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Sterling Bancorp Announces Results for the Three Months Ended March 31, 2017

Key Performance Highlights for the Three Months ended March 31, 2017 vs. March 31, 2016

($ in thousands except per share amounts)GAAP / As Reported Non-GAAP / As Adjusted1
2016 2017 Change
% / bps
2016 2017 Change
% / bps
Total revenue2$108,940 $121,626 11.6% $111,312 $125,751 13.0%
Net income23,766 39,067 64.4 32,159 41,461 28.9
Diluted EPS0.18 0.29 61.1 0.25 0.31 24.0
Net interest margin33.46% 3.42% (4) 3.53% 3.55% 2
Return on average tangible equity10.18 14.31 413 13.78 15.19 141
Return on average tangible assets0.85 1.20 35 1.15 1.27 12
Operating efficiency ratio463.3 49.6 (1,370) 48.9 43.7 (520)

  • GAAP diluted earnings per share increased by 61.1% and adjusted diluted earnings per share increased by 24.0% relative to the same quarter last year.
  • Annualized loan growth of 10.1% (end of period balances, including acquired loans) and 0.6% (average balances, including acquired loans) over the linked quarter.
  • Weighted average yield on loans for the first quarter of 2017 was 4.57%, which represented an eight basis points increase over the linked quarter.
  • Total deposits increased $183.5 million over the linked quarter mainly due to growth in commercial deposits and seasonal inflows in municipal deposits. Total commercial and retail demand deposits grew $153.8 million over the linked quarter, or an annualized growth rate of 8.4%.
  • Core deposits5 increased $281.8 million over the linked quarter and $551.8 million relative to the same quarter a year ago, which represented annualized growth of 13.0% and 6.5%, respectively.
  • The loans to deposits ratio was 95.2% and the weighted average cost of deposits was 0.38%, which represented an increase of two basis points relative to the linked quarter.
  • Total revenue was $121.6 million, a decrease of $1.7 million in the linked quarter due to two fewer days in the period and the sale of the trust division in the fourth quarter of 2016. Adjusted total revenue increased $739 thousand relative to the linked quarter.
  • Adjusted operating leverage, which is defined as the ratio of growth in adjusted total revenue to growth in adjusted non-interest expense, relative to the same quarter a year ago, was 11.8.
  • Announced definitive agreement to merge with Astoria Financial Corporation (“Astoria”) on March 7, 2017. The merger is expected to create a high performing regional bank focused on serving commercial and consumer clients in the Greater New York metropolitan area. The combined company will have approximately $29 billion in assets, $20 billion in loans, and $19 billion in deposits. The transaction is expected to close in the fourth quarter of 2017, subject to stockholder and regulatory approval, and is expected to be immediately accretive to tangible book value and earnings per share.

1. Non-GAAP / as adjusted measures are defined in the non-GAAP tables beginning on page 16.
2. Total revenue as adjusted is equal to tax equivalent net interest income plus non-interest income excluding securities gains and losses.

3. Net interest margin as adjusted is equal to net interest margin plus the tax equivalent adjustment for tax exempt securities.
4. See page 17 for an explanation of the operating efficiency ratio.
5. Core deposits include retail, commercial and municipal transaction, money market and savings accounts and exclude certificates of deposit and brokered deposits, except for reciprocal Certificate of Deposit Account Registry balances.

MONTEBELLO, N.Y., April 25, 2017 (GLOBE NEWSWIRE) -- Sterling Bancorp (NYSE:STL) (the “Company”), the parent company of Sterling National Bank (the “Bank”), today announced results for the three months ended March 31, 2017. Net income for the quarter ended March 31, 2017 was $39.1 million, or $0.29 per diluted share, compared to net income of $41.0 million, or $0.31 per diluted share, for the linked quarter ended December 31, 2016 and net income of $23.8 million, or $0.18 per diluted share, for the first quarter of 2016.

President’s Comments
Jack Kopnisky, President and Chief Executive Officer, commented: “Our positive momentum in operating performance continued in the first quarter of 2017, as we reached new records in loans, deposits, revenues and adjusted profitability. As of March 31, 2017, our total assets reached $14.7 billion, compared to $12.9 billion a year ago. Our total portfolio loans were $9.8 billion, compared to $8.3 billion a year ago and our total deposits were $10.3 billion, compared to $9.3 billion a year ago. We continue to make progress in building a high performing regional bank that focuses on serving commercial middle market clients and consumers in the most attractive markets in the Greater New York metropolitan area.

“We had strong earnings performance in the quarter. Our GAAP net income was $39.1 million, or $0.29 per diluted share. Our adjusted net income was $41.5 million and adjusted diluted earnings per share were $0.31, compared to $32.2 million and $0.25, respectively, for the first quarter of 2016. This represents growth in adjusted net income and adjusted diluted earnings per share of 28.9% and 24.0%, respectively. We continue to focus on controlling our operating expenses and improving our operating efficiency. During the quarter, our reported operating efficiency ratio was 49.6% and our adjusted operating efficiency ratio was 43.7%. This represents a decrease of 1,370 and 520 basis points, respectively, relative to the same quarter a year ago. We also continue to increase our operating leverage as, for the quarter ended March 31, 2017, adjusted total revenues grew 13.0% while adjusted non-interest expenses grew 1.1% relative to the same quarter a year ago.

“We have a strong balance sheet with a loan portfolio that has a balanced mix of 42.8% commercial and industrial loans, 44.8% commercial real estate loans, 2.5% acquisition development and construction loans and 9.9% consumer loans. Our diversified loan portfolio and businesses position us well for a rising interest rate environment. During the quarter, the weighted average yield on loans was 4.57%, an increase of eight basis points over the linked quarter. We continue to maintain a strong funding profile with a loans to deposits ratio of approximately 95.2% and a weighted average cost of deposits of 0.38%. Our net interest margin was 3.55% on a tax equivalent basis, which represented an increase of two basis points over the same period a year ago and three basis points over the linked quarter.

“In March 2017, we announced that we entered into a definitive agreement to merge with Astoria, which is the next step in the continued growth and evolution of our company. Astoria operates in highly attractive markets in New York City and Long Island, has a premier low cost deposit base and will allow us to further accelerate our strategy of building a high performing regional bank. The combined company will have approximately $29 billion in assets and $19 billion in deposits in the Greater New York metropolitan area. We anticipate the merger will close in the fourth quarter of 2017, subject to among other items, stockholder and regulatory approvals, and will be immediately accretive to tangible book value and earnings per share.

“Lastly, we have declared a dividend on our common stock of $0.07 per share payable on May 22, 2017 to holders of record as of May 8, 2017. Thank you to all of our clients, colleagues and stockholders for your continued support, and we welcome our new partners at Astoria as we work together to build a stronger, more diversified and more profitable company in 2017 and beyond.”

Reconciliation of GAAP Results to Adjusted Results (non-GAAP)
GAAP net income of $39.1 million, or $0.29 per diluted share, for the first quarter of 2017, included a pre-tax net loss on sale of securities of $23 thousand, a pre-tax charge of $3.1 million due to merger-related expense associated with the pending merger with Astoria and the pre-tax amortization of non-compete agreements and acquired customer list intangibles of $396 thousand. Excluding the impact of these items and their corresponding tax adjustment at the Company’s estimated effective tax rate of 32.5% for full year 2017, adjusted net income was $41.5 million, or $0.31 per diluted share.

Non-GAAP financial measures include references to the terms “adjusted” or “excluding”. See the reconciliation of the Company’s non-GAAP financial measures beginning on page 16.

Net Interest Income and Margin

($ in thousands)For the three months ended Change % / bps
3/31/2016 12/31/2016 3/31/2017 Y-o-Y Linked Qtr
Interest income$106,006 $123,075 $126,000 18.9% 2.4%
Interest expense12,496 15,827 17,210 37.7 8.7
Net interest income$93,510 $107,248 $108,790 16.3 1.4
Accretion income on acquired loans$5,613 $4,504 $3,482 (38.0)% (22.7)%
Yield on loans4.62% 4.49% 4.57% (5) 8
Tax equivalent yield on investment securities2.65 2.81 2.97 32 16
Tax equivalent yield on interest earning assets4.00 4.02 4.09 9 7
Cost of total deposits0.29 0.36 0.38 9 2
Cost of interest bearing deposits0.44 0.53 0.55 11 2
Cost of borrowings1.92 1.72 1.74 (18) 2
Tax equivalent net interest margin3.53 3.52 3.55 2 3
Average loans, includes loans held for sale$7,745,467 $9,267,290 $9,281,516 19.8% 0.2%
Average investment securities2,733,324 2,973,410 3,273,658 19.8 10.1
Average total earning assets10,880,356 12,566,281 12,889,578 18.5 2.6
Average deposits and mortgage escrow8,916,617 10,161,022 10,186,615 14.2 0.3

First quarter 2017 compared with first quarter 2016
Net interest income was $108.8 million, an increase of $15.3 million compared to the first quarter of 2016. This was mainly due to an increase in average loans originated through our commercial banking teams and the acquisition of NewStar Business Credit LLC (“NSBC Acquisition”), which closed on March 31, 2016, and the franchise finance loan portfolio acquired from GE Capital, which closed in September 2016. Other key components of the changes in net interest income were the following:

  • The yield on loans was 4.57%, compared to 4.62% for the three months ended March 31, 2016. The decline in yield on loans was mainly due to lower accretion income on acquired loans between the periods.
  • Yield on loans included $3.5 million of accretion income on loans associated with prior acquisitions compared to $5.6 million in the first quarter of 2016.
  • Average commercial loans were $8.3 billion compared to $6.7 billion in the first quarter of 2016, an increase of $1.6 billion or 24.0%.
  • The tax equivalent yield on investment securities increased 32 basis points to 2.97%. This was mainly due to an increase in the proportion of tax exempt securities in the investment portfolio and increase in market interest rates. Average tax exempt securities balances grew to $1.3 billion for the quarter ended March 31, 2017, compared to $593.8 million in the first quarter of 2016.
  • The tax equivalent yield on interest earning assets increased nine basis points from the first quarter of 2016 to 4.09% for the first quarter of 2017.
  • The cost of total deposits was 38 basis points and the cost of borrowings was 1.74%, compared to 29 basis points and 1.92%, respectively, for the same period a year ago.
  • Tax equivalent net interest margin was 3.55% compared to 3.53% for the same period a year ago.

First quarter 2017 compared with linked quarter ended December 31, 2016
Net interest income increased $1.5 million, or 5.7% annualized, compared to the linked quarter ended December 31, 2016. Net interest income performance in the first quarter of 2017 relative to the linked quarter was negatively impacted given there are 90 days in the first quarter compared to 92 days in the linked quarter. Key components of the changes in net interest income in the linked quarter were the following:

  • The yield on loans was 4.57% compared to 4.49% for the linked quarter, an increase of eight basis points, which was mainly due to an increase in market interest rates.
  • Accretion of income on acquired loans was $3.5 million in the first quarter of 2017 compared to $4.5 million in the linked quarter.
  • The average balance of loans increased $14.2 million for the first quarter of 2017 compared to the linked quarter. Based on end of period balances, total loans increased by $236.7 million, or 10.1% annualized relative to the linked quarter. The majority of the loan growth was originated in March 2017; as a result, average loans should increase in the second quarter of 2017.
  • The tax equivalent yield on investment securities increased 16 basis points to 2.97% in the first quarter of 2017. This was mainly the result of increases in market interest rates and purchases of securities. Average securities increased $300.2 million compared to the linked quarter, as we have begun to reposition our securities portfolio in anticipation of the merger with Astoria.
  • The tax equivalent yield on interest earning assets increased seven basis points to 4.09% in the quarter.
  • The cost of total deposits increased two basis points to 38 basis points in the quarter. The total cost of borrowings increased two basis points to 1.74%.
  • Average interest bearing deposits increased by $65.3 million and average borrowings increased $281.7 million relative to the linked quarter, which resulted in an increase of $1.4 million in interest expense.
  • Tax equivalent net interest margin was 3.55% compared to 3.52% in the linked quarter.

Non-interest Income

($ in thousands)For the three months ended Change %
3/31/2016 12/31/2016 3/31/2017 Y-o-Y Linked Qtr
Total non-interest income$15,430 $16,057 $12,836 (16.8)% (20.1)%
Net (loss) gain on sale of securities(283) (102) (23) (91.9) NM
Net gain on sale of trust division 2,255 NM NM
Adjusted non-interest income$15,713 $13,904 $12,859 (18.2) (7.5)

First quarter 2017 compared with first quarter 2016
Excluding net (loss) gain on sale of securities, adjusted non-interest income declined $2.9 million in the first quarter of 2017 to $12.9 million compared to $15.7 million in the same quarter last year. The change was mainly due to a decrease in mortgage banking fee income of $1.7 million resulting from the sale of our residential mortgage originations business, which was completed in the third quarter of 2016; a decrease of $1.2 million in deposit fees and service charges, associated mainly with the impact of the Durbin Amendment, which decreased our interchange revenue effective July 1, 2016; and a decline in investment management fees of $893 thousand, associated mainly with the sale of our trust division in the fourth quarter of 2016. Partially offsetting these decreases was an increase in other non-interest income of $1.6 million, which was due to an increase in letters of credit fees, higher other commissions and loan fees, syndication fees and loan swap fees mainly generated by our commercial banking teams and the NSBC Acquisition.

First quarter 2017 compared with linked quarter ended December 31, 2016
Excluding net (loss) gain on sale of securities and net gain on sale of the trust division (which was $2.3 million and recorded in other non-interest income for the quarter ended December 31, 2016), adjusted non-interest income decreased $1.0 million from $13.9 million in the linked quarter ended December 31, 2016 to $12.9 million in the first quarter of 2017. This was mainly due to lower accounts receivable and factoring commissions of $379 thousand given seasonality in the factoring business; lower mortgage banking fee income of $380 thousand as a result of the sale of our residential mortgage originations business; lower investment management fees of $334 thousand due to the sale of the trust division; and lower other non-interest income of $157 thousand due mainly to lower loan participation activity. These declines were partially offset by an increase in deposit fees and service charges of $168 thousand.

Non-interest Expense

($ in thousands)For the three months ended Change % / bps
3/31/2016 12/31/2016 3/31/2017 Y-o-Y Linked Qtr
Compensation and benefits$30,020 $32,060 $31,391 4.6% (2.1)%
Occupancy and office operations9,282 8,372 8,134 (12.4) (2.8)
Merger-related expense265 3,127 NM NM
Loss on extinguishment of borrowings8,716 NM
Charge for asset write-downs and severance2,485 NM NM
Other real estate owned, net582 206 1,676 188.0 713.6
Other expenses17,581 16,434 16,022 (8.9) (2.5)
Total non-interest expense$68,931 $57,072 $60,350 (12.4) 5.7
Full time equivalent employees (“FTEs”) at period end1,078 970 978 (9.3) 0.8
Financial centers at period end48 42 42 (12.5)
Efficiency ratio, as reported63.3% 46.3% 49.6% 1,370 (330)
Efficiency ratio, as adjusted48.9 43.3 43.7 520 (40)

First quarter 2017 compared with first quarter 2016
Total non-interest expense decreased $8.6 million relative to the first quarter of 2016, from $68.9 million to $60.4 million, in the first quarter of 2017. Contributing to the decline in non-interest expense was a decrease of $1.1 million in occupancy and office operations, which was mainly due to the consolidation of financial centers and other locations in 2016. Expenses related to the loss on extinguishment of borrowings and charge for asset write-downs and severance were associated with the prepayment of FHLB debt and the NSBC Acquisition and did not recur in the first quarter of 2017. Other expenses declined mainly due to lower amortization of intangible assets of $824 thousand, as certain non-compete intangible assets from prior acquisitions are now fully amortized, and regulatory fees and assessments decreased by $370 thousand, as FDIC deposit insurance fees assessed to the Bank were reduced. Partially offsetting these declines was an increase in compensation and benefits expense of $1.4 million in the first quarter of 2017, which was mainly due to an increase in the accrual for self-funded medical insurance. The total FTE count declined by 100 between the first quarter of 2017 and the year earlier period, mainly due to the completion of the merger integration with Hudson Valley Holding Corp., the sale of the residential mortgage originations business and the sale of the trust division. However, we have continued hiring new commercial banking teams, risk management personnel and acquired personnel through the NSBC Acquisition and will continue to do so in 2017. Merger-related expense in the first quarter of 2016 were incurred in connection with the NSBC Acquisition; merger-related expense in the first quarter of 2017 were incurred in connection with the Astoria merger and consisted mainly of financial and legal advisory fees.

First quarter 2017 compared with linked quarter ended December 31, 2016
Total non-interest expense increased $3.3 million from $57.1 million in the linked quarter to $60.4 million in the first quarter of 2017. The increase was mainly related to the increase in merger-related expense, as described above, and an increase in other real estate owned, net (“OREO”) expense. In the first quarter of 2017 we incurred $1.7 million of OREO expense, of which $1.3 million represented the write-down of properties to their fair value based on updated appraisals and pending and completed sales. OREO balances decreased by $4.0 million, or 29.3%, in the first quarter of 2017 relative to the linked quarter. Partially offsetting these increases was a decrease in compensation and benefits expense of $669 thousand between the periods. Occupancy and office operations also declined in the quarter by $238 thousand due to the ongoing consolidation of our real estate footprint and locations.

Taxes
We recorded income tax expense at an effective tax rate of 31.2% for the first quarter of 2017, compared to 34.0% in the first quarter of 2016. The effective tax rate in the linked quarter ended December 31, 2016 was 32.5%.

The adoption of a new accounting standard in the first quarter of 2017 requires that tax benefits in excess of compensation costs associated with our stock-based compensation plans be included in income tax expense as a discrete item. In the first quarter of 2017, we recorded a tax benefit of $742 thousand associated with the vesting of stock-based compensation which reduced our tax rate by 1.3% for the period. We anticipate our effective income tax rate, excluding the impact of income tax expense associated with vested stock-based compensation plans in 2017 will remain between 32% and 33%. However, the effective income tax rate may change materially should changes to current tax law be enacted in 2017. Any changes to current tax law may also have an impact on our deferred tax position.

Key Balance Sheet Highlights as of March 31, 2017

($ in thousands)As of Change % / bps
3/31/2016 12/31/2016 3/31/2017 Y-o-Y Linked Qtr
Total assets$12,865,356 $14,178,447 $14,659,337 13.9% 3.4%
Total portfolio loans, gross8,286,163 9,527,230 9,763,967 17.8 2.5
Commercial & industrial (“C&I”) loans3,416,538 4,171,950 4,181,818 22.4 0.2
Commercial real estate loans3,676,214 4,144,018 4,376,645 19.1 5.6
Acquisition, development and construction loans179,517 230,086 238,966 33.1 3.9
Total commercial loans7,272,269 8,546,054 8,797,429 21.0 2.9
Total deposits9,328,622 10,068,259 10,251,725 9.9 1.8
Core deposits8,535,384 8,805,301 9,087,137 6.5 3.2
Investment securities2,847,742 3,118,838 3,416,395 20.0 9.5
Total borrowings1,675,508 2,056,612 2,328,576 39.0 13.2
Loans to deposits88.8% 94.6% 95.2% 640 60
Core deposits to total deposits91.5 87.5 88.6 (290) 110
Investment securities to total assets22.1 22.0 23.3 120 130

Highlights in balance sheet items as of March 31, 2017 were the following:

  • C&I loans (which include traditional C&I, asset-based lending, payroll finance, warehouse lending, factored receivables, equipment financing and public sector finance loans) represented 42.8%, commercial real estate loans represented 44.8%, consumer and residential mortgage loans combined represented 9.9%, and acquisition, development and construction loans represented 2.5% of the total loan portfolio.
  • Commercial loan growth, which includes all C&I loans, commercial real estate and acquisition, development and construction loans, was $1.5 billion for the twelve months ended March 31, 2017. Commercial loan growth was $251.4 million relative to the linked quarter.
  • Mortgage warehouse lending balances were $486.4 million at March 31, 2017, a decline of $130.6 million, or 21.2%, compared to December 31, 2016. As anticipated, the decrease in balances was due to an increase in residential mortgage lending interest rates which negatively impacted mortgage refinance activity and origination volumes in the period.
  • Aggregate exposure to taxi medallion relationships was $49.8 million, which represented 0.51% of total loans as of March 31, 2017, a decline of $1.9 million from $51.7 million as of December 31, 2016. The decline was due to repayments.
  • Total deposits at March 31, 2017 increased $183.5 million, or 1.8%, compared to December 31, 2016, and increased $923.1 million, or 9.9%, over March 31, 2016. The increase in deposits was mainly due to seasonal inflows in municipal deposits and growth in commercial deposits.
  • Core deposits at March 31, 2017 increased $281.8 million, compared to December 31, 2016. The increase was mainly due to growth in commercial deposits and seasonal inflows in municipal deposits. Core deposits increased $551.8 million, or 6.5%, over March 31, 2016.

Credit Quality

($ in thousands)For the three months ended Change % / bps
3/31/2016 12/31/2016 3/31/2017 Y-o-Y Linked Qtr
Provision for loan losses$4,000 $5,500 $4,500 12.5% (18.2)%
Net charge-offs1,131 1,283 1,183 4.6 (7.8)
Allowance for loan losses53,014 63,622 66,939 26.3 5.2
Non-performing loans85,438 78,853 72,924 (14.6) (7.5)
Net charge-offs annualized0.06% 0.06% 0.05% (1) (1)
Allowance for loan losses to total loans0.64 0.67 0.69 5 2
Total valuation balances recorded against portfolio loans to adjusted gross portfolio loans61.17 1.05 1.03 (14) (2)
Allowance for loan losses to non-performing loans62.0 80.7 91.8 2,980 1,110

6 See a reconciliation of this non-GAAP financial measure on page 18.

Provision for loan losses was $4.5 million for the first quarter of 2017 compared to $5.5 million in the linked quarter and $4.0 million in the same period a year ago. In the first quarter of 2017, provision for loan losses was $3.3 million in excess of net charge-offs of $1.2 million. Allowance coverage ratios increased to 0.69% of total loans and 91.8% of non-performing loans. The decrease in non-performing loans at March 31, 2017 compared to December 31, 2016 was mainly due to improvements in borrower performance as non-performing loans decreased by $5.9 million to $72.9 million.

As a result of purchase accounting, a substantial portion of the loans acquired in prior merger transactions do not have an allocation in the allowance for loan losses as the performance of these loans remains satisfactory. The total valuation balances recorded against portfolio loans to adjusted gross portfolio loans6 was 1.05% and 1.03% at December 31, 2016 and March 31, 2017, respectively.

Aggregate exposure to taxi medallion relationships as of March 31, 2017 was $49.8 million. This represented a decrease of $1.9 million relative to the linked quarter.

Capital

($ in thousands, except share and per share data) As of Change % / bps
3/31/2016 12/31/2016 3/31/2017 Y-o-Y Three
months
Total stockholders’ equity$1,698,133 $1,855,183 $1,888,613 11.2% 1.8%
Goodwill and intangible assets772,390 762,953 760,698 (1.5) (0.3)
Tangible stockholders’ equity$925,743 $1,092,230 $1,127,915 21.8 3.3
Common shares outstanding130,548,989 135,257,570 135,604,435 3.9 0.3
Book value per share$13.01 $13.72 $13.93 7.1 1.5
Tangible book value per share7.09 8.08 8.32 17.3 3.0
Tangible equity to tangible assets7.66% 8.14% 8.12% 46 (2)
Estimated Tier 1 leverage ratio - Company8.60 8.95 8.89 29 (6)
Estimated Tier 1 leverage ratio - Bank9.16 9.08 8.99 (17) (9)

The increase in stockholders’ equity of $33.4 million to $1.9 billion as of March 31, 2017 compared to December 31, 2016 was mainly due to net income of $39.1 million and a decrease in accumulated other comprehensive loss of $2.9 million. The decrease in accumulated other comprehensive loss was due to an increase in the fair value of our available for sale securities portfolio. Stock option exercises and stock-based compensation, which totaled $885 thousand also contributed to the increase. These increases were partially offset by declared dividends of $9.4 million.

Total goodwill and other intangible assets were $760.7 million at March 31, 2017, a decrease of $2.3 million compared to December 31, 2016, which was due to amortization of intangibles.

For the quarter ended March 31, 2017, basic and diluted weighted average common shares outstanding increased to 135.2 million and 135.8 million, respectively, compared to 132.3 million basic shares and 133.0 million diluted shares, respectively, for the quarter ended December 31, 2016. The increase in the diluted weighted average shares was mainly due to our common equity raise completed on November 22, 2016. Total common shares outstanding at March 31, 2017 were approximately 135.6 million.

Conference Call Information
Sterling Bancorp will host a teleconference and webcast on Wednesday, April 26, 2017 at 10:30 AM Eastern Time to discuss the Company’s results. Interested parties are invited to listen to the webcast and view accompanying slides on the Company’s website at www.sterlingbancorp.com. Analysts are invited to listen by dialing (877) 874-1570, Conference ID #9380814. A replay of the teleconference can be accessed through the Company’s website.

About Sterling Bancorp
Sterling Bancorp, whose principal subsidiary is Sterling National Bank, specializes in the delivery of service and solutions to business owners, their families and consumers within the communities it serves through teams of dedicated and experienced relationship managers. Sterling National Bank offers a complete line of commercial, business, and consumer banking products and services. For more information, visit the Sterling Bancorp website at www.sterlingbancorp.com.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This release may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may concern Sterling Bancorp’s current expectations about its future results, plans, operations and prospects and involve certain risks, including the following: our ability to obtain regulatory approvals and meet other closing conditions to the merger with Astoria, including approval by Sterling Bancorp and Astoria Financial Corporation stockholders, on the expected terms and schedule; delay in closing the Astoria merger; difficulties and delays in integrating Astoria’s business or fully realizing cost savings and other benefits; business disruption following the proposed transaction; to grow revenues faster than we grow expenses, a deterioration in general economic conditions, either nationally, internationally, or in our market areas, including extended declines in the real estate market and constrained financial markets; inflation; the effects of, and changes in, trade; changes in asset quality and credit risk; introduction, withdrawal, success and timing of business initiatives; capital management activities; including our ability to effectively deploy recently raised capital; customer disintermediation; and the success of Sterling Bancorp in managing those risks. Other factors that could cause Sterling Bancorp’s actual results to differ from those indicated in forward-looking statements are included in the “Risk Factors” section of Sterling Bancorp’s filings with the Securities and Exchange Commission. The forward-looking statements speak only as of the date they are made and we undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.

Financial information contained in this release should be considered to be an estimate pending the filing with the Securities and Exchange Commission of the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2017. While the Company is not aware of any need to revise the results disclosed in this release, accounting literature may require information received by management between the date of this release and the filing of the Quarterly Report on Form 10-Q to be reflected in the results of the fiscal period, even though the new information was received by management subsequent to the date of this release.

Sterling Bancorp and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(unaudited, in thousands, except share and per share data)

3/31/2016 12/31/2016 3/31/2017
Assets:
Cash and cash equivalents$486,730 $293,646 $253,703
Investment securities2,847,742 3,118,838 3,416,395
Loans held for sale27,237 41,889 2,559
Portfolio loans:
Commercial and industrial3,416,538 4,171,950 4,181,818
Commercial real estate3,676,214 4,144,018 4,376,645
Acquisition, development and construction179,517 230,086 238,966
Residential mortgage718,733 697,108 695,398
Consumer295,161 284,068 271,140
Total portfolio loans, gross8,286,163 9,527,230 9,763,967
Allowance for loan losses(53,014) (63,622) (66,939)
Total portfolio loans, net8,233,149 9,463,608 9,697,028
Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank Stock, at cost118,330 135,098 148,030
Accrued interest receivable33,392 43,319 48,974
Premises and equipment, net62,432 57,318 57,567
Goodwill696,600 696,600 696,600
Other intangibles75,790 66,353 64,098
Bank owned life insurance197,615 199,889 201,259
Other real estate owned14,527 13,619 9,632
Other assets71,812 48,270 63,492
Total assets$12,865,356 $14,178,447 $14,659,337
Liabilities:
Deposits$9,328,622 $10,068,259 $10,251,725
FHLB borrowings1,444,817 1,791,000 2,035,000
Other borrowings23,571 16,642 44,472
Senior notes98,996 76,469 76,551
Subordinated notes108,124 172,501 172,553
Mortgage escrow funds14,972 13,572 13,153
Other liabilities148,121 184,821 177,270
Total liabilities11,167,223 12,323,264 12,770,724
Stockholders’ equity:
Common stock1,367 1,411 1,411
Additional paid-in capital1,501,417 1,597,287 1,590,293
Treasury stock(70,142) (66,188) (62,046)
Retained earnings261,332 349,308 382,676
Accumulated other comprehensive income (loss)4,159 (26,635) (23,721)
Total stockholders’ equity1,698,133 1,855,183 1,888,613
Total liabilities and stockholders’ equity$12,865,356 $14,178,447 $14,659,337
Shares of common stock outstanding at period end130,548,989 135,257,570 135,604,435
Book value per share$13.01 $13.72 $13.93
Tangible book value per share17.09 8.08 8.32

1 See reconciliation of non-GAAP financial measures beginning on page 16.

Sterling Bancorp and Subsidiaries
CONSOLIDATED CONDENSED INCOME STATEMENTS
(unaudited, in thousands, except share and per share data)

For the Quarter Ended
3/31/2016 12/31/2016 3/31/2017
Interest and dividend income:
Loans and loan fees$89,034 $104,651 $104,570
Securities taxable12,016 9,993 12,282
Securities non-taxable3,879 7,168 7,618
Other earning assets1,077 1,263 1,530
Total interest and dividend income106,006 123,075 126,000
Interest expense:
Deposits6,409 9,252 9,508
Borrowings6,087 6,575 7,702
Total interest expense12,496 15,827 17,210
Net interest income93,510 107,248 108,790
Provision for loan losses4,000 5,500 4,500
Net interest income after provision for loan losses89,510 101,748 104,290
Non-interest income:
Accounts receivable / factoring commissions and other fees4,494 4,148 3,769
Mortgage banking income2,002 651 271
Deposit fees and service charges4,496 3,167 3,335
Net (loss) gain on sale of securities(283) (102) (23)
Bank owned life insurance1,327 1,333 1,370
Investment management fees1,124 565 231
Other2,270 6,295 3,883
Total non-interest income15,430 16,057 12,836
Non-interest expense:
Compensation and benefits30,020 32,060 31,391
Stock-based compensation plans1,540 1,557 1,736
Occupancy and office operations9,282 8,372 8,134
Amortization of intangible assets3,053 2,881 2,229
FDIC insurance and regulatory assessments2,258 1,531 1,888
Other real estate owned, net582 206 1,676
Merger-related expenses265 3,127
Charge for asset write-downs, retention and severance2,485
Loss on extinguishment of borrowings8,716
Other10,730 10,465 10,169
Total non-interest expense68,931 57,072 60,350
Income before income tax expense36,009 60,733 56,776
Income tax expense12,243 19,737 17,709
Net income$23,766 $40,996 $39,067
Weighted average common shares:
Basic129,974,025 132,271,761 135,163,347
Diluted130,500,975 132,995,762 135,811,721
Earnings per common share:
Basic earnings per share$0.18 $0.31 $0.29
Diluted earnings per share0.18 0.31 0.29
Dividends declared per share0.07 0.07 0.07

Sterling Bancorp and Subsidiaries
SELECTED FINANCIAL DATA
(unaudited, in thousands, except share and per share data)

As of and for the Quarter Ended
End of Period3/31/2016 6/30/2016 9/30/2016 12/31/2016 3/31/2017
Total assets$12,865,356 $13,065,248 $13,617,228 $14,178,447 $14,659,337
Tangible assets 112,092,966 12,296,123 12,851,370 13,415,494 13,898,639
Securities available for sale1,894,820 1,613,013 1,417,617 1,727,417 1,941,671
Securities held to maturity952,922 1,367,046 1,380,100 1,391,421 1,474,724
Portfolio loans8,286,163 8,594,295 9,168,741 9,527,230 9,763,967
Goodwill696,600 696,600 696,600 696,600 696,600
Other intangibles75,790 72,525 69,258 66,353 64,098
Deposits9,328,622 9,785,556 10,197,253 10,068,259 10,251,725
Municipal deposits (included above)1,285,264 1,184,231 1,551,147 1,270,921 1,391,221
Borrowings1,675,508 1,309,954 1,451,526 2,056,612 2,328,576
Stockholders’ equity1,698,133 1,735,994 1,765,160 1,855,183 1,888,613
Tangible equity 1925,743 966,869 999,302 1,092,230 1,127,915
Quarterly Average Balances
Total assets12,001,370 12,700,038 13,148,201 13,671,676 14,015,953
Tangible assets 111,253,958 11,929,107 12,380,448 12,907,133 13,253,877
Loans, gross:
Commercial real estate (includes multi-family)3,587,341 3,694,162 3,823,853 3,963,216 4,190,817
Acquisition, development and construction179,517 197,489 215,798 224,735 237,451
Commercial and industrial:
Traditional commercial and industrial1,201,960 1,229,473 1,274,194 1,383,013 1,410,354
Asset-based lending304,779 636,383 640,931 700,285 713,438
Payroll finance192,428 187,887 162,938 218,365 217,031
Warehouse lending248,831 301,882 404,156 551,746 379,978
Factored receivables181,974 183,051 200,471 231,554 184,859
Equipment financing616,995 630,922 652,531 586,078 595,751
Public sector finance179,147 226,929 350,244 361,339 370,253
Total commercial and industrial2,926,114 3,396,527 3,685,465 4,032,380 3,871,664
Residential mortgage755,564 729,685 727,304 729,834 700,934
Consumer297,028 295,666 292,088 287,267 280,650
Loans, total 27,745,467 8,313,529 8,744,508 9,267,290 9,281,516
Securities (taxable)2,139,547 2,032,518 1,838,775 1,789,553 2,016,752
Securities (non-taxable)593,777 837,133 1,098,933 1,183,857 1,256,906
Other interest earning assets401,565 375,244 333,622 325,581 334,404
Total earning assets10,880,356 11,558,424 12,015,838 12,566,281 12,889,578
Deposits:
Non-interest bearing demand3,009,085 3,059,562 3,196,204 3,217,156 3,177,448
Interest bearing demand1,607,227 2,016,365 2,107,669 2,116,708 1,950,332
Savings (including mortgage escrow funds)814,485 809,123 827,647 798,090 797,386
Money market2,866,666 3,056,188 3,174,536 3,395,542 3,681,962
Certificates of deposit619,154 620,759 609,438 633,526 579,487
Total deposits and mortgage escrow8,916,617 9,561,997 9,915,494 10,161,022 10,186,615
Borrowings1,274,605 1,304,442 1,324,001 1,517,482 1,799,204
Stockholders’ equity1,686,274 1,711,902 1,751,414 1,805,790 1,869,085
Tangible equity 1938,862 940,971 983,661 1,041,247 1,107,009
1 See a reconciliation of this non-GAAP financial measure on page 16.
2 Includes loans held for sale, but excludes allowance for loan losses.


Sterling Bancorp and Subsidiaries
SELECTED FINANCIAL DATA AND PERFORMANCE RATIOS
(unaudited, in thousands, except share and per share data)

As of and for the Quarter Ended
3/31/2016 6/30/2016 9/30/2016 12/31/2016 3/31/2017
Per Share Data
Basic earnings per share$ 0.18 $0.29 $ 0.29 $ 0.31 $ 0.29
Diluted earnings per share0.18 0.29 0.29 0.31 0.29
Adjusted diluted earnings per share, non-GAAP 10.25 0.27 0.29 0.30 0.31
Dividends declared per share0.07 0.07 0.07 0.07 0.07
Book value per share13.01 13.29 13.49 13.72 13.93
Tangible book value per share17.09 7.40 7.64 8.08 8.32
Shares of common stock o/s130,548,989 130,620,463 130,853,673 135,257,570 135,604,435
Basic weighted average common shares o/s129,974,025 130,081,465 130,239,193 132,271,761 135,163,347
Diluted weighted average common shares o/s130,500,975 130,688,729 130,875,614 132,995,762 135,811,721
Performance Ratios (annualized)
Return on average assets0.80% 1.20% 1.13% 1.19% 1.13%
Return on average equity5.67% 8.87% 8.50% 9.03% 8.48%
Return on average tangible assets, as reported 10.85% 1.27% 1.20% 1.26% 1.20%
Return on average tangible equity, as reported 110.18% 16.14% 15.13% 15.66% 14.31%
Return on average tangible assets, as adjusted 11.15% 1.19% 1.21% 1.23% 1.27%
Return on average tangible equity, as adjusted 113.78% 15.14% 15.28% 15.27% 15.19%
Efficiency ratio, as adjusted 148.88% 47.19% 45.76% 43.35% 43.73%
Analysis of Net Interest Income
Yield on loans4.62% 4.68% 4.57% 4.49% 4.57%
Yield on investment securities - tax equivalent 22.65% 2.76% 2.74% 2.81% 2.97%
Yield on interest earning assets - tax equivalent 24.00% 4.09% 4.03% 4.02% 4.09%
Cost of total deposits0.29% 0.35% 0.37% 0.36% 0.38%
Cost of borrowings1.92% 1.73% 1.75% 1.72% 1.74%
Cost of interest bearing liabilities0.70% 0.72% 0.74% 0.74% 0.79%
Net interest rate spread - tax equivalent basis 23.30% 3.37% 3.29% 3.28% 3.30%
Net interest margin - GAAP basis3.46% 3.49% 3.41% 3.40% 3.42%
Net interest margin - tax equivalent basis 23.53% 3.60% 3.53% 3.52% 3.55%
Capital
Tier 1 leverage ratio - Company 38.60% 8.36% 8.31% 8.95% 8.89%
Tier 1 leverage ratio - Bank only 39.16% 8.84% 8.72% 9.08% 8.99%
Tier 1 risk-based capital ratio - Bank only 310.89% 10.70% 10.42% 10.87% 10.77%
Total risk-based capital ratio - Bank only 312.60% 12.37% 12.66% 13.06% 12.93%
Tangible equity to tangible assets - Company 17.66% 7.86% 7.78% 8.14% 8.12%
Condensed Five Quarter Income Statement
Interest and dividend income$106,006 $114,309 $118,161 $123,075 $126,000
Interest expense12,496 13,929 15,031 15,827 17,210
Net interest income93,510 100,380 103,130 107,248 108,790
Provision for loan losses4,000 5,000 5,500 5,500 4,500
Net interest income after provision for loan losses89,510 95,380 97,630 101,748 104,290
Non-interest income15,430 20,442 19,039 16,057 12,836
Non-interest expense68,931 59,640 62,256 57,072 60,350
Income before income tax expense36,009 56,182 54,413 60,733 56,776
Income tax expense12,243 18,412 16,991 19,737 17,709
Net income$23,766 $37,770 $37,422 $40,996 $39,067
1 See a reconciliation of non-GAAP financial measures beginning on page 16.
2 Tax equivalent basis represents interest income earned on municipal securities divided by the applicable Federal tax rate of 35%.
3 Regulatory capital amounts and ratios are preliminary estimates pending filing of the Company’s and Bank’s regulatory reports.


Sterling Bancorp and Subsidiaries
ASSET QUALITY INFORMATION
(unaudited, in thousands, except share and per share data)

As of and for the Quarter Ended
3/31/2016 6/30/2016 9/30/2016 12/31/2016 3/31/2017
Allowance for Loan Losses Roll Forward
Balance, beginning of period$50,145 $ 53,014 $ 55,865 59,405 $ 63,622
Provision for loan losses4,000 5,000 5,500 5,500 4,500
Loan charge-offs1:
Traditional commercial & industrial(489) (429) (570) (219) (687)
Payroll finance (28)
Factored receivables(81) (792) (60) (267) (296)
Equipment financing(457) (572) (377) (576) (471)
Commercial real estate(4) (100) (630) (225) (83)
Multi-family (18) (399)
Residential mortgage(224) (209) (338) (274) (158)
Consumer(511) (532) (259) (313) (114)
Total charge offs(1,766) (2,680) (2,633) (1,874) (1,809)
Recoveries of loans previously charged-off1:
Traditional commercial & industrial313 153 381 152 139
Asset-based lending16 46 3
Payroll finance4 28
Factored receivables24 17 10 10 16
Equipment financing108 102 123 227 140
Commercial real estate21 53 111 168 2
Multi-family2
Acquisition development & construction 104 136
Residential mortgage28 1 1 149
Consumer119 27 48 33 41
Total recoveries635 531 673 591 626
Net loan charge-offs(1,131) (2,149) (1,960) (1,283) (1,183)
Balance, end of period$53,014 $55,865 $59,405 $63,622 $66,939
Asset Quality Data and Ratios
Non-performing loans (“NPLs”) non-accrual$84,436 $79,036 $77,794 $77,163 $72,136
NPLs still accruing1,002 528 3,273 1,690 788
Total NPLs85,438 79,564 81,067 78,853 72,924
Other real estate owned14,527 16,590 16,422 13,619 9,632
Non-performing assets (“NPAs”)$99,965 $96,154 $97,489 $92,472 $82,556
Loans 30 to 89 days past due$19,168 $18,653 $17,683 $15,100 $15,611
Net charge-offs as a % of average loans (annualized)0.06% 0.10% 0.09% 0.06% 0.05%
NPLs as a % of total loans1.03 0.93 0.88 0.83 0.75
NPAs as a % of total assets0.78 0.74 0.72 0.65 0.56
Allowance for loan losses as a % of NPLs62.0 70.2 73.3 80.7 91.8
Allowance for loan losses as a % of total loans0.64 0.65 0.65 0.67 0.69
Total valuation balances recorded against portfolio loans to adjusted gross portfolio loans21.17 1.11 1.10 1.05 1.03
Special mention loans$101,560 $103,710 $101,784 $104,569 $110,832
Substandard loans131,919 125,571 112,551 95,152 101,496
Doubtful loans556 330 932 442 902
1 There were no charge-offs or recoveries on warehouse lending or public sector finance loans during the periods presented.
2 See a reconciliation of this non-GAAP financial measure on page 18.


Sterling Bancorp and Subsidiaries
QUARTERLY YIELD TABLE
(unaudited, in thousands, except share and per share data)

For the Quarter Ended
December 31, 2016
March 31, 2017
Average
balance
Interest Yield/
Rate
Average
balance
Interest Yield/
Rate
(Dollars in thousands)
Interest earning assets:
Commercial loans$8,250,189 $94,043 4.53% $8,299,932 $94,548 4.62%
Consumer loans287,267 3,187 4.41% 280,650 3,132 4.53%
Residential mortgage loans729,834 7,422 4.07% 700,934 6,890 3.93%
Total net loans 19,267,290 104,652 4.49% 9,281,516 104,570 4.57%
Securities taxable1,789,553 9,993 2.22% 2,016,752 12,282 2.47%
Securities non-taxable1,183,857 11,027 3.73% 1,256,906 11,720 3.73%
Interest earning deposits215,120 200 0.37% 210,800 254 0.49%
FHLB and Federal Reserve Bank stock110,461 1,063 3.83% 123,604 1,276 4.19%
Total securities and other earning assets3,298,991 22,283 2.69% 3,608,062 25,532 2.87%
Total interest earning assets12,566,281 126,935 4.02% 12,889,578 130,102 4.09%
Non-interest earning assets1,105,395 1,126,375
Total assets$13,671,676 $14,015,953
Interest bearing liabilities:
Demand deposits$2,116,708 $1,763 0.33% $1,950,332 $1,960 0.41%
Savings deposits 2798,090 1,285 0.64% 797,386 1,226 0.62%
Money market deposits3,395,542 4,693 0.55% 3,681,962 4,944 0.54%
Certificates of deposit633,526 1,511 0.95% 579,487 1,378 0.96%
Total interest bearing deposits6,943,866 9,252 0.53% 7,009,167 9,508 0.55%
Senior notes76,415 1,113 5.79% 76,497 1,141 6.05%
Other borrowings1,268,591 3,113 0.98% 1,550,183 4,212 1.10%
Subordinated notes172,476 2,349 5.45% 172,524 2,349 5.45%
Total borrowings1,517,482 6,575 1.72% 1,799,204 7,702 1.74%
Total interest bearing liabilities8,461,348 15,827 0.74% 8,808,371 17,210 0.79%
Non-interest bearing deposits3,217,156 3,177,448
Other non-interest bearing liabilities187,382 161,049
Total liabilities11,865,886 12,146,868
Stockholders’ equity1,805,790 1,869,085
Total liabilities and stockholders’ equity$13,671,676 $14,015,953
Net interest rate spread 3 3.28% 3.30%
Net interest earning assets 4$4,104,933 $4,081,207
Net interest margin - tax equivalent 111,108 3.52% 112,892 3.55%
Less tax equivalent adjustment (3,860) (4,102)
Net interest income $107,248 $108,790
Ratio of interest earning assets to interest bearing liabilities148.5% 146.3%

1 Average balances include loans held for sale and non-accrual loans. Interest includes prepayment fees and late charges.
2 Includes club accounts and interest bearing mortgage escrow balances.
3 Net interest rate spread represents the difference between the tax equivalent yield on average interest earning assets and the cost of average interest bearing liabilities.
4 Net interest earning assets represents total interest earning assets less total interest bearing liabilities.

Sterling Bancorp and Subsidiaries
QUARTERLY YIELD TABLE
(unaudited, in thousands, except share and per share data)

For the Quarter Ended
March 31, 2016
March 31, 2017
Average
balance
Interest Yield/
Rate
Average
balance
Interest Yield/
Rate
(Dollars in thousands)
Interest earning assets:
Commercial loans$6,692,875 $78,137 4.70% $8,299,932 $94,548 4.62%
Consumer loans297,028 3,296 4.46% 280,650 3,132 4.53%
Residential mortgage loans755,564 7,601 4.02% 700,934 6,890 3.93%
Total net loans 17,745,467 89,034 4.62% 9,281,516 104,570 4.57%
Securities taxable2,139,547 12,016 2.26% 2,016,752 12,282 2.47%
Securities non-taxable593,777 5,968 4.02% 1,256,906 11,720 3.73%
Interest earning deposits296,668 311 0.42% 210,800 254 0.49%
FHLB and Federal Reserve Bank stock104,897 766 2.94% 123,604 1,276 4.19%
Total securities and other earning assets3,134,889 19,061 2.45% 3,608,062 25,532 2.87%
Total interest earning assets10,880,356 108,095 4.00% 12,889,578 130,102 4.09%
Non-interest earning assets1,121,014 1,126,375
Total assets$12,001,370 $14,015,953
Interest bearing liabilities:
Demand deposits$1,607,227 $1,004 0.25% $1,950,332 $1,960 0.41%
Savings deposits 2814,485 606 0.30% 797,386 1,226 0.62%
Money market deposits2,866,666 3,672 0.52% 3,681,962 4,944 0.54%
Certificates of deposit619,154 1,127 0.73% 579,487 1,378 0.96%
Total interest bearing deposits5,907,532 6,409 0.44% 7,009,167 9,508 0.55%
Senior notes98,928 1,478 6.01% 76,497 1,141 6.05%
Other borrowings1,172,112 4,560 1.56% 1,550,183 4,212 1.10%
Subordinated notes3,565 49 5.50% 172,524 2,349 5.45%
Total borrowings1,274,605 6,087 1.92% 1,799,204 7,702 1.74%
Total interest bearing liabilities7,182,137 12,496 0.70% 8,808,371 17,210 0.79%
Non-interest bearing deposits3,009,085 3,177,448
Other non-interest bearing liabilities123,874 161,049
Total liabilities10,315,096 12,146,868
Stockholders’ equity1,686,274 1,869,085
Total liabilities and stockholders’ equity$12,001,370 $14,015,953
Net interest rate spread 3 3.30% 3.30%
Net interest earning assets 4$3,698,219 $4,081,207
Net interest margin - tax equivalent 95,599 3.53% 112,892 3.55%
Less tax equivalent adjustment (2,089) (4,102)
Net interest income $93,510 $108,790
Ratio of interest earning assets to interest bearing liabilities151.5% 146.3%

1 Average balances include loans held for sale and non-accrual loans. Interest includes prepayment fees and late charges.
2 Includes club accounts and interest bearing mortgage escrow balances.
3 Net interest rate spread represents the difference between the tax equivalent yield on average interest earning assets and the cost of average interest bearing liabilities.
4 Net interest earning assets represents total interest earning assets less total interest bearing liabilities.

Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)

The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is
useful to investors. See legend on page 18.
As of and for the Quarter Ended
3/31/2016 6/30/2016 9/30/2016 12/31/2016 3/31/2017
The following table shows the reconciliation of stockholders’ equity to tangible equity and the tangible equity ratio1:
Total assets$12,865,356 $13,065,248 $13,617,228 $14,178,447 $14,659,337
Goodwill and other intangibles(772,390) (769,125) (765,858) (762,953) (760,698)
Tangible assets12,092,966 12,296,123 12,851,370 13,415,494 13,898,639
Stockholders’ equity1,698,133 1,735,994 1,765,160 1,855,183 1,888,613
Goodwill and other intangibles(772,390) (769,125) (765,858) (762,953) (760,698)
Tangible stockholders’ equity925,743 966,869 999,302 1,092,230 1,127,915
Common stock outstanding at period end130,548,989 130,620,463 130,853,673 135,257,570 135,604,435
Stockholders’ equity as a % of total assets13.20% 13.29% 12.96% 13.08% 12.88%
Book value per share$13.01 $13.29 $13.49 $13.72 $13.93
Tangible equity as a % of tangible assets7.66% 7.86% 7.78% 8.14% 8.12%
Tangible book value per share$7.09 $7.40 $7.64 $8.08 $8.32
The following table shows the reconciliation of reported return on average tangible equity and adjusted return on average tangible equity2:
Average stockholders’ equity$1,686,274 $1,711,902 $1,751,414 $1,805,790 $1,869,085
Average goodwill and other intangibles(747,412) (770,931) (767,753) (764,543) (762,076)
Average tangible stockholders’ equity938,862 940,971 983,661 1,041,247 1,107,009
Net income23,766 37,770 37,422 40,996 39,067
Net income, if annualized95,586 151,910 148,874 163,093 158,438
Reported return on average tangible equity10.18% 16.14% 15.13% 15.66% 14.31%
Adjusted net income (see reconciliation on page 17)$32,159 $35,414 $37,793 $39,954 $41,461
Annualized adjusted net income129,343 142,434 150,350 158,947 168,147
Adjusted return on average tangible equity13.78% 15.14% 15.28% 15.27% 15.19%
The following table shows the reconciliation of reported return on tangible assets and adjusted return on tangible assets3:
Average assets$12,001,370 $12,700,038 $13,148,201 $13,671,676 $14,015,953
Average goodwill and other intangibles(747,412) (770,931) (767,753) (764,543) (762,076)
Average tangible assets11,253,958 11,929,107 12,380,448 12,907,133 13,253,877
Net income23,766 37,770 37,422 40,996 39,067
Net income, if annualized95,586 151,910 148,874 163,093 158,438
Reported return on average tangible assets0.85% 1.27% 1.20% 1.26% 1.20%
Adjusted net income (see reconciliation on page 17)$32,159 $35,414 $37,793 $39,954 $41,461
Annualized adjusted net income129,343 142,434 150,350 158,947 168,147
Adjusted return on average tangible assets1.15% 1.19% 1.21% 1.23% 1.27%

Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)

The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors. See legend on page 18.
As of and for the Quarter Ended
3/31/2016 6/30/2016 9/30/2016 12/31/2016 3/31/2017
The following table shows the reconciliation of the reported operating efficiency ratio and adjusted operating efficiency ratio4:
Net interest income$93,510 $100,380 $103,130 $107,248 $108,790
Non-interest income15,430 20,442 19,039 16,057 12,836
Total net revenue108,940 120,822 122,169 123,305 121,626
Tax equivalent adjustment on securities2,089 3,162 3,635 3,860 4,102
Net loss (gain) on sale of securities283 (4,474) (3,433) 102 23
Net (gain) on sale of trust division (2,255)
Adjusted total net revenue111,312 119,510 122,371 125,012 125,751
Non-interest expense68,931 59,640 62,256 57,072 60,350
Merger-related expense(265) (3,127)
Charge for asset write-downs, retention and severance(2,485) (2,000)
Loss on extinguishment of borrowings(8,716) (1,013)
Amortization of intangible assets(3,053) (3,241) (3,241) (2,881) (2,229)
Adjusted non-interest expense54,412 56,399 56,002 54,191 54,994
Reported operating efficiency ratio63.3% 49.4% 51.0% 46.3% 49.6%
Adjusted operating efficiency ratio48.9 47.2 45.8 43.3 43.7
The following table shows the reconciliation of reported net income (GAAP) and adjusted net income (non-GAAP) and adjusted diluted earnings per share5:
Income before income tax expense$36,009 $56,182 $54,413 $60,733 $56,776
Income tax expense12,243 18,412 16,991 19,737 17,709
Net income (GAAP)23,766 37,770 37,422 40,996 39,067
Adjustments:
Net loss (gain) on sale of securities283 (4,474) (3,433) 102 23
Net (gain) on sale of trust division (2,255)
Merger-related expense265 3,127
Charge for asset write-downs, retention and severance2,485 2,000
Loss on extinguishment of borrowings8,716 1,013
Amortization of non-compete agreements and acquired customer list intangible assets968 969 970 610 396
Total adjustments12,717 (3,505) 550 (1,543) 3,546
Income tax (benefit) expense(4,324) 1,149 (179) 501 (1,152)
Total adjustments net of taxes8,393 (2,356) 371 (1,042) 2,394
Adjusted net income (non-GAAP)$32,159 $35,414 $37,793 $39,954 $41,461
Weighted average diluted shares130,500,975 130,688,729 130,875,614 132,995,762 135,811,721
Diluted EPS as reported (GAAP)$0.18 $0.29 $0.29 $0.31 $0.29
Adjusted diluted EPS (non-GAAP)0.25 0.27 0.29 0.30 0.31

Sterling Bancorp and Subsidiaries
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)

The Company provides supplemental reporting of non-GAAP / adjusted financial measures as management believes this information is useful to investors. See legend below.
As of and for the Quarter Ended
3/31/2016 6/30/2016 9/30/2016 12/31/2016 3/31/2017
The following table shows a reconciliation of the allowance for loan losses and remaining purchase accounting adjustments to portfolio loans6:
Allowance for loan losses$53,014 $55,865 $59,405 $63,622 $66,939
Remaining purchase accounting adjustments:
Acquired performing loans27,340 23,802 26,003 22,199 19,733
Purchased credit impaired loans16,862 15,955 15,513 14,813 14,450
Total remaining purchase accounting adjustments44,202 39,757 41,516 37,012 34,183
Total valuation balances recorded against portfolio loans$97,216 $95,622 $100,921 $100,634 $101,122
Total portfolio loans, gross$8,286,163 $8,594,295 $9,168,741 $9,527,230 $9,763,967
Remaining purchase accounting adjustments:
Acquired performing loans27,340 23,802 26,003 22,199 19,733
Purchased credit impaired loans16,862 15,955 15,513 14,813 14,450
Adjusted portfolio loans, gross$8,330,365 $8,634,052 $9,210,257 $9,564,242 $9,798,150
Allowance for loan losses to total portfolio loans, gross0.64% 0.65% 0.65% 0.67% 0.69%
Total valuation balances recorded against portfolio loans to adjusted gross portfolio loans1.17% 1.11% 1.10% 1.05% 1.03%

The non-GAAP / adjusted measures presented above are used by our management and Board of Directors on a regular basis in addition to our GAAP results to facilitate the assessment of our financial performance and to assess our performance compared to our annual budget and strategic plans. These non-GAAP/adjusted financial measures complement our GAAP reporting and are presented above to provide investors, analysts, regulators and others information that we use to manage and evaluate our performance each period. This information supplements our GAAP reported results, and should not be viewed in isolation from, or as a substitute for, our GAAP results. When non-GAAP / adjusted measures are impacted by income tax expense, we present the pre-tax amount for the income and expense items that result in the non-GAAP adjustments and present the income tax expense impact at the effective tax rate in effect for the period presented.

1 Stockholders’ equity as a percentage of total assets, book value per share, tangible equity as a percentage of tangible assets and tangible book value per share provides information to help assess our capital position and financial strength. We believe tangible book measures improve comparability to other banking organizations that have not engaged in acquisitions that have resulted in the accumulation of goodwill and other intangible assets.
2 Reported return on average tangible equity and adjusted return on average tangible equity measures provide information to evaluate the use of our tangible equity.
3 Reported return on tangible assets and adjusted return on tangible assets measures provide information to help assess our profitability.
4 The reported operating efficiency ratio is a non-GAAP measure calculated by dividing our GAAP non-interest expense by the sum of our GAAP net interest income plus GAAP non-interest income. The adjusted operating efficiency ratio is a non-GAAP measure calculated by dividing non-interest expense adjusted for intangible asset amortization and certain expenses generally associated with discrete merger transactions and non-recurring strategic plans by the sum of net interest income plus non-interest income plus the tax equivalent adjustment on securities income and elimination of the impact of gain or loss on sale of securities. The adjusted operating efficiency ratio is a measure we use to assess our operating performance.
5 Adjusted net income and adjusted earnings per share present a summary of our earnings which includes adjustments to exclude certain revenues and expenses (generally associated with discrete merger transactions and non-recurring strategic plans) to help in assessing our profitability. Historically we have imputed income tax expense on adjusted earnings at our GAAP earnings effective tax rate. Due to the adoption of a new accounting standard in the first quarter of 2017 that requires vesting of share-based compensation awards be treated as a discrete item in income tax expense, our effective tax rate for GAAP earnings decreased from our estimate for full year 2017 of 32.5% to 31.2% for the quarter ended March 31, 2017. Therefore, for purposes of calculating adjusted net income, we recognized income tax expense at our 2017 anticipated effective tax rate of 32.5%.
6 The reconciliation of the allowance for loan losses and remaining purchase accounting adjustments to portfolio loans provides information to evaluate the impact of purchase accounting adjustments and the allowance for loan losses on our portfolio loans. In purchase accounting, the prior allowance for loan losses is not carried over, and in place, we are required to estimate the fair value of the loan, which includes an estimate of life of loan losses on the portfolio, which is included as a purchase discount within the acquired loan portfolio.

STERLING BANCORP CONTACT: Luis Massiani, SEVP & Chief Financial Officer 845.369.8040 http://www.sterlingbancorp.com

Source:Sterling Bancorp