Sterling Bancorp Reports Second Quarter 2019 Financial Results

July 29, 2019

Q2 2019 Highlights

Net income of $13.4 million, down from $16.0 million in Q2 2018, and $15.7 million in Q1 2019
Included in the second quarter 2019 results was a $1.2 million valuation allowance taken against the Company’s mortgage servicing rights
Fully diluted EPS of $0.26, down from $0.30 for both Q2 2018 and Q1 2019
Second quarter annualized ROAA of 1.64% and annualized ROATCE of 15.6%
Revenue, net of interest expense, of $32.8 million, down from $36.2 million in Q2 2018, and $34.1 million in Q1 2019
Total loan originations of $356.5 million, down from $433.9 million in Q2 2018 and up from $304.9 million in Q1 2019
Total gross loans, including loans held for investment and loans held for sale, of $2.95 billion, a 3% increase from Q2 2018, and flat from Q1 2019
Total deposits of $2.55 billion, a 9% increase from Q2 2018, and a 5% increase from Q1 2019
Net interest margin of 3.84%, compared to 3.96% in Q2 2018 and 3.86% in Q1 2019
Repurchased approximately 1.0 million shares of common stock at an average price of $9.67 during the quarter

SOUTHFIELD, Mich.--(BUSINESS WIRE)--Jul. 29, 2019-- Sterling Bancorp, Inc. (NASDAQ: SBT) (the “Company”), the holding company of Sterling Bank and Trust, F.S.B. (the “Bank”), today reported unaudited financial results for its second quarter ended June 30, 2019.

For the second quarter 2019, net income totaled $13.4 million, or $0.26 per diluted share, based on 51.5 million weighted average diluted shares outstanding.This compares to first quarter 2019 net income of $15.7 million, or $0.30 per diluted share, based on 52.6 million weighted average diluted shares outstanding.For the second quarter of 2018, net income totaled $16.0 million, or $0.30 per diluted share, based on 53.0 million weighted average diluted shares outstanding.

“Overall, our financial results for the second quarter of 2019 were generally in line with our expectations,” said Gary Judd, Chairman and CEO of Sterling Bancorp. “We generated higher pre-provision net interest income during the quarter, driven by slightly higher average loan balances and a relatively stable net interest margin. Our non-interest income was marked by a lower gain on the sale of loans and a valuation allowance taken against our mortgage servicing rights primarily due to the decline in long-term interest rates. And while we experienced good loan production, payoffs trended upwards in this low mortgage rate environment, resulting in flat total loan growth.

“Our business remains sound. We will continue to opportunistically utilize loan sales to diversify our revenue. We expect to resume our loan growth as our pipeline is healthy and credit quality remains excellent, which should translate into continued strong returns for our shareholders,” Mr. Judd concluded.

Financial Highlights (Unaudited)

	At or for the Three Months Ended
(dollars in thousands, except per share data)	June 30, 2019			March 31, 2019			June 30, 2018
Net income	$	13,434		$	15,683		$	15,982
Income per share, diluted	$	0.26		$	0.30		$	0.30
Net interest income	$	30,715		$	30,300		$	29,857
Net interest margin		3.84	%		3.86	%		3.96	%
Non-interest income	$	2,068		$	3,828		$	6,297
Non-interest expense	$	13,725		$	13,122		$	12,621
Loans, net of allowance for loan losses	$	2,924,813		$	2,923,576		$	2,816,156
Total deposits	$	2,546,660		$	2,436,567		$	2,340,605
Nonperforming loans	$	6,697		$	7,337		$	641
Allowance for loan losses to total loans		0.71	%		0.70	%		0.72	%
Allowance for loan losses to nonperforming loans		312	%		282	%		3,167	%
Provision (recovery) for loan losses	$	180		$	(1,014	)	$	1,120
Net charge offs (recoveries)	$	(40	)	$	138		$	(48	)
Return on average assets		1.64	%		1.94	%		2.08	%
Return on average shareholders' equity		15.54	%		18.44	%		21.31	%
Efficiency ratio		41.87	%		38.45	%		34.91	%

Operating Results for the Second Quarter 2019

Revenue

Revenue, net of interest expense, was $32.8 million for the second quarter of 2019, a decrease of 4% from the first quarter of 2019. The decrease was primarily attributable to a $1.2 million valuation allowance taken against the Company’s mortgage servicing rights, and to a lesser extent, a reduction in gain on loan sales.

Revenue, net of interest expense, for the second quarter of 2018 was $36.2 million. The $3.4 million year-over-year decrease was due to a $4.2 million decrease in non-interest income, partially offset by a $0.8 million increase in net interest income.

Net Interest Income

Net interest income for the second quarter of 2019 was $30.7 million, an increase of 1% from $30.3 million for the first quarter of 2019.The slight increase in net interest income was primarily attributable toa$54.1 million increase in average interest earning assets, partially offset by a 2 basis point decrease in the net interest margin.

Relative to the second quarter of 2018, net interest income increased 3% from $29.9 million.The increase in net interest income from the second quarter of 2018 was primarily driven by a $184.2 million increase in average interest earning assets, partially offset by a 12 basis point decrease in the net interest margin.

Net Interest Margin

Net interest margin for the second quarter of 2019 was 3.84%, down 2 basis points from the net interest margin of 3.86% for the first quarter of 2019. Net interest margin was impacted by an 11 basis point increase in the average cost of interest-bearing liabilities, growth in interest-bearing liabilities outpacing growth in interest earning assets, and was partially offset by an 11 basis point increase in the average yield on interest earning assets.

Relative to the second quarter of 2018, net interest margin decreased from 3.96%, primarily due to a 55basis point increase in the average cost of interest-bearing liabilities, partially offset by a 35 basis point increase in the average yield on interest earning assets.

Non-interest Income

Non-interest income for the second quarter of 2019 was $2.1 million, a decrease from $3.8 million for the first quarter of 2019. The decrease was primarily attributable to the $1.2 million mortgage servicing rights valuation allowance, and to a lesser extent, a $478,000 decrease in the gain on sale of loans.

Non-interest income decreased $4.2 million from $6.3 million in the second quarter of 2018, primarily as a result of a $3.1 million decrease in the gain on sale of loans due to fewer residential mortgages sold in the secondary market as compared to the prior year period, and the $1.2 million mortgage servicing rights valuation allowance taken in the second quarter of 2019.

Non-interest Expense

Non-interest expense for the second quarter of 2019 was $13.7 million, an increase from $13.1 million for the first quarter of 2019. The increase was primarily attributable to slightly higher salaries and employee benefits and professional fees, a portion of which were related to increased regulatory compliance initiatives.

Relative to the second quarter of 2018, non-interest expense increased 9% from $12.6 million.The increase was primarily due to an increase in salaries and employee benefits and occupancy and equipment costs required to support new offices and the growth in the Company’s operations, as well as higher professional fees.

The Company’s operating efficiency ratio was 41.9% in the second quarter of 2019, compared with 38.5% in the first quarter of 2019 and 34.9% in the second quarter of 2018.

Income Taxes

The effective tax rate for the second quarter of 2019 was 29%, comparable to the effective tax rate of 29% for both the first quarter of 2019 and the second quarter of 2018.

Loan Portfolio

Total gross loans, which includes those held for investment and held for sale, were $2.95 billion at June 30, 2019, an increase from $2.94 billion at March 31, 2019.The Company had a $29.9 million increase in residential mortgage loans held for investment and a $0.3 million increase in residential mortgage loans held for sale, partially offset by a $20.3 million decrease in construction and commercial real estate loans, and an $8.1 million decrease in commercial and industrial loans. As the Company continues to utilize loan sales to support balance sheet and liquidity strategies, the amount of residential mortgage loans held for sale may vary from quarter to quarter.

During the second quarter of 2019, the Company originated $356.5 million in loans, which included $316.1 million in residential mortgage loans and $40.4 million in commercial real estate, construction loans and commercial lines of credit.

Deposits

Total deposits were $2.55 billion at June 30, 2019, compared with $2.44 billion at March 31, 2019.The $110.1 million increase was primarily attributable to a $229.9 million increase in time deposits, partially offset by a $119.7 million decrease in money market, savings and NOW deposits.Within time deposits, retail deposits increased by $154.9 million to $1.089 billion and brokered CD increased by $75.0 million, from a zero balance at March 31, 2019.

Credit Quality

Nonperforming assets totaled $12.2 million, or 0.37% of total assets, at June 30, 2019, compared with $14.2 million, or 0.44% of total assets, at March 31, 2019. The decrease was primarily due to a $2.0 million construction loan, which was placed on non-accrual in the prior quarter, being paid off in full during the second quarter.

Recoveries for the second quarter of 2019 were $40,000 and there were no charge-offs during the quarter. The Company recorded a provision for loan losses of $180,000 for the second quarter of 2019.

The allowance for loan losses was 0.71% of total loans and 312% of nonperforming loans at June 30, 2019, compared with 0.70% and 282%, respectively, at March 31, 2019.

Capital

At June 30, 2019, the Bank exceeded all regulatory capital requirements under Basel III and was considered to be a ‘‘well-capitalized’’ financial institution, as summarized in the following tables:

	Well Capitalized		Company Actual at June 30, 2019
Total adjusted capital to risk-weighted assets	N/A		21.91	%
Tier 1 (core) capital to risk-weighted assets	N/A		17.51	%
Common Tier 1 (CET 1)	N/A		17.51	%
Tier 1 (core) capital to adjusted tangible assets	N/A		10.40	%

	Well Capitalized		Sterling Bank Actual at June 30, 2019
Total adjusted capital to risk-weighted assets	10.00	%	17.72	%
Tier 1 (core) capital to risk-weighted assets	8.00	%	16.64	%
Common Tier 1 (CET 1)	6.50	%	16.64	%
Tier 1 (core) capital to adjusted tangible assets	5.00	%	9.88	%

Share Repurchase Program

During the quarter, the Company repurchased approximately 1.0 million shares of common stock at an average price of $9.67 per share. Year-to-date, approximately 2.2 million shares have been repurchased at an average price of $9.59 per share.

Conference Call and Webcast

Management will host a conference call today at 5:00 p.m. Eastern Time to discuss the Company's financial results. The conference call number for U.S. participants is (833) 535-2201 and the conference call number for participants outside the U.S. is (412) 902-6744. Additionally, interested parties can listen to a live webcast of the call in the "Investor Relations" section of the Company's website at www.sterlingbank.com. An archived version of the webcast will be available in the same location shortly after the live call has ended.

A replay of the conference call may be accessed through August 12, 2019 by dialing (877) 344-7529, using conference ID number 10133156.

About Sterling Bancorp, Inc.

Sterling Bancorp, Inc. is a unitary thrift holding company. Its wholly owned subsidiary, Sterling Bank and Trust, F.S.B., has primary branch operations in San Francisco and Los Angeles, California, New York City and Bellevue, Washington. Sterling offers a broad range of loan products to the residential and commercial markets, as well as retail and business banking services. Sterling also has an operations center and a branch in Southfield, Michigan. Sterling was named as the top performing community bank in the United States with total assets between $3 billion and $10 billion in 2018 by S&P Global Market Intelligence for the second year in a row (in 2017 the asset range was $1 billion to $10 billion). For additional information, please visit the Company’s website at http://www.sterlingbank.com.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures include “Average Tangible Common Equity,” and “Return on Average Tangible Common Equity,” each of which are common metrics in the banking industry. Our management uses these non-GAAP financial measures to assess the Company’s capital strength and business performance. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies. For further information see “Return on Average Tangible Common Equity Reconciliations (non-GAAP)” in the Financial Data section that follows.

Forward-Looking Statements

Readers should note that in addition to the historical information contained herein, this press release includes "forward-looking statements," within the meaning of the federal securities laws, including but not limited to statements about the Company’s expected loan production, operating expenses and future earnings levels. These statements are subject to many risks and uncertainties, including changes in interest rates and other general economic, business and political conditions, including changes in the financial markets; changes in business plans as circumstances warrant; and other risks detailed from time to time in filings made by the Company with the Securities and Exchange Commission. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe" or "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Sterling Bancorp, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(dollars in thousands)	June 30, 2019		March 31, 2019		% change	December 31, 2018			% change	June 30, 2018			% change
Assets
Cash and due from banks	$	80,416	$	58,030	39%	$	52,526		53%	$	36,820		118%
Interest-bearing deposits with other banks		1,100		1,100	0%		1,100		0%		-		N/M
Investment securities		153,449		151,049	2%		148,896		3%		142,648		8%
Mortgage loans held for sale		500		165	203%		1,248		(60)%		21,641		(98)%
Loans, net of allowance for loan losses of $20,918, $20,698, $21,850 and $20,300		2,924,813		2,923,576	0%		2,895,953		1%		2,816,156		4%
Accrued interest receivable		13,842		13,746	1%		13,529		2%		12,396		12%
Mortgage servicing rights, net		9,772		10,755	(9)%		10,633		(8)%		9,295		5%
Leasehold improvements and equipment, net		9,675		9,680	0%		9,489		2%		8,413		15%
Federal Home Loan Bank stock, at cost		22,950		22,950	0%		22,950		0%		22,950		0%
Cash surrender value of bank-owned life insurance		31,606		31,454	0%		31,302		1%		30,991		2%
Operating lease right-of-use assets		20,454		21,398	(4)%		-		N/M		-		N/M
Deferred tax asset, net		6,440		5,938	8%		6,122		5%		5,905		9%
Other assets		4,115		2,351	75%		3,026		36%		4,124		0%
Total assets	$	3,279,132	$	3,252,192	1%	$	3,196,774		3%	$	3,111,339		5%

Liabilities
Noninterest-bearing deposits	$	70,406	$	70,527	0%	$	76,815		(8)%	$	73,791		(5)%
Interest-bearing deposits		2,476,254		2,366,040	5%		2,375,870		4%		2,266,814		9%
Total deposits		2,546,660		2,436,567	5%		2,452,685		4%		2,340,605		9%
Federal Home Loan Bank borrowings		240,000		333,051	(28)%		293,000		(18)%		350,000		(31)%
Subordinated notes, net		65,102		65,065	0%		65,029		0%		64,958		0%
Operating lease liabilities		21,480		22,331	(4)%		-		N/M		-		N/M
Accrued expenses and other liabilities		63,837		56,276	13%		51,003		25%		51,666		24%
Total liabilities		2,937,079		2,913,290	1%		2,861,717		3%		2,807,229		5%

Shareholders’ Equity
Preferred stock, authorized 10,000,000 shares; no shares issued and outstanding		-		-	-		-		-		-		-
Common stock, no par value, authorized 500,000,000 shares; issued and outstanding 50,846,521 shares at June 30, 2019, 51,870,853 shares at March 31, 2019, 53,012,283 shares at December 31, 2018, and 53,002,963 shares at June 30, 2018		89,683		99,694	(10)%		111,238		(19)%		111,238		(19)%
Additional paid-in capital		12,992		12,839	1%		12,713		2%		12,501		4%
Retained earnings		239,190		226,272	6%		211,115		13%		180,438		33%
Accumulated other comprehensive income (loss)		188		97	94%		(9	)	N/M		(67	)	N/M
Total shareholders’ equity		342,053		338,902	1%		335,057		2%		304,110		12%
Total liabilities and shareholders’ equity	$	3,279,132	$	3,252,192	1%	$	3,196,774		3%	$	3,111,339		5%
N/M- not meaningful

Sterling Bancorp, Inc.
Condensed Consolidated Statements of Income (Unaudited)
	Three Months Ended										Six Months Ended
	June 30,			March 31,			%	June 30,		%	June 30,			June 30,		%
(dollars in thousands, except per share amounts)	2019			2019			change	2018		change	2019			2018		change
Interest income:
Interest and fees on loans	$	43,301		$	41,722		4%	$	38,580	12%	$	85,023		$	74,980	13%
Interest and dividends on investment securities and restricted stock		1,272			1,227		4%		842	51%		2,499			1,661	50%
Other interest		216			236		(8)%		119	82%		452			233	94%
Total interest income		44,789			43,185		4%		39,541	13%		87,974			76,874	14%
Interest expense:
Interest on deposits		11,524			10,656		8%		7,179	61%		22,180			13,768	61%
Interest on Federal Home Loan Bank borrowings		1,375			1,055		30%		1,334	3%		2,430			2,167	12%
Interest on subordinated notes		1,175			1,174		0%		1,171	0%		2,349			2,343	0%
Total interest expense		14,074			12,885		9%		9,684	45%		26,959			18,278	47%
Net interest income		30,715			30,300		1%		29,857	3%		61,015			58,596	4%
Provision (recovery) for loan losses		180			(1,014	)	118%		1,120	(84)%		(834	)		1,761	(147)%
Net interest income after provision (recovery) for loan losses		30,535			31,314		(2)%		28,737	6%		61,849			56,835	9%
Non-interest income:
Service charges and fees		112			104		8%		92	22%		216			166	30%
Investment management and advisory fees		425			340		25%		500	(15)%		765			1,123	(32)%
Gain on sale of loans		2,002			2,480		(19)%		5,096	(61)%		4,482			9,102	(51)%
Net servicing (loss) income		(1,002	)		325		(408)%		233	(530)%		(677	)		710	(195)%
Other income		531			579		(8)%		376	41%		1,110			689	61%
Total non-interest income		2,068			3,828		(46)%		6,297	(67)%		5,896			11,790	(50)%
Non-interest expense:
Salaries and employee benefits		7,381			7,267		2%		7,229	2%		14,648			13,878	6%
Occupancy and equipment		2,170			2,237		(3)%		1,610	35%		4,407			3,156	40%
Professional fees		1,104			962		15%		824	34%		2,066			1,446	43%
Advertising and marketing		406			439		(8)%		351	16%		845			700	21%
FDIC assessments		190			255		(25)%		474	(60)%		445			1,017	(56)%
Data processing		303			308		(2)%		295	3%		611			583	5%
Other		2,171			1,654		31%		1,838	18%		3,825			3,344	14%
Total non-interest expense		13,725			13,122		5%		12,621	9%		26,847			24,124	11%
Income before income taxes		18,878			22,020		(14)%		22,413	(16)%		40,898			44,501	(8)%
Income tax expense		5,444			6,337		(14)%		6,431	(15)%		11,781			12,770	(8)%
Net income	$	13,434		$	15,683		(14)%	$	15,982	(16)%	$	29,117		$	31,731	(8)%
Income per share, basic and diluted	$	0.26		$	0.30			$	0.30		$	0.56		$	0.60
Weighted average common shares outstanding:
Basic		51,510,951			52,554,446				52,963,308			52,029,816			52,963,308
Diluted		51,520,944			52,562,820				52,965,365			52,039,000			52,965,133

Sterling Bancorp, Inc.
Selected Financial Data (Unaudited)
	As of and for the Three Months Ended
		June 30,	March 31,	June 30,
Performance Ratios:		2019	2019	2018
Return on average assets		1.64%	1.94%	2.08%
Return on average shareholders' equity		15.54%	18.44%	21.31%
Return on average tangible common equity		15.55%	18.46%	21.36%
Yield on earning assets		5.60%	5.49%	5.25%
Cost of average interest-bearing liabilities		2.02%	1.91%	1.47%
Net interest spread		3.58%	3.58%	3.78%
Net interest margin		3.84%	3.86%	3.96%
Efficiency ratio ⁽¹⁾		41.87%	38.45%	34.91%

(1) Efficiency Ratio is computed as the ratio of non-interest expense divided by the sum of net interest income and non-interest income.

Sterling Bancorp, Inc.
Yield Analysis and Net Interest Income (Unaudited)
	Three Months Ended
	June 30, 2019			March 31, 2019			June 30, 2018
(dollars in thousands)	Average Balance	Interest	Average Yield/ Rate	Average Balance	Interest	Average Yield/ Rate	Average Balance	Interest	Average Yield/ Rate
Interest earning assets
Loans ⁽¹⁾	$ 2,994,142	$ 43,301	5.78%	$ 2,942,261	$ 41,722	5.67%	$ 2,829,819	$ 38,580	5.45%
Securities, includes restricted stock	174,823	1,272	2.91%	170,117	1,227	2.89%	159,243	842	2.12%
Other interest earning assets	28,794	216	3.00%	31,293	236	3.02%	24,496	119	1.94%
Total interest earning assets	$ 3,197,759	$ 44,789	5.60%	$ 3,143,671	$ 43,185	5.49%	$ 3,013,558	$ 39,541	5.25%
Interest-bearing liabilities
Money Market, Savings, NOW	$ 1,356,200	$ 4,961	1.47%	$ 1,474,129	$ 5,378	1.48%	$ 1,515,912	$ 4,468	1.18%
Time deposits	1,044,388	6,563	2.52%	922,996	5,278	2.32%	715,863	2,711	1.52%
Total interest-bearing deposits	2,400,588	11,524	1.93%	2,397,125	10,656	1.80%	2,231,775	7,179	1.29%
FHLB borrowings	323,583	1,375	1.68%	268,566	1,055	1.57%	351,846	1,334	1.50%
Subordinated debt	65,079	1,175	7.22%	65,043	1,174	7.22%	64,935	1,171	7.21%
Total borrowings	388,662	2,550	2.60%	333,609	2,229	2.67%	416,781	2,505	2.38%
Total interest-bearing liabilities	$ 2,789,250	14,074	2.02%	$ 2,730,734	12,885	1.91%	$ 2,648,556	9,684	1.47%
Net interest income and spread⁽²⁾		$ 30,715	3.58%		$ 30,300	3.58%		$ 29,857	3.78%
Net interest margin ⁽²⁾			3.84%			3.86%			3.96%

(1) Nonaccrual loans are included in the respective average loan balances. Income, if any, on such loans is recognized on a cash basis.
(2) Interest income does not include taxable equivalent adjustments.

	Six Months Ended
	June 30, 2019					June 30, 2018
(dollars in thousands)	Average Balance		Interest		Average Yield/ Rate	Average Balance		Interest		Average Yield/ Rate
Interest earning assets
Loans ⁽¹⁾	$	2,968,345	$	85,023	5.73%	$	2,782,055	$	74,980	5.39%
Securities, includes restricted stock		172,483		2,499	2.90%		150,478		1,661	2.21%
Other interest earning assets		30,037		452	3.01%		24,579		233	1.90%
Total interest earning assets	$	3,170,865	$	87,974	5.55%	$	2,957,112	$	76,874	5.20%
Interest-bearing liabilities
Money Market, Savings, NOW	$	1,414,839	$	10,339	1.47%	$	1,520,648	$	8,602	1.14%
Time deposits		984,027		11,841	2.43%		710,872		5,166	1.47%
Total interest-bearing deposits		2,398,866		22,180	1.86%		2,231,520		13,768	1.24%
FHLB borrowings		296,227		2,430	1.63%		305,707		2,167	1.41%
Subordinated debt		65,061		2,349	7.22%		64,918		2,343	7.22%
Total borrowings		361,288		4,779	2.63%		370,625		4,510	2.42%
Total interest-bearing liabilities	$	2,760,154		26,959	1.97%	$	2,602,145		18,278	1.42%
Net interest income and spread⁽²⁾			$	61,015	3.58%			$	58,596	3.78%
Net interest margin ⁽²⁾					3.85%					3.96%

(1) Nonaccrual loans are included in the respective average loan balances. Income, if any, on such loans is recognized on a cash basis.
(2) Interest income does not include taxable equivalent adjustments.

Sterling Bancorp, Inc.
Loan Composition (Unaudited)
(dollars in thousands)	June 30, 2019			March 31, 2019			% change	December 31, 2018			% change	June 30, 2018			% change
Residential real estate	$	2,523,883		$	2,494,030		1%	$	2,452,441		3%	$	2,367,876		7%
Commercial real estate		220,388			240,896		(9)%		250,955		(12)%		250,465		(12)%
Construction		172,656			172,398		0%		176,605		(2)%		172,262		0%
Commercial lines of credit		28,774			36,916		(22)%		37,776		(24)%		45,821		(37)%
Other consumer		30			34		(12)%		26		15%		32		(6)%
Total loans held for investment		2,945,731			2,944,274		0%		2,917,803		1%		2,836,456		4%
Less: allowance for loan losses		(20,918	)		(20,698	)	1%		(21,850	)	(4)%		(20,300	)	3%
Loans, net	$	2,924,813		$	2,923,576		0%	$	2,895,953		1%	$	2,816,156		4%

Mortgage loans held for sale	$	500		$	165		203%	$	1,248		(60)%	$	21,641		(98)%
Total gross loans	$	2,946,231		$	2,944,439		0%	$	2,919,051		1%	$	2,858,097		3%

Sterling Bancorp, Inc.
Allowance for Loan Losses (Unaudited)
	Three Months Ended
(dollars in thousands)	June 30, 2019		March 31, 2019			December 31, 2018		June 30, 2018
Balance at beginning of period	$	20,698	$	21,850		$	20,765	$	19,132
Provision (recovery) for loan losses		180		(1,014	)		1,045		1,120
Charge offs		-		(176	)		-		(4	)
Recoveries		40		38			40		52
Balance at end of period	$	20,918	$	20,698		$	21,850	$	20,300

Sterling Bancorp, Inc.
Deposit Composition (Unaudited)
(dollars in thousands)	June 30, 2019		March 31, 2019		% change	December 31, 2018		% change	June 30, 2018		% change
Noninterest bearing demand deposits	$	70,406	$	70,527	0%	$	76,815	(8)%	$	73,791	(5)%
Money Market, Savings and NOW		1,312,010		1,431,715	(8)%		1,481,591	(11)%		1,518,635	(14)%
Time deposits		1,164,244		934,325	25%		894,279	30%		748,179	56%
Total deposits	$	2,546,660	$	2,436,567	5%	$	2,452,685	4%	$	2,340,605	9%

Sterling Bancorp, Inc.
Capital and Credit Quality Ratios (Unaudited)
	As of and for the Three Months Ended
(dollars in thousands)	June 30, 2019			March 31, 2019			December 31, 2018			June 30, 2018
Capital Ratios
Regulatory and Other Capital Ratios— Consolidated:
Total adjusted capital to risk-weighted assets		21.91	%		21.64	%		21.98	%		20.77	%
Tier 1 (core) capital to risk-weighted assets		17.51	%		17.27	%		17.45	%		16.21	%
Common Tier 1 (CET 1)		17.51	%		17.27	%		17.45	%		16.21	%
Tier 1 (core) capital to adjusted tangible assets		10.40	%		10.49	%		10.42	%		9.88	%

Regulatory and Other Capital Ratios—Bank:
Total adjusted capital to risk-weighted assets		17.72	%		17.12	%		16.94	%		15.60	%
Tier 1 (core) capital to risk-weighted assets		16.64	%		16.07	%		15.80	%		14.52	%
Common Tier 1 (CET 1)		16.64	%		16.07	%		15.80	%		14.52	%
Tier 1 (core) capital to adjusted tangible assets		9.88	%		9.76	%		9.44	%		8.84	%

Credit Quality Data
Nonperforming loans⁽¹⁾	$	6,697		$	7,337		$	4,500		$	641
Nonperforming loans to total loans		0.23	%		0.25	%		0.15	%		0.02	%
Nonperforming assets⁽²⁾	$	12,190		$	14,155		$	10,157		$	3,583
Nonperforming assets to total assets		0.37	%		0.44	%		0.32	%		0.12	%
Allowance for loan losses to total loans		0.71	%		0.70	%		0.75	%		0.72	%
Allowance for loan losses to nonperforming loans		312	%		282	%		486	%		3,167	%
Net charge offs (recoveries) to average loans		(0.00	)%		0.00	%		(0.00	)%		0.00	%

(1) Nonperforming loans include nonaccrual loans and loans past due 90 days or more and still accruing interest.
(2) Nonperforming assets include nonperforming loans and loans modified under troubled debt restructurings and other repossessed assets.

Return on Average Tangible Common Equity Reconciliations (non-GAAP)

Average tangible common equity and return on average tangible common equity are non-GAAP disclosures. Sterling’s management uses these non-GAAP financial measures to assess the Company’s capital strength and business performance. Average tangible common equity excludes the effect of intangible assets. This non-GAAP financial measure should not be considered a substitute for those comparable measures that are similarly titled that are determined in accordance with U.S. GAAP that may be used by other companies. The following is a reconciliation of average tangible common equity to the average shareholders’ equity, its most comparable GAAP measure, as well as a calculation of return on average tangible common equity as of June 30, 2019 and 2018, and March 31, 2019.

Sterling Bancorp, Inc.
GAAP to Non-GAAP Reconciliations
	As of and for the Three Months Ended									As of and for the Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
(dollars in thousands)	2019			2019			2018			2019			2018
Net Income	$	13,434		$	15,683		$	15,982		$	29,117		$	31,731
Average shareholders' equity		345,806			340,221			299,988			343,029			292,088
Adjustment
Customer-related intangible		(300	)		(413	)		(750	)		(356	)		(806	)
Average tangible common equity	$	345,506		$	339,808		$	299,238		$	342,673		$	291,282
Return on average tangible common equity*		15.55	%		18.46	%		21.36	%		16.99	%		21.79	%

*Annualized

View source version on businesswire.com: https://www.businesswire.com/news/home/20190729005658/en/

Source: Sterling Bancorp, Inc.

Financial Profiles, Inc.
Larry Clark
310-622-8223
Kristen Papke
310-622-8225
SBT@finprofiles.com

Sterling Bank offers a broad range of financial services including personal banking, small business lending, mortgages, credit cards, auto financing and investment advice.

Press Releases

Sterling Bancorp Reports Second Quarter 2019 Financial Results