Sterling Bancorp Reports Fourth Quarter and Full Year 2023 Financial Results

Sterling Bancorp, Inc. (NASDAQ: SBT) (“Sterling” or the “Company”), the holding company of Sterling Bank and Trust, F.S.B. (the “Bank”), today reported its financial results for the quarter and year ended December 31, 2023.

Fourth Quarter and Year-End 2023 Highlights

  • Fourth quarter net income of $5.1 million, or $0.10 per diluted share; full year net income of $7.4 million, or $0.15 per diluted share
  • Fourth quarter net interest margin of 2.52%; full year net interest margin of 2.68%
  • Fourth quarter provision for (recovery of) credit losses of $(4.4) million; full year provision for (recovery of) credit losses of $(8.5) million
  • Nonperforming assets of $9.0 million, or 0.37% of total assets
  • Ratio of allowance for credit losses to total loans of 2.18%
  • Total gross loans of $1.3 billion
  • Fourth quarter non-interest expense of $12.8 million; full year non-interest expense of $65.7 million
  • Total deposits of $2.0 billion
  • Shareholders’ equity of $327.7 million
  • Company’s consolidated and Bank’s leverage ratio of 13.95% and 13.38%, respectively

The Company reported net income of $5.1 million, or $0.10 per diluted share, for the quarter ended December 31, 2023, compared to net income of $0.3 million, or $0.01 per diluted share, for the quarter ended September 30, 2023. For the year ended December 31, 2023, net income was $7.4 million, or $0.15 per diluted share, compared to a net loss of $(14.2) million, or $(0.28) per diluted share, for the year ended December 31, 2022.

Thomas M. O’Brien, Chairman, President, and Chief Executive Officer commented:

“Sterling’s fourth quarter reflects continuing improvement in our expense management as the government investigations directed at Sterling have been resolved. However, we continued to bear expenses from certain indemnified individuals who are responding to government inquiries. In the fourth quarter, those expenses were approximately $0.7 million, which was more than offset by the receipt of $3.8 million of insurance reimbursements for certain prior invoices. Our directors and officers insurance covering these matters was ultimately exhausted with these payments, and we do not expect any future defense costs to be covered by insurance. We will also continue to bear modest legal, compliance and administrative costs related to our commitments under the Plea Agreement with the DOJ. Our loan portfolio declined throughout the year as we have not introduced new lending products, yet we generally maintained our total assets by increasing our short-term liquid assets at rates above our funding costs. Resulting net income for the quarter and the year further enhanced our strong capital position.

Going forward, we believe the impact of the elevated interest rate environment, particularly on deposit prices, will not likely improve in the near-term, although the pace of the rise in deposit costs has slowed. We continually evaluate our strategic position and alternatives, and currently believe that prevailing economic conditions and the lack of a robust capital market for community banks create significant limitations on pursuing a new strategic direction. Accordingly, we have elected to be patient and wait for market conditions to improve before pursuing new strategies. This approach could also create opportunities for potential strategic combinations. In the meantime, we believe we have positioned Sterling well to protect our strengths, namely: strong capital, strong liquidity and solid credit quality.”

Balance Sheet

Total Assets – Total assets were $2.4 billion at December 31, 2023, a decrease of $30.7 million, or 1%, from September 30, 2023 and a decrease of $28.7 million, or 1%, from December 31, 2022.

Cash and due from banks increased $14.3 million, or 3%, to $578.0 million at December 31, 2023 compared to $563.6 million at September 30, 2023 and increased $198.2 million, or 52%, from $379.8 million at December 31, 2022. Debt securities, all of which are available for sale, increased $20.9 million, or 5%, to $419.2 million at December 31, 2023 compared to $398.3 million at September 30, 2023 and increased $75.7 million, or 22%, from $343.6 million at December 31, 2022.

Total gross loans held for investment of $1.3 billion at December 31, 2023 declined $68.2 million, or 5%, from September 30, 2023 and declined $309.9 million, or 19%, from $1.7 billion at December 31, 2022.

Total Deposits – Total deposits were $2.0 billion at December 31, 2023, a decrease of $36.7 million, or 2%, from September 30, 2023 and an increase of $49.9 million, or 3%, from December 31, 2022.

Money market, savings and NOW deposits of $1.1 billion decreased $32.2 million, or 3%, from September 30, 2023 and increased $56.3 million, or 5%, compared to December 31, 2022. Time deposits of $873.2 million at December 31, 2023 increased $1.1 million compared to September 30, 2023 and increased $11.5 million, or 1%, compared to December 31, 2022. Noninterest-bearing deposits of $35.2 million decreased $5.5 million, or 14%, compared to September 30, 2023 and decreased $17.8 million, or 34%, compared to December 31, 2022. We did not have any brokered deposits at December 31, 2023, September 30, 2023, or December 31, 2022. The ratio of total estimated uninsured deposits to total deposits was 21.5%, 21.4% and 20.6% at December 31, 2023, September 30, 2023 and December 31, 2022, respectively. Our current strategy is to continue to offer market interest rates on our deposit products to maintain our existing customer base and our liquidity position.

Borrowings – Federal Home Loan Bank borrowings were $50 million at December 31, 2023, which were unchanged from September 30, 2023 and December 31, 2022. In the third quarter of 2023, the Company redeemed all of its subordinated notes with an aggregate outstanding principal balance of $65.0 million at a redemption price equal to 100% of the outstanding principal amount plus accrued interest.

Capital – Total shareholders’ equity was $327.7 million at December 31, 2023 compared to $316.1 million at September 30, 2023 and $312.6 million at December 31, 2022. The increase in shareholders’ equity since September 30, 2023 is primarily attributable to a $5.8 million reduction in the unrealized loss on our investment securities portfolio included in accumulated other comprehensive loss as a result of lower market yields of U.S. Treasury securities with longer maturities during the fourth quarter of 2023, along with net income of $5.1 million for the fourth quarter.

At December 31, 2023, the Company’s consolidated and the Bank’s leverage ratio were 13.95% and 13.38%, respectively. The Company and the Bank elected to opt into the Community Bank Leverage Ratio framework, effective January 1, 2023. As such, each of the Company and the Bank is required to maintain a Tier 1 leverage ratio of greater than 9.0% to be considered to have satisfied the minimum regulatory capital requirements as well as the capital ratio requirements to be considered well capitalized for regulatory purposes.

Asset Quality and Recovery of Credit Losses – A recovery of credit losses of $(4.4) million was recorded for the fourth quarter of 2023 compared to a recovery of credit losses of $(1.9) million for the third quarter of 2023. The recovery of credit losses during the fourth quarter primarily reflects general improvement in our economic forecast as well as the decline in our loan portfolio from the prior period. The allowance for credit losses was $29.4 million, $34.3 million and $45.5 million, or 2.18%, 2.42% and 2.74% of total loans held for investment, at December 31. 2023, September 30, 2023 and December 31, 2022, respectively.

Recoveries during the fourth and third quarter of 2023 were $64 thousand and $1 thousand, respectively, with no charge offs in either quarter.

Nonperforming assets at December 31, 2023 totaled $9.0 million, or 0.37% of total assets, compared to $6.2 million, or 0.25% of total assets, at September 30, 2023, primarily due to an increase of $3.9 million in nonaccrual residential real estate loans, partially offset by the extension of a $1.1 million construction loan in the fourth quarter which was over 90 days past its maturity at September 30, 2023. Nonperforming assets at December 31, 2023 declined by $29.3 million, or 77%, from December 31, 2022 mainly due to the sale of nonperforming and chronically delinquent residential real estate loans in the second quarter of 2023.

Results of Operations

Net Interest Income and Net Interest Margin – Net interest income for the fourth quarter of 2023 was $15.1 million compared to $16.0 million for the prior quarter of 2023 and $18.5 million for the fourth quarter of 2022. The net interest margin of 2.52% for the fourth quarter of 2023 decreased from the prior quarter’s net interest margin of 2.62% and decreased from the net interest margin of 3.09% for the fourth quarter of 2022. The decrease in net interest income during the fourth quarter of 2023 compared to the prior quarter was primarily due to the decline in the average balance of our loan portfolio of $69.4 million, or 5%, during the fourth quarter and a 26 basis point increase in the average rate paid on interest-bearing deposits during the same period, partially offset by a 9 and 39 basis point increase in the average yields on loans and investments, respectively. The decrease in net interest income during the fourth quarter of 2023 compared to the fourth quarter of 2022 was primarily due to a 204 basis point increase in the average rate paid on interest-bearing deposits, partially offset by a 95 basis point increase in the average yield on total interest-earning assets during the same period.

Net interest income for the year ended December 31, 2023 was $65.0 million, a decrease of $13.8 million from the year ended December 31, 2022. The net interest margin of 2.68% for the year ended December 31, 2023 decreased from the prior year’s net interest margin of 3.06%. The decrease in net interest income for the year ended December 31, 2023 is primarily attributable to a 216 basis point increase in the average rate paid on interest-bearing deposits, reflecting the effects of the increasing rate environment during 2022 which continued into the first half of 2023. This was partially offset by the impact of a 365 basis point increase in the average yield of other interest-earning assets (primarily cash and cash equivalents) and 136 basis point increase in the average yield on investment securities. Interest income on loans decreased $0.7 million primarily due to the impact of a $315.2 million, or 17%, decline in the average balance of loans, despite a 96 basis point increase in the average yield on loans.

Non-Interest Income – Non-interest income for the fourth quarter of 2023 was $0.2 million compared to $0.4 million for the prior quarter and $0.2 million for the fourth quarter of 2022.

Non-interest income for the year ended December 31, 2023 was $2.8 million, an increase of $1.5 million from $1.3 million for the year ended December 31, 2022. The increase was primarily attributable to a $1.6 million gain on the sale of all loans that were held for sale, comprised primarily of nonperforming and chronically delinquent residential real estate loans, which occurred in the second quarter of 2023.

Non-Interest Expense – Non-interest expense for the fourth quarter of 2023 was $12.8 million, a decrease of $4.9 million, or 28%, compared to $17.7 million for the third quarter of 2023, and a decrease of $24.3 million, or 65%, compared to $37.1 million the fourth quarter of 2022. The decrease compared to the third quarter of 2023 was primarily due to a $5.2 million decrease in professional fees. During the fourth quarter of 2023, we received $3.8 million from our insurance carriers for expenses previously incurred relating to the government investigations which was primarily due to ongoing investigations against selected individuals and our decision to cover legal costs with respect to certain of these individuals. Professional fees also decreased as the Office of Comptroller of the Currency and U.S. Department of Justice (the “DOJ”) investigations into the Company and Bank were resolved. We expect to incur future legal expenses relating to ongoing government investigations against selected individuals, which will not be covered by our insurance carriers as the policy limits have been reached.

Non-interest expense for the year ended December 31, 2023 was $65.7 million, a decrease of $31.9 million, or 33%, compared to $97.6 million for the year ended December 31, 2022. The decrease was primarily attributable to an $18.2 million provision for contingent losses recognized during the fourth quarter of 2022 reflecting our revised estimate of the financial impact of the resolution of the DOJ investigation. Professional fees were $13.8 million lower in 2023 compared to 2022 due in part to receiving $5.9 million more in 2023 compared to 2022 in payments from our insurance carriers for expenses previously incurred relating to the government investigations. Professional fees for 2023 also decreased as the government investigations against the Company and Bank were resolved. Other expenses declined $2.4 million, or 24%, in 2023 primarily due to a $2.3 million loss in 2022 to record the fair value discount on $65.6 million of repurchased Advantage Loan Program loans. Salaries and employee benefits expense in the year ended December 31, 2023 increased $2.4 million, or 7%, primarily due to a $4.0 million reversal in the second quarter of 2022 of liabilities upon the surrender of certain split-dollar and company-owned life insurance policies.

Income Tax Expense – For the year ended December 31, 2023, the Company recorded income tax expense of $3.1 million, or an effective tax rate of 30%, which differs slightly from our statutory rate of 28% due primarily to non-deductible compensation and other non-deductible expenses. For the year ended December 31, 2022, the Company recorded an income tax expense of $6.6 million on a loss before income taxes of $(7.6) million. Our income tax expense for the year ended December 31, 2022 included $3.6 million in income tax on the increase in the cash surrender value of certain split-dollar and company-owned life insurance policies as a result of the surrender of these policies and the effect of the provision for contingent losses in 2022 being non-deductible.

Conference Call and Webcast

Management will host a conference call on Wednesday, January 24, 2024 at 11:00 a.m. Eastern Time to discuss the Company’s unaudited financial results for the quarter and year ended December 31, 2023. The conference call number for U.S. participants is (833) 535-2201 and the conference call number for participants outside the United States is (412) 902-6744. Additionally, interested parties can listen to a live webcast of the call in the “Investor Relations” section of the Company’s website at www.sterlingbank.com. An archived version of the webcast will be available in the same location shortly after the live call has ended.

A replay of the conference call may be accessed through January 31, 2024 by U.S callers dialing (877) 344-7529 and international callers dialing (412) 317-0088, using conference ID number 1967279.

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. Sterling offers a range of loan products as well as retail and business banking services. Sterling also has an operations center and a branch in Southfield, Michigan. For additional information, please visit the Company’s website at http://www.sterlingbank.com.

Forward-Looking Statements

This Press Release contains certain statements that are, or may be deemed to be, “forward-looking statements” regarding the Company’s plans, expectations, thoughts, beliefs, estimates, goals and outlook for the future. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance, including any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions. These statements are often, but not always, made through the use of words or phrases such as “may,” “might,” “should,” “could,” “believe,” “expect,” “continue,” “will,” “estimate,” “plan,” “anticipate” and “would” or the negative versions of those words or other comparable words or phrases of a future or forward-looking nature, though the absence of these words does not mean a statement is not forward-looking. All statements other than statements of historical facts, including but not limited to statements regarding, the economy and financial markets, government investigations, credit quality, the regulatory scheme governing our industry, competition in our industry, interest rates, our liquidity, our business and our governance, are forward-looking statements. We have based the forward-looking statements in this Press Release primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, business strategy and financial needs. These forward-looking statements are not historical facts, and they are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. There can be no assurance that future developments will be those that have been anticipated. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. The risks, uncertainties and other factors detailed from time to time in our public filings, including those included in the disclosures under the headings “Cautionary Note Regarding Forward-Looking Statements” in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2023 and “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2023, subsequent periodic reports and future periodic reports, could affect future results and events, causing those results and events to differ materially from those views expressed or implied in the Company’s forward-looking statements. These risks are not exhaustive. Other sections of this Press Release and our filings with the Securities and Exchange Commission include additional factors that could adversely impact our business and financial performance. Moreover, we operate in very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Press Release. Should one or more of the foregoing risks materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those projected in, or implied by, such forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. The Company disclaims any obligation to update, revise, or correct any forward-looking statements based on the occurrence of future events, the receipt of new information or otherwise.

Sterling Bancorp, Inc.
Consolidated Financial Highlights (Unaudited)
 

At and for the Three Months Ended

 

At and for the Year Ended

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

(dollars in thousands, except per share data)

2023

 

2023

 

2022

 

2023

 

2022

Net income (loss)

$

5,063

 

$

314

 

$

(18,433

)

$

7,413

 

$

(14,194

)

Income (loss) per share, diluted

$

0.10

 

$

0.01

 

$

(0.37

)

$

0.15

 

$

(0.28

)

Net interest income

$

15,105

 

$

15,994

 

$

18,521

 

$

64,959

 

$

78,802

 

Net interest margin

 

2.52

%

 

2.62

%

 

3.09

%

 

2.68

%

 

3.06

%

Non-interest income

$

213

 

$

384

 

$

248

 

$

2,786

 

$

1,347

 

Non-interest expense

$

12,830

 

$

17,702

 

$

37,110

 

$

65,710

 

$

97,648

 

Loans, net of allowance for credit losses

$

1,319,568

 

$

1,382,860

 

$

1,613,385

 

$

1,319,568

 

$

1,613,385

 

Total deposits

$

2,003,986

 

$

2,040,658

 

$

1,954,037

 

$

2,003,986

 

$

1,954,037

 

Asset Quality
Nonperforming loans

$

8,973

 

$

6,182

 

$

33,725

 

$

8,973

 

$

33,725

 

Allowance for credit losses to total loans

 

2.18

%

 

2.42

%

 

2.74

%

 

2.18

%

 

2.74

%

Allowance for credit losses to nonaccrual loans

 

329

%

 

681

%

 

135

%

 

329

%

 

135

%

Nonaccrual loans to total loans outstanding

 

0.66

%

 

0.36

%

 

2.03

%

 

0.66

%

 

2.03

%

Net charge offs (recoveries) to average loans outstanding during the period

 

0.00

%

 

0.00

%

 

(0.02

)%

 

0.40

%

 

0.06

%

Recovery of credit losses

$

(4,357

)

$

(1,942

)

$

(179

)

$

(8,527

)

$

(9,934

)

Net charge offs (recoveries)

$

(64

)

$

(1

)

$

(281

)

$

5,945

 

$

1,150

 

Performance Ratios
Return on average assets

 

0.83

%

 

0.05

%

 

(3.01

)%

 

0.30

%

 

(0.54

)%

Return on average shareholders' equity

 

6.34

%

 

0.39

%

 

(22.15

)%

 

2.35

%

 

(4.19

)%

Efficiency ratio (1)

 

83.76

%

 

108.08

%

 

197.72

%

 

97.00

%

 

121.83

%

Yield on average interest-earning assets

 

5.49

%

 

5.39

%

 

4.54

%

 

5.23

%

 

3.88

%

Cost of average interest-bearing liabilities

 

3.47

%

 

3.24

%

 

1.74

%

 

3.02

%

 

0.98

%

Net interest spread

 

2.02

%

 

2.15

%

 

2.80

%

 

2.21

%

 

2.90

%

Capital Ratios(2)(3)
Regulatory and Other Capital Ratios — Consolidated:
Tier 1 (core) capital to average total assets (leverage ratio)

 

13.95

%

 

13.42

%

 

13.54

%

 

13.95

%

 

13.54

%

Regulatory and Other Capital Ratios — Bank:
Tier 1 (core) capital to average total assets (leverage ratio)

 

13.38

%

 

12.93

%

 

16.56

%

 

13.38

%

 

16.56

%

 
(1) Efficiency ratio is computed as the ratio of non-interest expense divided by the sum of net interest income and non-interest income.
(2) December 31, 2023 capital ratios are estimated.
(3) Effective January 1, 2023, the Company and Bank elected to opt into the community bank leverage ratio framework.
Sterling Bancorp, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
 

December 31,

 

September 30,

 

%

 

December 31,

 

%

(dollars in thousands)

2023

 

2023

 

change

 

2022

 

change

Assets
Cash and due from banks

$

577,967

 

$

563,622

 

3

%

$

379,798

 

52

%

Interest-bearing time deposits with other banks

 

5,226

 

 

1,174

 

N/M

 

 

934

 

N/M

 

Debt securities available for sale

 

419,213

 

 

398,302

 

5

%

 

343,558

 

22

%

Equity securities

 

4,703

 

 

4,505

 

4

%

 

4,642

 

1

%

Loans held for sale

 

 

 

 

N/M

 

 

7,725

 

(100

)%

Loans, net of allowance for credit losses of $29,404, $34,267 and $45,464

 

1,319,568

 

 

1,382,860

 

(5

)%

 

1,613,385

 

(18

)%

Accrued interest receivable

 

8,509

 

 

8,854

 

(4

)%

 

7,829

 

9

%

Mortgage servicing rights, net

 

1,542

 

 

1,631

 

(5

)%

 

1,794

 

(14

)%

Leasehold improvements and equipment, net

 

5,430

 

 

5,583

 

(3

)%

 

6,301

 

(14

)%

Operating lease right-of-use assets

 

11,454

 

 

12,197

 

(6

)%

 

14,800

 

(23

)%

Federal Home Loan Bank stock, at cost

 

18,923

 

 

18,923

 

0

%

 

20,288

 

(7

)%

Federal Reserve Bank stock, at cost

 

9,048

 

 

9,001

 

1

%

 

 

N/M

 

Company-owned life insurance

 

8,711

 

 

8,658

 

1

%

 

8,501

 

2

%

Deferred tax asset, net

 

16,959

 

 

22,475

 

(25

)%

 

23,704

 

(28

)%

Other assets

 

8,750

 

 

8,888

 

(2

)%

 

11,476

 

(24

)%

Total assets

$

2,416,003

 

$

2,446,673

 

(1

)%

$

2,444,735

 

(1

)%

 
Liabilities
Noninterest-bearing deposits

$

35,245

 

$

40,780

 

(14

)%

$

53,041

 

(34

)%

Interest-bearing deposits

 

1,968,741

 

 

1,999,878

 

(2

)%

 

1,900,996

 

4

%

Total deposits

 

2,003,986

 

 

2,040,658

 

(2

)%

 

1,954,037

 

3

%

Federal Home Loan Bank borrowings

 

50,000

 

 

50,000

 

0

%

 

50,000

 

0

%

Subordinated notes, net

 

 

 

 

N/M

 

 

65,271

 

(100

)%

Operating lease liabilities

 

12,537

 

 

13,317

 

(6

)%

 

15,990

 

(22

)%

Other liabilities

 

21,757

 

 

26,595

 

(18

)%

 

46,810

 

(54

)%

Total liabilities

 

2,088,280

 

 

2,130,570

 

(2

)%

 

2,132,108

 

(2

)%

 
Shareholders’ Equity
Preferred stock, authorized 10,000,000 shares; no shares issued and outstanding

 

 

 

 

 

 

 

 

Common stock, no par value, authorized 500,000,000 shares; shares issued and outstanding 52,070,361, 52,072,631 and 50,795,871

 

84,323

 

 

84,323

 

0

%

 

83,295

 

1

%

Additional paid-in capital

 

16,660

 

 

15,882

 

5

%

 

14,808

 

13

%

Retained earnings

 

241,964

 

 

236,901

 

2

%

 

234,049

 

3

%

Accumulated other comprehensive loss

 

(15,224

)

 

(21,003

)

28

%

 

(19,525

)

22

%

Total shareholders’ equity

 

327,723

 

 

316,103

 

4

%

 

312,627

 

5

%

Total liabilities and shareholders’ equity

$

2,416,003

 

$

2,446,673

 

(1

)%

$

2,444,735

 

(1

)%

 
N/M - Not Meaningful
Sterling Bancorp, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
 

Three Months Ended

 

Year Ended

December 31,

 

September 30,

 

%

 

December 31,

 

%

 

December 31,

 

December 31,

 

%

(dollars in thousands, except per share amounts)

2023

 

2023

 

change

 

2022

 

change

 

2023

 

2022

 

change

Interest income
Interest and fees on loans

$

20,969

 

$

21,663

 

(3

)%

$

21,786

 

(4

)%

$

86,684

 

$

87,375

 

(1

)%

Interest and dividends on investment securities and restricted stock

 

3,800

 

 

3,134

 

21

%

 

2,293

 

66

%

 

12,056

 

 

6,426

 

88

%

Interest on interest-bearing cash deposits

 

8,159

 

 

8,081

 

1

%

 

3,200

 

N/M

 

 

28,049

 

 

6,131

 

N/M

 

Total interest income

 

32,928

 

 

32,878

 

0

%

 

27,279

 

21

%

 

126,789

 

 

99,932

 

27

%

Interest expense
Interest on deposits

 

17,572

 

 

16,391

 

7

%

 

6,922

 

N/M

 

 

57,109

 

 

14,992

 

N/M

 

Interest on Federal Home Loan Bank borrowings

 

251

 

 

250

 

0

%

 

250

 

0

%

 

994

 

 

1,169

 

(15

)%

Interest on subordinated notes

 

 

 

243

 

(100

)%

 

1,586

 

(100

)%

 

3,727

 

 

4,969

 

(25

)%

Total interest expense

 

17,823

 

 

16,884

 

6

%

 

8,758

 

N/M

 

 

61,830

 

 

21,130

 

N/M

 

Net interest income

 

15,105

 

 

15,994

 

(6

)%

 

18,521

 

(18

)%

 

64,959

 

 

78,802

 

(18

)%

Recovery of credit losses

 

(4,357

)

 

(1,942

)

N/M

 

 

(179

)

N/M

 

 

(8,527

)

 

(9,934

)

14

%

Net interest income after recovery of credit losses

 

19,462

 

 

17,936

 

9

%

 

18,700

 

4

%

 

73,486

 

 

88,736

 

(17

)%

Non-interest income
Service charges and fees

 

75

 

 

97

 

(23

)%

 

84

 

(11

)%

 

344

 

 

435

 

(21

)%

Gain (loss) on sale of investment securities

 

(111

)

 

 

N/M

 

 

32

 

N/M

 

 

(113

)

 

32

 

N/M

 

Gain (loss) on sale of loans held for sale

 

(72

)

 

 

N/M

 

 

(57

)

(26

)%

 

1,623

 

 

143

 

N/M

 

Unrealized gain (loss) on equity securities

 

198

 

 

(137

)

N/M

 

 

10

 

N/M

 

 

61

 

 

(580

)

N/M

 

Net servicing income (loss)

 

40

 

 

107

 

(63

)%

 

98

 

(59

)%

 

308

 

 

(20

)

N/M

 

Income earned on company-owned life insurance

 

83

 

 

83

 

0

%

 

81

 

2

%

 

327

 

 

751

 

(56

)%

Other

 

 

 

234

 

(100

)%

 

 

N/M

 

 

236

 

 

586

 

(60

)%

Total non-interest income

 

213

 

 

384

 

(45

)%

 

248

 

(14

)%

 

2,786

 

 

1,347

 

N/M

 

Non-interest expense
Salaries and employee benefits

 

8,500

 

 

8,753

 

(3

)%

 

8,985

 

(5

)%

 

35,937

 

 

33,507

 

7

%

Occupancy and equipment

 

2,096

 

 

2,110

 

(1

)%

 

2,216

 

(5

)%

 

8,369

 

 

8,657

 

(3

)%

Professional fees

 

(908

)

 

4,242

 

N/M

 

 

5,929

 

N/M

 

 

10,076

 

 

23,908

 

(58

)%

FDIC insurance

 

264

 

 

274

 

(4

)%

 

115

 

N/M

 

 

1,058

 

 

1,146

 

(8

)%

Data processing

 

704

 

 

745

 

(6

)%

 

766

 

(8

)%

 

2,941

 

 

3,058

 

(4

)%

Net provision for (recovery of) mortgage repurchase liability

 

(40

)

 

(80

)

50

%

 

31

 

N/M

 

 

(59

)

 

(639

)

91

%

Provision for contingent losses

 

 

 

 

N/M

 

 

18,239

 

(100

)%

 

 

 

18,239

 

(100

)%

Other

 

2,214

 

 

1,658

 

34

%

 

829

 

N/M

 

 

7,388

 

 

9,772

 

(24

)%

Total non-interest expense

 

12,830

 

 

17,702

 

(28

)%

 

37,110

 

(65

)%

 

65,710

 

 

97,648

 

(33

)%

Income (loss) before income taxes

 

6,845

 

 

618

 

N/M

 

 

(18,162

)

N/M

 

 

10,562

 

 

(7,565

)

N/M

 

Income tax expense

 

1,782

 

 

304

 

N/M

 

 

271

 

N/M

 

 

3,149

 

 

6,629

 

(52

)%

Net income (loss)

$

5,063

 

$

314

 

N/M

 

$

(18,433

)

N/M

 

$

7,413

 

$

(14,194

)

N/M

 

 
Income (loss) per share, basic and diluted

$

0.10

 

$

0.01

 

$

(0.37

)

$

0.15

 

$

(0.28

)

Weighted average common shares outstanding:
Basic

 

50,703,220

 

 

50,699,967

 

 

50,403,310

 

 

50,630,928

 

 

50,346,198

 

Diluted

 

51,182,011

 

 

51,069,683

 

 

50,403,310

 

 

50,778,559

 

 

50,346,198

 

 
N/M - Not Meaningful
Sterling Bancorp, Inc.
Yield Analysis and Net Interest Income (Unaudited)
             
Three Months Ended
December 31, 2023 September 30, 2023 December 31, 2022
Average     Average Average     Average Average     Average
(dollars in thousands) Balance   Interest   Yield/Rate Balance   Interest   Yield/Rate Balance   Interest   Yield/Rate
Interest-earning assets            
Loans(1)            
Residential real estate and other consumer

$

1,111,391

 

$

17,181

 

6.18

%

$

1,174,075

 

$

17,546

 

5.98

%

$

1,428,840

 

$

18,331

 

5.13

%

Commercial real estate

 

237,997

 

 

3,065

 

5.15

%

 

228,939

 

 

2,953

 

5.16

%

 

219,414

 

 

2,480

 

4.52

%

Construction

 

13,789

 

 

347

 

10.07

%

 

29,337

 

 

786

 

10.72

%

 

45,486

 

 

957

 

8.42

%

Commercial and industrial

 

17,611

 

 

376

 

8.54

%

 

17,796

 

 

378

 

8.50

%

 

1,389

 

 

18

 

5.18

%

Total loans

 

1,380,788

 

 

20,969

 

6.07

%

 

1,450,147

 

 

21,663

 

5.98

%

 

1,695,129

 

 

21,786

 

5.14

%

Securities, includes restricted stock(2)

 

431,994

 

 

3,800

 

3.52

%

 

400,838

 

 

3,134

 

3.13

%

 

370,460

 

 

2,293

 

2.48

%

Other interest-earning assets

 

585,703

 

 

8,159

 

5.57

%

 

589,267

 

 

8,081

 

5.49

%

 

335,237

 

 

3,200

 

3.82

%

Total interest-earning assets

 

2,398,485

 

 

32,928

 

5.49

%

 

2,440,252

 

 

32,878

 

5.39

%

 

2,400,826

 

 

27,279

 

4.54

%

Noninterest-earning assets            
Cash and due from banks

 

3,822

   

 

4,780

   

 

4,221

   
Other assets

 

30,305

   

 

29,535

   

 

28,432

   
Total assets

$

2,432,612

   

$

2,474,567

   

$

2,433,479

   
Interest-bearing liabilities            
Money market, savings and NOW

$

1,116,533

 

$

9,745

 

3.46

%

$

1,099,070

 

$

8,930

 

3.22

%

$

1,078,873

 

$

3,490

 

1.28

%

Time deposits

 

873,928

 

 

7,827

 

3.55

%

 

907,466

 

 

7,461

 

3.26

%

 

799,524

 

 

3,432

 

1.70

%

Total interest-bearing deposits

 

1,990,461

 

 

17,572

 

3.50

%

 

2,006,536

 

 

16,391

 

3.24

%

 

1,878,397

 

 

6,922

 

1.46

%

FHLB borrowings

 

50,000

 

 

251

 

1.96

%

 

50,000

 

 

250

 

1.96

%

 

50,000

 

 

250

 

1.96

%

Subordinated notes, net

 

-

 

 

-

 

0.00

%

 

9,218

 

 

243

 

10.32

%

 

65,283

 

 

1,586

 

9.51

%

Total borrowings

 

50,000

 

 

251

 

1.96

%

 

59,218

 

 

493

 

3.26

%

 

115,283

 

 

1,836

 

6.23

%

Total interest-bearing liabilities

 

2,040,461

 

 

17,823

 

3.47

%

 

2,065,754

 

 

16,884

 

3.24

%

 

1,993,680

 

 

8,758

 

1.74

%

Noninterest-bearing liabilities            
Demand deposits

 

38,310

   

 

42,355

   

 

60,615

   
Other liabilities

 

36,768

   

 

48,640

   

 

49,036

   
Shareholders' equity

 

317,073

   

 

317,818

   

 

330,148

   
Total liabilities and shareholders' equity

$

2,432,612

   

$

2,474,567

   

$

2,433,479

   
Net interest income and spread(2)  

$

15,105

 

2.02

%

 

$

15,994

 

2.15

%

 

$

18,521

 

2.80

%

Net interest margin(2)    

2.52

%

   

2.62

%

   

3.09

%

             
(1) Nonaccrual loans are included in the respective average loan balances. Income, if any, on such loans is recognized on a cash basis.
(2) Interest income does not include taxable equivalence adjustments.
             
Year Ended    
December 31, 2023 December 31, 2022    
Average     Average Average     Average    
(dollars in thousands) Balance   Interest   Yield/Rate Balance   Interest   Yield/Rate    
Interest-earning assets            
Loans(1)            
Residential real estate and other consumer

$

1,231,559

 

$

71,491

 

5.80

%

$

1,524,373

 

$

71,229

 

4.67

%

   
Commercial real estate

 

228,963

 

 

11,401

 

4.98

%

 

225,480

 

 

10,921

 

4.84

%

   
Construction

 

29,020

 

 

2,987

 

10.29

%

 

63,841

 

 

5,179

 

8.11

%

   
Commercial and industrial

 

9,827

 

 

805

 

8.19

%

 

879

 

 

46

 

5.23

%

   
Total loans

 

1,499,369

 

 

86,684

 

5.78

%

 

1,814,573

 

 

87,375

 

4.82

%

   
Securities, includes restricted stock(2)

 

393,767

 

 

12,056

 

3.06

%

 

377,959

 

 

6,426

 

1.70

%

   
Other interest-earning assets

 

532,789

 

 

28,049

 

5.26

%

 

380,236

 

 

6,131

 

1.61

%

   
Total interest-earning assets

 

2,425,925

 

 

126,789

 

5.23

%

 

2,572,768

 

 

99,932

 

3.88

%

   
Noninterest-earning assets            
Cash and due from banks

 

4,326

   

 

3,942

       
Other assets

 

28,648

   

 

33,547

       
Total assets

$

2,458,899

   

$

2,610,257

       
Interest-bearing liabilities            
Money market, savings and NOW

$

1,049,818

 

$

29,559

 

2.82

%

$

1,215,059

 

$

7,006

 

0.58

%

   
Time deposits

 

912,966

 

 

27,550

 

3.02

%

 

782,760

 

 

7,986

 

1.02

%

   
Total interest-bearing deposits

 

1,962,784

 

 

57,109

 

2.91

%

 

1,997,819

 

 

14,992

 

0.75

%

   
FHLB borrowings

 

50,000

 

 

994

 

1.99

%

 

89,822

 

 

1,169

 

1.30

%

   
Subordinated notes, net

 

34,683

 

 

3,727

 

10.60

%

 

65,310

 

 

4,969

 

7.50

%

   
Total borrowings

 

84,683

 

 

4,721

 

5.50

%

 

155,132

 

 

6,138

 

3.90

%

   
Total interest-bearing liabilities

 

2,047,467

 

 

61,830

 

3.02

%

 

2,152,951

 

 

21,130

 

0.98

%

   
Noninterest-bearing liabilities            
Demand deposits

 

43,702

   

 

67,953

       
Other liabilities

 

52,220

   

 

50,740

       
Shareholders' equity

 

315,510

   

 

338,613

       
Total liabilities and shareholders' equity

$

2,458,899

   

$

2,610,257

       
Net interest income and spread(2)  

$

64,959

 

2.21

%

 

$

78,802

 

2.90

%

   
Net interest margin(2)    

2.68

%

   

3.06

%

   
             
(1) Nonaccrual loans are included in the respective average loan balances. Income, if any, on such loans is recognized on a cash basis.
(2) Interest income does not include taxable equivalence adjustments.
Sterling Bancorp, Inc.
Loan Composition (Unaudited)
 

December 31,

 

September 30,

 

%

 

December 31,

 

%

(dollars in thousands)

2023

 

2023

 

change

 

2022

 

change

Residential real estate

$

1,085,776

 

$

1,139,205

 

 

(5

)%

$

1,391,276

 

 

(22

)%

Commercial real estate

 

236,982

 

 

237,812

 

 

(0

)%

 

221,669

 

 

7

%

Construction

 

10,381

 

 

22,292

 

 

(53

)%

 

44,503

 

 

(77

)%

Commercial and industrial

 

15,832

 

 

17,809

 

 

(11

)%

 

1,396

 

 

N/M

 

Other consumer

 

1

 

 

9

 

 

(89

)%

 

5

 

 

(80

)%

Total loans held for investment

 

1,348,972

 

 

1,417,127

 

 

(5

)%

 

1,658,849

 

 

(19

)%

Less: allowance for credit losses

 

(29,404

)

 

(34,267

)

 

(14

)%

 

(45,464

)

 

(35

)%

Loans, net

$

1,319,568

 

$

1,382,860

 

 

(5

)%

$

1,613,385

 

 

(18

)%

 
Loans held for sale

$

-

 

$

-

 

 

N/M

 

$

7,725

 

 

(100

)%

Total gross loans

$

1,348,972

 

$

1,417,127

 

 

(5

)%

$

1,666,574

 

 

(19

)%

 
N/M - Not Meaningful
 
 
 
Sterling Bancorp, Inc.
Allowance for Credit Losses - Loans (Unaudited)
 

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31, December 31,
(dollars in thousands)

2023

 

2023

 

2022

 

2023

 

2022

Balance at beginning of period

$

34,267

 

$

36,153

 

$

45,362

 

$

45,464

 

$

56,548

 

Adjustment to adopt ASU 2016-13

 

 

 

 

 

 

 

(1,651

)

 

 

Adjustment to adopt ASU 2022-02

 

 

 

 

 

 

 

380

 

 

 

Balance after adoption

$

34,267

 

$

36,153

 

$

45,362

 

$

44,193

 

$

56,548

 

Provision for (recovery of) credit losses

 

(4,927

)

 

(1,887

)

 

(179

)

 

(8,844

)

 

(9,934

)

Charge offs

 

 

 

 

 

 

 

(6,478

)

 

(4,261

)

Recoveries

 

64

 

 

1

 

 

281

 

 

533

 

 

3,111

 

Balance at end of period

$

29,404

 

$

34,267

 

$

45,464

 

$

29,404

 

$

45,464

 

 
 
 
Sterling Bancorp, Inc.
Deposit Composition (Unaudited)
 

December 31,

 

September 30,

 

%

 

December 31,

 

%

(dollars in thousands)

2023

 

2023

 

change

 

2022

 

change

Noninterest-bearing deposits

$

35,245

 

$

40,780

 

 

(14

)%

$

53,041

 

 

(34

)%

Money Market, Savings and NOW

 

1,095,521

 

 

1,127,735

 

 

(3

)%

 

1,039,263

 

 

5

%

Time deposits

 

873,220

 

 

872,143

 

 

0

%

 

861,733

 

 

1

%

Total deposits

$

2,003,986

 

$

2,040,658

 

 

(2

)%

$

1,954,037

 

 

3

%

Sterling Bancorp, Inc.
Credit Quality Data (Unaudited)
 
At and for the Three Months Ended

December 31,

 

September 30,

 

December 31,

(dollars in thousands)

2023

 

2023

 

2022

Nonaccrual loans(1)(2)
Residential real estate

$

8,942

 

$

5,035

 

$

33,690

 

Loans past due 90 days or more and still accruing interest

 

31

 

 

1,147

 

 

35

 

Nonperforming loans

 

8,973

 

 

6,182

 

 

33,725

 

Other troubled debt restructurings(3)

 

 

 

 

 

2,637

 

Nonaccrual loans held for sale

 

 

 

 

 

1,942

 

Nonperforming assets

$

8,973

 

$

6,182

 

$

38,304

 

Total loans (1)

$

1,348,972

 

$

1,417,127

 

$

1,658,849

 

Total assets

$

2,416,003

 

$

2,446,673

 

$

2,444,735

 

Nonaccrual loans to total loans outstanding (2)

 

0.66

%

 

0.36

%

 

2.03

%

Nonperforming assets to total assets

 

0.37

%

 

0.25

%

 

1.57

%

Allowance for credit losses to total loans

 

2.18

%

 

2.42

%

 

2.74

%

Allowance for credit losses to nonaccrual loans

 

329

%

 

681

%

 

135

%

Net charge offs (recoveries) to average loans outstanding during the period

 

0.00

%

 

0.00

%

 

(0.02

)%

 
(1) Loans are classified as held for investment and are presented before the allowance for credit losses.
(2) Total nonaccrual loans exclude nonaccrual loans held for sale. If nonaccrual loans held for sale are included, the ratio of total nonaccrual loans to total gross loans would be 0.66%, 0.36% and 2.14% at December 31, 2023, September 30, 2023, and December 31, 2022, respectively.
(3) Other troubled debt restructurings at December 31, 2022 exclude those loans presented above as nonaccrual or past due 90 days or more and still accruing interest. Effective January 1, 2023, loan modifications involving borrowers experiencing financial difficulty are evaluated under the new credit loss model. There were no such loan modifications during the three months ended December 31, 2023 and September 30, 2023.

 

Contacts

Investor Contact:

Sterling Bancorp, Inc.

Karen Knott

Executive Vice President and Chief Financial Officer

(248) 359-6624

kzaborney@sterlingbank.com

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