Sterling Bancorp Reports Third Quarter 2019 Financial Results

October 28, 2019

Q3 2019 Highlights

Net income of $13.9 million, up from $13.4 million in Q2 2019, and down from $15.7 million in Q3 2018
Fully diluted EPS of $0.28, up from $0.26 for Q2 2019, and down from $0.30 for Q3 2018
Third quarter annualized ROAA of 1.67% and annualized ROATCE of 15.98%
Revenue, net of interest expense, of $33.2 million, up from $32.8 million in Q2 2019, and down from $35.0 million in Q3 2018
Total loan originations of $282.1 million, down from $356.5 million in Q2 2019 and $419.2 million in Q3 2018
Total gross loans, including loans held for investment and loans held for sale of $2.93 billion, down 1% from Q2 2019, and flat from Q3 2018
Prior to loan sales, total gross loans increased by 2% from Q2 2019
Total deposits of $2.57 billion, up 1% from Q2 2019 and 7% increase from Q3 2018
Net interest margin of 3.70%, compared to 3.84% in Q2 2019 and 3.95% in Q3 2018
Repurchased approximately 0.4 million shares of common stock at an average price of $9.89 during the quarter

SOUTHFIELD, Mich.--(BUSINESS WIRE)--Oct. 28, 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 third quarter ended September 30, 2019.

For the third quarter 2019, net income totaled $13.9 million, or $0.28 per diluted share, based on 50.4 million weighted average diluted shares outstanding. This compares to second quarter 2019 net income of $13.4 million, or $0.26 per diluted share, based on 51.5 million weighted average diluted shares outstanding. For the third quarter of 2018, net income totaled $15.7 million, or $0.30 per diluted share, based on 53.0 million weighted average diluted shares outstanding.

“Overall, our financial results for the third quarter were in line with our expectations,” said Gary Judd, Chairman and CEO of Sterling Bancorp. “We continue to generate top quartile returns, as our annualized return on average assets was 1.67% and our annualized return on tangible common equity was 15.98%. Our moderately higher EPS for the quarter was driven by higher non-interest income and well-managed expenses.

“During the quarter, net interest margin was negatively impacted by our increased liquidity and lower yields on our loan portfolio. In addition, our loan production was lower during the quarter as we maintained our underwriting and pricing discipline in a very competitive lending market. Despite this pressure, our total loans grew modestly during the quarter, prior to our loan sales.

“We remain optimistic in our outlook as we end the year. We are focused on converting our healthy loan pipeline into closed loans while maintaining solid credit quality and reducing deposit costs. While we will continue to opportunistically utilize loan sales to diversify our revenue going forward, we may significantly reduce these sales in the fourth quarter and retain the majority of our new loan production on our balance sheet. Therefore, we expect to resume our loan growth and achieve net interest margin stability, which should translate into continued strong returns for our shareholders,” Mr. Judd concluded.

Financial Highlights (Unaudited)

Sterling Bancorp, Inc.
Financial Highlights (Unaudited)
	At or for the Three Months Ended
(dollars in thousands, except per share data)	September 30, 2019			June 30, 2019			September 30, 2018
Net income	$	13,884		$	13,434		$	15,741
Income per share, diluted	$	0.28		$	0.26		$	0.30
Net interest income	$	30,010		$	30,715		$	30,798
Net interest margin		3.70	%		3.84	%		3.95	%
Non-interest income	$	3,165		$	2,068		$	4,233
Non-interest expense	$	13,426		$	13,725		$	12,531
Loans, net of allowance for loan losses	$	2,904,232		$	2,924,813		$	2,796,150
Total deposits	$	2,571,845		$	2,546,660		$	2,412,071
Nonperforming loans	$	9,974		$	6,697		$	356
Allowance for loan losses to total loans		0.72	%		0.71	%		0.74	%
Allowance for loan losses to nonperforming loans		213	%		312	%		5,833	%
Provision for loan losses	$	251		$	180		$	423
Net recoveries	$	(35	)	$	(40	)	$	(42	)
Return on average assets		1.67	%		1.64	%		1.98	%
Return on average shareholders' equity		15.97	%		15.54	%		20.07	%
Efficiency ratio		40.47	%		41.87	%		35.77	%

Operating Results for the Third Quarter 2019

Revenue

Revenue, net of interest expense, was $33.2 million for the third quarter of 2019, an increase of 1% from the second quarter of 2019. The increase was primarily attributable to a $1.1 million increase in non-interest income, partially offset by a $0.7 million decrease in net interest income.

Revenue, net of interest expense, for the third quarter of 2018 was $35.0 million. The 5% year-over-year decrease was due to a $1.1 million decrease in non-interest income and a $0.8 million decrease in net interest income.

Net Interest Income

Net interest income for the third quarter of 2019 was $30.0 million, a decrease of 2% from $30.7 million for the second quarter of 2019. The decrease in net interest income was primarily attributable to a 14 basis point decrease in the net interest margin, partially offset by a $49.5 million increase in average interest earning assets.

Relative to the third quarter of 2018, net interest income decreased 3% from $30.8 million. The decrease in net interest income from the third quarter of 2018 was primarily driven by a 25 basis point decrease in the net interest margin, partially offset by a $130.5 million increase in average interest earning assets.

Net Interest Margin

Net interest margin for the third quarter of 2019 was 3.70%, down 14 basis points from the net interest margin of 3.84% for the second quarter of 2019. Net interest margin was impacted by a 15 basis point decrease in the average yield on interest earning assets, partially offset by a 2 basis point decrease in the cost of average interest-bearing liabilities.

Relative to the third quarter of 2018, net interest margin decreased from 3.95%, primarily due to a 38 basis point increase in the average cost of interest-bearing liabilities, partially offset by a 7 basis point increase in the average yield on interest earning assets.

Non-interest Income

Non-interest income for the third quarter of 2019 was $3.2 million, an increase from $2.1 million for the second quarter of 2019. The increase was primarily attributable to a lower mortgage servicing rights valuation allowance taken in the third quarter as compared to the prior quarter.

Non-interest income decreased $1.1 million from $4.2 million in the third quarter of 2018, primarily as a result of a $1.1 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.

Non-interest Expense

Non-interest expense for the third quarter of 2019 was $13.4 million, a decrease from $13.7 million for the second quarter of 2019. The decrease was primarily attributable to lower FDIC assessments, advertising and marketing expenses, data processing and other expenses, partially offset by higher salaries and employee benefits and professional fees, a portion of which were related to increased regulatory compliance initiatives. The lower FDIC assessments is primarily the result of Small Bank Assessment Credits applied during the third quarter.

Relative to the third quarter of 2018, non-interest expense increased 7% from $12.5 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 40.5% in the third quarter of 2019, compared with 41.9% in the second quarter of 2019 and 35.8% in the third quarter of 2018.

Income Taxes

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

Loan Portfolio

Total gross loans, which includes those held for investment and held for sale, were $2.93 billion at September 30, 2019, a decrease from $2.95 billion at June 30, 2019. The Company had an $18.6 million decrease in residential mortgage loans held for investment and a $4.3 million decrease in commercial lines of credit, partially offset by a net $2.6 million increase in construction and commercial real estate loans.

During the third quarter of 2019, the Company originated $282.1 million in loans, which included $241.7 million in residential mortgage loans and $40.4 million in construction and commercial real estate loans.

The Company sold $76.1 million in residential mortgage loans during the third quarter, including Agency sales. 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.

Deposits

Total deposits were $2.57 billion at September 30, 2019, compared with $2.55 billion at June 30, 2019. The $25.2 million increase was primarily attributable to a $52.7 million increase in time deposits and a $6.9 million increase in noninterest-bearing deposits, partially offset by a $34.5 million decrease in money market, savings and NOW deposits. Within time deposits, retail deposits increased by $102.7 million to $1.192 billion and brokered CDs decreased by $50.0 million to $25.0 million.

Credit Quality

Nonperforming assets totaled $12.3 million, or 0.37% of total assets, at September 30, 2019, compared with $12.2 million, or 0.37% of total assets, at June 30, 2019. Nonperforming loans at September 30, 2019 totaled $10.0 million, compared with $6.7 million at June 30, 2019. The increase was primarily due to a $3.5 million construction loan which was placed on non-accrual during the quarter. The Company believes that no impairment exists, as there is more than sufficient collateral value supporting this loan.

Recoveries for the third quarter of 2019 were $35,000 and there were no charge-offs during the quarter. The Company recorded a provision for loan losses of $251,000 for the third quarter of 2019.

The allowance for loan losses was 0.72% of total loans and 213% of nonperforming loans at September 30, 2019, compared with 0.71% and 312%, respectively, at June 30, 2019.

Capital

At September 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 September 30, 2019
Total adjusted capital to risk-weighted assets	N/A	22.64%
Tier 1 (core) capital to risk-weighted assets	N/A	18.17%
Common Tier 1 (CET 1)	N/A	18.17%
Tier 1 (core) capital to adjusted tangible assets	N/A	10.54%

	Well Capitalized	Sterling Bank Actual at September 30, 2019
Total adjusted capital to risk-weighted assets	10.00%	18.47%
Tier 1 (core) capital to risk-weighted assets	8.00%	17.37%
Common Tier 1 (CET 1)	6.50%	17.37%
Tier 1 (core) capital to adjusted tangible assets	5.00%	10.07%

Share Repurchase Program

During the quarter, the Company repurchased approximately 0.4 million shares of common stock at an average price of $9.89 per share. Year-to-date, approximately 2.7 million shares have been repurchased at an average price of $9.64 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 November 11, 2019 by dialing (877) 344-7529, using conference ID number 10135479.

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)	September 30, 2019		June 30, 2019		% change	December 31, 2018			% change	September 30, 2018			% change
Assets
Cash and due from banks	$	146,246	$	80,416	82%	$	52,526		178%	$	48,879		199%
Interest-bearing deposits with other banks		1,100		1,100	0%		1,100		0%		-		N/M
Investment securities		153,306		153,449	0%		148,896		3%		142,749		7%
Mortgage loans held for sale		837		500	67%		1,248		(33)%		113,805		(99)%
Loans, net of allowance for loan losses of $21,204, $20,918, $21,850 and $20,765		2,904,232		2,924,813	(1)%		2,895,953		0%		2,796,150		4%
Accrued interest receivable		13,861		13,842	0%		13,529		2%		13,087		6%
Mortgage servicing rights, net		9,910		9,772	1%		10,633		(7)%		9,411		5%
Leasehold improvements and equipment, net		9,386		9,675	(3)%		9,489		(1)%		9,040		4%
Operating lease right-of-use assets		19,662		20,454	(4)%		-		N/M		-		N/M
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		31,761		31,606	0%		31,302		1%		31,146		2%
Deferred tax asset, net		6,681		6,440	4%		6,122		9%		7,002		(5)%
Other assets		2,298		4,115	(44)%		3,026		(24)%		2,744		(16)%
Total assets	$	3,322,230	$	3,279,132	1%	$	3,196,774		4%	$	3,196,963		4%

Liabilities
Noninterest-bearing deposits	$	77,335	$	70,406	10%	$	76,815		1%	$	79,432		(3)%
Interest-bearing deposits		2,494,510		2,476,254	1%		2,375,870		5%		2,332,639		7%
Total deposits		2,571,845		2,546,660	1%		2,452,685		5%		2,412,071		7%
Federal Home Loan Bank borrowings		229,000		240,000	(5)%		293,000		(22)%		335,000		(32)%
Subordinated notes, net		65,140		65,102	0%		65,029		0%		64,993		0%
Operating lease liabilities		20,804		21,480	(3)%		-		N/M		-		N/M
Accrued expenses and other liabilities		84,064		63,837	32%		51,003		65%		65,456		28%
Total liabilities		2,970,853		2,937,079	1%		2,861,717		4%		2,877,520		3%

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 50,424,940 shares at September 30, 2019, 50,846,521 shares at June 30, 2019, and 53,012,283 shares at December 31, 2018 and September 30, 2018		85,515		89,683	(5)%		111,238		(23)%		111,238		(23)%
Additional paid-in capital		13,138		12,992	1%		12,713		3%		12,604		4%
Retained earnings		252,571		239,190	6%		211,115		20%		195,649		29%
Accumulated other comprehensive income (loss)		153		188	(19)%		(9	)	N/M		(48	)	N/M
Total shareholders’ equity		351,377		342,053	3%		335,057		5%		319,443		10%
Total liabilities and shareholders’ equity	$	3,322,230	$	3,279,132	1%	$	3,196,774		4%	$	3,196,963		4%

N/M- not meaningful

Sterling Bancorp, Inc.
Condensed Consolidated Statements of Income (Unaudited)
	Three Months Ended										Nine Months Ended
	September 30,			June 30,			%	September 30,		%	September 30,			September 30,		%
(dollars in thousands, except per share amounts)	2019			2019			change	2018		change	2019			2018		change
Interest income:
Interest and fees on loans	$	42,351		$	43,301		(2)%	$	40,772	4%	$	127,374		$	115,752	10%
Interest and dividends on investment securities and restricted stock		1,252			1,272		(2)%		958	31%		3,751			2,619	43%
Other interest		608			216		181%		166	266%		1,060			399	166%
Total interest income		44,211			44,789		(1)%		41,896	6%		132,185			118,770	11%
Interest expense:
Interest on deposits		12,249			11,524		6%		8,628	42%		34,429			22,396	54%
Interest on Federal Home Loan Bank borrowings		777			1,375		(43)%		1,297	(40)%		3,207			3,464	(7)%
Interest on subordinated notes		1,175			1,175		0%		1,173	0%		3,524			3,516	0%
Total interest expense		14,201			14,074		1%		11,098	28%		41,160			29,376	40%
Net interest income		30,010			30,715		(2)%		30,798	(3)%		91,025			89,394	2%
Provision (recovery) for loan losses		251			180		39%		423	(41)%		(583	)		2,184	(127)%
Net interest income after provision (recovery) for loan losses		29,759			30,535		(3)%		30,375	(2)%		91,608			87,210	5%
Non-interest income:
Service charges and fees		111			112		(1)%		100	11%		327			266	23%
Investment management and advisory fees		477			425		12%		445	7%		1,242			1,568	(21)%
Gain on sale of loans		1,877			2,002		(6)%		3,005	(38)%		6,359			12,107	(47)%
Net servicing income (loss)		240			(1,002	)	124%		291	(18)%		(437	)		1,001	(144)%
Other income		460			531		(13)%		392	17%		1,570			1,081	45%
Total non-interest income		3,165			2,068		53%		4,233	(25)%		9,061			16,023	(43)%
Non-interest expense:
Salaries and employee benefits		7,545			7,381		2%		6,973	8%		22,193			20,851	6%
Occupancy and equipment		2,126			2,170		(2)%		1,760	21%		6,533			4,916	33%
Professional fees		1,389			1,104		26%		898	55%		3,455			2,344	47%
Advertising and marketing		269			406		(34)%		470	(43)%		1,114			1,170	(5)%
FDIC assessments		(5	)		190		(103)%		186	(103)%		440			1,203	(63)%
Data processing		271			303		(11)%		311	(13)%		882			894	(1)%
Other		1,831			2,171		(16)%		1,933	(5)%		5,656			5,277	7%
Total non-interest expense		13,426			13,725		(2)%		12,531	7%		40,273			36,655	10%
Income before income taxes		19,498			18,878		3%		22,077	(12)%		60,396			66,578	(9)%
Income tax expense		5,614			5,444		3%		6,336	(11)%		17,395			19,106	(9)%
Net income	$	13,884		$	13,434		3%	$	15,741	(12)%	$	43,001		$	47,472	(9)%
Income per share:
Basic	$	0.28		$	0.26			$	0.30		$	0.84		$	0.90
Diluted	$	0.28		$	0.26			$	0.30		$	0.83		$	0.90
Weighted average common shares outstanding:
Basic		50,428,108			51,510,951				52,963,308			51,490,046			52,963,308
Diluted		50,441,572			51,520,944				52,966,593			51,500,657			52,965,089

Sterling Bancorp, Inc.
Selected Financial Data (Unaudited)
	As of and for the Three Months Ended
	September 30,	June 30,	September 30,
Performance Ratios:	2019	2019	2018
Return on average assets	1.67%	1.64%	1.98%
Return on average shareholders' equity	15.97%	15.54%	20.07%
Return on average tangible common equity	15.98%	15.55%	20.11%
Yield on earning assets	5.45%	5.60%	5.38%
Cost of average interest-bearing liabilities	2.00%	2.02%	1.62%
Net interest spread	3.45%	3.58%	3.76%
Net interest margin	3.70%	3.84%	3.95%
Efficiency ratio ⁽¹⁾	40.47%	41.87%	35.77%

(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
	September 30, 2019					June 30, 2019					September 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⁾	$	2,971,369	$	42,351	5.70%	$	2,994,142	$	43,301	5.78%	$	2,923,584	$	40,772	5.58%
Securities, includes restricted stock		177,646		1,252	2.82%		174,823		1,272	2.91%		165,636		958	2.31%
Other interest earning assets		98,281		608	2.47%		28,794		216	3.00%		27,604		166	2.41%
Total interest earning assets	$	3,247,296	$	44,211	5.45%	$	3,197,759	$	44,789	5.60%	$	3,116,824	$	41,896	5.38%
Interest-bearing liabilities
Money Market, Savings, NOW	$	1,300,786	$	4,458	1.36%	$	1,356,200	$	4,961	1.47%	$	1,539,304	$	5,181	1.34%
Time deposits		1,217,234		7,791	2.54%		1,044,388		6,563	2.52%		796,197		3,447	1.72%
Total interest-bearing deposits		2,518,020		12,249	1.93%		2,400,588		11,524	1.93%		2,335,501		8,628	1.47%
FHLB borrowings		229,897		777	1.32%		323,583		1,375	1.68%		324,795		1,297	1.56%
Subordinated debt		65,116		1,175	7.22%		65,079		1,175	7.22%		64,970		1,173	7.22%
Total borrowings		295,013		1,952	2.59%		388,662		2,550	2.60%		389,765		2,470	2.48%
Total interest-bearing liabilities	$	2,813,033		14,201	2.00%	$	2,789,250		14,074	2.02%	$	2,725,266		11,098	1.62%
Net interest income and spread⁽²⁾			$	30,010	3.45%			$	30,715	3.58%			$	30,798	3.76%
Net interest margin ⁽²⁾					3.70%					3.84%					3.95%

(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.

	Nine Months Ended
	September 30, 2019					September 30, 2018
(dollars in thousands)	Average Balance		Interest		Average Yield/ Rate	Average Balance		Interest		Average Yield/ Rate
Interest earning assets
Loans ⁽¹⁾	$	2,969,364	$	127,374	5.72%	$	2,829,749	$	115,752	5.45%
Securities, includes restricted stock		174,223		3,751	2.87%		155,586		2,619	2.24%
Other interest earning assets		52,773		1,060	2.68%		25,599		399	2.08%
Total interest earning assets	$	3,196,360	$	132,185	5.51%	$	3,010,934	$	118,770	5.26%
Interest-bearing liabilities
Money Market, Savings, NOW	$	1,376,403	$	14,797	1.44%	$	1,526,935	$	13,783	1.21%
Time deposits		1,062,617		19,632	2.47%		739,626		8,613	1.56%
Total interest-bearing deposits		2,439,020		34,429	1.89%		2,266,561		22,396	1.32%
FHLB borrowings		273,874		3,207	1.54%		312,140		3,464	1.46%
Subordinated debt		65,080		3,524	7.22%		64,935		3,516	7.22%
Total borrowings		338,954		6,731	2.62%		377,075		6,980	2.44%
Total interest-bearing liabilities	$	2,777,974		41,160	1.98%	$	2,643,636		29,376	1.49%
Net interest income and spread⁽²⁾			$	91,025	3.53%			$	89,394	3.77%
Net interest margin ⁽²⁾					3.80%					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)	September 30, 2019			June 30, 2019			% change	December 31, 2018			% change	September 30, 2018			% change
Residential real estate	$	2,505,274		$	2,523,883		(1)%	$	2,452,441		2%	$	2,341,989		7%
Commercial real estate		224,570			220,388		2%		250,955		(11)%		252,782		(11)%
Construction		171,051			172,656		(1)%		176,605		(3)%		177,734		(4)%
Commercial lines of credit		24,512			28,774		(15)%		37,776		(35)%		44,375		(45)%
Other consumer		29			30		(3)%		26		12%		35		(17)%
Total loans held for investment		2,925,436			2,945,731		(1)%		2,917,803		0%		2,816,915		4%
Less: allowance for loan losses		(21,204	)		(20,918	)	1%		(21,850	)	(3)%		(20,765	)	2%
Loans, net	$	2,904,232		$	2,924,813		(1)%	$	2,895,953		0%	$	2,796,150		4%

Mortgage loans held for sale	$	837		$	500		67%	$	1,248		(33)%	$	113,805		(99)%
Total gross loans	$	2,926,273		$	2,946,231		(1)%	$	2,919,051		0%	$	2,930,720		0%

Sterling Bancorp, Inc.
Allowance for Loan Losses (Unaudited)
	Three Months Ended
(dollars in thousands)	September 30, 2019		June 30, 2019		December 31, 2018		September 30, 2018
Balance at beginning of period	$	20,918	$	20,698	$	20,765	$	20,300
Provision for loan losses		251		180		1,045		423
Charge offs		-		-		-		-
Recoveries		35		40		40		42
Balance at end of period	$	21,204	$	20,918	$	21,850	$	20,765

Sterling Bancorp, Inc.
Deposit Composition (Unaudited)
(dollars in thousands)	September 30, 2019		June 30, 2019		% change	December 31, 2018		% change	September 30, 2018		% change
Noninterest bearing deposits	$	77,335	$	70,406	10%	$	76,815	1%	$	79,432	(3)%
Money Market, Savings and NOW		1,277,518		1,312,010	(3)%		1,481,591	(14)%		1,537,202	(17)%
Time deposits		1,216,992		1,164,244	5%		894,279	36%		795,437	53%
Total deposits	$	2,571,845	$	2,546,660	1%	$	2,452,685	5%	$	2,412,071	7%

Sterling Bancorp, Inc.
Capital and Credit Quality Ratios (Unaudited)
	As of and for the Three Months Ended
(dollars in thousands)	September 30, 2019		June 30, 2019		December 31, 2018		September 30, 2018
Capital Ratios
Regulatory and Other Capital Ratios— Consolidated:
Total adjusted capital to risk-weighted assets		22.64%		21.91%		21.98%		21.00%
Tier 1 (core) capital to risk-weighted assets		18.17%		17.51%		17.45%		16.55%
Common Tier 1 (CET 1)		18.17%		17.51%		17.45%		16.55%
Tier 1 (core) capital to adjusted tangible assets		10.54%		10.40%		10.42%		10.04%

Regulatory and Other Capital Ratios—Bank:
Total adjusted capital to risk-weighted assets		18.47%		17.72%		16.94%		15.99%
Tier 1 (core) capital to risk-weighted assets		17.37%		16.64%		15.80%		14.91%
Common Tier 1 (CET 1)		17.37%		16.64%		15.80%		14.91%
Tier 1 (core) capital to adjusted tangible assets		10.07%		9.88%		9.44%		9.04%

Credit Quality Data
Nonperforming loans⁽¹⁾	$	9,974	$	6,697	$	4,500	$	356
Nonperforming loans to total loans		0.34%		0.23%		0.15%		0.01%
Nonperforming assets⁽²⁾	$	12,345	$	12,190	$	10,157	$	6,035
Nonperforming assets to total assets		0.37%		0.37%		0.32%		0.19%
Allowance for loan losses to total loans		0.72%		0.71%		0.75%		0.74%
Allowance for loan losses to nonperforming loans		213%		312%		486%		5,833%
Net 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 September 30, 2019 and 2018, and June 30, 2019.

Sterling Bancorp, Inc.
GAAP to Non-GAAP Reconciliations
	As of and for the Three Months Ended									As of and for the Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
(dollars in thousands)	2019			2019			2018			2019			2018
Net Income	$	13,884		$	13,434		$	15,741		$	43,001		$	47,472
Average shareholders' equity		347,810			345,806			313,697			344,640			299,370
Adjustment
Customer-related intangible		(188	)		(300	)		(638	)		(299	)		(749	)
Average tangible common equity	$	347,622		$	345,506		$	313,059		$	344,341		$	298,621
Return on average tangible common equity*		15.98	%		15.55	%		20.11	%		16.65	%		21.20	%

*Annualized

View source version on businesswire.com: https://www.businesswire.com/news/home/20191028005721/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 Third Quarter 2019 Financial Results