Sterling Bancorp Net Income From Recurring Operations Rises 15% To $5.6 Million For The 2013 Second Quarter

NEW YORK, July 26, 2013 /PRNewswire/ -- 

Sterling Bancorp (NYSE: STL) today reported on its financial and operating results for the 2013 second quarter, highlighted by growth in loans and deposits, higher revenues, expense discipline and continued sound asset quality.

Net income from recurring operations rose 15% for the 2013 second quarter to $5.6 million, or $0.18 per diluted share.  This figure excludes professional fee expenses related to the planned merger with Provident New York Bancorp of $1.1 million after tax effect.  On a GAAP basis, including the merger-related fee expenses, net income for the 2013 second quarter was $4.5 million, or $0.15 per diluted share.      

For the first six months of 2013, net income from recurring operations rose 15% from the year-ago period, to $10.9 million, or $0.35 per diluted share.  GAAP net income was $9.8 million or $0.32 per diluted share, including the merger-related professional fee expenses.

Selected Financial Highlights

2013 Second Quarter: Business Growth, Rising Operating Earnings

"Sterling Bancorp's solid performance for the 2013 second quarter is clearly reflected in the increase of 19% in pre-tax income from recurring operations. Our progress is also demonstrated by the continued growth of loans and deposits, higher gross revenues, expense discipline and sound asset quality," noted Louis J. Cappelli, Sterling's Chairman and Chief Executive Officer. 

"These results also continued to benefit from our successful asset-liability management strategy, which provided the liquidity to fund a meaningful level of loan growth and led to an expansion of the net interest margin to 4.10% – which increased as compared to both the year-ago second quarter and the first quarter of 2013. We believe Sterling is well positioned for a rising interest rate environment that may result from the market's reaction to anticipated actions by the Federal Reserve Board.  We offer a range of financial products that should experience rising demand in a strengthening economy, and that provide diverse sources of interest income and noninterest income, and we also have an asset-sensitive balance sheet that should benefit from higher interest rates."

Sterling Bancorp-Provident Bancorp Merger

As previously announced on April 4, 2013, Sterling Bancorp and Provident New York Bancorp have entered into a definitive merger agreement in a stock-for-stock transaction.  Following the merger, the resulting holding company and national bank will maintain the Sterling brand name.  The merger is expected to close in the fourth calendar quarter of 2013, subject to approval by the shareholders of both companies, regulatory approval and other customary closing conditions. Sterling Bancorp shareholders will be notified when a special meeting to vote on the merger has been scheduled.   

"Our enthusiasm about the merger with Provident, and the enormous opportunity to create a premier high performing banking institution, grows stronger every day.  Merger integration planning is in process, with the engagement of both the Sterling and Provident teams, to ensure that the transaction is a success from Day 1, and that we deliver the full potential of the merger through revenue growth, expense savings and a high level of customer service.  We will offer a broader range of services to small-to-middle market businesses and consumers in the greater New York metropolitan area and beyond, and are committed to delivering solid value for shareholders," Mr. Cappelli noted.

The merger agreement provides for Sterling and Provident to coordinate with each other regarding the declaration and payment of dividends. Accordingly, Sterling recently announced that its next quarterly cash dividend of $0.09 per common share will be payable on August 15, 2013 to shareholders of record as of August 1, 2013. This payment extends Sterling's history of continuous cash dividends to 271 consecutive quarters or more than 67 years.

Net Interest Income

Net interest income was $24.4 million for second quarter 2013, an increase of 7% from the 2012 period. This growth was primarily driven by higher loan balances due to a continuing strategy of shifting the Company's asset mix toward loans from investment securities, as well as a reduction in cost of funds largely due to disciplined deposit pricing, rising noninterest-bearing demand deposit balances, and a pay-down of higher cost borrowings. Net interest margin increased to 4.10% for the 2013 second quarter, increasing 6 basis points compared to the 2012 second quarter and 8 basis points from the 2013 first quarter.  For the first six months of 2013, net interest income increased more than 7% to $48.5 million.

Noninterest Income

Noninterest income was $9.8 million for the 2013 second quarter, versus $10.5 million a year ago. For the first six months of 2013, noninterest income was $20.5 million, compared to $20.8 million a year ago.  Noninterest income in 2013 benefitted from growth in mortgage banking income.  Accounts receivable management and other related fees and security gains decreased, offsetting this benefit.  

Noninterest Expenses

Noninterest expenses were $25.8 million for second quarter 2013, versus $23.6 million for the same 2012 period. Excluding the merger-related professional fee expenses previously noted, noninterest expenses increased 3% from a year ago, primarily reflecting investments in the growth of Sterling's business along with expenses associated with Universal Mortgage, acquired in the 2012 third quarter.  Noninterest expenses for the first six months of 2013 were $50.6 million, compared to $46.7 million a year earlier, again reflecting merger-related fee expenses, investments in the growth of Sterling's business, and expenses associated with Universal Mortgage. 

Loan, Deposit and Asset Growth

Total loans, net of unearned discount approached $1.8 billion as of June 30, 2013, an increase of 12% from a year earlier.  The ratio of loans to deposits was 80% at June 30, 2013.

Total deposits were more than $2.2 billion at June 30, 2013, increasing approximately 10% from a year earlier. Noninterest-bearing demand deposits represented 42% of total deposits, among the highest ratios of demand to total deposits in the industry.  The growth in demand deposits reflects the Company's emphasis on generating such deposits as part of its customer relationship model.

Total assets increased to over $2.7 billion at June 30, 2013.  Total investment securities decreased by $52.2 million from a year ago, to $675.2 million, reflecting the successful strategy of redeploying assets from investments into loans. 

Asset Quality

Sterling continued to demonstrate sound credit quality metrics during the 2013 second quarter.  Net charge-offs were $1.4 million for the recent quarter, down from $1.7 million for the same 2012 period.  Nonperforming assets were $6.7 million or 0.24% of total assets at June 30, 2013, compared to $7.1 million or 0.28% a year earlier.  The allowance for loan losses as a percentage of portfolio loans was 1.30% at June 30, 2013, compared to 1.35% a year earlier.  The Company's continued sound asset quality is reflected in a provision for loan losses of $1.5 million for second quarter 2013, a decrease from $2.8 million a year ago. 

Capital

The Company's capital base has continued to exceed all regulatory requirements for well-capitalized institutions.  At June 30, 2013, Sterling's Tier 1 risk-based capital ratio was 11.54% (compared to a requirement of 6.00%), total risk-based capital was 12.65% (requirement of 10.00%), and the Tier 1 leverage ratio was 9.36% (requirement of 5.00%).  The tangible common equity ratio was 7.75% at June 30, 2013.

Conference Call

Sterling Bancorp will hold a conference call on Friday, July 26, 2013, at 10:00 a.m. Eastern Time to discuss these financial results.  To access the conference call live, interested parties may dial 800-288-8976 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 26, 2013, until 11:59 p.m. Eastern Time on August 9, 2013.  To access the replay by telephone, interested parties may dial 800-475-6701 and enter the Access Code 298680.

About Sterling Bancorp

Sterling Bancorp (NYSE: STL) is a New York City-based financial corporation with assets of $2.7 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.

Forward Looking Statements
Certain statements in this press release, including, but not limited to, statements as to future results of operations, liquidity, interest rate risk, operating expenses, financial position, dividends and other events, plans and objectives for future operations, capital, liquidity, and growth, statements concerning the economic environment, asset quality and future levels of nonaccrual loans, charge-offs and provisions for loan losses, the effect of actions of the Federal Reserve on interest rates, the impact of rising interest rates on our performance and financial condition, the demand for our products in a strengthened economy, our ability to offer a broader range of services to small-to-middle market businesses and consumers in the greater New York metropolitan area and beyond, whether we can continue to shift our asset mix toward loans from investment securities, our ability and Provident's ability to obtain shareholder and regulatory approvals and meet other closing conditions to the merger, 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, 2012.

Additional Information for Stockholders
In connection with the proposed merger with Provident, Provident has filed with the Securities and Exchange Commission ("SEC") a Registration Statement on Form S-4 that includes a joint proxy statement of Provident and the Company and a prospectus of Provident, as well as other relevant documents concerning the proposed transaction and will file further amendments to certain of these documents.  The Company will mail the joint proxy statement/prospectus to its stockholders.  SHAREHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED MERGER WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.  Investors and security holders may obtain a free copy of the proxy statement/prospectus (when available) and other filings containing information about Provident and Sterling at the SEC's website at www.sec.gov.  The joint proxy statement/prospectus (when available) and the other filings may also be obtained free of charge at Provident's website at www.providentbanking.com under the tab "Investor Relations," and then under the heading "SEC Filings" or at the Company's website at www.snb.com under the tab "Investor Relations," and then under the heading "SEC Filings."

Provident, the Company and certain of their respective directors and executive officers, under the SEC's rules, may be deemed to be participants in the solicitation of proxies of Provident and the Company's shareholders in connection with the proposed merger.  Information about the directors and executive officers of Provident and their ownership of Provident common stock is set forth in the proxy statement for Provident's 2013 annual meeting of shareholders, as filed with the SEC on Schedule 14A on January 10, 2013. Information about the directors and executive officers of the Company and their ownership of our common stock is set forth in the proxy statement for the Company's 2012 annual meeting of shareholders, as filed with the SEC on a Schedule 14A on April 3, 2012.  Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the joint proxy statement/prospectus regarding the proposed merger when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph.

SOURCE Sterling Bancorp