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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-38290

Sterling Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Michigan

38-3163775

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

One Towne Square, Suite 1900

Southfield, Michigan 48076

(248) 355-2400

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading Symbol(s)

    

Name of each exchange on which registered

Common stock, no par value per share

SBT

The NASDAQ Stock Market LLC (NASDAQ

Capital Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

Accelerated filer 

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

As of May 11, 2021, 50,189,609 shares of the registrant’s Common Stock were outstanding.

Table of Contents

STERLING BANCORP, INC.

FORM 10-Q

INDEX

PART I — FINANCIAL INFORMATION

Item 1.

    

Financial Statements (Unaudited)

    

Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020

2

Condensed Consolidated Statements of Income for the three months ended March 31, 2021 and 2020

3

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2020

4

Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2021 and 2020

5

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020

6

Notes to the Condensed Consolidated Financial Statements (Unaudited)

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

37

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

56

Item 4.

Controls and Procedures

57

PART II — OTHER INFORMATION

Item 1.

Legal Proceedings

58

Item 1A.

Risk Factors

59

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

60

Item 6.

Exhibits

61

Exhibit Index

61

SIGNATURES

62

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Table of Contents

Sterling Bancorp, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(dollars in thousands)

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

March 31, 

December 31, 

    

2021

    

2020

Assets

 

  

 

  

Cash and due from banks

$

873,223

$

998,497

Interest-bearing time deposits with other banks

5,528

7,021

Investment securities

 

259,686

 

304,958

Mortgage loans held for sale

 

19,848

 

22,284

Loans, net of allowance for loan losses of $71,871 and $72,387

 

2,389,599

 

2,434,356

Accrued interest receivable

 

10,439

 

10,990

Mortgage servicing rights, net

4,626

5,688

Leasehold improvements and equipment, net

 

9,085

 

8,512

Operating lease right-of-use assets

18,791

19,232

Federal Home Loan Bank stock, at cost

22,950

22,950

Cash surrender value of bank-owned life insurance

 

32,631

 

32,495

Deferred tax asset, net

 

24,104

 

24,326

Other assets

 

23,517

 

22,736

Total assets

$

3,694,027

$

3,914,045

Liabilities and Shareholders' Equity

 

  

 

  

Liabilities:

 

  

 

  

Noninterest-bearing deposits

$

61,329

$

58,458

Interest-bearing deposits

 

2,749,868

 

3,040,508

Deposits held for sale

78,035

Total deposits

 

2,889,232

 

3,098,966

Federal Home Loan Bank borrowings

 

318,000

 

318,000

Subordinated notes, net

 

65,384

 

65,341

Operating lease liabilities

20,056

20,497

Accrued expenses and other liabilities

 

79,439

 

91,650

Total liabilities

 

3,372,111

 

3,594,454

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 50,009,407 shares at March 31, 2021 and 49,981,861 shares at December 31, 2020, respectively

 

80,807

 

80,807

Additional paid-in capital

 

13,603

 

13,544

Retained earnings

 

227,178

 

224,853

Accumulated other comprehensive income

 

328

 

387

Total shareholders’ equity

 

321,916

 

319,591

Total liabilities and shareholders’ equity

$

3,694,027

$

3,914,045

See accompanying notes to condensed consolidated financial statements.

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Sterling Bancorp, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(dollars in thousands, except per share amounts)

Three Months Ended

March 31, 

    

2021

    

2020

Interest income

Interest and fees on loans

$

31,294

$

39,525

Interest and dividends on investment securities and restricted stock

390

1,034

Other interest

263

434

Total interest income

31,947

40,993

Interest expense

Interest on deposits

6,702

10,364

Interest on Federal Home Loan Bank borrowings

838

810

Interest on subordinated notes

1,180

1,177

Total interest expense

8,720

12,351

Net interest income

23,227

28,642

Provision (recovery) for loan losses

(737)

20,853

Net interest income after provision (recovery) for loan losses

23,964

7,789

Non-interest income

Service charges and fees

159

117

Investment management and advisory fees

— 

313

Gain on sale of investment securities

— 

233

Gain on sale of mortgage loans held for sale

398

269

Unrealized gains (losses) on equity securities

(90)

80

Net servicing loss

(430)

(911)

Income on cash surrender value of bank-owned life insurance

313

328

Other

103

100

Total non-interest income

453

529

Non-interest expense

Salaries and employee benefits

7,848

6,753

Occupancy and equipment

2,196

2,118

Professional fees

8,755

3,312

Advertising and marketing

40

273

FDIC assessments

719

19

Data processing

346

335

Net recovery of mortgage repurchase liability

(153)

— 

Other

1,583

1,425

Total non-interest expense

21,334

14,235

Income (loss) before income taxes

3,083

(5,917)

Income tax expense (benefit)

758

(1,887)

Net income (loss)

$

2,325

$

(4,030)

Income (loss) per share, basic and diluted

$

0.05

$

(0.08)

Weighted average common shares outstanding:

Basic

49,851,202

49,837,662

Diluted

49,912,860

49,837,662

See accompanying notes to condensed consolidated financial statements.

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Sterling Bancorp, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(dollars in thousands)

Three Months Ended

March 31, 

    

2021

    

2020

Net income (loss)

$

2,325

$

(4,030)

Other comprehensive income (loss), net of tax:

Unrealized gains (losses) on investment securities, arising during the period, net of tax effect of $(23) and $284, respectively

(59)

731

Reclassification adjustment for gains included in net income of $- and $233, respectively, included in gain on sale of investment securities, net of tax effect of $- and $65, respectively

— 

(168)

Total other comprehensive income (loss)

(59)

563

Comprehensive income (loss)

$

2,266

$

(3,467)

See accompanying notes to condensed consolidated financial statements.

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Sterling Bancorp, Inc.

Condensed Consolidated Statements of Changes in Shareholders’ Equity

(dollars in thousands, except share amounts)

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Retained

Comprehensive

Shareholders’

    

Shares

    

Amount

    

Capital

    

Earnings

    

Income (Loss)

    

Equity

Balance at January 1, 2020

49,944,473

$

80,889

$

13,210

$

238,319

$

196

$

332,614

Net loss

(4,030)

(4,030)

Repurchases of shares of common stock

(10,912)

(82)

(82)

Stock-based compensation

134,177

109

109

Other comprehensive income

 

 

 

 

563

 

563

Dividends distributed ($0.01 per share)

 

 

 

(499)

 

 

(499)

Balance at March 31, 2020

50,067,738

$

80,807

$

13,319

$

233,790

$

759

$

328,675

Balance at January 1, 2021

49,981,861

$

80,807

$

13,544

$

224,853

$

387

$

319,591

Net income

2,325

2,325

Restricted stock surrendered due to employee tax liability

(8,536)

(46)

(46)

Stock-based compensation

36,082

105

105

Other comprehensive loss

(59)

(59)

Balance at March 31, 2021

50,009,407

$

80,807

$

13,603

$

227,178

$

328

$

321,916

See accompanying notes to condensed consolidated financial statements.

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Table of Contents

Sterling Bancorp, Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

Three Months Ended

March 31, 

    

2021

    

2020

Cash Flows From Operating Activities

 

  

 

  

Net income (loss)

$

2,325

$

(4,030)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

Provision (recovery) for loan losses

 

(737)

 

20,853

Deferred income taxes

 

245

 

(6,237)

Gain on sale of investment securities

 

 

(233)

Unrealized (gains) losses on equity securities

 

90

 

(80)

Amortization (accretion), net, on investment securities

 

576

 

(128)

Depreciation and amortization on leasehold improvements and equipment

408

398

Origination, net of principal payments, mortgage loans held for sale

 

(7,980)

 

(16,855)

Proceeds from sale of mortgage loans held for sale

 

10,740

 

14,578

Gain on sale of mortgage loans held for sale

 

(398)

 

(269)

Net recovery of mortgage repurchase liability

(153)

Increase in cash surrender value of bank-owned life insurance, net of premiums

 

(136)

 

(153)

Valuation allowance adjustments and amortization of mortgage servicing rights

 

1,136

 

1,896

Stock-based compensation

105

109

Other

 

43

 

39

Change in operating assets and liabilities:

 

 

Accrued interest receivable

 

551

 

497

Other assets

190

662

Accrued expenses and other liabilities

 

(10,111)

 

(13,504)

Net cash used in operating activities

 

(3,106)

 

(2,457)

Cash Flows From Investing Activities

 

  

 

  

Maturities of interest-bearing time deposits with other banks

1,493

Maturities and principal receipts of investment securities

44,524

47,272

Sales of investment securities

23,044

Purchases of investment securities

 

(75,717)

Net decrease in loans

 

133,438

 

71,032

Purchases of portfolio loans

(90,862)

Purchase of leasehold improvements and equipment

 

(981)

 

(281)

Net cash provided by investing activities

 

87,612

 

65,350

Cash Flows From Financing Activities

 

  

 

  

Net increase (decrease) in deposits

 

(209,734)

 

149,853

Proceeds from advances from Federal Home Loan Bank

 

 

100,000

Cash paid for surrender of vested shares due to employee tax liability

(46)

Repurchase of shares of common stock

(82)

Dividends paid to shareholders

 

 

(499)

Net cash provided by (used in) financing activities

 

(209,780)

 

249,272

Net change in cash and due from banks

 

(125,274)

 

312,165

Cash and due from banks at beginning of period

 

998,497

 

77,819

Cash and due from banks at end of period

$

873,223

$

389,984

Supplemental cash flows information

 

  

 

  

Cash paid:

 

  

 

  

Interest

$

11,582

$

9,993

Income taxes

102

Noncash investing and financing activities:

Right-of-use assets obtained in exchange for new operating lease liabilities

530

42

See accompanying notes to condensed consolidated financial statements.

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Sterling Bancorp, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(dollars in thousands, except per share amounts)

Note 1—Nature of Operations and Basis of Presentation

Nature of Operations

Sterling Bancorp, Inc. (unless stated otherwise or the context otherwise requires, with its subsidiaries, the “Company”) is a unitary thrift holding company that was incorporated in 1989 and the parent company to its wholly-owned subsidiary, Sterling Bank and Trust, F.S.B. (the “Bank”). The Company’s business is conducted through the Bank, which was formed in 1984. The Bank originates residential and commercial real estate loans, construction loans, commercial lines of credit and other consumer loans and provides deposit products, consisting primarily of checking, savings and term certificate accounts. The Bank operates through a network of 30 branches of which 26 branches are located in San Francisco and Los Angeles, California with the remaining branches located in New York, New York, Southfield, Michigan and the greater Seattle market.

The Company is headquartered in Southfield, Michigan, and its operations are in the financial services industry. Management evaluates the performance of the Company's business based on one reportable segment, community banking.

On March 19, 2021, the Bank entered into an agreement with First Federal Savings & Loan Association of Port Angeles, a Washington state chartered bank, to sell the Bank’s Bellevue, Washington branch office, subject to receipt of applicable regulatory approvals and other customary closing conditions. The sale includes the transfer of all deposit accounts located at the branch, with a total balance of $78,035 at March 31, 2021, as well as the transfer of all branch premises and equipment. The agreement provides that the Bank will receive a premium of 2.1% on the principal balance of the deposits at closing. The agreement also provides that the buyer intends to offer employment to all associated staff. This transaction is expected to close in the second quarter of 2021.

The Company is subject to regulation, examination and supervision by the Board of Governors of the Federal Reserve System (the “FRB” or “Federal Reserve”). The Bank is a federally chartered stock savings bank that is subject to regulation, supervision and examination by the Office of the Comptroller of the Currency (“OCC”) of the U.S. Department of Treasury and the Federal Deposit Insurance Corporation (“FDIC”) and is a member of the Federal Home Loan Bank (“FHLB”) system.

Basis of Presentation

The condensed consolidated balance sheet as of March 31, 2021, and the condensed consolidated statements of income, comprehensive income (loss), changes in shareholders’ equity and cash flows for the three months ended March 31, 2021 and 2020 are unaudited. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all adjustments, in the opinion of management, of a normal recurring nature that are necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. The financial data and other financial information disclosed in these notes to the condensed consolidated financial statements related to these periods are also unaudited. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ended December 31, 2021 or for any future annual or interim period. The consolidated balance sheet at December 31, 2020 included herein was derived from the audited financial statements as of that date. The accompanying unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 26, 2021 (the “2020 Form 10-K”).

Note 2—New Accounting Standards

Recently Issued Accounting Guidance Not Yet Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which is intended to improve financial reporting by requiring recording of credit losses on loans and other financial instruments on a more timely basis. The guidance will replace the current incurred loss accounting model with an expected loss approach and requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance requires enhanced disclosures to help investors and other financial statement users

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STERLING BANCORP, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(dollars in thousands, except per share amounts)

better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which clarifies the scope of the credit losses standard and addresses issues related to accrued interest receivable balances and recoveries, among other things. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief. The amendments provide entities with an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis, upon adoption of Topic 326. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates. This update deferred the effective dates of Topic 326 to January 1, 2023 for certain entities including smaller reporting companies (as defined by the U.S. Securities and Exchange Commission (the “SEC”)). The Company, as a smaller reporting company as of the relevant measuring period, qualified for this extension.

At this time, the Company has formed a cross-functional implementation team consisting of individuals from credit, finance and information systems. The implementation team has been working with a software vendor to assist in implementing required changes to credit loss estimation models and processes. The historical data set for model development has been finalized, and the credit loss estimation models are in the process of being developed and tested. The Company expects to recognize a cumulative effect adjustment to the opening balance of retained earnings as of the beginning of the first reporting period in which ASU No. 2016-13 is effective. The Company has not yet determined the magnitude of any such one-time adjustment or of the overall impact of ASU No. 2016-13 on its consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The relief provided by this guidance is elective and applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The guidance provides that changes in contract terms that are made to effect the reference rate reform transition are considered related to the replacement of a reference rate if they are not the result of a business decision that is separate from or in addition to changes to the terms of a contract to effect that transition. If certain criteria are met, entities can elect to not apply certain modification accounting requirements to contracts affected by reference rate reform. The Company’s primary contracts that reference LIBOR are its loan contracts, purchase and sale agreements for investment securities transactions, customer deposit agreements and borrowing agreements with the FHLB. The Company has not yet determined an alternative rate to LIBOR at this time. The optional amendments in ASU No. 2020-04 are effective for all entities for contract modifications made for LIBOR transition between March 12, 2020 through December 31, 2022. The Company may take advantage of the LIBOR transition relief allowed under this ASU in the future.

In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848), Scope. The amendments in this guidance refine the scope of Topic 848 and clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting also apply to derivative instruments that use an interest rate for margining, discounting or contract price alignment that is modified as a result of reference rate reform (commonly referred to as the discounting transition). ASU No. 2021-01 expands the scope of Topic 848 to also include certain derivative instruments that do not reference LIBOR or a reference rate that is expected to be discontinued, but that are being modified as a result of the discounting transition. Currently, the Company does not use derivative instruments and does not anticipate taking advantage of the LIBOR transition relief allowed under this ASU.

Note 3—Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The condensed consolidated financial statements include the results of the Company and its wholly-owned subsidiary.

On December 21, 2020, QCM, LLC, doing business as Quantum Capital Management, a wholly-owned subsidiary of Quantum Fund, LLC and an indirect wholly-owned subsidiary of the Bank, completed the sale of substantially all of its assets, which consisted

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Table of Contents

STERLING BANCORP, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(dollars in thousands, except per share amounts)

primarily of client advisory agreements for aggregate consideration of $250. The operations of Quantum Capital Management were not significant.

All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Due to the inherent uncertainty involved in making estimates, actual results reported in the future periods may be based upon amounts that could differ from those estimates.

Concentration of Credit Risk

The loan portfolio consists primarily of residential real estate loans, which are collateralized by real estate. At March 31, 2021 and December 31, 2020, residential real estate loans accounted for 82% and 81%, respectively, of the loan portfolio. In addition, most of these residential loans and other commercial loans have been made to individuals and businesses in the state of California, which are dependent on the area economy for their livelihoods and servicing of their loan obligation. At March 31, 2021 and December 31, 2020, approximately 86% and 87%, respectively, of the loan portfolio was originated to customers in California.

Starting December 9, 2019, the Bank suspended its Advantage Loan Program and announced on March 6, 2020 that it permanently discontinued this program. Loans originated under this Program comprised a significant component of the Bank’s total loan originations. Advantage Loan Program loans (including nonaccrual residential real estate loans held for sale of $18,572 at March 31, 2021) totaled $1,488,343 and $1,515,248, or 73% and 74%, of the residential loan portfolio at March 31, 2021 and December 31, 2020, respectively.

Risks and Uncertainties – COVID-19

The coronavirus disease 2019 (“COVID-19”) pandemic, and related efforts to contain it, have caused significant disruptions in the functioning of the financial markets, resulted in an unprecedented slowdown in economic activity and a related increase in unemployment, and have increased economic and market uncertainty and volatility. The Company’s primary market areas of California, the greater Seattle market, and New York City have been hit particularly hard by the COVID-19 pandemic. Federal and state governments have taken, and continue to take, unprecedented actions to contain the spread of the disease, including vaccine distribution, closures of businesses and schools, fiscal stimulus, and legislation designed to deliver monetary aid and other relief for businesses and individuals impacted by the pandemic.

During the first quarter of 2021, the COVID-19 pandemic continues to create and exacerbate significant risks and uncertainties for the market that the Bank serves. As the Bank’s residential and commercial customers are facing various levels of financial stress, the Bank continues to experience an elevated level of delinquent and nonaccrual loans, primarily in residential real estate, office, lodging, retail and construction loans.

The duration and severity of the effect of the COVID-19 pandemic on economic, market and business conditions remain uncertain. The Company continues to be subject to heightened business, operational, market, credit and other risks related to the COVID-19 pandemic, which may have an adverse effect on its business, financial condition, liquidity, results of operations, risk-weighted assets and regulatory capital.

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STERLING BANCORP, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(dollars in thousands, except per share amounts)

Note 4—Investment Securities

Debt Securities

The following tables summarize the amortized cost and fair value of debt securities available for sale at March 31, 2021 and December 31, 2020 and the corresponding amounts of gross unrealized gains and losses:

March 31, 2021

Amortized

Gross Unrealized

Fair

    

Cost

    

Gain

    

Loss

    

Value

Available for sale:

 

  

 

  

 

  

 

  

U.S. Treasury & Agency securities

$

118,624

$

162

$

$

118,786

Mortgage-backed securities

31,462

70

(418)

31,114

Collateralized mortgage obligations

 

103,658

 

729

 

(68)

 

104,319

Collateralized debt obligations

 

213

 

 

(20)

 

193

Total

$

253,957

$

961

$

(506)

$

254,412

December 31, 2020

Amortized

Gross Unrealized

Fair

    

Cost

    

Gain

    

Loss

    

Value

Available for sale:

 

  

 

  

 

  

 

  

U.S. Treasury & Agency securities

$

138,742

$

255

$

$

138,997

Mortgage-backed securities

33,743

72

(1)

33,814

Collateralized mortgage obligations

 

126,359

 

628

 

(391)

 

126,596

Collateralized debt obligations

 

214

 

 

(27)

 

187

Total

$

299,058

$

955

$

(419)

$

299,594

Securities with a fair value of $73,725 were pledged as collateral on FHLB borrowings at March 31, 2021.

All of the Company’s mortgage-backed securities, and a majority of the Company’s collateralized mortgage obligations are issued and/or guaranteed by a U.S. government agency (Government National Mortgage Association) or a U.S. government-sponsored enterprise (Federal Home Loan Mortgage Corporation (“Freddie Mac”) or Federal National Mortgage Association (“Fannie Mae”)). The fair value of the private-label collateralized mortgage obligations was $720 and $816 at March 31, 2021 and December 31, 2020, respectively.

No securities of any single issuer, other than debt securities issued by the U.S. government, government agency and government-sponsored enterprises, were in excess of 10% of total shareholders’ equity as of March 31, 2021 and December 31, 2020.

For the three months ended March 31, 2020, the proceeds from sales of debt securities available for sale were $23,044. The Company recorded gross realized gains of $235 and gross realized losses of $(2). There were no sales of debt securities available for sale for the three months ended March 31, 2021.

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STERLING BANCORP, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(dollars in thousands, except per share amounts)

The amortized cost and fair value of debt securities available for sale issued by U.S. Treasury and Agency securities at March 31, 2021 are shown by contractual maturity. Mortgage-backed securities, collateralized mortgage obligations and collateralized debt obligations are disclosed separately in the table below, as the expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

Amortized

Fair

    

Cost

    

Value

U.S. Treasury & Agency securities

 

  

 

  

Due less than one year

$

44,970

$

45,061

Due after one year through five years

73,654

73,725

Mortgage-backed securities

31,462

31,114

Collateralized mortgage obligations

 

103,658

 

104,319

Collateralized debt obligations

 

213

 

193

Total

$

253,957

$

254,412

The following table summarizes debt securities available for sale, at fair value, with unrealized losses at March 31, 2021 and December 31, 2020 aggregated by major security type and length of time the individual securities have been in a continuous unrealized loss position:

March 31, 2021

Less than 12 Months

12 Months or More

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

    

Value

    

Losses

    

Value

    

Losses

    

Value

    

Losses

Mortgage-backed securities

$

20,970

$

(418)

$

$

20,970

$

(418)

Collateralized mortgage obligations

32,360

(68)

32,360

(68)

Collateralized debt obligations

 

193

(20)

193

(20)

Total

$

53,330

$

(486)

$

193

$

(20)

$

53,523

$

(506)

December 31, 2020

Less than 12 Months

12 Months or More

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

    

Value

    

Losses

    

Value

    

Losses

    

Value

    

Losses

Mortgage-backed securities

$

5,694

$

(1)

$

$

$

5,694

$

(1)

Collateralized mortgage obligations

75,740

(391)

75,740

(391)

Collateralized debt obligations

 

 

 

187

 

(27)

 

187

 

(27)

Total

$

81,434

$

(392)