Sterling Bancorp Net Income Climbs 94% in Second Quarter of 2012

NEW YORK, July 24, 2012 /PRNewswire/ --

Strong Financial Results

• Net income available to common shareholders was $4.9 million – approximately double the 2011 amount of $2.5 million.
• Earnings per share doubled to $0.16 from $0.08.
• Return on average tangible equity approached 10.00%.
• Total revenue rose 4% to $36.4 million.
• Net interest margin increased 14 basis points to 4.04%.
• Noninterest expenses were well-controlled, increasing less than 2%.

Robust Loan, Deposit and Asset Growth

• Loans in portfolio rose 15% to nearly $1.6 billion.
• Total deposits were $2.0 billion.
• Total assets approximated $2.6 billion.

Solid Credit Metrics

• Net charge-offs decreased to $1.7 million or 0.43% of loans.
• Ratio of nonperforming assets to total assets decreased to 0.28%.
• Allowance for loan losses as a percentage of nonaccrual loans was 377%.

Comparisons above are at or for the quarters ended June 30, 2012 vs. June 30, 2011.

Sterling Bancorp (NYSE: STL) today reported a 94% increase in net income available to common shareholders for the 2012 second quarter, rising to $4.9 million from $2.5 million in the 2011 second quarter.  Net income available to common shareholders per share doubled to $0.16 for the 2012 second quarter, from $0.08 in the year-ago period.

For the first six months of 2012, net income available to common shareholders rose 63% to $9.5 million from $5.8 million in the same period of 2011. Net income available to common shareholders per share was up 55% to $0.31 for the first six months of 2012, from $0.20 in the year-ago period.  Results for the 2011 second quarter and six months included dividends on preferred shares and accretion of $1.4 million and $2.1 million, respectively, related to TARP preferred shares and warrants to purchase common shares, which were redeemed in April 2011. 

Execution of Growth Strategies Drives Positive Momentum

"Sterling delivered outstanding second quarter results," said Louis J. Cappelli, Sterling's Chairman and Chief Executive Officer.  "Our EPS doubled on the strength of our continued growth in loans and deposits, higher total revenues, well-controlled expenses and further improvements in our already solid asset quality metrics."

"Our performance is a reflection of Sterling's strong core earnings power – as we have focused our strategies on positioning the Company for profitable growth and increasing shareholder value," Mr. Cappelli continued.  "We have aligned our product portfolio to serve the needs of businesses and others in the New York City-metropolitan region and beyond – a dynamic and robust market. We have a depth of expertise in an array of products, including categories that are often overlooked or underserved by competitors, which gives us many opportunities for growth.  We also have pursued an ongoing strategy to redeploy assets from our sizeable and liquid investment portfolio into loans, producing an improvement in our yield and net interest margin.  At the same time, we have a diversified revenue-generation capacity; our relatively high level of noninterest income, at approximately 30% of total revenues, provides balance and consistency at a time when loan yields are affected by the low interest rate environment. And we have contributed to our positive momentum through well-controlled expenses, which increased only $388 thousand compared to the $1.4 million growth in total revenues in the recent quarter.  In addition, asset quality has continued to improve from an already solid base."                  

"We feel very positive about our ability to drive profitable growth during the remainder of this year," noted Mr. Cappelli. "We remain focused on delivering increasing shareholder value by expanding our business volume and market share, growing our revenues, and maintaining control of expenses along with rigorous asset quality standards."

Net Interest Income

Net interest income rose 7% to $22.9 million for the 2012 second quarter, from $21.4 million for the 2011 second quarter.  This primarily reflected the Company's execution of its strategy to shift the asset mix toward higher loan balances and lower investment securities balances, with a resulting increase in yields, while also taking a disciplined approach to reducing funding costs.  Net interest margin increased to 4.04% for the 2012 second quarter, up 14 basis points compared to the year-ago period.  For the first six months of 2012, net interest income increased to $45.3 million, from $41.2 million for the 2011 period. 

Noninterest Income

Total noninterest income was $10.7 million for the 2012 second quarter, compared to $10.4 million in the 2011 second quarter.  This increase primarily reflected higher mortgage banking income and service charges, partially offset by lower accounts receivable management and other related fees and reduced securities gains.  For the first six months of 2012, total noninterest income was $21.1 million, versus $21.4 million in the year-ago period. Noninterest income was a key contributor to Sterling's financial performance, representing approximately 29% of total revenue in both the second quarter and first six months of 2012.

Noninterest Expenses

Noninterest expenses were $23.8 million for the 2012 second quarter, an increase of only $388 thousand or less than 2%, from the 2011 second quarter.  For the first six months of 2012, noninterest expenses were $47.0 million, an increase of approximately 2% from the same period of 2011. 

Loans, Deposits and Total Assets

Total loans held in portfolio were $1.57 billion at June 30, 2012, increasing 15% from a year earlier.  Sterling continues to have a robust loan pipeline and ample liquidity to support loan growth.  The ratio of portfolio loans to deposits was approximately 76.6% at June 30, 2012.

Total deposits were $2.04 billion at June 30, 2012.  Noninterest-bearing demand deposits totaled $786.4 million at June 30, 2012, a $184.1 million increase from a year ago, and represented 38% of total deposits, among the highest ratios of demand to total deposits in the industry. 

Total assets were $2.55 billion at June 30, 2012, essentially unchanged from $2.58 billion a year ago. 

Asset Quality

Sterling continued to exhibit strong credit quality metrics during the 2012 second quarter.  The provision for loan losses decreased to $2.75 million from $3.0 million for the same quarter of 2011, representing the lowest provision since the fourth quarter of 2008.  Net charge-offs were $1.7 million for the 2012 second quarter, the lowest level since the third quarter of 2008, and compared to $2.5 million a year ago. The allowance for loan losses as a percentage of nonaccrual loans was 377% at June 30, 2012, versus 323% a year earlier. Nonperforming assets were $7.1 million or 0.28% of total assets at June 30, 2012, compared to $7.7 million or 0.30% a year ago.  The allowance for loan losses as a percentage of portfolio loans was 1.35% at June 30, 2012, essentially unchanged from a year earlier.

Capital

The Company's capital base has continued to exceed all regulatory requirements for well-capitalized institutions.  At June 30, 2012, Sterling's Tier 1 risk-based capital ratio was 11.81% (compared to a requirement of 6.00%), total risk-based capital was 12.89% (requirement of 10.00%), and the Tier 1 leverage ratio was 9.58% (requirement of 5.00%).  The tangible common equity ratio was 8.09% at June 30, 2012.

Conference Call

Sterling Bancorp will host a teleconference call for the financial community on Tuesday, July 24, 2012, at 10:00 a.m. Eastern Time to discuss these financial results.  To access the conference call live, interested parties may dial 800-288-9626 at least 10 minutes prior to the call. 

A replay of the conference call will be available beginning at approximately 1:00 p.m. Eastern Time on July 24, 2012, until 11:59 p.m. Eastern Time on August 7, 2012.  To access the replay by telephone, interested parties may dial 800-475-6701 and enter the Access Code 254258.

About Sterling Bancorp

Sterling Bancorp (NYSE: STL) is a New York City-based financial corporation with assets of $2.6 billion. Since 1929, Sterling National Bank, the Company's principal banking subsidiary, has successfully served the needs of businesses, professionals and individuals in the NY metropolitan area and beyond. Sterling is well-known for its high-touch, hands-on approach to customer service and a special focus on serving the business community.

Sterling provides clients with a full range of depository and cash management services and a broad portfolio of financing solutions—including working capital lines, accounts receivable and inventory financing, factoring, trade financing, payroll funding and processing, equipment financing, commercial and residential mortgages and mortgage warehouse lines of credit.

Certain statements in this press release, including but not limited to, statements as to future events, future liquidity, future interest rate risk and operating expenses, statements concerning future results of operations, financial position or dividends, and plans and objectives for future operations, future capital, future liquidity and future growth, statements concerning the economic environment, asset quality and future levels of nonaccrual loans, charge-offs and provisions for loan losses, and our ability to continue growth in loans, deposits and revenues, to control expenses and to improve asset quality metrics, our ability to continue profitable growth and enhance shareholder value, our ability to identify overlooked or underserved categories of loans and to offer a diverse array of products, our ability to redeploy assets from investment portfolio to loans and to produce improvements in our yield and net interest margin from such strategy, our ability to drive profitable growth during the remainder of 2012, and our ability to maintain expand our business volume and market share, and other statements contained herein regarding matters that are not historical facts, are "forward-looking statements" as defined in the Securities Exchange Act of 1934. These statements are not historical facts but instead are subject to numerous assumptions, risks and uncertainties, and represent only the Company's belief regarding future events, many of which, by their nature, are inherently uncertain and outside its control. Any forward-looking statements the Company may make speak only as of the date on which such statements are made.  The Company's actual results and financial position may differ materially from the anticipated results and financial condition indicated in or implied by these forward-looking statements, and the Company makes no commitment to update or revise forward-looking statements to reflect new information or subsequent events or changes in expectations. For a discussion of some of the risks and important factors that could affect the Company's future results and financial condition, see "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations – Forward-Looking Statements and Factors that Could Affect Future Results" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

SOURCE Sterling Bancorp