6,531	141	%	$	10,416	51	%
Income per share, basic and diluted	$	0.30	$	0.13			$	0.23
Weighted average common shares outstanding, basic and diluted	52,963,308		49,033,542				45,271,000

N/M - not meaningful

Sterling Bancorp, Inc.

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