Sterling Bancorp Reports Net Income Available to Common Shareholders of $15.5 Million for 2011, up From $4.4 Million in 2010

NEW YORK, Jan. 31, 2012 /PRNewswire/ --

Highlights*:

• Sharp growth in profitability – Net income available to common shareholders for 2011 was 350% of the 2010 amount.
• Higher net interest income – Sterling’s results benefitted from an increase in net interest income to $84.1 million in 2011 from $81.6 million in 2010.
• Rising loan volume – Loans in portfolio rose 12% and approached $1.5 billion.
• Improved yield on loans – The yield on loans was up by 5 basis points sequentially, to 5.42% for the 2011 fourth quarter, as compared to the 2011 third quarter.
• Increasing deposits – Total deposits approached $2.0 billion, rising 14%.  Noninterest-bearing demand deposits increased 34%, to $765.8 million.
• Noninterest income – Total noninterest income was $44.1 million, or 31% of total revenue.
• Expense control – Noninterest expenses increased 3%, comparing 2011 to 2010.
• Tax benefit – The Company recognized a tax benefit in the 2011 periods due to the completion of tax audits for prior years.  
• Strong capital – The tangible common equity ratio was 8.01%, up from 6.81%, reflecting the benefit of a public equity offering in March 2011 as well as retention of earnings.
• TARP repayment – In 2011, Sterling redeemed all of the preferred stock and warrants issued to the U.S. Treasury under the TARP Capital Purchase Program.
• Growing assets – Total assets approached $2.5 billion, an increase of 6%.
• Solid credit metrics – The allowance for loan losses as a percentage of nonaccrual loans increased to 315% from 275% a year ago.  The provision for loan losses decreased to $12.0 million from $28.5 million. The ratio of nonperforming assets to total assets was 0.33%, compared to 0.29% a year ago.  

* As of December 31, 2011 and 2010 or full-year periods, as applicable, unless otherwise noted.

Sterling Bancorp (NYSE: STL), a financial holding company headquartered in New York City and the parent company of Sterling National Bank, today reported higher earnings for the full year and fourth quarter ended December 31, 2011, as well as strong growth in loans, deposits and total assets.

Net income available to common shareholders for the full year 2011 was $15.5 million, or 350% of the $4.4 million reported in 2010.  Net income available to common shareholders per diluted share increased to $0.51 for 2011, from $0.18 a year ago.

For the 2011 fourth quarter, net income available to common shareholders was $5.3 million, increasing from $3.5 million in the 2010 fourth quarter.  Net income available to common shareholders per diluted share increased to $0.17 for the 2011 fourth quarter, from $0.13 in the 2010 fourth quarter.

Results for the full year and fourth quarter 2011 benefitted from continued growth in the Company's loan volume, which led to higher net interest income and increased accounts receivable management and other related fees.  The 2011 results also reflected certain items specific to the fourth quarter, including: a net tax benefit, primarily due to the completion of Federal tax audits for the periods 2002 through 2009, of approximately $1.9 million; an expense related to the settlement of certain litigation of approximately $900 thousand; and a write-down of certain assets to realizable value, amounting to about $600 thousand. In a loss mitigation effort related to the residential mortgage repurchase issues prevalent across the banking industry, the Company also recognized a charge for incurred and probable repurchase obligations of nearly $700 thousand.    

Management Perspective

"Sterling delivered strong results in 2011, with net income available to common shareholders at 350% of the 2010 level, double-digit growth in loans and deposits, and solid asset quality.  This performance in a year of challenge and uncertainty for the overall economy and financial industry demonstrates the fundamental earnings power of our business model.  We saw robust demand for our products and services, reflecting our unwavering commitment to the needs of small-to-midsized businesses and all of our customers, and our focus on a resilient marketplace in the New York metropolitan area and beyond," said Louis J. Cappelli, Sterling's Chairman and Chief Executive Officer.

"Sterling has continued to thrive because of our longstanding commitment to serve the needs of the small-to-midsized businesses that are vital engines of economic activity and job creation.  In the recent past, we have enhanced our offerings to these customers by expanding our range of financial solutions, including such capabilities as mortgage warehouse financing and trade financing.  Our capacity to serve our market and grow our business for the future is also supported by our strong capital base and high asset quality.  We look forward to building on this solid platform to drive profitable performance and grow shareholder value in the future," Mr. Cappelli concluded.

Fourth Quarter 2011 Financial Results

Net income available to common shareholders for the fourth quarter of 2011 was $5.3 million, or $0.17 per diluted share, compared to $3.5 million, or $0.13 per diluted share for the same quarter of 2010.  Per share results in the 2011 fourth quarter reflected the impact of an additional 3.9 million average common shares outstanding, due to Sterling's March 2011 common share offering.  The proceeds of the offering provided additional capital to respond to growth opportunities.  The Company's per share earnings growth was partially offset by the effect of the higher share count.

Net interest income was $21.9 million for the 2011 fourth quarter, up from $20.3 million for the 2010 fourth quarter.  This primarily reflected the benefit of higher average loan balances and reduced funding costs, partially offset by the impact of lower yields on interest-earning assets and higher interest-bearing deposit balances.  Net interest margin was 3.77% for the 2011 fourth quarter, compared to 3.98% for the 2010 fourth quarter, due in part to Sterling's strategy of maintaining liquidity for future loan demand by investing in short-term instruments and interest-bearing deposits with the Federal Reserve Bank.

Total noninterest income was $10.3 million for the 2011 fourth quarter, compared to $12.1 million in the same period of 2010.  This primarily reflected higher accounts receivable management and other related fees, which were more than offset by decreased residential mortgage banking income due to the mortgage repurchase charge noted earlier and industry-wide conditions with respect to lower mortgage volume and the slower pace of investor funding. The 2011 period's results also reflect a reduction in service charges and securities gains.          

Noninterest expenses were $24.7 million for the 2011 fourth quarter, an increase of approximately $300 thousand from the year-ago period.  This increase principally reflected higher compensation expenses related to the growth in Sterling's business, and the expenses for certain legal matters and the asset write-down noted earlier, partially offset by lower deposit insurance premiums due to a change during the 2011 third quarter in the method of calculating such premiums.

Sterling recognized a tax benefit of $864 thousand in the 2011 fourth quarter, compared to a provision for income taxes of $928 thousand in the 2010 fourth quarter.  The 2011 period was positively impacted primarily by the net benefit from the completion of Federal tax audits noted earlier.  

Full Year 2011 Financial Results

Net income available to common shareholders for the full year 2011 was $15.5 million, or $0.51 per diluted share, compared to $4.4 million, or $0.18 per diluted share, for 2010.  Results for the 2011 period included a charge for accelerated accretion of $1.2 million due to the redemption of all issued and outstanding Series A preferred shares and repurchase of the related warrant to purchase common shares in each case issued under the TARP Capital Purchase Program.  Per share results in 2011 reflected the impact of an additional 5.5 million average common shares outstanding, largely due to Sterling's March 2011 common share offering.  

Net interest income was $84.1 million for 2011, compared to $81.6 million for 2010.  The comparison largely reflected the benefit of higher average loan and investment securities balances and reduced funding costs, partially offset by the impact of lower yields on interest-earning assets and higher interest-bearing deposit balances.  Net interest margin was 3.92% for 2011, compared to 4.25% for 2010, due in part to the strategy of maintaining liquidity, as noted earlier.

The provision for loan losses decreased to $12.0 million for 2011, compared to $28.5 million a year earlier.  The higher provision for loan losses in the year-ago period reflected the Company's decision in the 2010 third quarter to accelerate the resolution of certain nonaccrual loans, principally leasing receivables.

Total noninterest income was $44.1 million for 2011, compared to $47.6 million in 2010.  This primarily reflected higher accounts receivable management and other related fees, more than offset by lower residential mortgage banking income, service charges and securities gains.          

Noninterest expenses were $94.3 million for 2011, compared to $91.6 million in 2010.  This increase principally reflected higher compensation expenses and occupancy costs related to the growth in Sterling's business and expenses for certain legal matters as noted earlier, partially offset by lower deposit insurance premiums.

The provision for income taxes was $4.2 million in 2011, including the net effect of the tax benefit recognized in the fourth quarter.  In 2010, the provision for income taxes was $2.2 million.

Loans, Deposits and Total Assets

Total loans held in portfolio approached $1.5 billion at December 31, 2011, rising 12% from a year earlier.  The Company continues to have a robust loan pipeline.  The ratio of portfolio loans to deposits was approximately 74.1% at December 31, 2011.

Total deposits were nearly $2.0 billion at December 31, 2011, up 14% from $1.7 billion a year earlier.  Noninterest-bearing demand deposits totaled $765.8 million at December 31, 2011, a 34% increase from a year ago, and represented 39% of total deposits, among the highest ratios of demand to total deposits in the industry.  

Total assets approached $2.5 billion at December 31, 2011, an increase of 6% from a year ago.  

Asset Quality

Sterling continued to exhibit strong credit quality throughout 2011.  Net charge-offs declined to $10.2 million for 2011, from $29.6 million a year-ago.  The allowance for loan losses as a percentage of nonaccrual loans was 315% at December 31, 2011, improved from 275% a year earlier. Nonperforming assets were $8.3 million or 0.33% of total assets at December 31, 2011, compared to $6.8 million or 0.29% a year ago.  

Capital

Sterling's capital base has continued to exceed all regulatory requirements for well-capitalized institutions.  At December 31, 2011, Sterling's Tier 1 risk-based capital ratio was 12.61% (compared to a requirement of 6.00%), total risk-based capital was 13.71% (requirement of 10.00%), and the Tier 1 leverage ratio was 9.02% (requirement of 5.00%).  Also during 2011, the Company redeemed all of the preferred stock and warrants issued to the U.S. Treasury under the TARP Capital Purchase Program.

The tangible common equity ratio rose to 8.01% at December 31, 2011 from 6.81% a year ago.      

Conference Call

Sterling Bancorp will host a teleconference call for the financial community on January 31, 2012, at 10:00 a.m. Eastern Time to discuss the full year and fourth quarter 2011 financial results.  To access the conference call live, interested parties may dial 800-398-9367 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 January 31, 2012, until 11:59 p.m. Eastern Time on February 14, 2012.  To access the replay by telephone, interested parties may dial 800-475-6701 and enter the Access Code 233854.

About Sterling Bancorp

Sterling Bancorp (NYSE: STL) is a New York City-based financial corporation with assets exceeding $2.4 billion. Since 1929, Sterling National Bank, the company's principal banking subsidiary, has successfully served the needs of businesses, professionals and individuals in the New York 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 offers clients a full range of depository and cash management services plus 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 continued robust demand for the Company's products and services, continued strong capital base and high asset quality of the Company, and the Company's ability to continue enhancing its offerings to small-to-midsized businesses, 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, 2010.