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Sterling Bancorp announces results for the fourth quarter and full year 2020. Diluted income per share available to common stockholders in the fourth quarter of $0.38 (as reported) and $0.49 (as adjusted).

/EIN News/ -- Key Performance Highlights

  • Adjusted PPNR excluding accretion income1, 2 of $130.3 million; increased $7.0 million, or 5.7% over linked quarter.
  • Adjusted total revenue1 was $256.1 million; an increase of $10.5 million, or 4.3% over linked quarter.
  • Net interest margin excluding accretion income1 of 3.25%, an increase of 15 basis points (“bps”) over the linked quarter.
  • Earning asset yields increased by six bps to 3.69% while cost of funding liabilities decreased by nine bps to 33 bps.
  • Total commercial loans were $20.0 billion, an increase of 5.5% over a year ago.
  • Total deposits were $23.1 billion, an increase of 3.1% over a year ago.
  • Total core deposits were $21.5 billion, an increase of 4.5% over a year ago.
  • Adjusted non-interest expense1 was $110.1 million, an increase of $4.3 million relative to the linked quarter. Adjusted operating efficiency ratio3 was 43.0%.
  • NPLs decreased by $13.8 million to $167.1 million; ACL / portfolio loans of 1.49% and ACL / NPLs of 195.2%.
  • TCE / TA1 was 9.55% and tangible book value per common share1 was $13.87, an increase of 6.0% over a year ago.
  • Completed $225.0 million subordinated debt capital raise; anticipate redeeming bank subordinated debt in April 2021.
  • Declared dividend per common share of $0.07.
  • Restarted share repurchase program in Q4 2020; with 1.9 million repurchased and 14.7 million available for repurchase under the program; targeting a 50% pay out ratio.

Results for the Three Months ended December 31, 2020 vs. December 31, 2019

($ in thousands except per share amounts) GAAP / As Reported   Non-GAAP / As Adjusted1
  12/31/2019   12/31/2020   Change
% / bps
  12/31/2019   12/31/2020   Change
% / bps
Total assets $ 30,586,497     $ 29,820,138     (2.5 ) %   $ 30,586,497     $ 29,820,138     (2.5 ) %
Total portfolio loans, gross 21,440,212     21,848,409     1.9       21,440,212     21,848,409     1.9    
Total deposits 22,418,658     23,119,522     3.1       22,418,658     23,119,522     3.1    
PPNR1, 2 145,188     122,474     (15.6 )     131,380     130,257     (0.9 )  
Net income available to common 104,722     74,457     (28.9 )     108,855     94,323     (13.3 )  
Diluted EPS available to common 0.52     0.38     (26.9 )     0.54     0.49     (9.3 )  
Net interest margin 3.37 %   3.33 %   (4 )     3.42 %   3.38 %   (4 )  
Tangible book value per common share1 $ 13.09     $ 13.87     6.0       $ 13.09     $ 13.87     6.0    

Results for the Three Months ended December 31, 2020 vs. September 30, 2020

($ in thousands except per share amounts) GAAP / As Reported   Non-GAAP / As Adjusted1
  9/30/2020   12/31/2020   Change
% / bps
  9/30/2020   12/31/2020   Change
% / bps
PPNR1, 2 $ 126,687     $ 122,474     (3.3 )     $ 123,286     $ 130,257     5.7  
Net income available to common 82,438     74,457     (9.7 )     87,682     94,323     7.6  
Diluted EPS available to common 0.43     0.38     (11.6 )     0.45     0.49     8.9  
Net interest margin 3.19 %   3.33 %   14       3.24 %   3.38 %   14  
Operating efficiency ratio3 48.5     52.1     360       43.1     43.0     (10 )
Allowance for credit losses (“ACL”) - loans $ 325,943     $ 326,100           $ 325,943     $ 326,100      
ACL to portfolio loans 1.46 %   1.49 %   3       1.46 %   1.49 %   3  
ACL to NPLs 180.2     195.2     15       180.2     195.2     15  
Tangible book value per common share1 $ 13.57     $ 13.87     2.2       $ 13.57     $ 13.87     2.2  

1. Non-GAAP / as adjusted measures are defined in the non-GAAP tables beginning on page 18.
2. PPNR represents pretax pre-provision net revenue. PPNR and PPNR excluding accretion income are non-GAAP measures and are measured as net interest income plus non-interest income less operating expenses before tax.
3. Operating efficiency ratio is a non-GAAP measure. See page 20 for an explanation of the operating efficiency ratio.

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PEARL RIVER, N.Y., Jan. 20, 2021 (GLOBE NEWSWIRE) -- Sterling Bancorp (NYSE: STL) (the “Company”), the parent company of Sterling National Bank (the “Bank”), today announced results for the three months and year ended December 31, 2020. Net income available to common stockholders for the three months ended December 31, 2020 was $74.5 million, or $0.38 per diluted share, compared to net income available to common stockholders of $82.4 million, or $0.43 per diluted share, for the linked quarter ended September 30, 2020, and net income available to common stockholders of $104.7 million, or $0.52 per diluted share, for the three months ended December 31, 2019.

Net income available to common stockholders for the year ended December 31, 2020 was $217.9 million, or $1.12 per diluted share, compared to net income available to common stockholders of $419.1 million, or $2.03 per diluted share, for the year ended December 31, 2019.

President’s Comments
Jack Kopnisky, President and Chief Executive Officer, commented: “We experienced a difficult operating environment in 2020, yet I could not be more pleased with our response to these challenges and how well we performed. The dedication of our colleagues, resilience of our business model and high quality of our client relationships is evident in our operating results. We have prioritized supporting our clients, colleagues and communities, and delivered strong profitability and substantial growth in tangible capital and tangible book value per common share.

“We closed 2020 with strong performance in the fourth quarter. Adjusted PPNR excluding accretion income was $130.3 million, an increase of 5.7% relative to the linked quarter. Our adjusted net income available to common stockholders was $94.3 million, or $0.49 per diluted share, which was an increase of four cents per share over the linked quarter. We saw improvements across many of our key profitability metrics, with positive operating leverage in the fourth quarter of 2.5x, adjusted return on average tangible assets of 1.33% and adjusted return on average tangible common equity 14.0%. At December 31, 2020, our tangible book value per common share was $13.87, an increase of 6.0% over last year.

“We continued to focus on those business segments that deliver the most attractive risk-adjusted returns. At December 31, 2020, our total core deposits were $21.5 billion, which represented growth of $934.1 million, or 4.5%, over last year. Our loan pipelines and origination activity increased significantly in the fourth quarter, and we anticipate this will continue in the first quarter of 2021. Total commercial loans grew to $20.0 billion, an increase of 5.5% over the same period a year ago. Most importantly, we effectively managed our interest rate margin by substantially reducing our funding costs and protecting our earning asset yields. Our net interest income was $222.0 million in the fourth quarter, an increase of $4.2 million relative to the linked quarter, and our tax equivalent net interest margin excluding accretion income was 3.25%, an increase of 15 basis points.

“In our fee-based businesses, client activity and transaction volumes are beginning to recover. In the fourth quarter, total non-interest income was $33.9 million, which included a gain of $3.7 million on the sale of commercial loans related to the Paycheck Protection Program (“PPP”) program. We anticipate fee revenue will return to pre-pandemic levels as business activity continues to recover in our factoring, payroll finance, syndications and cash management businesses.

“In the fourth quarter, our adjusted non-interest expenses were $110.1 million and our adjusted operating efficiency ratio was 43.0%. Given the improving economic outlook, we are making targeted investments in technology through Brio Direct, Banking as a Service and other digital platforms. We are also investing in our business development functions, including hires in key commercial areas that include syndications, innovation finance, treasury management and small business. We are investing for the future, and are confident that these investments will drive scalable and efficient growth in our business and revenues.

“Asset quality performance was also strong and in-line with our expectations. As of December 31, 2020, the majority of our clients on loan payment deferrals had resumed making payments; total loan payment deferrals decreased to $208.4 million and were 1.0% of total portfolio loans. Total net charge-offs in the fourth quarter were $27.3 million, which included adjusting the carrying value of our remaining taxi medallion relationships. We anticipate we will sell or exit the remaining taxi medallion balances in the first quarter of 2021. As of December 31, 2020, our allowance for credit losses - portfolio loans was $326.1 million, or 1.49% of total loans and 195.2% of non-performing loans.

“We have a strong capital position. Our tangible common equity to tangible assets ratio increased 40 basis points in the fourth quarter to 9.55% and our Tier 1 leverage ratio was 10.13%. We declared our regular dividend of $0.07 on our common stock, payable on February 16, 2021 to holders of record as of February 1, 2021. We restarted our stock repurchase program in Q4 2020 and repurchased 1.9 million shares. The program had 14.7 million shares available for repurchase as of December 31, 2020.

“Finally, I would like to thank our clients, shareholders, and colleagues, all of whom have exhibited extraordinary resilience through these trying times. The dedication and hard work of our colleagues positions us well to emerge from these events as a better company and take advantage of the significant opportunities in front of us in 2021.”

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Reconciliation of GAAP Results to Adjusted Results (non-GAAP)
The Company’s GAAP net income available to common stockholders of $74.5 million, or $0.38 per diluted share, for the fourth quarter of 2020, included the following items:

  • a pre-tax loss of $111 thousand on the sale of investment securities;
  • a pre-tax charge of $13.3 million related to the sale and disposition of nine financial centers and two back office locations;
  • a pre-tax charge of $2.7 million related to the repayment of FHLB borrowings and a portion of the subordinated notes - Bank; and
  • the pre-tax amortization of non-compete agreements and acquired customer list intangible assets of $172 thousand.

Excluding the impact of these items, adjusted net income available to common stockholders was $94.3 million, or $0.49 per diluted share, for the three months ended December 31, 2020. Our effective income tax rate for the full year 2020 was 13.5%, which is the tax rate we use to calculate our adjusted earnings in the three months ended December 31, 2020.

For the year ended December 31, 2020, our GAAP net income available to common stockholders was $217.9 million, or $1.12 per diluted share. Our adjusted net income available to common stockholders was $234.1 million, or $1.20 per diluted share. Adjusted earnings for the year ended December 31, 2020, are calculated using our effective income tax rate of 13.5%

Non-GAAP financial measures include the terms “adjusted” or “excluding”. See the reconciliation of the Company’s non-GAAP financial measures beginning on page 18.

Net Interest Income and Margin

($ in thousands) For the three months ended   Change % / bps
  12/31/2019   9/30/2020   12/31/2020   Y-o-Y   Linked Qtr
Interest and dividend income $ 295,474     $ 244,658     $ 242,610     (17.9 ) %   (0.8 ) %
Interest expense 67,217     26,834     20,584     (69.4 )     (23.3 )  
Net interest income $ 228,257     $ 217,824     $ 222,026     (2.7 )     1.9    
                   
Accretion income on acquired loans $ 19,497     $ 9,172     $ 8,560     (56.1 ) %   (6.7 ) %
Yield on loans 4.84 %   3.82 %   3.90 %   (94 )     8    
Tax equivalent yield on investment securities4 2.89     3.09     2.94     5       (15 )  
Tax equivalent yield on interest earning assets4 4.41     3.63     3.69     (72 )     6    
Cost of total deposits 0.89     0.31     0.22     (67 )     (9 )  
Cost of interest bearing deposits 1.10     0.40     0.29     (81 )     (11 )  
Cost of borrowings 2.38     1.95     3.35     97       140    
Cost of interest bearing liabilities 1.28     0.53     0.43     (85 )     (10 )  
Total cost of funding liabilities5 1.06     0.42     0.33     (73 )     (9 )  
Tax equivalent net interest margin6 3.42     3.24     3.38     (4 )     14    
                   
Average commercial loans $ 18,473,473     $ 20,090,445     $ 19,992,074     8.2   %   (0.5 ) %
Average loans, including loans held for sale 21,000,949     22,159,535     21,879,511     4.2       (1.3 )  
Average cash balances 573,861     424,249     331,587     (42.2 )     (21.8 )  
Average investment securities 5,064,936     4,392,864     4,155,784     (17.9 )     (5.4 )  
Average total interest earning assets 26,901,439     27,163,337     26,522,991     (1.4 )     (2.4 )  
Average deposits and mortgage escrow 22,289,097     23,665,916     23,849,187     7.0       0.8    

4. Tax equivalent basis represents interest income earned on tax exempt securities divided by the applicable federal tax rate of 21%. 
5. Includes interest bearing liabilities and non-interest bearing deposits. 
6. Tax equivalent net interest margin is equal to net interest income plus the tax equivalent adjustment for tax exempt securities divided by average interest earning assets. The tax equivalent adjustment is assumed at a 21% federal tax rate in all periods presented.

Fourth quarter 2020 compared with fourth quarter 2019

Net interest income was $222.0 million for the quarter ended December 31, 2020, a decrease of $6.2 million compared to the

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fourth quarter of 2019. This was mainly due to a decline in accretion income on acquired loans. Other key components of changes in net interest income were the following:

  • The tax equivalent yield on interest earning assets decreased 72 basis points to 3.69% mainly due to lower accretion income on acquired loans and changes in market rates of interest.
  • The yield on loans was 3.90% compared to 4.84% for the three months ended December 31, 2019. The decrease in yield on loans was mainly due to the decline in market interest rates. Accretion income on acquired loans was $8.6 million in the fourth quarter of 2020, compared to $19.5 million in the fourth quarter of 2019.
  • The tax equivalent yield on investment securities was 2.94% compared to 2.89% for the three months ended December 31, 2019. Average investment securities were $4.2 billion, or 15.7%, of average total interest earning assets for the fourth quarter of 2020 compared to $5.1 billion, or 18.8%, of average total interest earning assets for the fourth quarter of 2019. The increase in yield was mainly due to an increase in corporate securities in 2020.
  • In the fourth quarter of 2020, average cash balances were $331.6 million compared to $573.9 million in the fourth quarter of 2019. In the fourth quarter of 2019, we maintained higher cash prior to the completion of an equipment finance portfolio acquisition.
  • Total interest expense was $20.6 million, a decline of $46.6 million compared to the fourth quarter of 2019. This was mainly due to lower interest expense paid on deposits and repayment of higher cost FHLB borrowings.
  • The cost of total deposits was 22 basis points for the fourth quarter of 2020 compared to 89 basis points for the same period a year ago. The decrease was mainly due to deposit pricing strategies we implemented in response to the declining interest rate environment.
  • The cost of borrowings was 3.35% for the fourth quarter of 2020 compared to 2.38% for the same period a year ago. The increase was mainly due to the change in composition of our borrowings. We repaid the majority of our FHLB borrowings during the year, which left a higher relative amount of longer term borrowings, which have higher interest coupons.
  • The total cost of interest bearing liabilities was 0.43% for the fourth quarter of 2020 compared to 1.28% for the same period a year ago. The decline was due to both changes in market rates of interest and changes in funding mix.
  • Average interest bearing deposits increased $391.4 million during the fourth quarter of 2020 compared to the same period a year ago, due to growth generated by our commercial banking teams and financial centers. Average borrowings decreased $2.0 billion compared to the fourth quarter of 2019.

Fourth quarter 2020 compared with linked quarter ended September 30, 2020

Net interest income increased $4.2 million for the quarter ended December 31, 2020 compared to the linked quarter. The increase was mainly due to a decrease in interest expense. Other key components of the changes in net interest income were the following:

  • The tax equivalent net interest margin was 3.38% compared to 3.24% in the linked quarter. Excluding accretion income on acquired loans, tax equivalent net interest margin increased 15 basis points to 3.25%.
  • The yield on loans was 3.90% compared to 3.82% for the linked quarter. The increase was mainly due to prepayment penalties on multi-family loans and resolution of residential mortgage loans that were under forbearance. Accretion income on acquired loans decreased $612 thousand to $8.6 million for the fourth quarter of 2020.
  • The tax equivalent yield on interest earning assets was 3.69% compared to 3.63% in the linked quarter mainly due to higher prepayment penalties on multi-family loans and recognition of interest income on loans in which we deferred income recognition while under CARES Act forbearance.
  • The cost of total deposits decreased nine basis points to 22 basis points, mainly due to deposit pricing strategies we implemented in response to the declining interest rate environment.
  • Total interest expense decreased $6.3 million from the linked quarter as a result of continued repricing of deposits and repayment of higher cost FHLB borrowings.
  • The average balance of commercial loans decreased $98.4 million and the average balance of residential mortgage loans declined $170.8 million.
  • The total balance of PPP loans was $142.8 million at the end of the year. We recognized $846 thousand in PPP loan fees as interest income in the fourth quarter of 2020, compared to $1.5 million in the linked quarter.
  • The tax equivalent yield on investment securities was 2.94% compared to 3.09% for the linked quarter. The decrease in yield was mainly due to premium amortization recognized in the linked quarter related to accelerated repayments on mortgage-backed securities.
  • The total cost of borrowings increased 140 basis points to 3.35%, mainly due to the change in mix of borrowings as we repaid FHLB borrowings and issued $225.0 million of subordinated notes in the period. We anticipate we will redeem the subordinated notes - Bank in April 2021.

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  • Average deposits and mortgage escrow increased by $183.3 million and average borrowings decreased by $895.9 million relative to the linked quarter.

Non-interest Income

($ in thousands) For the three months ended   Change %
  12/31/2019   9/30/2020   12/31/2020   Y-o-Y   Linked Qtr
Deposit fees and service charges $ 6,506     $ 5,960     $ 5,975     (8.2 ) %   0.3   %
Accounts receivable management / factoring commissions and other related fees 6,572     5,393     6,498     (1.1 ) %   20.5   %
Bank owned life insurance (“BOLI”) 4,770     5,363     4,961     4.0   %   (7.5 ) %
Loan commissions and fees 8,698     7,290     13,220     52.0   %   81.3   %
Investment management fees 1,597     1,735     1,700     6.4   %   (2.0 ) %
Net (loss) gain on sale of securities (76 )   642     (111 )   46.1   %   (117.3 ) %
(Loss) on termination of pension plan (280 )           NM       NM    
Other 4,594     1,842     1,678     (63.5 ) %   (8.9 ) %
Total non-interest income 32,381     28,225     33,921     4.8   %   20.2   %
Net (loss) gain on sale of securities (76 )   642     (111 )   46.1   %   (117.3 ) %
(Loss) on termination of pension plan (280 )           NM       NM    
Adjusted non-interest income $ 32,737     $ 27,583     $ 34,032     4.0   %   23.4   %
                                       

Fourth quarter 2020 compared with fourth quarter 2019
Adjusted non-interest income increased $1.3 million in the fourth quarter of 2020 to $34.0 million, compared to $32.7 million in the same quarter last year. The increase was mainly due to the gain on sale of PPP loans of $3.7 million, and an increase in income received on operating leases that were acquired in the equipment portfolio transaction in the fourth quarter of 2019.

Loan swap fees, which are included in other income, declined $2.6 million due to lower transaction volumes.

In the fourth quarter of 2019, we realized a loss on termination of a pension plan of $280 thousand.

Fourth quarter 2020 compared with linked quarter ended September 30, 2020
Adjusted non-interest income increased approximately $6.4 million relative to the linked quarter to $34.0 million. The increase was primarily a result of increased transactional activity in our account receivable management business and an increase in loan commissions and fees, which increased $5.9 million relative to the linked quarter. This increase includes $3.7 million of gain from sale of PPP loans, gain from sale of Main Street Lending Program of $370 thousand, an increase of $1.0 million in loan syndication fees and an increase in operating lease revenues.

In the fourth quarter of 2020, we realized a loss of $111 thousand on sale of securities compared to a gain of $642 thousand in the third quarter of 2020.

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Non-interest Expense

($ in thousands) For the three months ended   Change % / bps
  12/31/2019   9/30/2020   12/31/2020   Y-o-Y   Linked Qtr
Compensation and benefits $ 52,453       $ 55,960     $ 56,563     7.8   %   1.1   %
Stock-based compensation plans 5,180       5,869     5,222     0.8       (11.0 )  
Occupancy and office operations 15,886       14,722     14,742     (7.2 )     0.1    
Information technology 9,313       8,422     9,559     2.6       13.5    
Amortization of intangible assets 4,785       4,200     4,200     (12.2 )        
FDIC insurance and regulatory assessments 3,134       3,332     2,865     (8.6 )     (14.0 )  
Other real estate owned (“OREO”), net (132 )     151     283     (314.4 )     87.4    
Impairment related to financial centers and real estate consolidation strategy           13,311     NM       NM    
Charge for asset write-downs, systems integration, retention and severance 5,133               NM       NM    
Loss on extinguishment of borrowings       6,241     2,749           (56.0 )  
Other expenses 19,698       20,465     23,979     21.7       17.2    
Total non-interest expense $ 115,450       $ 119,362     $ 133,473     15.6       11.8    
Full time equivalent employees (“FTEs”) at period end 1,639       1,466     1,460     (10.9 )     (0.4 )  
Financial centers at period end 82       78     76     (7.3 )     (2.6 )  
Operating efficiency ratio, as reported8 44.3   %   48.5 %   52.1 %   780       360    
Operating efficiency ratio, as adjusted8 39.9       43.1     43.0     310       (10 )  

8 See a reconciliation of non-GAAP financial measures beginning on page 18.

Fourth quarter 2020 compared with fourth quarter 2019
Total non-interest expense increased $18.0 million relative to the fourth quarter of 2019. Key components of the change in non-interest expense between the periods were the following:

  • Compensation and benefits increased $4.1 million as decreases in financial center personnel were offset by hiring of information technology, risk management and commercial banking personnel. Severance costs for displaced personnel were $1.2 million. Total FTEs declined to 1,460 from 1,639.
  • Occupancy and office operations expense decreased $1.1 million, mainly due to the consolidation of financial centers and other back-office locations. We have consolidated 6 financial centers in the past twelve months.
  • Impairment related to financial centers and real estate consolidation strategy represents loss on sale of financial center and other locations and early termination payments on leased locations.
  • Charge for asset write-downs, systems integration, retention and severance incurred in the fourth quarter of 2019 was related to the equipment finance loan portfolio acquisition.
  • Other expenses increased $4.3 million to $24.0 million, mainly due to $3.1 million of depreciation expense on operating leases acquired in the fourth quarter of 2019. The remainder of the increase was mainly due to an increase in consulting fees related to information technology projects.

Fourth quarter 2020 compared with linked quarter ended September 30, 2020
Total non-interest expense increased $14.1 million to $133.5 million in the fourth quarter of 2020. Key components of the change in non-interest expense were the following:

  • Compensation and benefits increased $603 thousand to $56.6 million in the fourth quarter of 2020. The increase was mainly due to an increase in annual bonus compensation.
  • Information technology increased $1.1 million to $9.6 million. The increase was mainly due to the amortization of investments related to various back-office automation and digital loan and deposit product initiatives.
  • Loss on extinguishment of borrowings in the fourth quarter was incurred in connection with the repayment of $250.0 million of FHLB advances and $30.0 million of subordinated notes - Bank. In the linked quarter, the loss was incurred in connection with the repayment of $450.0 million of FHLB advances.

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  • Other expenses increased by $3.5 million, mainly due to an increase in charitable contributions and other donations, increased operating expenses associated with maintenance of office locations, and a write-down associated with repossessed assets related to foreclosed equipment finance loans.

Taxes

We recorded income tax expense of $18.6 million in the fourth quarter of 2020, compared to income tax expense of $12.3 million in the linked quarter and income tax expense of $27.9 million in the prior year period. For the three months ended December 31, 2020, we recorded income tax expense at an estimated effective income tax rate of 19.5% compared to 12.7% for the three months ended September 30, 2020. The increase in the effective tax rate was mainly due to an adjustment related to a net operating loss carryback benefit we recorded in our 2019 tax return in connection with provisions of the CARES Act. For the three months ended December 31, 2019, we recorded income tax expense at an estimated effective income tax rate of 20.7%.

Our estimated effective income tax rate for full year 2020 prior to discrete items was 13.5%. Discrete items include mainly the impact of vesting of stock-based compensation, adjustments to our estimates related to the amount of available net loss carryback available under the CARES Act, and our accrual for uncertain tax positions. Our actual estimated income tax rate for the full year 2020 after discrete items was 11.7%.

Key Balance Sheet Highlights as of December 31, 2020

($ in thousands) As of   Change % / bps
  12/31/2019   9/30/2020   12/31/2020   Y-o-Y   Linked Qtr
Total assets $ 30,586,497     $ 30,617,722     $ 29,820,138     (2.5 ) %   (2.6 ) %
Total portfolio loans, gross 21,440,212     22,281,940     21,848,409     1.9       (1.9 )  
Commercial & industrial (“C&I”) loans 8,232,719     9,331,717     9,160,268     11.3       (1.8 )  
Commercial real estate loans (including multi-family) 10,295,518     10,377,282     10,238,650     (0.6 )     (1.3 )  
Acquisition, development and construction (“ADC”) loans 467,331     633,166     642,943     37.6       1.5    
Total commercial loans 18,995,568     20,342,165     20,041,861     5.5       (1.5 )  
Residential mortgage loans 2,210,112     1,739,563     1,616,641     (26.9 )     (7.1 )  
Loan portfolio composition:                  
Commercial & industrial (“C&I”) loans 38.4 %   41.9 %   41.9 %   350          
Commercial real estate loans (including multi-family) 48.0     46.6     46.9     (110 )     30    
Acquisition, development and construction (“ADC”) loans 2.2     2.8     2.9     70       10    
Residential and consumer 11.4     8.7     8.3     (310 )     (40 )  
BOLI $ 613,848     $ 625,236     $ 629,576     2.6       0.7    
Core deposits9 20,548,459     22,563,276     21,482,525     4.5       (4.8 )  
Total deposits 22,418,658     24,255,333     23,119,522     3.1       (4.7 )  
Municipal deposits (included in core deposits) 1,988,047     2,397,072     1,648,945     (17.1 )     (31.2 )  
Investment securities, net 5,075,309     4,201,350     4,039,456     (20.4 )     (3.9 )  
Total borrowings 2,885,958     993,535     1,321,714     (54.2 )     33.0    
Loans to deposits 95.6 %   91.9 %   94.5 %   (110 )     260    
Core deposits9 to total deposits 91.7     93.0     92.9     120       (10 )  
Investment securities, net to earning assets 18.8     15.6     15.4     (340 )     (20 )  

9 Core deposits include retail, commercial and municipal transaction, money market, savings accounts and certificates of deposit accounts, and reciprocal Certificate of Deposit Account Registry balances and exclude brokered and wholesale deposits.

Highlights in balance sheet items as of December 31, 2020 were the following:

  • C&I loans includes traditional C&I, PPP, asset-based lending, payroll finance, warehouse lending, factored receivables, equipment financing and public sector finance loans. C&I loans and commercial real estate loans represented 88.8% of our loan portfolio at December 31, 2020 compared to 86.4% a year ago. Residential and consumer loans are now less than 10% of our total portfolio loans. During the year, we have continued to experience run-off of broker originated multi-family loans, which resulted in the decline in the proportion of commercial real estate loans. In the fourth quarter of 2020, we sold $464.2 million of PPP loans, which included the majority of such loans for which the forgiveness process had not yet been started.

7

  • Residential mortgage loans were $1.6 billion at December 31, 2020, a decline of $122.9 million from the linked quarter and a decline of $593.5 million from the same period a year ago. In the third quarter of 2020, we sold non-performing residential mortgage loans with a net book value of $53.2 million.   
  • Core deposits at December 31, 2020 were $21.5 billion and decreased $1.1 billion compared to September 30, 2020, and increased $934.1 million compared to December 31, 2019. The decline in the fourth quarter of both core deposits and total deposits was mainly due to expected seasonal outflows of municipal deposits. Money market balances declined $247.2 million as certain institutional non-relationship balances were withdrawn. The growth compared to December 31, 2019 in both core deposits and total deposits was mainly due to successful commercial banking and financial center deposit gathering strategies and the increase in balances that has occurred since the outset of the pandemic.
  • Total deposits at December 31, 2020 decreased $1.1 billion compared to September 30, 2020, and total deposits increased $700.9 million compared to December 31, 2019. The decrease over the linked quarter and the increase compared to December 31, 2019 was mainly due to the same factors as discussed in relation to the change in core deposits.
  • Municipal deposits at December 31, 2020 were $1.6 billion, a decrease of $748.1 million relative to September 30, 2020. Municipal deposits reach their peak at the end of the third quarter in connection with seasonal tax collections by local municipalities.
  • Investment securities, net decreased by $161.9 million from September 30, 2020 and $1.0 billion from December 31, 2019, and represented 15.4% of earning assets at December 31, 2020. The decline is consistent with our goal in the current interest rate environment of investment securities representing approximately 15.0% of earning assets.  
  • Total borrowings at December 31, 2020 were $1.3 billion, an increase of $328.2 million relative to September 30, 2020 and a decrease of $1.6 billion relative to December 31, 2019. The increase was mainly due to the issuance of $225.0 million of Subordinated notes. We anticipate a portion of these proceeds will be used to redeem the subordinated notes - Bank in April 2021. Compared to December 31, 2019, the sale of securities and deposit inflows allowed us to reduce borrowings.

Credit Quality

($ in thousands) For the three months ended   Change % / bps
  12/31/2019   9/30/2020   12/31/2020   Y-o-Y   Linked Qtr
Provision for credit losses $ 10,585     $ 31,000     $ 27,500     159.8   %   (11.3 ) %
Net charge-offs 9,082     70,546     27,343     201.1       (61.2 )  
Allowance for credit losses (“ACL”) - loans 106,238     325,943     326,100     207.0          
Loans 30 to 89 days past due accruing 52,880     68,979     72,912     37.9       5.7    
Non-performing loans 179,161     180,851     167,059     (6.8 )     (7.6 )  
Annualized net charge-offs to average loans 0.17 %   1.27 %   0.50 %   33       (77 )  
Special mention loans 159,976     204,267     461,458     188.5       125.9    
Substandard loans 295,428     375,427     528,760     79.0       40.8    
ACL - loans to total loans 0.50     1.46     1.49     99       3    
ACL - loans to non-performing loans 59.3     180.2     195.2     13,590       1,500    

For the three months ended December 31, 2020, provision for credit losses on portfolio loans was $27.5 million, which was $157 thousand greater than net charge-offs. The provision for credit losses was based on our reasonable and supportable forecasts of future macroeconomic scenarios used to estimate expected credit losses. ACL - loans was $326.1 million, or 1.49% of total portfolio loans compared to 1.46% at September 30, 2020, and increased to 195.2% of non-performing loans from 180.2% at September 30, 2020.

Net charge-offs were $27.3 million in the fourth quarter of 2020 and consisted mainly of charge-offs related to taxi medallion, asset-based lending, factored receivables, traditional C&I and commercial real estate loans.

Non-performing loans declined by $13.8 million to $167.1 million at December 31, 2020 compared to the linked quarter. Loans 30 to 89 days past due were $72.9 million, an increase of $3.9 million from the linked quarter.

Special mention loans increased $257.2 million compared to the linked quarter. Substandard loans, which include non-performing loans, increased $153.3 million relative to the linked quarter. The increase was mainly due to CRE and multi-family

8

loans and the majority of these loans are related to borrowers that previously requested payment forbearance under the CARES Act. As of December 31, 2020, loan payment deferrals were $208.4 million, or 1.0% of the total portfolio loans.

Capital

($ in thousands, except share and per share data) As of   Change % / bps
  12/31/2019   9/30/2020   12/31/2020   Y-o-Y   Linked Qtr
Total stockholders’ equity $ 4,530,113     $ 4,557,785     $ 4,590,514     1.3   %   0.7   %
Preferred stock 137,581     136,917     136,689     (0.6 )     (0.2 )  
Goodwill and other intangible assets 1,793,846     1,781,246     1,777,047     (0.9 )     (0.2 )  
Tangible common stockholders’ equity 10 $ 2,598,686     $ 2,639,622     $ 2,676,778     3.0       1.4    
Common shares outstanding 198,455,324     194,458,841     192,923,371     (2.8 )     (0.8 )  
Book value per common share $ 22.13     $ 22.73     $ 23.09     4.3       1.6    
Tangible book value per common share 10 13.09     13.57     13.87     6.0       2.2    
Tangible common equity as a % of tangible assets 10 9.03 %   9.15 %   9.55 %   52       40    
Est. Tier 1 leverage ratio - Company 9.55     9.93     10.13     58       20    
Est. Tier 1 leverage ratio - Company fully implemented     9.59     9.80     N/A       21    
Est. Tier 1 leverage ratio - Bank 10.11     10.48     11.33     122       85    
Est. Tier 1 leverage ratio - Bank fully implemented     10.13     11.01     N/A       88    
                   
10 See a reconciliation of non-GAAP financial measures beginning on page 18.

Total stockholders’ equity increased $32.7 million as of December 31, 2020 compared to September 30, 2020 to $4.6 billion. For the fourth quarter of 2020, net income of $76.4 million and stock-based compensation activity that totaled $5.6 million was partially offset by common stock repurchases of $30.6 million, common dividends of $13.5 million, preferred dividends of $2.2 million, and other comprehensive loss of $3.1 million.

We elected the five-year transition provision to delay for two years the full impact of the Current Expected Credit Losses (“CECL”) methodology on regulatory capital, followed by a three-year transition period. The December 31, 2020 fully implemented ratio data reflects the full impact of CECL and excludes the benefits of phase-ins.

Total goodwill and other intangible assets were $1.8 billion at December 31, 2020, a decrease of $4.2 million compared to September 30, 2020, which was due to amortization.

Diluted weighted average common shares outstanding declined relative to the linked quarter by approximately 185 thousand. Total common shares outstanding at December 31, 2020 were approximately 192.9 million.

Tangible book value per common share was $13.87 at December 31, 2020, which represented an increase of 6.0% compared to a year ago.

Conference Call Information
Sterling Bancorp will host a teleconference and webcast on Thursday, January 21, 2021 at 8:00 AM Eastern Time to discuss the Company’s results. Analysts, investors and interested parties are invited to listen to the webcast and view accompanying slides on the Company’s website at www.sterlingbancorp.com or by dialing (888) 394-8218 Conference ID 5798619. 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 services 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.

9

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, revenues, expenses, tax rates, capital and liquidity levels and ratios, asset levels, asset quality, financial position, plans, operations and prospects. Forward-looking statements involve certain risks, including the effects of the novel coronavirus disease (COVID-19), which include, but are not limited to, the federal, state and local government actions and reactions to COVID-19, the health of our staff and that of our clients, the continuity of our, our clients’ and our third party providers’ operations, the increased likelihood of cyber and payment fraud risk, the continued ability of our borrowers to repay their loans throughout and following the pandemic, the potential decline in collateral values resulting from COVID-19 and its effects, and the resulting impact upon our financial position, results of operations, cash flows and our outlook, as well as the following: business disruption; a failure 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; 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 Annual Report on Form 10-K for the twelve months ended December 31, 2020. 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 Annual Report on Form 10-K 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.

10

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

  12/31/2019   9/30/2020   12/31/2020
Assets:          
Cash and cash equivalents $ 329,151     $ 437,558     $ 305,002  
Investment securities, net 5,075,309     4,201,350     4,039,456  
Loans held for sale 8,125     36,826     11,749  
Portfolio loans:          
Commercial and industrial (“C&I”) 8,232,719     9,331,717     9,160,268  
Commercial real estate (including multi-family) 10,295,518     10,377,282     10,238,650  
Acquisition, development and construction (“ADC”) loans 467,331     633,166     642,943  
Residential mortgage 2,210,112     1,739,563     1,616,641  
Consumer 234,532     200,212     189,907  
Total portfolio loans, gross 21,440,212     22,281,940     21,848,409  
Allowance for credit losses (106,238 )   (325,943 )   (326,100 )
Total portfolio loans, net 21,333,974     21,955,997     21,522,309  
FHLB and Federal Reserve Bank Stock, at cost 251,805     167,293     166,190  
Accrued interest receivable 100,312     102,379     97,505  
Premises and equipment, net 227,070     217,481     202,555  
Goodwill 1,683,482     1,683,482     1,683,482  
Other intangibles 110,364     97,764     93,565  
BOLI 613,848     625,236     629,576  
Other real estate owned 12,189     6,919     5,347  
Other assets 840,868     1,085,437     1,063,402  
Total assets $ 30,586,497     $ 30,617,722     $ 29,820,138  
Liabilities:          
Deposits $ 22,418,658     $ 24,255,333     $ 23,119,522  
FHLB borrowings 2,245,653     397,000     382,000  
Federal Funds Purchased         277,000  
Paycheck Protection Program Lending Facility     117,497      
Other borrowings 22,678     35,223     27,101  
Senior notes 173,504          
Subordinated notes - Company 270,941     270,445     491,910  
Subordinated notes - Bank 173,182     173,370     143,703  
Mortgage escrow funds 58,316     84,031     59,686  
Other liabilities 693,452     727,038     728,702  
Total liabilities 26,056,384     26,059,937     25,229,624  
Stockholders’ equity:          
Preferred stock 137,581     136,917     136,689  
Common stock 2,299     2,299     2,299  
Additional paid-in capital 3,766,716     3,761,216     3,761,993  
Treasury stock (583,408 )   (660,312 )   (686,911 )
Retained earnings 1,166,709     1,229,799     1,291,628  
Accumulated other comprehensive income 40,216     87,866     84,816  
Total stockholders’ equity 4,530,113     4,557,785     4,590,514  
Total liabilities and stockholders’ equity $ 30,586,497     $ 30,617,722     $ 29,820,138  
           
Shares of common stock outstanding at period end 198,455,324     194,458,841     192,923,371  
Book value per common share $ 22.13     $ 22.73     $ 23.09  
Tangible book value per common share1 13.09     13.57     13.87  
1 See reconciliation of non-GAAP financial measures beginning on page 18.

11

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

   For the Quarter Ended   For the Year Ended
  12/31/2019   9/30/2020   12/31/2020   12/31/2019   12/31/2020
Interest and dividend income:                  
Loans and loan fees $ 256,377     $ 213,009     $ 214,522     $ 1,029,369     $ 882,874  
Securities taxable 20,367     18,623     15,679     94,823     73,786  
Securities non-taxable 13,031     12,257     11,839     55,802     49,924  
Other earning assets 5,699     769     570     22,546     7,437  
Total interest and dividend income 295,474     244,658     242,610     1,202,540     1,014,021  
Interest expense:                  
Deposits 49,907     18,251     13,417     192,361     105,559  
Borrowings 17,310     8,583     7,167     91,256     43,541  
Total interest expense 67,217     26,834     20,584     283,617     149,100  
Net interest income 228,257     217,824     222,026     918,923     864,921  
Provision for credit losses - loans 10,585     31,000     27,500     45,985     251,683  
Provision for credit losses - held to maturity securities     (1,000 )           703  
Net interest income after provision for credit losses 217,672     187,824     194,526     872,938     612,535  
Non-interest income:                  
Deposit fees and service charges 6,506     5,960     5,975     26,398     23,903  
Accounts receivable management / factoring commissions and other related fees 6,572     5,393     6,498     23,837     21,847  
BOLI 4,770     5,363     4,961     20,670     20,292  
Loan commissions and fees 8,698     7,290     13,220     24,129     39,537  
Investment management fees 1,597     1,735     1,700     7,305     6,660  
Net (loss) gain on sale of securities (76 )   642     (111 )   (6,905 )   9,428  
Net gain on security calls                 4,880  
Gain on sale of residential mortgage loans             8,313      
(Loss) gain on termination of pension plan (280 )           11,817      
Other 4,594     1,842     1,678     15,301     9,015  
Total non-interest income 32,381     28,225     33,921     130,865     135,562  
Non-interest expense:                  
Compensation and benefits 52,453     55,960     56,563     215,766     222,067  
Stock-based compensation plans 5,180     5,869     5,222     19,473     23,010  
Occupancy and office operations 15,886     14,722     14,742     64,363     59,358  
Information technology 9,313     8,422     9,559     35,580     33,311  
Amortization of intangible assets 4,785     4,200     4,200     19,181     16,800  
FDIC insurance and regulatory assessments 3,134     3,332     2,865     12,660     13,041  
Other real estate owned, net (132 )   151     283     622     1,719  
Impairment related to financial centers and real estate consolidation strategy         13,311     14,398     13,311  
Charge for asset write-downs, systems integration, retention and severance 5,133             8,477      
Loss (gain) on extinguishment of borrowings     6,241     2,749     (46 )   19,462  
Other 19,698     20,465     23,979     73,363     90,350  
Total non-interest expense 115,450     119,362     133,473     463,837     492,429  
Income before income tax expense 134,603     96,687     94,974     539,966     255,668  
Income tax expense 27,905     12,280     18,551     112,925     29,899  
Net income 106,698     84,407     76,423     427,041     225,769  
Preferred stock dividend 1,976     1,969     1,966     7,933     7,883  
Net income available to common stockholders $ 104,722     $ 82,438     $ 74,457     $ 419,108     $ 217,886  
Weighted average common shares:                  
Basic 199,719,747     193,494,929     193,036,678     205,679,874     194,084,358  
Diluted 200,252,542     193,715,943     193,530,930     206,131,628     194,393,343  
Earnings per common share:                  
Basic earnings per share $ 0.52     $ 0.43     $ 0.39     $ 2.04     $ 1.12  
Diluted earnings per share 0.52     0.43     0.38     2.03     1.12  
Dividends declared per share 0.07     0.07     0.07     0.28     0.28  

 

12

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 Period 12/31/2019   3/31/2020   6/30/2020   9/30/2020   12/31/2020
Total assets $ 30,586,497     $ 30,335,036     $ 30,839,893     $ 30,617,722     $ 29,820,138  
Tangible assets 1 28,792,651     28,545,390     29,054,447     28,836,476     28,043,091  
Securities available for sale 3,095,648     2,660,835     2,620,624     2,419,458     2,298,618  
Securities held to maturity, net 1,979,661     1,956,177     1,924,955     1,781,892     1,740,838  
Loans held for sale2 8,125     8,124     44,437     36,826     11,749  
Portfolio loans 21,440,212     21,709,957     22,295,267     22,281,940     21,848,409  
Goodwill 1,683,482     1,683,482     1,683,482     1,683,482     1,683,482  
Other intangibles 110,364     106,164     101,964     97,764     93,565  
Deposits 22,418,658     22,558,280     23,600,621     24,255,333     23,119,522  
Municipal deposits (included above) 1,988,047     2,091,259     1,724,049     2,397,072     1,648,945  
Borrowings 2,885,958     2,598,698     2,582,609     993,535     1,321,714  
Stockholders’ equity 4,530,113     4,422,424     4,484,187     4,557,785     4,590,514  
Tangible common equity 1 2,598,686     2,495,415     2,561,599     2,639,622     2,676,778  
Quarterly Average Balances                  
Total assets 30,349,691     30,484,433     30,732,914     30,652,856     30,024,165  
Tangible assets 1 28,569,589     28,692,033     28,944,714     28,868,840     28,244,364  
Loans, gross:                  
Commercial real estate (includes multi-family) 10,061,625     10,288,977     10,404,643     10,320,930     10,191,707  
ADC 459,372     497,009     519,517     636,061     685,368  
C&I:                  
Traditional C&I (includes PPP loans) 2,399,901     2,470,570     3,130,248     3,339,872     3,155,851  
Asset-based lending3 1,137,719     1,107,542     981,518     864,075     876,377  
Payroll finance3 228,501     217,952     173,175     143,579     162,762  
Warehouse lending3 1,307,645     1,089,576     1,353,885     1,550,425     1,637,507  
Factored receivables3 258,892     229,126     188,660     163,388     214,021  
Equipment financing3 1,430,715     1,703,016     1,677,273     1,590,855     1,535,582  
Public sector finance3 1,189,103     1,216,326     1,286,265     1,481,260     1,532,899  
Total C&I 7,952,476     8,034,108     8,791,024     9,133,454     9,114,999  
Residential mortgage 2,284,419     2,152,440     2,006,400     1,862,390     1,691,567  
Consumer 243,057     233,643     219,052     206,700     195,870  
Loans, total4 21,000,949     21,206,177     21,940,636     22,159,535     21,879,511  
Securities (taxable) 2,905,545     2,883,367     2,507,384     2,363,059     2,191,333  
Securities (non-taxable) 2,159,391     2,163,206     2,122,672     2,029,805     1,964,451  
Other interest earning assets 835,554     727,511     669,422     610,938     487,696  
Total interest earning assets 26,901,439     26,980,261     27,240,114     27,163,337     26,522,991  
Deposits:                  
Non-interest bearing demand 4,361,642     4,346,518     5,004,907     5,385,939     5,530,334  
Interest bearing demand 4,359,767     4,616,658     4,766,298     4,688,343     4,870,544  
Savings (including mortgage escrow funds) 2,614,523     2,800,021     2,890,402     2,727,475     2,712,041  
Money market 7,681,491     7,691,381     8,035,750     8,304,834     8,577,920  
Certificates of deposit 3,271,674     3,237,990     2,766,580     2,559,325     2,158,348  
Total deposits and mortgage escrow 22,289,097     22,692,568     23,463,937     23,665,916     23,849,187  
Borrowings 2,890,407     2,580,922     2,101,016     1,747,941     852,057  
Stockholders’ equity 4,524,417     4,506,537     4,464,403     4,530,334     4,591,770  
Tangible common stockholders’ equity 1 2,606,617     2,576,558     2,538,842     2,609,179     2,675,055  
                   
1 See a reconciliation of non-GAAP financial measures beginning on page 18.
2 Loans held for sale mainly includes commercial syndication loans.
3 Asset-based lending, payroll finance, warehouse lending, factored receivables, equipment finance and public sector finance comprise our commercial finance loan portfolio.
4 Includes loans held for sale, but excludes allowance for credit losses.

13

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
Per Common Share Data 12/31/2019   3/31/2020   6/30/2020   9/30/2020   12/31/2020
Basic earnings per share $ 0.52     $ 0.06       $ 0.25     $ 0.43     $ 0.39  
Diluted earnings per share 0.52     0.06       0.25     0.43     0.38  
Adjusted diluted earnings per share, non-GAAP 1 0.54     (0.02 )     0.29     0.45     0.49  
Dividends declared per common share 0.07     0.07       0.07     0.07     0.07  
Book value per common share 22.13     22.04       22.35     22.73     23.09  
Tangible book value per common share1 13.09     12.83       13.17     13.57     13.87  
Shares of common stock o/s 198,455,324     194,460,656       194,458,805     194,458,841     192,923,371  
Basic weighted average common shares o/s 199,719,747     196,344,061       193,479,757     193,494,929     193,036,678  
Diluted weighted average common shares o/s 200,252,542     196,709,038       193,604,431     193,715,943     193,530,930  
Performance Ratios (annualized)                  
Return on average assets 1.37 %   0.16   %   0.64 %   1.07 %   0.99 %
Return on average equity 9.18     1.09       4.40     7.24     6.45  
Return on average tangible assets 1.45     0.17       0.68     1.14     1.05  
Return on average tangible common equity 15.94     1.90       7.73     12.57     11.07  
Return on average tangible assets, adjusted 1 1.51     (0.04 )     0.79     1.21     1.33  
Return on avg. tangible common equity, adjusted 1 16.57     (0.49 )     9.02     13.37     14.03  
Operating efficiency ratio, as adjusted 1 39.9     42.4       45.1     43.1     43.0  
Analysis of Net Interest Income                  
Accretion income on acquired loans $ 19,497     $ 10,686       $ 10,086     $ 9,172     $ 8,560  
Yield on loans 4.84 %   4.47   %   4.03 %   3.82 %   3.90 %
Yield on investment securities - tax equivalent 2 2.89     2.96       3.05     3.09     2.94  
Yield on interest earning assets - tax equivalent 2 4.41     4.13       3.79     3.63     3.69  
Cost of interest bearing deposits 1.10     1.00       0.61     0.40     0.29  
Cost of total deposits 0.89     0.81       0.48     0.31     0.22  
Cost of borrowings 2.38     2.49       2.26     1.95     3.35  
Cost of interest bearing liabilities 1.28     1.19       0.78     0.53     0.43  
Net interest rate spread - tax equivalent basis 2 3.13     2.94       3.01     3.10     3.26  
Net interest margin - GAAP basis 3.37     3.16       3.15     3.19     3.33  
Net interest margin - tax equivalent basis 2 3.42     3.21       3.20     3.24     3.38  
Capital                  
Tier 1 leverage ratio - Company 3 9.55 %   9.41   %   9.51 %   9.93 %   10.13 %
Tier 1 leverage ratio - Bank only 3 10.11     9.99       10.09     10.48     11.33  
Tier 1 risk-based capital ratio - Bank only 3 12.32     12.19       12.24     12.39     13.38  
Total risk-based capital ratio - Bank only 3 13.63     13.80       13.85     13.86     14.73  
Tangible common equity - Company 1 9.03     8.74       8.82     9.15     9.55  
Condensed Five Quarter Income Statement                  
Interest and dividend income $ 295,474     $ 273,527       $ 253,226     $ 244,658     $ 242,610  
Interest expense 67,217     61,755       39,927     26,834     20,584  
Net interest income 228,257     211,772       213,299     217,824     222,026  
Provision for credit losses 10,585     138,280       56,606     30,000     27,500  
Net interest income after provision for credit losses 217,672     73,492       156,693     187,824     194,526  
Non-interest income 32,381     47,326       26,090     28,225     33,921  
Non-interest expense 115,450     114,713       124,881     119,362     133,473  
Income before income tax expense 134,603     6,105       57,902     96,687     94,974  
Income tax expense (benefit) 27,905     (8,042 )     7,110     12,280     18,551  
Net income $ 106,698     $ 14,147       $ 50,792     $ 84,407     $ 76,423  
                   
1 See a reconciliation of non-GAAP financial measures beginning on page 18.
2 Tax equivalent basis represents interest income earned on tax exempt securities divided by the applicable federal tax rate of 21%.
3 Regulatory capital amounts and ratios are preliminary estimates pending filing of the Company’s and Bank’s regulatory reports.

14

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

  As of and for the Quarter Ended
Allowance for Credit Losses Roll Forward 12/31/2019   3/31/2020   6/30/2020   9/30/2020   12/31/2020
Balance, beginning of period $ 104,735       $ 106,238       $ 326,444       $ 365,489       $ 325,943    
Implementation of CECL accounting standard:                  
Gross up from purchase credit impaired loans       22,496                      
Transition amount charged to equity       68,088                      
Provision for credit losses - loans 10,585       136,577       56,606       31,000       27,500    
Loan charge-offs1:                  
Traditional C&I (470 )     (298 )     (3,988 )     (1,089 )     (17,757 )  
Asset-based lending (5,856 )     (985 )     (1,500 )     (1,297 )        
Payroll finance (168 )           (560 )           (730 )  
Factored receivables (68 )     (7 )     (3,731 )     (6,893 )     (2,099 )  
Equipment financing (1,739 )     (4,793 )     (7,863 )     (42,128 )     (3,445 )  
Commercial real estate (583 )     (1,275 )     (11 )     (3,650 )     (3,266 )  
Multi-family             (154 )           (430 )  
ADC       (3 )     (1 )           (307 )  
Residential mortgage (334 )     (1,072 )     (702 )     (17,353 )     (23 )  
Consumer (401 )     (1,405 )     (172 )     (97 )     (62 )  
Total charge-offs (9,619 )     (9,838 )     (18,682 )     (72,507 )     (28,119 )  
Recoveries of loans previously charged-off1:                  
Traditional C&I 232       475       116       677       194    
Payroll finance 5       9       1       262       38    
Factored receivables 9       4       1       185       122    
Equipment financing 91       1,105       387       816       217    
Commercial real estate       60       584             174    
Multi-family 105             1                
Acquisition development & construction       105                      
Residential mortgage 5                         1    
Consumer 90       1,125       31       21       30    
Total recoveries 537       2,883       1,121       1,961       776    
Net loan charge-offs (9,082 )     (6,955 )     (17,561 )     (70,546 )     (27,343 )  
Balance, end of period $ 106,238       $ 326,444       $ 365,489       $ 325,943       $ 326,100    
Asset Quality Data and Ratios                  
Non-performing loans (“NPLs”) non-accrual $ 179,051       $ 252,205       $ 260,333       $ 180,795       $ 166,889    
NPLs still accruing 110       1,545       272       56       170    
Total NPLs 179,161       253,750       260,605       180,851       167,059    
Other real estate owned 12,189       11,815       8,665       6,919       5,347    
Non-performing assets (“NPAs”) $ 191,350       $ 265,565       $ 269,270       $ 187,770       $ 172,406    
Loans 30 to 89 days past due $ 52,880       $ 69,769       $ 66,268       $ 68,979       $ 72,912    
Net charge-offs as a % of average loans (annualized) 0.17   %   0.13   %   0.32   %   1.27   %   0.50   %
NPLs as a % of total loans 0.84       1.17       1.17       0.81       0.76    
NPAs as a % of total assets 0.63       0.88       0.87       0.61       0.58    
Allowance for credit losses as a % of NPLs 59.3       128.6       140.2       180.2       195.2    
Allowance for credit losses as a % of total loans 0.50       1.50       1.64       1.46       1.49    
Special mention loans $ 159,976       $ 132,356       $ 141,805       $ 204,267       $ 461,458    
Substandard loans 295,428       402,393       415,917       375,427       528,760    
Doubtful loans                         304    
                   
1 There were no charge-offs or recoveries on warehouse lending or public sector finance loans during the periods presented. There were no asset-based lending recoveries during the periods presented.

15

Sterling Bancorp and Subsidiaries
Non-GAAP Financial Measures
(unaudited, in thousands, except share and per share data)

  For the Quarter Ended
  September 30, 2020   December 31, 2020
  Average
balance
  Interest   Yield/
Rate
  Average
balance
  Interest   Yield/
Rate
   
  (Dollars in thousands)
Interest earning assets:                      
Traditional C&I and commercial finance loans $ 9,133,454     $ 83,415     3.63 %   $ 9,114,999     $ 83,429     3.64 %
Commercial real estate (includes multi-family) 10,320,930     104,463     4.03     10,191,707     105,193     4.11  
ADC 636,061     6,117     3.83     685,368     6,500     3.77  
Commercial loans 20,090,445     193,995     3.84     19,992,074     195,122     3.88  
Consumer loans 206,700     2,025     3.90     195,870     2,028     4.12  
Residential mortgage loans 1,862,390     16,989     3.65     1,691,567     17,372     4.11  
Total gross loans 1 22,159,535     213,009     3.82     21,879,511     214,522     3.90  
Securities taxable 2,363,059     18,623     3.14     2,191,333     15,679     2.85  
Securities non-taxable 2,029,805     15,515     3.06     1,964,451     14,985     3.05  
Interest earning deposits 424,249     154     0.14     331,587     105     0.13  
FHLB and Federal Reserve Bank Stock 186,689     615     1.31     156,109     465     1.18  
Total securities and other earning assets 5,003,802     34,907     2.78     4,643,480     31,234     2.68  
Total interest earning assets 27,163,337     247,916     3.63     26,522,991     245,756     3.69  
Non-interest earning assets 3,489,519             3,501,174          
Total assets $ 30,652,856             $ 30,024,165          
Interest bearing liabilities:                      
Demand and savings 2 deposits $ 7,415,818     $ 4,116     0.22 %   $ 7,582,585     $ 3,230     0.17 %
Money market deposits 8,304,834     8,078     0.39     8,577,920     6,065     0.28  
Certificates of deposit 2,559,325     6,057     0.94     2,158,348     4,122     0.76  
Total interest bearing deposits 18,279,977     18,251     0.40     18,318,853     13,417     0.29  
Other borrowings 1,303,849     3,378     1.03     261,787     518     0.79  
Subordinated debentures - Bank 173,328     2,360     5.45     168,222     2,293     5.45  
Subordinated debentures - Company 270,764     2,845     4.20     422,048     4,356     4.13  
Total borrowings 1,747,941     8,583     1.95     852,057     7,167     3.35  
Total interest bearing liabilities 20,027,918     26,834     0.53     19,170,910     20,584     0.43  
Non-interest bearing deposits 5,385,939             5,530,334          
Other non-interest bearing liabilities 708,665             731,151          
Total liabilities 26,122,522             25,432,395          
Stockholders’ equity 4,530,334             4,591,770          
Total liabilities and stockholders’ equity $ 30,652,856             $ 30,024,165          
Net interest rate spread 3         3.10 %           3.26 %
Net interest earning assets 4 $ 7,135,419             $ 7,352,081          
Net interest margin - tax equivalent     221,082     3.24 %       225,172     3.38 %
Less tax equivalent adjustment     (3,258 )           (3,146 )    
Net interest income     217,824             222,026      
Accretion income on acquired loans     9,172             8,560      
Tax equivalent net interest margin excluding accretion income on acquired loans     $ 211,910     3.10 %       $ 216,612     3.25 %
Ratio of interest earning assets to interest bearing liabilities 135.6 %           138.4 %        

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.

16

Sterling Bancorp and Subsidiaries
Non-GAAP Financial Measures
(unaudited, in thousands, except share and per share data)

  For the Quarter Ended
  December 31, 2019   December 31, 2020
  Average
balance
  Interest   Yield/
Rate
  Average
balance
  Interest   Yield/
Rate
   
  (Dollars in thousands)
Interest earning assets:                      
Traditional C&I and commercial finance loans $ 7,952,476     $ 97,221     4.85 %   $ 9,114,999     $ 83,429     3.64 %
Commercial real estate (includes multi-family) 10,061,625     122,435     4.83     10,191,707     105,193     4.11  
ADC 459,372     5,924     5.12     685,368     6,500     3.77  
Commercial loans 18,473,473     225,580     4.84     19,992,074     195,122     3.88  
Consumer loans 243,057     3,290     5.37     195,870     2,028     4.12  
Residential mortgage loans 2,284,419     27,507     4.82     1,691,567     17,372     4.11  
Total gross loans 1 21,000,949     256,377     4.84     21,879,511     214,522     3.90  
Securities taxable 2,905,545     20,367     2.78     2,191,333     15,679     2.85  
Securities non-taxable 2,159,391     16,494     3.06     1,964,451     14,985     3.05  
Interest earning deposits 573,861     2,423     1.68     331,587     105     0.13  
FHLB and Federal Reserve Bank stock 261,693     3,276     4.97     156,109     465     1.18  
Total securities and other earning assets 5,900,490     42,560     2.86     4,643,480     31,234     2.68  
Total interest earning assets 26,901,439     298,937     4.41     26,522,991     245,756     3.69  
Non-interest earning assets 3,448,252             3,501,174          
Total assets $ 30,349,691             $ 30,024,165          
Interest bearing liabilities:                      
Demand and savings 2 deposits $ 6,974,290     $ 13,670     0.78 %   $ 7,582,585     $ 3,230     0.17 %
Money market deposits 7,681,491     20,867     1.08     8,577,920     6,065     0.28  
Certificates of deposit 3,271,674     15,370     1.86     2,158,348     4,122     0.76  
Total interest bearing deposits 17,927,455     49,907     1.10     18,318,853     13,417     0.29  
Senior notes 173,601     1,369     3.15              
Other borrowings 2,496,546     13,112     2.08     261,787     518     0.79  
Subordinated debentures - Bank 173,142     2,358     5.45     168,222     2,293     5.45  
Subordinated debentures - Company 47,118     471     4.00     422,048     4,356     4.13  
Total borrowings 2,890,407     17,310     2.38     852,057     7,167     3.35  
Total interest bearing liabilities 20,817,862     67,217     1.28     19,170,910     20,584     0.43  
Non-interest bearing deposits 4,361,642             5,530,334          
Other non-interest bearing liabilities 645,770             731,151          
Total liabilities 25,825,274             25,432,395          
Stockholders’ equity 4,524,417             4,591,770          
Total liabilities and stockholders’ equity $ 30,349,691             $ 30,024,165          
Net interest rate spread 3         3.13 %           3.26 %
Net interest earning assets 4 $ 6,083,577             $ 7,352,081          
Net interest margin - tax equivalent     231,720     3.42 %       225,172     3.38 %
Less tax equivalent adjustment     (3,463 )           (3,146 )    
Net interest income     228,257             222,026      
Accretion income on acquired loans     19,497             8,560      
Tax equivalent net interest margin excluding accretion income on acquired loans     $ 212,223     3.13 %       $ 216,612     3.25 %
Ratio of interest earning assets to interest bearing liabilities 129.2 %           138.4 %        

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.

17

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 beginning on page 22.
  As of and for the Quarter Ended
  12/31/2019   3/31/2020   6/30/2020   9/30/2020   12/31/2020
                                       
The following table shows the reconciliation of pretax pre-provision net revenue to adjusted pretax pre-provision net revenue1:
                   
Net interest income $ 228,257     $ 211,772     $ 213,299     $ 217,824     $ 222,026  
Non-interest income 32,381     47,326     26,090     28,225     33,921  
Total net revenue 260,638     259,098     239,389     246,049     255,947  
Non-interest expense 115,450     114,713     124,881     119,362     133,473  
PPNR 145,188     144,385     114,508     126,687     122,474  
                   
Adjustments:                  
Accretion income (19,497 )   (10,686 )   (10,086 )   (9,172 )   (8,560 )
Net loss (gain) on sale of securities 76     (8,412 )   (485 )   (642 )   111  
Net loss on termination of Astoria defined benefit pension plan 280                  
Loss on extinguishment of debt     744     9,723     6,241     2,749  
Impairment related to financial centers and real estate consolidation strategy                 13,311  
Charge for asset write-downs, systems integration, retention and severance 5,133                  
Amortization of non-compete agreements and acquired customer list intangible assets 200     172     172     172     172  
Adjusted PPNR $ 131,380     $ 126,203     $ 113,832     $ 123,286     $ 130,257  

18

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 beginning on page 22.
  As of and for the Quarter Ended
  12/31/2019   3/31/2020   6/30/2020   9/30/2020   12/31/2020
                                                 
The following table shows the reconciliation of stockholders’ equity to tangible common equity and the tangible common equity ratio2:
                   
Total assets $ 30,586,497       $ 30,335,036       $ 30,839,893       $ 30,617,722       $ 29,820,138    
Goodwill and other intangibles (1,793,846 )     (1,789,646 )     (1,785,446 )     (1,781,246 )     (1,777,047 )  
Tangible assets 28,792,651       28,545,390       29,054,447       28,836,476       28,043,091    
Stockholders’ equity 4,530,113       4,422,424       4,484,187       4,557,785       4,590,514    
Preferred stock (137,581 )     (137,363 )     (137,142 )     (136,917 )     (136,689 )  
Goodwill and other intangibles (1,793,846 )     (1,789,646 )     (1,785,446 )     (1,781,246 )     (1,777,047 )  
Tangible common stockholders’ equity 2,598,686       2,495,415       2,561,599       2,639,622       2,676,778    
Common stock outstanding at period end 198,455,324       194,460,656       194,458,805       194,458,841       192,923,371    
Common stockholders’ equity as a % of total assets 14.36   %   14.13   %   14.10   %   14.44   %   14.94   %
Book value per common share $ 22.13       $ 22.04       $ 22.35       $ 22.73       $ 23.09    
Tangible common equity as a % of tangible assets 9.03   %   8.74   %   8.82   %   9.15   %   9.55   %
Tangible book value per common share $ 13.09       $ 12.83       $ 13.17       $ 13.57       $ 13.87    
 
The following table shows the reconciliation of reported return on average tangible common equity and adjusted return on average tangible common equity3:
                   
Average stockholders’ equity $ 4,524,417       $ 4,506,537       $ 4,464,403       $ 4,530,334       $ 4,591,770    
Average preferred stock (137,698 )     (137,579 )     (137,361 )     (137,139 )     (136,914 )  
Average goodwill and other intangibles (1,780,102 )     (1,792,400 )     (1,788,200 )     (1,784,016 )     (1,779,801 )  
Average tangible common stockholders’ equity 2,606,617       2,576,558       2,538,842       2,609,179       2,675,055    
Net income available to common 104,722       12,171       48,820       82,438       74,457    
Net income, if annualized 415,473       48,951       196,353       327,960       296,209    
Reported return on avg tangible common equity 15.94   %   1.90   %   7.73   %   12.57   %   11.07   %
Adjusted net income (loss) (see reconciliation on page 20) $ 108,855       $ (3,124 )     $ 56,926       $ 87,682       $ 94,323    
Annualized adjusted net income (loss) 431,870       (12,565 )     228,955       348,822       375,242    
Adjusted return on average tangible common equity 16.57   %   (0.49 ) %   9.02   %   13.37   %   14.03   %
                   
The following table shows the reconciliation of reported return on average tangible assets and adjusted return on average tangible assets4:
                   
Average assets $ 30,349,691        $ 30,484,433        $ 30,732,914        $ 30,652,856        $ 30,024,165     
Average goodwill and other intangibles (1,780,102 )     (1,792,400 )     (1,788,200 )     (1,784,016 )     (1,779,801 )  
Average tangible assets 28,569,589        28,692,033        28,944,714        28,868,840        28,244,364     
Net income available to common 104,722        12,171        48,820        82,438        74,457     
Net income, if annualized 415,473        48,951        196,353        327,960        296,209     
Reported return on average tangible assets 1.45    %   0.17    %   0.68    %   1.14    %   1.05    %
Adjusted net income (loss) (see reconciliation on page 20) $ 108,855        $ (3,124 )     $ 56,926        $ 87,682        $ 94,323     
Annualized adjusted net income (loss) 431,870        (12,565 )     228,955        348,822        375,242     
Adjusted return on average tangible assets 1.51    %   (0.04 ) %   0.79    %   1.21    %   1.33    %
                   

19

Sterling Bancorp and Subsidiaries
NON-GAAP FFINANCIAL 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 beginning on page 22.
  As of and for the Quarter Ended
  12/31/2019   3/31/2020   6/30/2020   9/30/2020   12/31/2020
 
The following table shows the reconciliation of the reported operating efficiency ratio and adjusted operating efficiency ratio5:
                   
Net interest income $ 228,257       $ 211,772       $ 213,299       $ 217,824       $ 222,026    
Non-interest income 32,381       47,326       26,090       28,225       33,921    
Total revenue 260,638       259,098       239,389       246,049       255,947    
Tax equivalent adjustment on securities 3,463       3,454       3,411       3,258       3,146    
Net loss (gain) on sale of securities 76       (8,412 )     (485 )     (642 )     111    
Loss on termination of pension plan 280                            
Depreciation of operating leases       (3,492 )     (3,136 )     (3,130 )     (3,130 )  
Adjusted total revenue 264,457       250,648       239,179       245,535       256,074    
Non-interest expense 115,450       114,713       124,881       119,362       133,473    
Charge for asset write-downs, systems integration, retention and severance (5,133 )                          
Impairment related to financial centers and real estate consolidation strategy                         (13,311 )  
Loss on extinguishment of borrowings       (744 )     (9,723 )     (6,241 )     (2,749 )  
Depreciation of operating leases       (3,492 )     (3,136 )     (3,130 )     (3,130 )  
Amortization of intangible assets (4,785 )     (4,200 )     (4,200 )     (4,200 )     (4,200 )  
Adjusted non-interest expense 105,532       106,277       107,822       105,791       110,083    
Reported operating efficiency ratio 44.3   %   44.3   %   52.2   %   48.5   %   52.1   %
Adjusted operating efficiency ratio 39.9       42.4       45.1       43.1       43.0    
                   
The following table shows the reconciliation of reported net income (GAAP) and earnings per share to adjusted net income available to common stockholders (non-GAAP) and adjusted diluted earnings per share(non-GAAP)6:
                   
Income before income tax expense $ 134,603       $ 6,105       $ 57,902       $ 96,687       $ 94,974    
Income tax expense (benefit) 27,905       (8,042 )     7,110       12,280       18,551    
Net income (GAAP) 106,698       14,147       50,792       84,407       76,423    
Adjustments:                  
Net loss (gain) on sale of securities 76       (8,412 )     (485 )     (642 )     111    
Loss on termination of pension plan 280                            
Loss on extinguishment of debt       744       9,723       6,241       2,749    
Impairment related to financial centers and real estate consolidation strategy.                         13,311    
Charge for asset write-downs, systems integration, retention and severance 5,133                            
Amortization of non-compete agreements and acquired customer list intangible assets 200       172       172       172       172    
Total pre-tax adjustments 5,689       (7,496 )     9,410       5,771       16,343    
Adjusted pre-tax income (loss) 140,292       (1,391 )     67,312       102,458       111,317    
Adjusted income tax expense (benefit) 29,461       (243 )     8,414       12,807       15,028    
Adjusted net income (loss) (non-GAAP) 110,831       (1,148 )     58,898       89,651       96,289    
Preferred stock dividend 1,976       1,976       1,972       1,969       1,966    
Adjusted net income (loss) available to common stockholders (non-GAAP) $ 108,855       $ (3,124 )     $ 56,926       $ 87,682       $ 94,323    
                   
Weighted average diluted shares 200,252,542       196,709,038       193,604,431       193,715,943       193,530,930    
Reported diluted EPS (GAAP) $ 0.52       $ 0.06       $ 0.25       $ 0.43       $ 0.38    
Adjusted diluted EPS (non-GAAP) 0.54       (0.02 )     0.29       0.45       0.49    

20

Sterling Bancorp and Subsidiaries
NON-GAAP FFINANCIAL 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 beginning on page 22.
  For the Year Ended December 31,
  2019   2020
 
The following table shows the reconciliation of reported net income (GAAP) and earnings per share to adjusted net income available to common stockholders (non-GAAP) and adjusted diluted earnings per share (non-GAAP)6:
Income before income tax expense $ 539,966     $ 255,668  
Income tax expense (benefit) 112,925     29,899  
Net income (GAAP) 427,041     225,769  
       
Adjustments:      
Net loss (gain) on sale of securities 6,905     (9,428 )
Net (gain) on termination of pension plan (11,817 )    
Net (gain) on sale or residential mortgage loans (8,313 )    
Impairment related to financial centers and real estate consolidation strategy 14,398     13,311  
Charge for asset write-downs, systems integration, retention and severance 8,477      
(Gain) loss on extinguishment of borrowings (46 )   19,462  
Amortization of non-compete agreements and acquired customer list intangible assets 840     686  
Total pre-tax adjustments 10,444     24,031  
Adjusted pre-tax income 550,410     279,699  
Adjusted income tax expense 115,586     37,759  
Adjusted net income (non-GAAP) $ 434,824     $ 241,940  
Preferred stock dividend 7,933     7,883  
Adjusted net income available to common stockholders (non-GAAP) $ 426,891     $ 234,057  
       
Weighted average diluted shares 206,131,628     194,393,343  
Diluted EPS as reported (GAAP) $ 2.03     $ 1.12  
Adjusted diluted EPS (non-GAAP) 2.07     1.20  

21

Sterling Bancorp and Subsidiaries
NON-GAAP FFINANCIAL 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 beginning on page 23.
  For the Year Ended December 31,
  2019   2020
 
The following table shows the reconciliation of reported return on average tangible common equity and adjusted return on average tangible common equity3:
Average stockholders’ equity $ 4,463,605       $ 4,523,468    
Average preferred stock (138,007 )     (137,247 )  
Average goodwill and other intangibles (1,773,475 )     (1,786,081 )  
Average tangible common stockholders’ equity 2,552,123       2,600,140    
Net income available to common stockholders $ 419,108       $ 217,886    
Reported return on average tangible common equity 16.42   %   8.38   %
Adjusted net income available to common stockholders (see reconciliation on page 21) $ 426,891       $ 234,057    
Adjusted return on average tangible common equity 16.73   %   9.00   %
The following table shows the reconciliation of reported return on avg tangible assets and adjusted return on avg tangible assets4:
Average assets $ 30,138,390       $ 30,472,854    
Average goodwill and other intangibles (1,773,475 )     (1,786,081 )  
Average tangible assets 28,364,915       28,686,773    
Net income available to common stockholders 419,108       217,886    
Reported return on average tangible assets 1.48   %   0.76   %
Adjusted net income available to common stockholders (see reconciliation on page 21) $ 426,891       $ 234,057    
Adjusted return on average tangible assets 1.51   %   0.82   %
The following table shows the reconciliation of the reported operating efficiency ratio and adjusted operating efficiency ratio5:                  
Net interest income $ 918,923