Sterling Bancorp Reports First Quarter 2020 Financial Highlights
Q1 2020 Financial Highlights
-
Net loss of
$27.8 million -
Net loss per share of
$(0.56) -
Non-interest expense of
$47.0 million , reflecting loan repurchase reserves of$7.8 million related primarily to the sale of loans originated under the Bank’s Advantage Loan Program and contingency reserves of$25.0 million related to previously disclosed litigation and investigations stemming from the Advantage Loan Program; these reserves reflect additional information obtained during the course of the previously-disclosed internal review of this program -
Provision for loan losses of
$20.9 million , reflecting our evaluation of the current and expected impacts on our loan portfolios of the COVID-19 pandemic -
Net interest income before provision for loan losses of
$28.6 million - Net interest margin of 3.57%
-
Non-interest income of
$0.5 million ; the decline in non-interest income reflects an increased valuation allowance against our mortgage servicing rights in the amount of$1.2 million -
Shareholders’ equity of
$332.6 million -
Bank capital ratios reflect a capital contribution of
$50.0 million from the Company to the Bank and continue to be in excess of minimum ratios required to be considered “well-capitalized” with a leverage ratio of 11.43%, a total risk-based capital ratio of 20.52% and a common equity tier one ratio of 19.26% - The Company’s consolidated leverage ratio of 10.08%, risk-based capital ratio of 21.55% and common equity tier one ratio of 16.96% continue to exceed regulatory capital requirements
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Total deposits of
$2.645 billion -
Total loan originations of
$185.4 million -
Total gross loans, including loans held for investment and loans held for sale, of
$2.846 billion - Total loan delinquencies increased during the quarter to 1.10% from 0.70%; nonperforming loans were relatively stable at 0.40%
-
Forbearances requested to date on approximately 470 loans, with an aggregate UPB of
$275 million
As the Bank’s internal review of the circumstances that led to the previously-reported discontinuation of the Advantage Loan Program has progressed, it has become apparent that the potential for liability related to the origination of residential mortgage loans under that program warrants the initial creation of reserves. Results from the internal review indicate that certain employees engaged in misconduct in connection with the origination of loans, including with respect to verification of income, the amount of income reported for borrowers, reliance on third parties, and related documentation. In addition, as previously disclosed, we are currently subject to various investigations and litigation stemming from the Bank’s residential lending practices, which are in their early stages and could result in additional liability. However, the Board of Directors believes that the recent management and personnel changes, particularly the agreement to hire Thomas M. O’Brien as the new Chairman, President and Chief Executive Officer, subject to the receipt of necessary regulatory non-objection, will ultimately enable the Company and the Bank to move forward in a stronger position to address and resolve any past regulatory and compliance issues.
As previously disclosed, the Bank is currently under formal investigation by the
In addition, as previously disclosed, the Company, certain of its current and former officers and directors, and other parties have been named as defendants in a shareholder class action captioned
The outcome of the pending investigations and litigation is uncertain. There can be no assurance (i) that we will not incur material losses due to damages, penalties, costs and/or expenses as a result of such investigations and litigation, (ii) that the reserves we have established will be sufficient to cover such losses, or (iii) that such losses will not materially exceed such reserves and have a material impact on our financial condition or results of operations. In addition, in connection with the audit of the Company’s
Conference Call and Webcast
Management will host a conference call today at
A replay of the conference call may be accessed through
About
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements generally can be identified by the use of forward-looking terminology such as “will,” “propose,” “may,” “plan,” “seek,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “continue,” “predict,” “project,” “potential,” “could,” “would,” “should” or similar terminology, including references to assumptions. Forward-looking statements are based on various assumptions and analyses made by us in light of our management's experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond our control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These factors include, without limitation, the following: the timing and occurrence or non-occurrence of events that may be subject to circumstances beyond our control; increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment; changes in deposit flows, loan demand or collateral values; changes in accounting principles, policies or guidelines; changes in general economic, business and political conditions, either nationally or locally in some or all areas in which we do business, or conditions in the real estate, securities or financial markets or the banking industry; legislative or regulatory changes; supervision and examination by the
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