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press release

April 19, 2021, 7:18 a.m. EDT

Sterling Bancorp announces results for the first quarter of 2021 with diluted earnings per share available to common stockholders of $0.50 (as reported) and $0.51 (as adjusted).

PEARL RIVER, Apr 19, 2021 (GLOBE NEWSWIRE via COMTEX) -- Key Performance Highlights

  • GAAP EPS increased $0.12 and adjusted EPS increased $0.02 over the linked quarter.

  • Net interest margin excluding accretion income [1] of 3.30%, an increase of five basis points ("bps") over the linked quarter.

  • Cost of funding liabilities decreased by six bps to 27 bps; earning asset yields decreased by one bp to 3.68%.

  • Adjusted PPNR excluding accretion income [1, 2] of $123.9 million; declined $6.4 million, or 4.9%, over the linked quarter.

  • Total deposits were $23.8 billion, an increase of 5.7% over a year ago.

  • Total core deposits were $22.2 billion, an increase of 3.4% over a year ago.

  • Total commercial loans were $19.5 billion, an increase of 0.4% over a year ago.

  • Average commercial loans were $19.6 billion, a 3.9% increase over the first quarter of 2020.

  • Adjusted non-interest expense [1] was $110.6 million, adjusted operating efficiency ratio [3] was 44.3%.

  • NPLs increased by $1.5 million to $168.6 million; ACL / portfolio loans of 1.53% and ACL / NPLs of 191.7%.

  • TCE / TA [1] was 9.63% and tangible book value per common share [1] was $14.08, an increase of 9.7% over a year ago.

  • Declared second quarter dividend per common share of $0.07.

  • Repurchased 1.2 million shares in the first quarter at a cost of $27.3 million and an average of $22.12 per share.

  • Completed previously announced redemption of subordinated debt - Bank on April 1, 2021.

  • Announced Banking as a Service partnerships with Google Plex, Bright Fi and Rho Technologies.

Results for the Three Months ended March 31, 2021 vs. March 31, 2020

($ in thousands except per share amounts) GAAP / As Reported Non-GAAP / As Adjusted [1]
March 31, 2020 March 31, 2021 Change % / bps March 31, 2020 March 31, 2021 Change % / bps
Total assets $ 30,335,036 $ 29,914,282 (1.4 ) % $ 30,335,036 $ 29,914,282 (1.4 ) %
Total portfolio loans, gross 21,709,957 21,151,973 (2.6 ) 21,709,957 21,151,973 (2.6 )
Total deposits 22,558,280 23,841,718 5.7 22,558,280 23,841,718 5.7
PPNR [1, 2] 144,385 132,105 (8.5 ) 126,203 123,895 (1.8 )
Net income available to common 12,171 97,187 698.5 (3,124 ) 97,603 NM
Diluted EPS available to common 0.06 0.50 733.3 (0.02 ) 0.51 NM
Net interest margin 3.16 % 3.38 % 22 3.21 % 3.43 % 22
Tangible book value per common share [1] $ 12.83 $ 14.08 9.7 $ 12.83 $ 14.08 9.7

Results for the Three Months ended March 31, 2021 vs. December 31, 2020

($ in thousands except per share amounts) GAAP / As Reported Non-GAAP / As Adjusted [1]
December 31, 2020 March 31, 2021 Change % / bps December 31, 2020 March 31, 2021 Change % / bps
PPNR [1, 2] $ 122,474 $ 132,105 7.9 $ 130,257 $ 123,895 (4.9 )
Net income available to common 74,457 97,187 30.5 94,323 97,603 3.5
Diluted EPS available to common 0.38 0.50 31.6 0.49 0.51 4.1
Net interest margin 3.33 % 3.38 % 5 3.38 % 3.43 % 5
Operating efficiency ratio [3] 52.1 47.2 (490 ) 43.0 44.3 130
Allowance for credit losses ("ACL") - loans $ 326,100 $ 323,186 (0.9 ) $ 326,100 $ 323,186 (0.9 )
ACL to portfolio loans 1.49 % 1.53 % 4 1.49 % 1.53 % 4
ACL to NPLs 195.2 191.7 (4 ) 195.2 191.7 (4 )
Tangible book value per common share [1] $ 13.87 $ 14.08 1.5 $ 13.87 $ 14.08 1.5

[1.] Non-GAAP / as adjusted measures are defined in the non-GAAP tables beginning on page 20.
[2.] PPNR represents pretax pre-provision net revenue. PPNR and PPNR excluding accretion income are non-GAAP measures and are measured as net interest income plus non-interest income less operating expenses before tax.
[3.] Operating efficiency ratio is a non-GAAP measure. See page 23 for an explanation of the operating efficiency ratio.

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PEARL RIVER, N.Y., April 19, 2021 (GLOBE NEWSWIRE) -- Sterling Bancorp /zigman2/quotes/206493117/composite STL -0.84% (the "Company"), the parent company of Sterling National Bank (the "Bank"), today announced results for the three months ended March 31, 2021. Net income available to common stockholders for the three months ended March 31, 2021 was $97.2 million, or $0.50 per diluted share, compared to net income available to common stockholders of $74.5 million, or $0.38 per diluted share, for the linked quarter ended December 31, 2020, and net income available to common stockholders of $12.2 million, or $0.06 per diluted share, for the three months ended March 31, 2020.

Chief Executive Officer's Comments
Jack Kopnisky, President and Chief Executive Officer, commented: "We are pleased with our results for the first quarter of 2021. While the economic environment remains challenging, the dedication of our colleagues, resilience of our business model and high quality of our client relationships is evident in our operating results. We continue to prioritize supporting our clients, colleagues and communities, and delivered strong profitability and substantial growth in tangible capital and tangible book value per common share.

"We opened 2021 with a strong first quarter. Our adjusted net income available to common stockholders was $97.6 million, or $0.51 per diluted share, which was an increase of two cents per share over the linked quarter. We saw improvements across many of our key profitability metrics, delivering adjusted return on average tangible assets of 1.42% and adjusted return on average tangible common equity of 14.6%. Adjusted PPNR excluding accretion income was $123.9 million, a decrease of 4.9% relative to the linked quarter, largely as a result of two fewer calendar days in the first quarter. Although loan origination activity continued to rebound in the first quarter of 2021, prepayment activity in certain portfolios has remained elevated, which impacted our earning assets balances. At March 31, 2021, our tangible book value per common share was $14.08, an increase of 9.7% over a year ago.

"We benefit from diversified asset origination capabilities allowing us to allocate capital to those business segments that deliver the most attractive risk-adjusted returns. We have a solid pipeline and anticipate stronger loan growth in the second quarter of 2021, driven by our C&I, CRE, and public sector businesses. Total commercial loans grew to $19.5 billion, an increase of 0.4% over the same period a year ago. At March 31, 2021, our total core deposits were $22.2 billion, which represented growth of $733.5 million, or 3.4%, over the linked quarter. Crucially, we continue to effectively manage our interest rate margin by substantially reducing our funding costs and protecting our earning asset yields. Our net interest income was $217.9 million in the first quarter and our tax equivalent net interest margin excluding accretion income was 3.30%, an increase of 5 basis points over the linked quarter.

"In our fee-based businesses, client activity and transaction volumes, while still below pre-pandemic levels, are beginning to recover. In the first quarter, total non-interest income was $32.4 million, a decline of $1.6 million versus the linked quarter, which included a gain of $3.7 million on the sale of commercial loans originated pursuant to the Paycheck Protection Program ("PPP"). Relative to the linked quarter, we saw growth in fee income in our loan syndications and cash management businesses and an increase in revenue from our customer derivatives businesses.

"In the first quarter, our adjusted non-interest expenses were $110.6 million and our adjusted operating efficiency ratio was 44.3%. We continue to invest in our technology infrastructure and digital capabilities, including in our digital banking offering Brio Direct, and in our Banking as a Service business. In the last 30 days, we announced a collaboration with Google to offer digital checking and savings accounts through the Google Plex platform, and entered into alliances with Rho Technologies and Bright Fi to offer a variety of banking services. We are also investing in our core business, to drive organic growth in key, high growth potential commercial verticals that offer attractive risk-adjusted returns, including by adding resources to our syndication, innovation finance, treasury management and small business teams. We are investing for the future, and are confident that these investments will drive scalable and sustainable growth in our business and earnings.

"Asset quality performance was in line with our expectations. As of March 31, 2021, the majority of our clients on loan payment deferrals had resumed making payments; with total loans on deferral decreasing $77.9 million to $130.5 million, or 0.6% of total portfolio loans. Total net charge-offs in the first quarter were $12.9 million, which included charges associated with the sale of $70.0 million of commercial loans, most of which were rated criticized or classified. As of March 31, 2021, our allowance for credit losses - portfolio loans was $323.2 million, or 1.53% of total loans and 191.7% of non-performing loans, reflecting an improving macro economic outlook but also our conservative approach to reserve releases as we continue to navigate through the credit cycle.

"We have a strong capital position. Our tangible common equity to tangible assets ratio increased eight basis points in the first quarter to 9.63% and our Tier 1 leverage ratio was 10.50%. We declared our regular dividend of $0.07 on our common stock, payable on May 14, 2021 to holders of record as of April 30, 2021. We restarted our stock repurchase program in the fourth quarter of 2020, repurchased 1.2 million shares in the first quarter of 2021 and have repurchased nearly 3.2 million shares since resuming our stock repurchase program. The program had 13.5 million shares available for repurchase as of March 31, 2021.

"Finally, I would like to thank our clients, shareholders, and colleagues, all of whom have exhibited extraordinary resilience to come through an exceptionally challenging period. I remain confident that the strength and diversification of our business model, our continued investments in technology and the dedication and commitment of our colleagues, positions us to drive

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continued and sustainable growth."

Reconciliation of GAAP Results to Adjusted Results (non-GAAP)
The Company's GAAP net income available to common stockholders of $97.2 million, or $0.50 per diluted share, for the first quarter of 2021, included the following items:

  • a pre-tax gain of $719 thousand on the sale of investment securities;

  • a pre-tax charge of $633 thousand related to the sale of two financial centers and the exit of two back office locations; and

  • the pre-tax amortization of non-compete agreements and acquired customer list intangible assets of $148 thousand.

Excluding the impact of these items, adjusted net income available to common stockholders was $97.6 million, or $0.51 per diluted share. For the three months ended March 31, 2021, our effective income tax rate was 18.8%, which was comprised of an estimated effective tax rate for 2021 of 18.5% and the impact discrete items related to executive compensation and the vesting of stock-based compensation awards. Our effective tax rate for purposes of reporting for adjusted earnings was 13.5% and 12.5% for the three months ended December 31, 2020 and March 31, 2020, respectively.

Non-GAAP financial measures include the terms "adjusted" or "excluding". See the reconciliation of the Company's non-GAAP financial measures beginning on page 20.

Net Interest Income and Margin

($ in thousands) For the three months ended Change % / bps
March 31, 2020 December 31, 2020 March 31, 2021 Y-o-Y Linked Qtr
Interest and dividend income $ 273,527 $ 242,610 $ 233,847 (14.5 ) % (3.6 ) %
Interest expense 61,755 20,584 15,933 (74.2 ) (22.6 )
Net interest income $ 211,772 $ 222,026 $ 217,914 2.9 (1.9 )
Accretion income on acquired loans $ 10,686 $ 8,560 $ 8,272 (22.6 ) % (3.4 ) %
Yield on loans 4.47 % 3.90 % 3.92 % (55 ) 2
Tax equivalent yield on investment securities [4] 2.96 2.94 3.02 6 8
Tax equivalent yield on interest earning assets [4] 4.13 3.69 3.68 (45 ) (1 )
Cost of total deposits 0.81 0.22 0.15 (66 ) (7 )
Cost of interest bearing deposits 1.00 0.29 0.20 (80 ) (9 )
Cost of borrowings 2.49 3.35 3.97 148 62
Cost of interest bearing liabilities 1.19 0.43 0.34 (85 ) (9 )
Total cost of funding liabilities [5] 0.98 0.33 0.27 (71 ) (6 )
Tax equivalent net interest margin [6] 3.21 3.38 3.43 22 5
Average loans, including loans held for sale $ 21,206,177 $ 21,879,511 $ 21,294,550 0.4 % (2.7 ) %
Average commercial loans 18,820,094 19,992,074 19,553,823 3.9 (2.2 )
Average investment securities 5,046,573 4,155,784 4,054,978 (19.6 ) (2.4 )
Average cash balances 489,691 331,587 648,178 32.4 95.5
Average total interest earning assets 26,980,261 26,522,991 26,149,732 (3.1 ) (1.4 )
Average deposits and mortgage escrow 22,692,568 23,849,187 23,546,928 3.8 (1.3 )

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

First quarter 2021 compared with first quarter 2020

Net interest income was $217.9 million for the quarter ended March 31, 2021, an increase of $6.1 million compared to the first quarter of 2020. This was mainly due to a decline in interest expense in line with decreases in market rates of interest and the

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repayment of higher cost FHLB borrowings. Other key components of changes in net interest income were the following:

  • The tax equivalent yield on interest earning assets decreased 45 basis points to 3.68%, in line with period over period decreases in market rates of interest.

  • The decline in market interest rates drove a decrease in our yield on loans, from 4.47% in the first quarter of 2020 to 3.92% in the first quarter of 2021.

  • Accretion income on acquired loans was $8.3 million in the first quarter of 2021, compared to $10.7 million in the first quarter of 2020.

  • Average investment securities were $4.1 billion, or 15.5%, of average total interest earning assets for the first quarter of 2021 compared to $5.0 billion, or 18.7%, of average total interest earning assets for the first quarter of 2020. The tax equivalent yield on investment securities was 3.02% compared to 2.96% for the three months ended March 31, 2020, mainly as a result of an increase in corporate securities held in the portfolio.

  • In the first quarter of 2021, strong growth in deposits drove increases in average cash balances to $648.2 million compared to $489.7 million in the first quarter of 2020.

  • Total interest expense was $15.9 million, a decline of $45.8 million compared to the first quarter of 2020. This was mainly due to lower interest expense paid on deposits and short-term borrowings and the impact of repayment of senior notes that matured in the second quarter of 2020.

  • The cost of total deposits was 15 basis points for the first quarter of 2021 compared to 81 basis points for the same period a year ago, in line with repricing of deposits in response to the low interest rate environment.

  • The cost of borrowings was 3.97% for the first quarter of 2021 compared to 2.49% for the same period a year ago. The increase was mainly due to the change in composition of our borrowings, with average borrowings of $721.6 million in the current quarter being comprised of $86.0 million in short-term borrowings and $635.6 million in higher coupon longer term borrowings, while for the prior year quarter average borrowings of $2.6 billion were comprised of predominately shorter term borrowings.

  • The total cost of interest bearing liabilities was 0.34% for the first quarter of 2021 compared to 1.19% for the same period a year ago. The decline was due to both changes in market rates of interest and changes in funding mix.

  • Average deposits and mortgage escrow increased $854.4 million during the first quarter of 2021 compared to the same period a year ago, due to growth generated by our commercial banking teams and financial centers.

First quarter 2021 compared with linked quarter ended December 31, 2020

Net interest income decreased $4.1 million for the quarter ended March 31, 2021 compared to the linked quarter, mainly due to the impact of the two fewer days of interest income recorded in the first quarter, as well as the impact of continued prepayment activity in certain portfolios. Other key components of the changes in net interest income were the following:

  • The average balance of commercial loans decreased $438.3 million, and the average balance of residential mortgage loans declined $133.3 million.

  • The tax equivalent net interest margin was 3.43% compared to 3.38% in the linked quarter. Excluding accretion income on acquired loans, tax equivalent net interest margin increased five basis points to 3.30%.

  • The yield on loans was 3.92% compared to 3.90% for the linked quarter. The increase was mainly due to prepayment fees on multi-family and other loans. Accretion income on acquired loans decreased $288 thousand to $8.3 million for the first quarter of 2021.

  • The remaining balance of PPP loans in the portfolio was $110.1 million at the end of the quarter, and all loans are in process of being forgiven. We recognized $367 thousand in PPP loan fees as interest income in the first quarter of 2021, compared to $846 thousand in the linked quarter. The decline was due to lower levels of repayments.

  • The tax equivalent yield on interest earning assets was 3.68% compared to 3.69% in the linked quarter, primarily as a result of an increase in the amount of cash held as a proportion of total earnings assets.

  • The tax equivalent yield on investment securities was 3.02% compared to 2.94% for the linked quarter. The increase in yield was mainly due to an increase in corporate securities.

  • The cost of total deposits decreased seven basis points to 15 basis points, mainly due to deposit repricing in response to the low interest rate environment.

  • Total interest expense decreased $4.7 million as a result of continued repricing of deposits and the impact of repayment of higher cost FHLB borrowings.

  • The total cost of borrowings increased 62 basis points to 3.97%, mainly due to the change in mix of borrowings with shorter term borrowings representing a smaller percentage of total borrowings.

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  • Average deposits and mortgage escrow decreased by $302.3 million and average borrowings decreased by $130.4 million relative to the linked quarter.

Non-interest Income

($ in thousands) For the three months ended Change %
March 31, 2020 December 31, 2020 March 31, 2021 Y-o-Y Linked Qtr
Deposit fees and service charges $ 6,622 $ 5,975 $ 6,563 (0.9 ) % 9.8 %
Accounts receivable management / factoring commissions and other related fees 5,538 6,498 5,426 (2.0 ) % (16.5 ) %
Bank owned life insurance ("BOLI") 5,018 4,961 4,955 (1.3 ) % (0.1 ) %
Loan commissions and fees 11,024 13,220 10,477 (5.0 ) % (20.7 ) %
Investment management fees 1,847 1,700 1,852 0.3 % 8.9 %
Net gain (loss) on sale of securities 8,412 (111 ) 719 (91.5 ) % NM
Net gain on security calls 4,880 -- -- NM NM
Other 3,985 1,678 2,364 (40.7 ) % 40.9 %
Total non-interest income 47,326 33,921 32,356 (31.6 ) % (4.6 ) %
Net gain (loss) on sale of securities 8,412 (111 ) 719 (91.5 ) % NM
Adjusted non-interest income $ 38,914 $ 34,032 $ 31,637 (18.7 ) % (7.0 ) %

First quarter 2021 compared with first quarter 2020
Adjusted non-interest income decreased $7.3 million in the first quarter of 2021 to $31.6 million, compared to $38.9 million in the same quarter last year. The decrease was mainly due to net gains realized on security calls in the first quarter of 2020 that did not recur, as well as from the impact of lower transactional volume in our derivatives business. In the first quarter of 2020, we realized a gain of $8.4 million on the sale of available for sale securities, which we sold to fund commercial loan growth.

Loan commissions and fees in the first quarter of 2020 included a $2.8 million gain on sale of small business equipment finance loans, which did not recur in 2021. In the first quarter of 2021, loan commissions and fees included $1.8 million in fees in connection with second round PPP loans originated by a third party in respect of which we earned a referral fee. A total of 1,118 loans closed with a principal amount of $160.9 million.

First quarter 2021 compared with linked quarter ended December 31, 2020

Adjusted non-interest income decreased approximately $2.4 million relative to the linked quarter to $31.6 million primarily as a result of a gain on sale of PPP loans of $3.7 million in the linked quarter. Treasury management fees, swap fees and net mortgage loan servicing fees increased versus the linked quarter.

In the first quarter of 2021, we realized a gain of $719 thousand on sale of securities, compared to a loss of $111 thousand in the fourth quarter of 2020.

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Non-interest Expense

($ in thousands) For the three months ended Change % / bps
March 31, 2020 December 31, 2020 March 31, 2021 Y-o-Y Linked Qtr
Compensation and benefits $ 54,876 $ 56,563 $ 58,087 5.9 % 2.7 %
Stock-based compensation plans 6,006 5,222 6,617 10.2 26.7
Occupancy and office operations 15,199 14,742 14,515 (4.5 ) (1.5 )
Information technology 8,018 9,559 9,246 15.3 (3.3 )
Amortization of intangible assets 4,200 4,200 3,776 (10.1 ) (10.1 )
FDIC insurance and regulatory assessments 3,206 2,865 3,230 0.7 12.7
Other real estate owned ("OREO"), net 52 283 (68 ) NM NM
Impairment related to financial centers and real estate consolidation strategy -- 13,311 633 NM NM
Loss on extinguishment of borrowings 744 2,749 -- NM NM
Other expenses 22,412 23,979 22,129 (1.3 ) (7.7 )
Total non-interest expense $ 114,713 $ 133,473 $ 118,165 3.0 (11.5 )
Full time equivalent employees ("FTEs") at period end 1,619 1,460 1,457 (10.0 ) (0.2 )
Operating efficiency ratio, as reported [7] 44.3 % 52.1 % 47.2 % 290 (490 )
Operating efficiency ratio, as adjusted [7] 42.4 43.0 44.3 190 130

[7] See a reconciliation of non-GAAP financial measures beginning on page 20.

First quarter 2021 compared with first quarter 2020
Total non-interest expense increased $3.5 million relative to the first quarter of 2020. Key components of the change in non-interest expense between the periods include the following:

  • Compensation and benefits increased $3.2 million mainly due to a higher bonus compensation accrual and an increase in medical costs incurred in the first quarter.

  • Occupancy and office operations expense decreased $684 thousand, mainly due to the consolidation of financial centers and other back-office locations. In the first quarter of 2021, we sold two financial centers, and exited two leases for financial center and back office location.

  • Information technology expense increased $1.2 million mainly due to the amortization of investments related to various back-office automation and digital banking initiatives.

  • Impairment related to financial centers and our real estate consolidation strategy represents loss on sale of financial center and other locations and early termination payments on leased locations.

First quarter 2021 compared with linked quarter ended December 31, 2020
Total non-interest expense decreased $15.3 million to $118.2 million. Key components of the change in non-interest expense include the following:

  • Compensation and benefits increased $1.5 million to $58.1 million in the first quarter of 2021. The increase was mainly due to payroll taxes and employer contributions to benefit plans, which are usually higher in the first quarter of the year compared to other quarters.

  • Loss on extinguishment of borrowings in the linked quarter was incurred in connection with the repayment of $250.0 million of FHLB advances and $30.0 million of subordinated notes - Bank.

  • Other expenses decreased by $1.9 million versus the linked quarter, mainly due to lower charitable contributions and other donations and lower write-downs associated with repossessed assets related to foreclosed equipment finance loans.

Taxes

We recorded income tax expense of $23.0 million in the first quarter of 2021, compared to income tax expense of $18.6 million in the linked quarter and income tax benefit of $8.0 million in the prior year quarter. For the three months ended March 31, 2021, we recorded income tax expense at an estimated effective income tax rate of 18.8% compared to 19.5% for the three months ended December 31, 2020.

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Key Balance Sheet Highlights as of March 31, 2021

($ in thousands) As of Change % / bps
March 31, 2020 December 31, 2020 March 31, 2021 Y-o-Y Linked Qtr
Total assets $ 30,335,036 $ 29,820,138 $ 29,914,282 (1.4 ) % 0.3 %
Total portfolio loans, gross 21,709,957 21,848,409 21,151,973 (2.6 ) (3.2 )
Commercial & industrial ("C&I") loans 8,483,474 9,160,268 8,451,615 (0.4 ) (7.7 )
Commercial real estate loans (including multi-family) 10,399,566 10,238,650 10,421,131 0.2 1.8
Acquisition, development and construction ("ADC") loans 524,714 642,943 618,295 17.8 (3.8 )
Total commercial loans 19,407,754 20,041,861 19,491,041 0.4 (2.7 )
Residential mortgage loans 2,077,534 1,616,641 1,486,597 (28.4 ) (8.0 )
Loan portfolio composition:
Commercial & industrial ("C&I") loans 39.1 % 41.9 % 40.0 % 90 (190 )
Commercial real estate loans (including multi-family) 47.9 46.9 49.3 140 240
Acquisition, development and construction ("ADC") loans 2.4 2.9 2.9 50 --
Residential and consumer 10.6 8.3 7.8 (280 ) (50 )
BOLI $ 616,648 $ 629,576 $ 630,430 2.2 0.1
Core deposits [9] 20,704,023 21,482,525 22,216,035 7.3 3.4
Total deposits 22,558,280 23,119,522 23,841,718 5.7 3.1
Municipal deposits (included in core deposits) 2,091,259 1,648,945 2,047,349 (2.1 ) 24.2
Investment securities, net 4,614,513 4,039,456 4,241,457 (8.1 ) 5.0
Investment securities, net to earning assets 17.2 % 15.4 % 16.5 % (70 ) 110
Total borrowings $ 2,598,698 $ 1,321,714 $ 667,499 (74.3 ) (49.5 )
Loans to deposits 96.2 % 94.5 % 88.7 % (750 ) (580 )
Core deposits [9 ] to total deposits 91.8 92.9 93.2 140 30

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

Highlights related to balance sheet items as of March 31, 2021 were the following:

  • C&I loans and commercial real estate loans represented 89.3% of our loan portfolio at March 31, 2021 compared to 87.0% a year ago. C&I loans includes traditional C&I, PPP, asset-based lending, payroll finance, warehouse lending, factored receivables, equipment financing and public sector finance loans.

  • A slowdown in mortgage refinance activity drove a $558.7 million decline in our mortgage warehouse lending balance at the end of the first quarter and was the primary driver of the decline in total portfolio, total commercial loans and total portfolio balance.

  • In the first quarter of 2021, we sold $70.0 million of commercial real estate loan which were mostly rated substandard or special mention. We recorded charge-offs of $5.9 million against the allowance for credit losses - loans to reduce the carrying value of loans to fair value prior to completing the transaction.

  • In the fourth quarter of 2020, we sold $464.2 million of PPP loans, which included the majority of such loans for which the forgiveness process had not yet been started.

  • Residential mortgage loans were $1.5 billion at March 31, 2021, a decline of $130.0 million from the linked quarter and a decline of $590.9 million from the same period a year ago. The decline was mainly due to repayments, and as compared to the same period a year ago also reflected our 2020 sale of non-performing residential mortgage loans with a net book value of $53.2 million.

  • Core deposits at March 31, 2021 were $22.2 billion an increase of $733.5 million compared to December 31, 2020, and an increase of $1.5 billion compared to March 31, 2020. The increase in the first quarter included increases primarily in interest bearing and non-interest bearing transaction accounts, money market accounts and municipal deposits. Certificate of deposit accounts declined $273.8 million as higher costing balances matured and were not renewed. Compared to March 31, 2020, certificate of deposit accounts declined $920.3 million. The growth in core and total deposits is a result both of our successful deposit gathering strategies as well as the increase in liquidity in the banking system overall, from government stimulus and other measures implemented in response to the economic downturn brought about by the pandemic.

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  • Municipal deposits at March 31, 2021 were $2.0 billion, an increase of $398.4 million relative to December 31, 2020. Municipal deposits generally increase in the first quarter of the year from tax collections by local municipalities.

  • Investment securities, net increased by $202.0 million from December 31, 2020 and decreased $373.1 million from March 31, 2020, representing 16.5% of earning assets at March 31, 2021. In the first quarter of 2021 the increase in investment securities included the purchase of US Treasury and corporate securities in response to the significant levels of excess liquidity generated by deposit inflows and the contraction in our loan portfolio.

  • Total borrowings at March 31, 2021 were $667.5 million, a decrease of $654.2 million relative to December 31, 2020 and a decrease of $1.9 billion relative to March 31, 2020, in both cases largely as a result of the repayments of higher costing FHLB borrowings.

  • On April 1, 2021, we redeemed the remaining balance of subordinated notes - Bank with a principal balance of $145.0 million at March 31, 2021 and coupon interest rate of 5.25%.

Credit Quality

($ in thousands) For the three months ended Change % / bps
March 31, 2020 December 31, 2020 March 31, 2021 Y-o-Y Linked Qtr
Provision for credit losses - loans $ 136,577 $ 27,500 $ 10,000 (92.7 ) % (63.6 ) %
Net charge-offs 6,955 27,343 12,914 85.7 (52.8 )
Allowance for credit losses ("ACL") - loans 326,444 326,100 323,186 (1.0 ) (0.9 )
Loans 30 to 89 days past due, accruing 69,769 72,912 42,165 (39.6 ) (42.2 )
Non-performing loans 253,750 167,059 168,557 (33.6 ) 0.9
Annualized net charge-offs to average loans 0.13 % 0.50 % 0.25 % 12 (25 )
Special mention loans $ 132,356 $ 461,458 $ 494,452 273.6 7.1
Substandard loans 402,393 528,760 590,109 46.6 11.6
ACL - loans to total loans 1.50 % 1.49 % 1.53 % 3 4
ACL - loans to non-performing loans 128.6 195.2 191.7 6,310 (350 )

For the three months ended March 31, 2021, provision for credit losses on portfolio loans was $10.0 million. The provision for credit losses is based on our reasonable and supportable forecasts of expected future losses inherent in our portfolio.

Net charge-offs were $12.9 million in the first quarter of 2021 and consisted of $5.9 million in charge-offs related to the sale of $70.0 million of CRE loans, most of which were rated special mention or substandard, a charge-off of $5.0 million on a large non-performing construction loan and $2.0 million of other net charge-offs.

Non-performing loans increased by $1.5 million to $168.6 million at March 31, 2021 compared to the linked quarter. Loans 30 to 89 days past due were $42.2 million, a decrease of $30.7 million from the linked quarter.

Special mention loans increased $33.0 million compared to the linked quarter. Substandard loans, which include non-performing loans, increased $61.3 million relative to the linked quarter. The increase was mainly due to CRE and multi-family loans, the majority of which are related to borrowers that previously requested payment forbearance under the CARES Act. The increases in special mention and substandard loans in the first quarter of 2021 are after recording the impact of the sale of a portfolio of CRE loans that contained a total of $60.1 million in loans rated special mention or substandard. As of March 31, 2021, loan payment deferrals were $130.5 million, or 0.6% of the total portfolio loans.

For additional information on our credit quality metrics including delinquency, criticized and classified see page 17, "Asset Quality Information by Portfolio".

8

Capital

($ in thousands, except share and per share data) As of Change % / bps
March 31, 2020 December 31, 2020 March 31, 2021 Y-o-Y Linked Qtr
Total stockholders' equity $ 4,422,424 $ 4,590,514 $ 4,620,164 4.5 % 0.6 %
Preferred stock 137,363 136,689 136,458 (0.7 ) (0.2 )
Goodwill and other intangible assets 1,789,646 1,777,046 1,773,270 (0.9 ) (0.2 )
Tangible common stockholders' equity [10] $ 2,495,415 $ 2,676,779 $ 2,710,436 8.6 1.3
Common shares outstanding 194,460,656 192,923,371 192,567,901 (1.0 ) (0.2 )
Book value per common share $ 22.04 $ 23.09 $ 23.28 5.6 0.8
Tangible book value per common share [ 10] 12.83 13.87 14.08 9.7 1.5
Tangible common equity as a % of tangible assets [10] 8.74 % 9.55 % 9.63 % 89 8
Est. Tier 1 leverage ratio - Company 9.41 10.14 10.50 109 36
Est. Tier 1 leverage ratio - Company fully implemented 9.06 9.80 10.15 N/A 35
Est. Tier 1 leverage ratio - Bank 9.99 11.33 11.76 177 43
Est. Tier 1 leverage ratio - Bank fully implemented 9.65 11.01 11.42 N/A 41
[ 10 ] See a reconciliation of non-GAAP financial measures beginning on page 20.

Total stockholders' equity increased $29.7 million to $4.6 billion versus the linked quarter as a result of net income of $99.2 million, stock-based compensation and stock option exercises of $7.4 million, partially offset by common stock repurchases of $27.3 million, common shares acquired from stock compensation plan activity of $6.6 million, common dividends of $13.5 million, preferred dividends of $2.2 million, and other comprehensive loss of $27.2 million.

We elected the five-year transition provision to delay for two years the full impact on regulatory capital of our adoption of the Current Expected Credit Loss ("CECL") accounting standard, followed by a three year transition period. The March 31, 2021 fully implemented ratio data reflects the full impact of CECL and excludes the benefits of phase-ins.

Tangible book value per common share was $14.08 at March 31, 2021, which represented an increase of 9.7% compared to a year ago.

Subsequent Event
As announced and further described in a separate press release issued by Sterling Bancorp today, Sterling Bancorp and Webster Financial Corporation, have entered into a merger agreement under which the companies will combine in an all stock merger of equals transaction.

Conference Call Information
In light of the announcement earlier today of entry into a merger agreement with Webster Financial Corporation ("Webster"), there will be a joint conference call to discuss the transaction and first quarter earnings at 8:30 A.M. Eastern Time today. To listen to the live call, please dial 877-407-8289 (US) or 201-689-8341 (International). A webcast can be accessed via Webster's Investor Relations website at www.wbst.com . Sterling has cancelled its originally scheduled earnings conference call on April 22, 2021.

About Sterling Bancorp
Sterling Bancorp, whose principal subsidiary is Sterling National Bank, specializes in the delivery of services and solutions to business owners, their families and consumers within the communities it serves through teams of dedicated and experienced relationship managers. Sterling National Bank offers a complete line of commercial, business, and consumer banking products and services. For more information, visit the Sterling Bancorp website at www.sterlingbancorp.com .

9

´╗┐CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This release may contain certain forward-looking statements, including, but not limited to, certain plans, expectations, goals, projections, and statements about the Company and the the proposed transaction, between Webster and the Company. Such statements are subject to numerous assumptions, risks, and uncertainties. Statements that do not describe historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements may be identified by words such as expect, anticipate, believe, intend, estimate, plan, target, goal, or similar expressions, or future or conditional verbs such as will, may, might, should, would, could, or similar variations. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995.

While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in general economic, political, or industry conditions; the magnitude and duration of the COVID-19 pandemic and its impact on the global economy and financial market conditions and our business, results of operations, and financial condition; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; movements in interest rates; reform of LIBOR; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services; the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, including those related to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III regulatory capital reforms, as well as those involving the OCC, Federal Reserve, FDIC, and CFPB; the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the merger agreement between Webster and the Company; the outcome of any legal proceedings that may be instituted against Webster or the Company; delays in completing the transaction; the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction); the failure to obtain stockholder approvals or to satisfy any of the other conditions to the transaction on a timely basis or at all; the possibility that the anticipated benefits of the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Webster and the Company do business; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management's attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction; the ability to complete the transaction and integration of Webster and the Company successfully; and other factors that may affect the future results of Webster and the Company. Additional factors that could cause results to differ materially from those described above can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, which is on file with the SEC and available on the Company's investor relations website, https://sterlingbank.gcs-web.com/investor-relations , under the heading "Financials" and in other documents the Company files with the SEC.

All forward-looking statements speak only as of the date they are made and are based on information available at that time. The Company assumes no obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

Financial information contained in this release should be considered to be an estimate pending the filing with the Securities and Exchange Commission of the Company's Quarterly Report on Form 10-Q for the three months ended March 31, 2021. While the Company is not aware of any need to revise the results disclosed in this release, accounting literature may require information received by management between the date of this release and the filing of the Quarterly Report on Form 10-Q to be reflected in the results of the fiscal period, even though the new information was received by management subsequent to the date of this release.

IMPORTANT ADDITIONAL INFORMATION
In connection with the proposed transaction, Webster will file with the SEC a Registration Statement on Form S-4 that will include a Joint Proxy Statement of Webster and the Company and a Prospectus of Webster , as well as other relevant documents concerning the proposed transaction. The proposed transaction involving Webster and the Company will be submitted to the Company's stockholders and Webster's stockholders for their consideration. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. INVESTORS AND STOCKHOLDERS OF WEBSTER AND STOCKHOLDERS OF THE COMPANY ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Stockholders will be able to obtain a free copy of the definitive joint proxy statement/prospectus, as well as other filings containing information about Webster and the Company, without charge, at the SEC's website ( http://www.sec.gov ). Copies of the joint proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, by directing a request to Kristen Manginelli, Director of Investor Relations, Webster Financial Corporation, 145 Bank Street, Waterbury, Connecticut 06702, (203) 578-2202 or to Emlen Harmon, Managing Director, Investor Relations, Sterling Bancorp, Two Blue Hill Plaza, Second Floor, Pearl River, New York 10965, (845) 369-8040.

PARTICIPANTS IN THE SOLICITATIONWebster, the Company, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Webster and the Company in connection with the proposed transaction under the rules of the SEC. Information regarding Webster's directors and executive officers is available in its definitive proxy statement relating to its 2021 Annual Meeting of Stockholders, which was filed with the SEC on March 19, 2021, and other documents filed by Webster with the SEC. Information regarding Sterling's directors and executive officers is available in its definitive proxy statement relating to its 2021 Annual Meeting of Stockholders, which was filed with the SEC on April 14, 2021, and other documents filed by Sterling with the SEC. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC. Free copies of this document may be obtained as described in the preceding paragraph.

10

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

March 31, 2020 December 31, 2020 March 31, 2021
Assets:
Cash and cash equivalents $ 348,636 $ 305,002 $ 935,633
Investment securities, net 4,614,513 4,039,456 4,241,457
Loans held for sale 8,124 11,749 36,237
Portfolio loans:
Commercial and industrial ("C&I") 8,483,474 9,160,268 8,451,614
Commercial real estate (including multi-family) 10,399,566 10,238,650 10,421,132
Acquisition, development and construction ("ADC") loans 524,714 642,943 618,295
Residential mortgage 2,077,534 1,616,641 1,486,597
Consumer 224,669 189,907 174,335
Total portfolio loans, gross 21,709,957 21,848,409 21,151,973
Allowance for credit losses (326,444 ) (326,100 ) (323,186 )
Total portfolio loans, net 21,383,513 21,522,309 20,828,787
FHLB and Federal Reserve Bank Stock, at cost 240,722 166,190 153,968
Accrued interest receivable 102,101 97,505 103,323
Premises and equipment, net 228,526 202,555 199,782
Goodwill 1,683,482 1,683,482 1,683,482
Other intangibles 106,164 93,564 89,788
BOLI 616,648 629,576 630,430
Other real estate owned 11,815 5,347 5,227
Other assets 990,792 1,063,403 1,006,168
Total assets $ 30,335,036 $ 29,820,138 $ 29,914,282
Liabilities:
Deposits $ 22,558,280 $ 23,119,522 $ 23,841,718
FHLB borrowings 1,955,451 382,000 --
Federal Funds Purchased -- 277,000 --
Other borrowings 27,562 27,101 31,679
Senior notes 171,422 -- --
Subordinated notes - Company 271,019 491,910 492,063
Subordinated notes - Bank 173,244 143,703 143,757
Mortgage escrow funds 96,491 59,686 82,245
Other liabilities 659,143 728,702 702,656
Total liabilities 25,912,612 25,229,624 25,294,118
Stockholders' equity:
Preferred stock 137,363 136,689 136,458
Common stock 2,299 2,299 2,299
Additional paid-in capital 3,749,508 3,761,993 3,745,890
Treasury stock (660,069 ) (686,911 ) (699,415 )
Retained earnings 1,125,702 1,291,628 1,377,341
Accumulated other comprehensive income 67,621 84,816 57,591
Total stockholders' equity 4,422,424 4,590,514 4,620,164
Total liabilities and stockholders' equity $ 30,335,036 $ 29,820,138 $ 29,914,282
Shares of common stock outstanding at period end 194,460,656 192,923,371 192,567,901
Book value per common share $ 22.04 $ 23.09 $ 23.28
Tangible book value per common share [1] 12.83 13.87 14.08
[1] See reconciliation of non-GAAP financial measures beginning on page 20.

11

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

For the Quarter Ended
March 31, 2020 December 31, 2020 March 31, 2021
Interest and dividend income:
Loans and loan fees $ 235,439 $ 214,522 $ 205,855
Securities taxable 20,629 15,679 15,352
Securities non-taxable 12,997 11,839 11,738
Other earning assets 4,462 570 902
Total interest and dividend income 273,527 242,610 233,847
Interest expense:
Deposits 45,781 13,417 8,868
Borrowings 15,974 7,167 7,065
Total interest expense 61,755 20,584 15,933
Net interest income 211,772 222,026 217,914
Provision for credit losses - loans 136,577 27,500 10,000
Provision for credit losses - held to maturity securities 1,703 -- --
Net interest income after provision for credit losses 73,492 194,526 207,914
Non-interest income:
Deposit fees and service charges 6,622 5,975 6,563
Accounts receivable management / factoring commissions and other related fees 5,538 6,498 5,426
BOLI 5,018 4,961 4,955
Loan commissions and fees 11,024 13,220 10,477
Investment management fees 1,847 1,700 1,852
Net gain (loss) on sale of securities 8,412 (111 ) 719
Net gain on security calls 4,880 -- --
Other 3,985 1,678 2,364
Total non-interest income 47,326 33,921 32,356
Non-interest expense:
Compensation and benefits 54,876 56,563 58,087
Stock-based compensation plans 6,006 5,222 6,617
Occupancy and office operations 15,199 14,742 14,515
Information technology 8,018 9,559 9,246
Amortization of intangible assets 4,200 4,200 3,776
FDIC insurance and regulatory assessments 3,206 2,865 3,230
Other real estate owned, net 52 283 (68 )
Impairment related to financial centers and real estate consolidation strategy -- 13,311 633
Loss on extinguishment of borrowings 744 2,749 --
Other 22,412 23,979 22,129
Total non-interest expense 114,713 133,473 118,165
Income before income tax expense 6,105 94,974 122,105
Income tax (benefit) expense (8,042 ) 18,551 22,955
Net income 14,147 76,423 99,150
Preferred stock dividend 1,976 1,966 1,963
Net income available to common stockholders $ 12,171 $ 74,457 $ 97,187
Weighted average common shares:
Basic 196,344,061 193,036,678 191,890,512
Diluted 196,709,038 193,530,930 192,621,907
Earnings per common share:
Basic earnings per share $ 0.06 $ 0.39 $ 0.51
Diluted earnings per share 0.06 0.38 0.50
Dividends declared per share 0.07 0.07 0.07
12


As of and for the Quarter Ended
End of Period March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021
Total assets $ 30,335,036 $ 30,839,893 $ 30,617,722 $ 29,820,138 $ 29,914,282
Tangible assets [1] 28,545,390 29,054,447 28,836,476 28,043,092 28,141,012
Securities available for sale 2,660,835 2,620,624 2,419,458 2,298,618 2,524,671
Securities held to maturity, net 1,956,177 1,924,955 1,781,892 1,740,838 1,716,786
Loans held for sale [2] 8,124 44,437 36,826 11,749 36,237
Portfolio loans 21,709,957 22,295,267 22,281,940 21,848,409 21,151,973
Goodwill 1,683,482 1,683,482 1,683,482 1,683,482 1,683,482
Other intangibles 106,164 101,964 97,764 93,564 89,788
Deposits 22,558,280 23,600,621 24,255,333 23,119,522 23,841,718
Municipal deposits (included above) 2,091,259 1,724,049 2,397,072 1,648,945 2,047,349
Borrowings 2,598,698 2,582,609 993,535 1,321,714 667,499
Stockholders' equity 4,422,424 4,484,187 4,557,785 4,590,514 4,620,164
Tangible common equity [1] 2,495,415 2,561,599 2,639,622 2,676,779 2,710,436
Quarterly Average Balances
Total assets 30,484,433 30,732,914 30,652,856 30,024,165 29,582,605
Tangible assets [1] 28,692,033 28,944,714 28,868,840 28,244,364 27,806,859
Loans, gross:
Commercial real estate (includes multi-family) 10,288,977 10,404,643 10,320,930 10,191,707 10,283,292
ADC 497,009 519,517 636,061 685,368 624,259
C&I:
Traditional C&I (includes PPP loans) 2,470,570 3,130,248 3,339,872 3,155,851 2,917,721
Asset-based lending [3] 1,107,542 981,518 864,075 876,377 751,861
Payroll finance [3] 217,952 173,175 143,579 162,762 146,839
Warehouse lending [3] 1,089,576 1,353,885 1,550,425 1,637,507 1,546,947
Factored receivables [3] 229,126 188,660 163,388 214,021 224,845
Equipment financing [3] 1,703,016 1,677,273 1,590,855 1,535,582 1,474,993
Public sector finance [3] 1,216,326 1,286,265 1,481,260 1,532,899 1,583,066
Total C&I 8,034,108 8,791,024 9,133,454 9,114,999 8,646,272
Residential mortgage 2,152,440 2,006,400 1,862,390 1,691,567 1,558,266
Consumer 233,643 219,052 206,700 195,870 182,461
Loans, total [4] 21,206,177 21,940,636 22,159,535 21,879,511 21,294,550
Securities (taxable) 2,883,367 2,507,384 2,363,059 2,191,333 2,103,768
Securities (non-taxable) 2,163,206 2,122,672 2,029,805 1,964,451 1,951,210
Other interest earning assets 727,511 669,422 610,938 487,696 800,204
Total interest earning assets 26,980,261 27,240,114 27,163,337 26,522,991 26,149,732
Deposits:
Non-interest bearing demand 4,346,518 5,004,907 5,385,939 5,530,334 5,521,538
Interest bearing demand 4,616,658 4,766,298 4,688,343 4,870,544 4,981,415
Savings (including mortgage escrow funds) 2,800,021 2,890,402 2,727,475 2,712,041 2,717,622
Money market 7,691,381 8,035,750 8,304,834 8,577,920 8,382,533
Certificates of deposit 3,237,990 2,766,580 2,559,325 2,158,348 1,943,820
Total deposits and mortgage escrow 22,692,568 23,463,937 23,665,916 23,849,187 23,546,928
Borrowings 2,580,922 2,101,016 1,747,941 852,057 721,642
Stockholders' equity 4,506,537 4,464,403 4,530,334 4,591,770 4,616,660
Tangible common stockholders' equity [1] 2,576,558 2,538,842 2,609,179 2,675,055 2,704,227
[1] See a reconciliation of non-GAAP financial measures beginning on page 20.
[2 ] Loans held for sale mainly includes commercial syndication loans.
[3 ] Asset-based lending, payroll finance, warehouse lending, factored receivables, equipment finance and public sector finance comprise our commercial finance loan portfolio.
[4 ] Includes loans held for sale, but excludes allowance for credit losses.

13


Sterling Bancorp and Subsidiaries
SELECTED FINANCIAL DATA AND PERFORMANCE RATIOS
(unaudited, in thousands, except share and per share data)

As of and for the Quarter Ended
Per Common Share Data March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021
Basic earnings per share $ 0.06 $ 0.25 $ 0.43 $ 0.39 $ 0.51
Diluted earnings per share 0.06 0.25 0.43 0.38 0.50
Adjusted diluted (loss) earnings per share, non-GAAP [1] (0.02 ) 0.29 0.45 0.49 0.51
Dividends declared per common share 0.07 0.07 0.07 0.07 0.07
Book value per common share 22.04 22.35 22.73 23.09 23.28
Tangible book value per common share [1] 12.83 13.17 13.57 13.87 14.08
Shares of common stock o/s 194,460,656 194,458,805 194,458,841 192,923,371 192,567,901
Basic weighted average common shares o/s 196,344,061 193,479,757 193,494,929 193,036,678 191,890,512
Diluted weighted average common shares o/s 196,709,038 193,604,431 193,715,943 193,530,930 192,621,907
Performance Ratios (annualized)
Return on average assets 0.16 % 0.64 % 1.07 % 0.99 % 1.33 %
Return on average equity 1.09 4.40 7.24 6.45 8.54
Return on average tangible assets 0.17 0.68 1.14 1.05 1.42
Return on average tangible common equity 1.90 7.73 12.57 11.07 14.58
Return on average tangible assets, adjusted [1] (0.04 ) 0.79 1.21 1.33 1.42
Return on avg. tangible common equity, adjusted [1] (0.49 ) 9.02 13.37 14.03 14.64
Operating efficiency ratio, as adjusted [1] 42.4 45.1 43.1 43.0 44.3
Analysis of Net Interest Income
Accretion income on acquired loans $ 10,686 $ 10,086 $ 9,172 $ 8,560 $ 8,272
Yield on loans 4.47 % 4.03 % 3.82 % 3.90 % 3.92 %
Yield on investment securities - tax equivalent [2] 2.96 3.05 3.09 2.94 3.02
Yield on interest earning assets - tax equivalent [2] 4.13 3.79 3.63 3.69 3.68
Cost of interest bearing deposits 1.00 0.61 0.40 0.29 0.20
Cost of total deposits 0.81 0.48 0.31 0.22 0.15
Cost of borrowings 2.49 2.26 1.95 3.35 3.97
Cost of interest bearing liabilities 1.19 0.78 0.53 0.43 0.34
Net interest rate spread - tax equivalent basis [2] 2.94 3.01 3.10 3.26 3.34
Net interest margin - GAAP basis 3.16 3.15 3.19 3.33 3.38
Net interest margin - tax equivalent basis [2] 3.21 3.20 3.24 3.38 3.43
Capital
Tier 1 leverage ratio - Company [3] 9.41 % 9.51 % 9.93 % 10.14 % 10.50 %
Tier 1 leverage ratio - Bank only [3] 9.99 10.09 10.48 11.33 11.76
Tier 1 risk-based capital ratio - Bank only [3] 12.19 12.24 12.39 13.38 14.02
Total risk-based capital ratio - Bank only [3] 13.80 13.85 13.86 14.73 15.40
Tangible common equity - Company [ 1] 8.74 8.82 9.15 9.55 9.63
Condensed Five Quarter Income Statement
Interest and dividend income $ 273,527 $ 253,226 $ 244,658 $ 242,610 $ 233,847
Interest expense 61,755 39,927 26,834 20,584 15,933
Net interest income 211,772 213,299 217,824 222,026 217,914
Provision for credit losses 138,280 56,606 30,000 27,500 10,000
Net interest income after provision for credit losses 73,492 156,693 187,824 194,526 207,914
Non-interest income 47,326 26,090 28,225 33,921 32,356
Non-interest expense 114,713 124,881 119,362 133,473 118,165
Income before income tax (benefit) expense 6,105 57,902 96,687 94,974 122,105
Income tax (benefit) expense (8,042 ) 7,110 12,280 18,551 22,955
Net income $ 14,147 $ 50,792 $ 84,407 $ 76,423 $ 99,150
[1] See a reconciliation of non-GAAP financial measures beginning on page 20.
[2] Tax equivalent basis represents interest income earned on tax exempt securities divided by the applicable federal tax rate of 21%.
[3 ] Regulatory capital amounts and ratios are preliminary estimates pending filing of the Company's and Bank's regulatory reports.

14

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

As of and for the Quarter Ended
Allowance for Credit Losses Roll Forward March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021
Balance, beginning of period $ 106,238 $ 326,444 $ 365,489 $ 325,943 $ 326,100
Implementation of CECL accounting standard:
Gross up from purchase credit impaired loans 22,496 -- -- -- --
Transition amount charged to equity 68,088 -- -- -- --
Provision for credit losses - loans 136,577 56,606 31,000 27,500 10,000
Loan charge-offs [1] :
Traditional C&I (298 ) (3,988 ) (1,089 ) (17,757 ) (1,027 )
Asset-based lending (985 ) (1,500 ) (1,297 ) -- --
Payroll finance -- (560 ) -- (730 ) --
Factored receivables (7 ) (3,731 ) (6,893 ) (2,099 ) (4 )
Equipment financing (4,793 ) (7,863 ) (42,128 ) (3,445 ) (2,408 )
Commercial real estate (1,275 ) (11 ) (3,650 ) (3,266 ) (2,933 )
Multi-family -- (154 ) -- (430 ) (3,230 )
ADC (3 ) (1 ) -- (307 ) (5,000 )
Residential mortgage (1,072 ) (702 ) (17,353 ) (23 ) (267 )
Consumer (1,405 ) (172 ) (97 ) (62 ) (391 )
Total charge-offs (9,838 ) (18,682 ) (72,507 ) (28,119 ) (15,260 )
Recoveries of loans previously charged-off [1] :
Traditional C&I 475 116 677 194 468
Payroll finance 9 1 262 38 2
Factored receivables 4 1 185 122 406
Equipment financing 1,105 387 816 217 854
Commercial real estate 60 584 -- 174 487
Multi-family -- 1 -- -- --
Acquisition development & construction 105 -- -- -- --
Residential mortgage -- -- -- 1 37
Consumer 1,125 31 21 30 92
Total recoveries 2,883 1,121 1,961 776 2,346
Net loan charge-offs (6,955 ) (17,561 ) (70,546 ) (27,343 ) (12,914 )
Balance, end of period $ 326,444 $ 365,489 $ 325,943 $ 326,100 $ 323,186
Asset Quality Data and Ratios
Non-performing loans ("NPLs") non-accrual $ 252,205 $ 260,333 $ 180,795 $ 166,889 $ 168,555
NPLs still accruing 1,545 272 56 170 2
Total NPLs 253,750 260,605 180,851 167,059 168,557
Other real estate owned 11,815 8,665 6,919 5,346 5,227
Non-performing assets ("NPAs") $ 265,565 $ 269,270 $ 187,770 $ 172,405 $ 173,784
Loans 30 to 89 days past due $ 69,769 $ 66,268 $ 68,979 $ 72,912 $ 42,165
Net charge-offs as a % of average loans (annualized) 0.13 % 0.32 % 1.27 % 0.50 % 0.25 %
NPLs as a % of total loans 1.17 1.17 0.81 0.76 0.80
NPAs as a % of total assets 0.88 0.87 0.61 0.58 0.58
Allowance for credit losses as a % of NPLs 128.6 140.2 180.2 195.2 191.7
Allowance for credit losses as a % of total loans 1.50 1.64 1.46 1.49 1.53
Special mention loans $ 132,356 $ 141,805 $ 204,267 $ 461,458 $ 494,452
Substandard loans 402,393 415,917 375,427 528,760 590,109
Doubtful loans -- -- -- 304 295
[1 ] There were no charge-offs or recoveries on warehouse lending or public sector finance loans during the periods presented. There were no asset-based lending recoveries during the periods presented.

15

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