STERLING BANCORP - FORM 8-K - EX-99.1 - January 20, 2021

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FOR IMMEDIATE RELEASESTERLING BANCORP CONTACT:
January 20, 2021Emlen Harmon, Senior Managing Director - Investor Relations
212.309.7646
http://www.sterlingbancorp.com
Sterling Bancorp announces results for the fourth quarter and full year 2020. Diluted income per share available to common stockholders in the fourth quarter of $0.38 (as reported) and $0.49 (as adjusted).
Key Performance Highlights
▪Adjusted PPNR excluding accretion income1, 2 of $130.3 million; increased $7.0 million, or 5.7% over linked quarter.
▪Adjusted total revenue1 was $256.1 million; an increase of $10.5 million, or 4.3% over linked quarter.
▪Net interest margin excluding accretion income1 of 3.25%, an increase of 15 basis points (“bps”) over the linked quarter.
▪Earning asset yields increased by six bps to 3.69% while cost of funding liabilities decreased by nine bps to 33 bps.
▪Total commercial loans were $20.0 billion, an increase of 5.5% over a year ago.
▪Total deposits were $23.1 billion, an increase of 3.1% over a year ago.
▪Total core deposits were $21.5 billion, an increase of 4.5% over a year ago.
▪Adjusted non-interest expense1 was $110.1 million, an increase of $4.3 million relative to the linked quarter. Adjusted operating efficiency ratio3 was 43.0%.
▪NPLs decreased by $13.8 million to $167.1 million; ACL / portfolio loans of 1.49% and ACL / NPLs of 195.2%.
▪TCE / TA1 was 9.55% and tangible book value per common share1 was $13.87, an increase of 6.0% over a year ago.
▪Completed $225.0 million subordinated debt capital raise; anticipate redeeming bank subordinated debt in April 2021.
▪Declared dividend per common share of $0.07.
▪Restarted share repurchase program in Q4 2020; with 1.9 million repurchased and 14.7 million available for repurchase under the program; targeting a 50% pay out ratio.
Results for the Three Months ended December 31, 2020 vs. December 31, 2019
($ in thousands except per share amounts)GAAP / As Reported
Non-GAAP / As Adjusted1
12/31/201912/31/2020Change % / bps12/31/201912/31/2020Change % / bps
Total assets$30,586,497 $29,820,138 (2.5)%$30,586,497 $29,820,138 (2.5)%
Total portfolio loans, gross21,440,212 21,848,409 1.9 21,440,212 21,848,409 1.9 
Total deposits22,418,658 23,119,522 3.1 22,418,658 23,119,522 3.1 
PPNR1, 2
145,188 122,474 (15.6)131,380 130,257 (0.9)
Net income available to common104,722 74,457 (28.9)108,855 94,323 (13.3)
Diluted EPS available to common0.52 0.38 (26.9)0.54 0.49 (9.3)
Net interest margin3.37 %3.33 %(4)3.42 %3.38 %(4)
Tangible book value per common share1
$13.09 $13.87 6.0 $13.09 $13.87 6.0 
Results for the Three Months ended December 31, 2020 vs. September 30, 2020
($ in thousands except per share amounts)GAAP / As Reported
Non-GAAP / As Adjusted1
9/30/202012/31/2020Change % / bps9/30/202012/31/2020Change % / bps
PPNR1, 2
$126,687 $122,474 (3.3)$123,286 $130,257 5.7 
Net income available to common82,438 74,457 (9.7)87,682 94,323 7.6 
Diluted EPS available to common0.43 0.38 (11.6)0.45 0.49 8.9 
Net interest margin3.19 %3.33 %14 3.24 %3.38 %14 
Operating efficiency ratio3
48.5 52.1 360 43.1 43.0 (10)
Allowance for credit losses (“ACL”) - loans$325,943 $326,100 — $325,943 $326,100 — 
ACL to portfolio loans1.46 %1.49 %3 1.46 %1.49 %3 
ACL to NPLs180.2 195.2 15 180.2 195.2 15 
Tangible book value per common share1
$13.57 $13.87 2.2 $13.57 $13.87 2.2 


1. Non-GAAP / as adjusted measures are defined in the non-GAAP tables beginning on page 18.
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 20 for an explanation of the operating efficiency ratio.

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PEARL RIVER, N.Y. – January 20, 2021 – Sterling Bancorp (NYSE: STL) (the “Company”), the parent company of Sterling National Bank (the “Bank”), today announced results for the three months and year ended December 31, 2020. Net income available to common stockholders for the three months ended December 31, 2020 was $74.5 million, or $0.38 per diluted share, compared to net income available to common stockholders of $82.4 million, or $0.43 per diluted share, for the linked quarter ended September 30, 2020, and net income available to common stockholders of $104.7 million, or $0.52 per diluted share, for the three months ended December 31, 2019.

Net income available to common stockholders for the year ended December 31, 2020 was $217.9 million, or $1.12 per diluted share, compared to net income available to common stockholders of $419.1 million, or $2.03 per diluted share, for the year ended December 31, 2019.

President’s Comments
Jack Kopnisky, President and Chief Executive Officer, commented: “We experienced a difficult operating environment in 2020, yet I could not be more pleased with our response to these challenges and how well we performed. The dedication of our colleagues, resilience of our business model and high quality of our client relationships is evident in our operating results. We have prioritized supporting our clients, colleagues and communities, and delivered strong profitability and substantial growth in tangible capital and tangible book value per common share.

“We closed 2020 with strong performance in the fourth quarter. Adjusted PPNR excluding accretion income was $130.3 million, an increase of 5.7% relative to the linked quarter. Our adjusted net income available to common stockholders was $94.3 million, or $0.49 per diluted share, which was an increase of four cents per share over the linked quarter. We saw improvements across many of our key profitability metrics, with positive operating leverage in the fourth quarter of 2.5x, adjusted return on average tangible assets of 1.33% and adjusted return on average tangible common equity 14.0%. At December 31, 2020, our tangible book value per common share was $13.87, an increase of 6.0% over last year.

“We continued to focus on those business segments that deliver the most attractive risk-adjusted returns. At December 31, 2020, our total core deposits were $21.5 billion, which represented growth of $934.1 million, or 4.5%, over last year. Our loan pipelines and origination activity increased significantly in the fourth quarter, and we anticipate this will continue in the first quarter of 2021. Total commercial loans grew to $20.0 billion, an increase of 5.5% over the same period a year ago. Most importantly, we effectively managed our interest rate margin by substantially reducing our funding costs and protecting our earning asset yields. Our net interest income was $222.0 million in the fourth quarter, an increase of $4.2 million relative to the linked quarter, and our tax equivalent net interest margin excluding accretion income was 3.25%, an increase of 15 basis points.

“In our fee-based businesses, client activity and transaction volumes are beginning to recover. In the fourth quarter, total non-interest income was $33.9 million, which included a gain of $3.7 million on the sale of commercial loans related to the Paycheck Protection Program (“PPP”) program. We anticipate fee revenue will return to pre-pandemic levels as business activity continues to recover in our factoring, payroll finance, syndications and cash management businesses.

“In the fourth quarter, our adjusted non-interest expenses were $110.1 million and our adjusted operating efficiency ratio was 43.0%. Given the improving economic outlook, we are making targeted investments in technology through Brio Direct, Banking as a Service and other digital platforms. We are also investing in our business development functions, including hires in key commercial areas that include syndications, innovation finance, treasury management and small business. We are investing for the future, and are confident that these investments will drive scalable and efficient growth in our business and revenues.

“Asset quality performance was also strong and in-line with our expectations. As of December 31, 2020, the majority of our clients on loan payment deferrals had resumed making payments; total loan payment deferrals decreased to $208.4 million and were 1.0% of total portfolio loans. Total net charge-offs in the fourth quarter were $27.3 million, which included adjusting the carrying value of our remaining taxi medallion relationships. We anticipate we will sell or exit the remaining taxi medallion balances in the first quarter of 2021. As of December 31, 2020, our allowance for credit losses - portfolio loans was $326.1 million, or 1.49% of total loans and 195.2% of non-performing loans.

“We have a strong capital position. Our tangible common equity to tangible assets ratio increased 40 basis points in the fourth quarter to 9.55% and our Tier 1 leverage ratio was 10.13%. We declared our regular dividend of $0.07 on our common stock, payable on February 16, 2021 to holders of record as of February 1, 2021. We restarted our stock repurchase program in Q4 2020 and repurchased 1.9 million shares. The program had 14.7 million shares available for repurchase as of December 31, 2020.

“Finally, I would like to thank our clients, shareholders, and colleagues, all of whom have exhibited extraordinary resilience through these trying times. The dedication and hard work of our colleagues positions us well to emerge from these events as a better company and take advantage of the significant opportunities in front of us in 2021.”



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Reconciliation of GAAP Results to Adjusted Results (non-GAAP)
The Company’s GAAP net income available to common stockholders of $74.5 million, or $0.38 per diluted share, for the fourth quarter of 2020, included the following items:
▪a pre-tax loss of $111 thousand on the sale of investment securities;
▪a pre-tax charge of $13.3 million related to the sale and disposition of nine financial centers and two back office locations;
▪a pre-tax charge of $2.7 million related to the repayment of FHLB borrowings and a portion of the subordinated notes - Bank; and
▪the pre-tax amortization of non-compete agreements and acquired customer list intangible assets of $172 thousand.
Excluding the impact of these items, adjusted net income available to common stockholders was $94.3 million, or $0.49 per diluted share, for the three months ended December 31, 2020. Our effective income tax rate for the full year 2020 was 13.5%, which is the tax rate we use to calculate our adjusted earnings in the three months ended December 31, 2020.
For the year ended December 31, 2020, our GAAP net income available to common stockholders was $217.9 million, or $1.12 per diluted share. Our adjusted net income available to common stockholders was $234.1 million, or $1.20 per diluted share. Adjusted earnings for the year ended December 31, 2020, are calculated using our effective income tax rate of 13.5%
Non-GAAP financial measures include the terms “adjusted” or “excluding”. See the reconciliation of the Company’s non-GAAP financial measures beginning on page 18.
Net Interest Income and Margin
($ in thousands)For the three months endedChange % / bps
12/31/20199/30/202012/31/2020Y-o-YLinked Qtr
Interest and dividend income$295,474 $244,658 $242,610 (17.9)%(0.8)%
Interest expense67,217 26,834 20,584 (69.4)(23.3)
Net interest income$228,257 $217,824 $222,026 (2.7)1.9 
Accretion income on acquired loans$19,497 $9,172 $8,560 (56.1)%(6.7)%
Yield on loans4.84 %3.82 %3.90 %(94)8 
Tax equivalent yield on investment securities4
2.89 3.09 2.94 5 (15)
Tax equivalent yield on interest earning assets4
4.41 3.63 3.69 (72)6 
Cost of total deposits0.89 0.31 0.22 (67)(9)
Cost of interest bearing deposits1.10 0.40 0.29 (81)(11)
Cost of borrowings2.38 1.95 3.35 97 140 
Cost of interest bearing liabilities1.28 0.53 0.43 (85)(10)
Total cost of funding liabilities5
1.06 0.42 0.33 (73)(9)
Tax equivalent net interest margin6
3.42 3.24 3.38 (4)14 
Average commercial loans
$18,473,473 $20,090,445 $19,992,074 8.2 %(0.5)%
Average loans, including loans held for sale
21,000,949 22,159,535 21,879,511 4.2 (1.3)
Average cash balances
573,861 424,249 331,587 (42.2)(21.8)
Average investment securities
5,064,936 4,392,864 4,155,784 (17.9)(5.4)
Average total interest earning assets
26,901,439 27,163,337 26,522,991 (1.4)(2.4)
Average deposits and mortgage escrow
22,289,097 23,665,916 23,849,187 7.0 0.8 

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.

Fourth quarter 2020 compared with fourth quarter 2019
Net interest income was $222.0 million for the quarter ended December 31, 2020, a decrease of $6.2 million compared to the

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fourth quarter of 2019. This was mainly due to a decline in accretion income on acquired loans. Other key components of changes in net interest income were the following:
▪The tax equivalent yield on interest earning assets decreased 72 basis points to 3.69% mainly due to lower accretion income on acquired loans and changes in market rates of interest.
▪The yield on loans was 3.90% compared to 4.84% for the three months ended December 31, 2019. The decrease in yield on loans was mainly due to the decline in market interest rates. Accretion income on acquired loans was $8.6 million in the fourth quarter of 2020, compared to $19.5 million in the fourth quarter of 2019.
▪The tax equivalent yield on investment securities was 2.94% compared to 2.89% for the three months ended December 31, 2019. Average investment securities were $4.2 billion, or 15.7%, of average total interest earning assets for the fourth quarter of 2020 compared to $5.1 billion, or 18.8%, of average total interest earning assets for the fourth quarter of 2019. The increase in yield was mainly due to an increase in corporate securities in 2020.
▪In the fourth quarter of 2020, average cash balances were $331.6 million compared to $573.9 million in the fourth quarter of 2019. In the fourth quarter of 2019, we maintained higher cash prior to the completion of an equipment finance portfolio acquisition.
▪Total interest expense was $20.6 million, a decline of $46.6 million compared to the fourth quarter of 2019. This was mainly due to lower interest expense paid on deposits and repayment of higher cost FHLB borrowings.
▪The cost of total deposits was 22 basis points for the fourth quarter of 2020 compared to 89 basis points for the same period a year ago. The decrease was mainly due to deposit pricing strategies we implemented in response to the declining interest rate environment.
▪The cost of borrowings was 3.35% for the fourth quarter of 2020 compared to 2.38% for the same period a year ago. The increase was mainly due to the change in composition of our borrowings. We repaid the majority of our FHLB borrowings during the year, which left a higher relative amount of longer term borrowings, which have higher interest coupons.
▪The total cost of interest bearing liabilities was 0.43% for the fourth quarter of 2020 compared to 1.28% 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 interest bearing deposits increased $391.4 million during the fourth quarter of 2020 compared to the same period a year ago, due to growth generated by our commercial banking teams and financial centers. Average borrowings decreased $2.0 billion compared to the fourth quarter of 2019.

Fourth quarter 2020 compared with linked quarter ended September 30, 2020
Net interest income increased $4.2 million for the quarter ended December 31, 2020 compared to the linked quarter. The increase was mainly due to a decrease in interest expense. Other key components of the changes in net interest income were the following:
▪The tax equivalent net interest margin was 3.38% compared to 3.24% in the linked quarter. Excluding accretion income on acquired loans, tax equivalent net interest margin increased 15 basis points to 3.25%.
▪The yield on loans was 3.90% compared to 3.82% for the linked quarter. The increase was mainly due to prepayment penalties on multi-family loans and resolution of residential mortgage loans that were under forbearance. Accretion income on acquired loans decreased $612 thousand to $8.6 million for the fourth quarter of 2020.
▪The tax equivalent yield on interest earning assets was 3.69% compared to 3.63% in the linked quarter mainly due to higher prepayment penalties on multi-family loans and recognition of interest income on loans in which we deferred income recognition while under CARES Act forbearance.
▪The cost of total deposits decreased nine basis points to 22 basis points, mainly due to deposit pricing strategies we implemented in response to the declining interest rate environment.
▪Total interest expense decreased $6.3 million from the linked quarter as a result of continued repricing of deposits and repayment of higher cost FHLB borrowings.
▪The average balance of commercial loans decreased $98.4 million and the average balance of residential mortgage loans declined $170.8 million.
▪The total balance of PPP loans was $142.8 million at the end of the year. We recognized $846 thousand in PPP loan fees as interest income in the fourth quarter of 2020, compared to $1.5 million in the linked quarter.
▪The tax equivalent yield on investment securities was 2.94% compared to 3.09% for the linked quarter. The decrease in yield was mainly due to premium amortization recognized in the linked quarter related to accelerated repayments on mortgage-backed securities.
▪The total cost of borrowings increased 140 basis points to 3.35%, mainly due to the change in mix of borrowings as we

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repaid FHLB borrowings and issued $225.0 million of subordinated notes in the period. We anticipate we will redeem the subordinated notes - Bank in April 2021.
▪Average deposits and mortgage escrow increased by $183.3 million and average borrowings decreased by $895.9 million relative to the linked quarter.

Non-interest Income
($ in thousands)For the three months endedChange %
12/31/20199/30/202012/31/2020Y-o-YLinked Qtr
Deposit fees and service charges$6,506 $5,960 $5,975 (8.2)%0.3 %
Accounts receivable management / factoring commissions and other related fees6,572 5,393 6,498 (1.1)%20.5 %
Bank owned life insurance (“BOLI”)4,770 5,363 4,961 4.0 %(7.5)%
Loan commissions and fees8,698 7,290 13,220 52.0 %81.3 %
Investment management fees1,597 1,735 1,700 6.4 %(2.0)%
Net (loss) gain on sale of securities(76)642 (111)46.1 %(117.3)%
(Loss) on termination of pension plan(280)— — NMNM
Other4,594 1,842 1,678 (63.5)%(8.9)%
  Total non-interest income32,381 28,225 33,921 4.8 %20.2 %
Net (loss) gain on sale of securities(76)642 (111)46.1 %(117.3)%
(Loss) on termination of pension plan(280)— — NMNM
  Adjusted non-interest income
$32,737 $27,583 $34,032 4.0 %23.4 %

Fourth quarter 2020 compared with fourth quarter 2019
Adjusted non-interest income increased $1.3 million in the fourth quarter of 2020 to $34.0 million, compared to $32.7 million in the same quarter last year. The increase was mainly due to the gain on sale of PPP loans of $3.7 million, and an increase in income received on operating leases that were acquired in the equipment portfolio transaction in the fourth quarter of 2019.
Loan swap fees, which are included in other income, declined $2.6 million due to lower transaction volumes.
In the fourth quarter of 2019, we realized a loss on termination of a pension plan of $280 thousand.
Fourth quarter 2020 compared with linked quarter ended September 30, 2020
Adjusted non-interest income increased approximately $6.4 million relative to the linked quarter to $34.0 million. The increase was primarily a result of increased transactional activity in our account receivable management business and an increase in loan commissions and fees, which increased $5.9 million relative to the linked quarter. This increase includes $3.7 million of gain from sale of PPP loans, gain from sale of Main Street Lending Program of $370 thousand, an increase of $1.0 million in loan syndication fees and an increase in operating lease revenues.

In the fourth quarter of 2020, we realized a loss of $111 thousand on sale of securities compared to a gain of $642 thousand in the third quarter of 2020.


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Non-interest Expense
($ in thousands)For the three months endedChange % / bps
12/31/20199/30/202012/31/2020Y-o-YLinked Qtr
Compensation and benefits$52,453 $55,960 $56,563 7.8 %1.1 %
Stock-based compensation plans5,180 5,869 5,222 0.8 (11.0)
Occupancy and office operations15,886 14,722 14,742 (7.2)0.1 
Information technology
9,313 8,422 9,559 2.6 13.5 
Amortization of intangible assets
4,785 4,200 4,200 (12.2)— 
FDIC insurance and regulatory assessments
3,134 3,332 2,865 (8.6)(14.0)
Other real estate owned (“OREO”), net
(132)151 283 (314.4)87.4 
Impairment related to financial centers and real estate consolidation strategy— — 13,311 NMNM
Charge for asset write-downs, systems integration, retention and severance
5,133 — — NM NM
Loss on extinguishment of borrowings
— 6,241 2,749 — (56.0)
Other expenses
19,698 20,465 23,979 21.7 17.2 
Total non-interest expense
$115,450 $119,362 $133,473 15.6 11.8 
Full time equivalent employees (“FTEs”) at period end
1,639 1,466 1,460 (10.9)(0.4)
Financial centers at period end82 78 76(7.3)(2.6)
Operating efficiency ratio, as reported8
44.3 %48.5 %52.1 %780 360 
Operating efficiency ratio, as adjusted8
39.9 43.1 43.0 310 (10)
8 See a reconciliation of non-GAAP financial measures beginning on page 18.

Fourth quarter 2020 compared with fourth quarter 2019
Total non-interest expense increased $18.0 million relative to the fourth quarter of 2019. Key components of the change in non-interest expense between the periods were the following:
▪Compensation and benefits increased $4.1 million as decreases in financial center personnel were offset by hiring of information technology, risk management and commercial banking personnel. Severance costs for displaced personnel were $1.2 million. Total FTEs declined to 1,460 from 1,639.
▪Occupancy and office operations expense decreased $1.1 million, mainly due to the consolidation of financial centers and other back-office locations. We have consolidated 6 financial centers in the past twelve months.
▪Impairment related to financial centers and real estate consolidation strategy represents loss on sale of financial center and other locations and early termination payments on leased locations.
▪Charge for asset write-downs, systems integration, retention and severance incurred in the fourth quarter of 2019 was related to the equipment finance loan portfolio acquisition.
▪Other expenses increased $4.3 million to $24.0 million, mainly due to $3.1 million of depreciation expense on operating leases acquired in the fourth quarter of 2019. The remainder of the increase was mainly due to an increase in consulting fees related to information technology projects.
Fourth quarter 2020 compared with linked quarter ended September 30, 2020
Total non-interest expense increased $14.1 million to $133.5 million in the fourth quarter of 2020. Key components of the change in non-interest expense were the following:
▪Compensation and benefits increased $603 thousand to $56.6 million in the fourth quarter of 2020. The increase was mainly due to an increase in annual bonus compensation.
▪Information technology increased $1.1 million to $9.6 million. The increase was mainly due to the amortization of investments related to various back-office automation and digital loan and deposit product initiatives.
▪Loss on extinguishment of borrowings in the fourth quarter was incurred in connection with the repayment of $250.0 million of FHLB advances and $30.0 million of subordinated notes - Bank. In the linked quarter, the loss was incurred in connection with the repayment of $450.0 million of FHLB advances.

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▪Other expenses increased by $3.5 million, mainly due to an increase in charitable contributions and other donations, increased operating expenses associated with maintenance of office locations, and a write-down associated with repossessed assets related to foreclosed equipment finance loans.
Taxes
We recorded income tax expense of $18.6 million in the fourth quarter of 2020, compared to income tax expense of $12.3 million in the linked quarter and income tax expense of $27.9 million in the prior year period. For the three months ended December 31, 2020, we recorded income tax expense at an estimated effective income tax rate of 19.5% compared to 12.7% for the three months ended September 30, 2020. The increase in the effective tax rate was mainly due to an adjustment related to a net operating loss carryback benefit we recorded in our 2019 tax return in connection with provisions of the CARES Act. For the three months ended December 31, 2019, we recorded income tax expense at an estimated effective income tax rate of 20.7%.
Our estimated effective income tax rate for full year 2020 prior to discrete items was 13.5%. Discrete items include mainly the impact of vesting of stock-based compensation, adjustments to our estimates related to the amount of available net loss carryback available under the CARES Act, and our accrual for uncertain tax positions. Our actual estimated income tax rate for the full year 2020 after discrete items was 11.7%.

Key Balance Sheet Highlights as of December 31, 2020
($ in thousands)As of Change % / bps
12/31/20199/30/202012/31/2020Y-o-YLinked Qtr
Total assets$30,586,497 $30,617,722 $29,820,138 (2.5)%(2.6)%
Total portfolio loans, gross21,440,212 22,281,940 21,848,409 1.9 (1.9)
Commercial & industrial (“C&I”) loans
8,232,719 9,331,717 9,160,268 11.3 (1.8)
Commercial real estate loans (including multi-family)
10,295,518 10,377,282 10,238,650 (0.6)(1.3)
Acquisition, development and construction (“ADC”) loans
467,331 633,166 642,943 37.6 1.5 
Total commercial loans 18,995,568 20,342,165 20,041,861 5.5 (1.5)
Residential mortgage loans2,210,112 1,739,563 1,616,641 (26.9)(7.1)
Loan portfolio composition:
Commercial & industrial (“C&I”) loans
38.4 %41.9 %41.9 %350 — 
Commercial real estate loans (including multi-family)
48.0 46.6 46.9 (110)30 
Acquisition, development and construction (“ADC”) loans
2.2 2.8 2.9 70 10 
Residential and consumer11.4 8.7 8.3 (310)(40)
BOLI$613,848 $625,236 $629,576 2.6 0.7 
Core deposits9
20,548,459 22,563,276 21,482,525 4.5 (4.8)
Total deposits22,418,658 24,255,333 23,119,522 3.1 (4.7)
Municipal deposits (included in core deposits)1,988,047 2,397,072 1,648,945 (17.1)(31.2)
Investment securities, net5,075,309 4,201,350 4,039,456 (20.4)(3.9)
Total borrowings2,885,958 993,535 1,321,714 (54.2)33.0 
Loans to deposits95.6 %91.9 %94.5 %(110)260 
Core deposits9 to total deposits
91.7 93.0 92.9 120 (10)
Investment securities, net to earning assets
18.8 15.6 15.4 (340)(20)
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 in balance sheet items as of December 31, 2020 were the following:
▪C&I loans includes traditional C&I, PPP, asset-based lending, payroll finance, warehouse lending, factored receivables, equipment financing and public sector finance loans. C&I loans and commercial real estate loans represented 88.8% of our loan portfolio at December 31, 2020 compared to 86.4% a year ago. Residential and consumer loans are now less than 10% of our total portfolio loans. During the year, we have continued to experience run-off of broker originated multi-family

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loans, which resulted in the decline in the proportion of commercial real estate loans. 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 $1.6 billion at December 31, 2020, a decline of $122.9 million from the linked quarter and a decline of $593.5 million from the same period a year ago. In the third quarter of 2020, we sold non-performing residential mortgage loans with a net book value of $53.2 million.
▪Core deposits at December 31, 2020 were $21.5 billion and decreased $1.1 billion compared to September 30, 2020, and increased $934.1 million compared to December 31, 2019. The decline in the fourth quarter of both core deposits and total deposits was mainly due to expected seasonal outflows of municipal deposits. Money market balances declined $247.2 million as certain institutional non-relationship balances were withdrawn. The growth compared to December 31, 2019 in both core deposits and total deposits was mainly due to successful commercial banking and financial center deposit gathering strategies and the increase in balances that has occurred since the outset of the pandemic.
▪Total deposits at December 31, 2020 decreased $1.1 billion compared to September 30, 2020, and total deposits increased $700.9 million compared to December 31, 2019. The decrease over the linked quarter and the increase compared to December 31, 2019 was mainly due to the same factors as discussed in relation to the change in core deposits.
▪Municipal deposits at December 31, 2020 were $1.6 billion, a decrease of $748.1 million relative to September 30, 2020. Municipal deposits reach their peak at the end of the third quarter in connection with seasonal tax collections by local municipalities.
▪Investment securities, net decreased by $161.9 million from September 30, 2020 and $1.0 billion from December 31, 2019, and represented 15.4% of earning assets at December 31, 2020. The decline is consistent with our goal in the current interest rate environment of investment securities representing approximately 15.0% of earning assets.
▪Total borrowings at December 31, 2020 were $1.3 billion, an increase of $328.2 million relative to September 30, 2020 and a decrease of $1.6 billion relative to December 31, 2019. The increase was mainly due to the issuance of $225.0 million of Subordinated notes. We anticipate a portion of these proceeds will be used to redeem the subordinated notes - Bank in April 2021. Compared to December 31, 2019, the sale of securities and deposit inflows allowed us to reduce borrowings.

Credit Quality
($ in thousands)For the three months endedChange % / bps
12/31/20199/30/202012/31/2020Y-o-YLinked Qtr
Provision for credit losses$10,585 $31,000 $27,500 159.8 %(11.3)%
Net charge-offs9,082 70,546 27,343 201.1 (61.2)
Allowance for credit losses (“ACL”) - loans
106,238 325,943 326,100 207.0 — 
Loans 30 to 89 days past due accruing
52,880 68,979 72,912 37.9 5.7 
Non-performing loans
179,161 180,851 167,059 (6.8)(7.6)
Annualized net charge-offs to average loans
0.17 %1.27 %0.50 %33 (77)
Special mention loans159,976 204,267 461,458 188.5 125.9 
Substandard loans295,428 375,427 528,760 79.0 40.8 
ACL - loans to total loans
0.50 1.46 1.49 99 3 
ACL - loans to non-performing loans
59.3 180.2 195.2 13,590 1,500 
For the three months ended December 31, 2020, provision for credit losses on portfolio loans was $27.5 million, which was $157 thousand greater than net charge-offs. The provision for credit losses was based on our reasonable and supportable forecasts of future macroeconomic scenarios used to estimate expected credit losses. ACL - loans was $326.1 million, or 1.49% of total portfolio loans compared to 1.46% at September 30, 2020, and increased to 195.2% of non-performing loans from 180.2% at September 30, 2020.
Net charge-offs were $27.3 million in the fourth quarter of 2020 and consisted mainly of charge-offs related to taxi medallion, asset-based lending, factored receivables, traditional C&I and commercial real estate loans.
Non-performing loans declined by $13.8 million to $167.1 million at December 31, 2020 compared to the linked quarter. Loans 30 to 89 days past due were $72.9 million, an increase of $3.9 million from the linked quarter.
Special mention loans increased $257.2 million compared to the linked quarter. Substandard loans, which include non-performing loans, increased $153.3 million relative to the linked quarter. The increase was mainly due to CRE and multi-family

8

loans and the majority of these loans are related to borrowers that previously requested payment forbearance under the CARES Act. As of December 31, 2020, loan payment deferrals were $208.4 million, or 1.0% of the total portfolio loans.
Capital
($ in thousands, except share and per share data)
As ofChange % / bps
12/31/20199/30/202012/31/2020Y-o-YLinked Qtr
Total stockholders’ equity$4,530,113 $4,557,785 $4,590,514 1.3 %0.7 %
Preferred stock
137,581 136,917 136,689 (0.6)(0.2)
Goodwill and other intangible assets
1,793,846 1,781,246 1,777,047 (0.9)(0.2)
Tangible common stockholders’ equity 10
$2,598,686 $2,639,622 $2,676,778 3.0 1.4 
Common shares outstanding198,455,324 194,458,841 192,923,371 (2.8)(0.8)
Book value per common share$22.13 $22.73 $23.09 4.3 1.6 
Tangible book value per common share 10
13.09 13.57 13.87 6.0 2.2 
Tangible common equity as a % of tangible assets 10
9.03 %9.15 %9.55 %52 40 
Est. Tier 1 leverage ratio - Company9.55 9.93 10.13 58 20 
Est. Tier 1 leverage ratio - Company fully implemented— 9.59 9.80 N/A21 
Est. Tier 1 leverage ratio - Bank
10.11 10.48 11.33 122 85 
Est. Tier 1 leverage ratio - Bank fully implemented— 10.13 11.01 N/A88 
 10 See a reconciliation of non-GAAP financial measures beginning on page 18.

Total stockholders’ equity increased $32.7 million as of December 31, 2020 compared to September 30, 2020 to $4.6 billion. For the fourth quarter of 2020, net income of $76.4 million and stock-based compensation activity that totaled $5.6 million was partially offset by common stock repurchases of $30.6 million, common dividends of $13.5 million, preferred dividends of $2.2 million, and other comprehensive loss of $3.1 million.

We elected the five-year transition provision to delay for two years the full impact of the Current Expected Credit Losses (“CECL”) methodology on regulatory capital, followed by a three-year transition period. The December 31, 2020 fully implemented ratio data reflects the full impact of CECL and excludes the benefits of phase-ins.

Total goodwill and other intangible assets were $1.8 billion at December 31, 2020, a decrease of $4.2 million compared to September 30, 2020, which was due to amortization.

Diluted weighted average common shares outstanding declined relative to the linked quarter by approximately 185 thousand. Total common shares outstanding at December 31, 2020 were approximately 192.9 million.

Tangible book value per common share was $13.87 at December 31, 2020, which represented an increase of 6.0% compared to a year ago.

Conference Call Information
Sterling Bancorp will host a teleconference and webcast on Thursday, January 21, 2021 at 8:00 AM Eastern Time to discuss the Company’s results. Analysts, investors and interested parties are invited to listen to the webcast and view accompanying slides on the Company’s website at www.sterlingbancorp.com or by dialing (888) 394-8218 Conference ID 5798619. A replay of the teleconference can be accessed through the Company’s website.

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 “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may concern Sterling Bancorp’s current expectations about its future results, revenues, expenses, tax rates, capital and liquidity levels and ratios, asset levels, asset quality, financial position, plans, operations and prospects. Forward-looking statements involve certain risks, including the effects of the novel coronavirus disease (COVID-19), which include, but are not limited to, the federal, state and local government actions and reactions to COVID-19, the health of our staff and that of our clients, the continuity of our, our clients’ and our third party providers’ operations, the increased likelihood of cyber and payment fraud risk, the continued ability of our borrowers to repay their loans throughout and following the pandemic, the potential decline in collateral values resulting from COVID-19 and its effects, and the resulting impact upon our financial position, results of operations, cash flows and our outlook, as well as the following: business disruption; a failure to grow revenues faster than we grow expenses; a deterioration in general economic conditions, either nationally, internationally, or in our market areas, including extended declines in the real estate market and constrained financial markets; inflation; the effects of, and changes in, trade; changes in asset quality and credit risk; introduction, withdrawal, success and timing of business initiatives; capital management activities; customer disintermediation; and the success of Sterling Bancorp in managing those risks. Other factors that could cause Sterling Bancorp’s actual results to differ from those indicated in forward-looking statements are included in the “Risk Factors” section of Sterling Bancorp’s filings with the Securities and Exchange Commission. The forward-looking statements speak only as of the date they are made and we undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.

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 Annual Report on Form 10-K for the twelve months ended December 31, 2020. 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 Annual Report on Form 10-K 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.

10

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


12/31/20199/30/202012/31/2020
Assets:
Cash and cash equivalents$329,151 $437,558 $305,002 
Investment securities, net5,075,309 4,201,350 4,039,456 
Loans held for sale8,125 36,826 11,749 
Portfolio loans:
Commercial and industrial (“C&I”)8,232,719 9,331,717 9,160,268 
Commercial real estate (including multi-family)10,295,518 10,377,282 10,238,650 
Acquisition, development and construction (“ADC”) loans467,331 633,166 642,943 
Residential mortgage2,210,112 1,739,563 1,616,641 
Consumer234,532 200,212 189,907 
Total portfolio loans, gross21,440,212 22,281,940 21,848,409 
Allowance for credit losses(106,238)(325,943)(326,100)
Total portfolio loans, net21,333,974 21,955,997 21,522,309 
FHLB and Federal Reserve Bank Stock, at cost
251,805 167,293 166,190 
Accrued interest receivable100,312 102,379 97,505 
Premises and equipment, net227,070 217,481 202,555 
Goodwill1,683,482 1,683,482 1,683,482 
Other intangibles110,364 97,764 93,565 
BOLI613,848 625,236 629,576 
Other real estate owned12,189 6,919 5,347 
Other assets840,868 1,085,437 1,063,402 
Total assets$30,586,497 $30,617,722 $29,820,138 
Liabilities:
Deposits$22,418,658 $24,255,333 $23,119,522 
FHLB borrowings2,245,653 397,000 382,000 
Federal Funds Purchased— — 277,000 
Paycheck Protection Program Lending Facility— 117,497 — 
Other borrowings22,678 35,223 27,101 
Senior notes173,504 — — 
Subordinated notes - Company270,941 270,445 491,910 
Subordinated notes - Bank173,182 173,370 143,703 
Mortgage escrow funds58,316 84,031 59,686 
Other liabilities693,452 727,038 728,702 
Total liabilities26,056,384 26,059,937 25,229,624 
Stockholders’ equity:
Preferred stock137,581 136,917 136,689 
Common stock2,299 2,299 2,299 
Additional paid-in capital3,766,716 3,761,216 3,761,993 
Treasury stock(583,408)(660,312)(686,911)
Retained earnings1,166,709 1,229,799 1,291,628 
Accumulated other comprehensive income40,216 87,866 84,816 
Total stockholders’ equity4,530,113 4,557,785 4,590,514 
Total liabilities and stockholders’ equity$30,586,497 $30,617,722 $29,820,138 
Shares of common stock outstanding at period end198,455,324 194,458,841 192,923,371 
Book value per common share$22.13 $22.73 $23.09 
Tangible book value per common share1
13.09 13.57 13.87 
1 See reconciliation of non-GAAP financial measures beginning on page 18.

11
.
Sterling Bancorp and Subsidiaries                                    
CONSOLIDATED INCOME STATEMENTS
(unaudited, in thousands, except share and per share data)
 For the Quarter EndedFor the Year Ended
12/31/20199/30/202012/31/202012/31/201912/31/2020
Interest and dividend income:
Loans and loan fees$256,377 $213,009 $214,522 $1,029,369 $882,874 
Securities taxable20,367 18,623 15,679 94,823 73,786 
Securities non-taxable13,031 12,257 11,839 55,802 49,924 
Other earning assets5,699 769 570 22,546 7,437 
Total interest and dividend income295,474 244,658 242,610 1,202,540 1,014,021 
Interest expense:
Deposits49,907 18,251 13,417 192,361 105,559 
Borrowings17,310 8,583 7,167 91,256 43,541 
Total interest expense67,217 26,834 20,584 283,617 149,100 
Net interest income228,257 217,824 222,026 918,923 864,921 
Provision for credit losses - loans10,585 31,000 27,500 45,985 251,683 
Provision for credit losses - held to maturity securities— (1,000)— — 703 
Net interest income after provision for credit losses217,672 187,824 194,526 872,938 612,535 
Non-interest income:
Deposit fees and service charges6,506 5,960 5,975 26,398 23,903 
Accounts receivable management / factoring commissions and other related fees6,572 5,393 6,498 23,837 21,847 
BOLI4,770 5,363 4,961 20,670 20,292 
Loan commissions and fees8,698 7,290 13,220 24,129 39,537 
Investment management fees1,597 1,735 1,700 7,305 6,660 
Net (loss) gain on sale of securities(76)642 (111)(6,905)9,428 
Net gain on security calls— — — — 4,880 
Gain on sale of residential mortgage loans— — — 8,313 — 
(Loss) gain on termination of pension plan(280)— — 11,817 — 
Other4,594 1,842 1,678 15,301 9,015 
Total non-interest income32,381 28,225 33,921 130,865 135,562 
Non-interest expense:
Compensation and benefits52,453 55,960 56,563 215,766 222,067 
Stock-based compensation plans5,180 5,869 5,222 19,473 23,010 
Occupancy and office operations15,886 14,722 14,742 64,363 59,358 
Information technology9,313 8,422 9,559 35,580 33,311 
Amortization of intangible assets4,785 4,200 4,200 19,181 16,800 
FDIC insurance and regulatory assessments3,134 3,332 2,865 12,660 13,041 
Other real estate owned, net (132)151 283 622 1,719 
Impairment related to financial centers and real estate consolidation strategy— — 13,311 14,398 13,311 
Charge for asset write-downs, systems integration, retention and severance5,133 — — 8,477 — 
Loss (gain) on extinguishment of borrowings— 6,241 2,749 (46)19,462 
Other19,698 20,465 23,979 73,363 90,350 
Total non-interest expense115,450 119,362 133,473 463,837 492,429 
Income before income tax expense134,603 96,687 94,974 539,966 255,668 
Income tax expense27,905 12,280 18,551 112,925 29,899 
Net income106,698 84,407 76,423 427,041 225,769 
Preferred stock dividend1,976 1,969 1,966 7,933 7,883 
Net income available to common stockholders$104,722 $82,438 $74,457 $419,108 $217,886 
Weighted average common shares:
Basic199,719,747 193,494,929 193,036,678 205,679,874 194,084,358 
Diluted200,252,542 193,715,943 193,530,930 206,131,628 194,393,343 
Earnings per common share:
Basic earnings per share$0.52 $0.43 $0.39 $2.04 $1.12 
Diluted earnings per share0.52 0.43 0.38 2.03 1.12 
Dividends declared per share0.07 0.07 0.07 0.28 0.28 

12

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

As of and for the Quarter Ended
End of Period12/31/20193/31/20206/30/20209/30/202012/31/2020
Total assets$30,586,497 $30,335,036 $30,839,893 $30,617,722 $29,820,138 
Tangible assets 1
28,792,651 28,545,390 29,054,447 28,836,476 28,043,091 
Securities available for sale3,095,648 2,660,835 2,620,624 2,419,458 2,298,618 
Securities held to maturity, net1,979,661 1,956,177 1,924,955 1,781,892 1,740,838 
Loans held for sale2
8,125 8,124 44,437 36,826 11,749 
Portfolio loans21,440,212 21,709,957 22,295,267 22,281,940 21,848,409 
Goodwill1,683,482 1,683,482 1,683,482 1,683,482 1,683,482 
Other intangibles110,364 106,164 101,964 97,764 93,565 
Deposits22,418,658 22,558,280 23,600,621 24,255,333 23,119,522 
Municipal deposits (included above)1,988,047 2,091,259 1,724,049 2,397,072 1,648,945 
Borrowings2,885,958 2,598,698 2,582,609 993,535 1,321,714 
Stockholders’ equity4,530,113 4,422,424 4,484,187 4,557,785 4,590,514 
Tangible common equity 1
2,598,686 2,495,415 2,561,599 2,639,622 2,676,778 
Quarterly Average Balances
Total assets30,349,691 30,484,433 30,732,914 30,652,856 30,024,165 
Tangible assets 1
28,569,589 28,692,033 28,944,714 28,868,840 28,244,364 
Loans, gross:
   Commercial real estate (includes multi-family)10,061,625 10,288,977 10,404,643 10,320,930 10,191,707 
ADC459,372 497,009 519,517 636,061 685,368 
C&I:
   Traditional C&I (includes PPP loans)2,399,901 2,470,570 3,130,248 3,339,872 3,155,851 
   Asset-based lending3
1,137,719 1,107,542 981,518 864,075 876,377 
   Payroll finance3
228,501 217,952 173,175 143,579 162,762 
   Warehouse lending3
1,307,645 1,089,576 1,353,885 1,550,425 1,637,507 
   Factored receivables3
258,892 229,126 188,660 163,388 214,021 
   Equipment financing3
1,430,715 1,703,016 1,677,273 1,590,855 1,535,582 
Public sector finance3
1,189,103 1,216,326 1,286,265 1,481,260 1,532,899 
          Total C&I7,952,476 8,034,108 8,791,024 9,133,454 9,114,999 
   Residential mortgage2,284,419 2,152,440 2,006,400 1,862,390 1,691,567 
   Consumer243,057 233,643 219,052 206,700 195,870 
Loans, total4
21,000,949 21,206,177 21,940,636 22,159,535 21,879,511 
Securities (taxable)2,905,545 2,883,367 2,507,384 2,363,059 2,191,333 
Securities (non-taxable)2,159,391 2,163,206 2,122,672 2,029,805 1,964,451 
Other interest earning assets835,554 727,511 669,422 610,938 487,696 
Total interest earning assets26,901,439 26,980,261 27,240,114 27,163,337 26,522,991 
Deposits:
   Non-interest bearing demand4,361,642 4,346,518 5,004,907 5,385,939 5,530,334 
   Interest bearing demand4,359,767 4,616,658 4,766,298 4,688,343 4,870,544 
   Savings (including mortgage escrow funds)2,614,523 2,800,021 2,890,402 2,727,475 2,712,041 
   Money market7,681,491 7,691,381 8,035,750 8,304,834 8,577,920 
   Certificates of deposit3,271,674 3,237,990 2,766,580 2,559,325 2,158,348 
Total deposits and mortgage escrow22,289,097 22,692,568 23,463,937 23,665,916 23,849,187 
Borrowings2,890,407 2,580,922 2,101,016 1,747,941 852,057 
Stockholders’ equity4,524,417 4,506,537 4,464,403 4,530,334 4,591,770 
Tangible common stockholders’ equity 1
2,606,617 2,576,558 2,538,842 2,609,179 2,675,055 
1 See a reconciliation of non-GAAP financial measures beginning on page 18.
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 Data12/31/20193/31/20206/30/20209/30/202012/31/2020
Basic earnings per share$0.52 $0.06 $0.25 $0.43 $0.39 
Diluted earnings per share0.52 0.06 0.25 0.43 0.38 
Adjusted diluted earnings per share, non-GAAP 1
0.54 (0.02)0.29 0.45 0.49 
Dividends declared per common share0.07 0.07 0.07 0.07 0.07 
Book value per common share22.13 22.04 22.35 22.73 23.09 
Tangible book value per common share1
13.09 12.83 13.17 13.57 13.87 
Shares of common stock o/s198,455,324 194,460,656 194,458,805 194,458,841 192,923,371 
Basic weighted average common shares o/s
199,719,747 196,344,061 193,479,757 193,494,929 193,036,678 
Diluted weighted average common shares o/s
200,252,542 196,709,038 193,604,431 193,715,943 193,530,930 
Performance Ratios (annualized)
Return on average assets1.37 %0.16 %0.64 %1.07 %0.99 %
Return on average equity9.18 1.09 4.40 7.24 6.45 
Return on average tangible assets1.45 0.17 0.68 1.14 1.05 
Return on average tangible common equity15.94 1.90 7.73 12.57 11.07 
Return on average tangible assets, adjusted 1
1.51 (0.04)0.79 1.21 1.33 
Return on avg. tangible common equity, adjusted 1
16.57 (0.49)9.02 13.37 14.03 
Operating efficiency ratio, as adjusted 1
39.9 42.4 45.1 43.1 43.0 
Analysis of Net Interest Income
Accretion income on acquired loans$19,497 $10,686 $10,086 $9,172 $8,560 
Yield on loans4.84 %4.47 %4.03 %3.82 %3.90 %
Yield on investment securities - tax equivalent 2
2.89 2.96 3.05 3.09 2.94 
Yield on interest earning assets - tax equivalent 2
4.41 4.13 3.79 3.63 3.69 
Cost of interest bearing deposits1.10 1.00 0.61 0.40 0.29 
Cost of total deposits0.89 0.81 0.48 0.31 0.22 
Cost of borrowings2.38 2.49 2.26 1.95 3.35 
Cost of interest bearing liabilities1.28 1.19 0.78 0.53 0.43 
Net interest rate spread - tax equivalent basis 2
3.13 2.94 3.01 3.10 3.26 
Net interest margin - GAAP basis3.37 3.16 3.15 3.19 3.33 
Net interest margin - tax equivalent basis 2
3.42 3.21 3.20 3.24 3.38 
Capital
Tier 1 leverage ratio - Company 3
9.55 %9.41 %9.51 %9.93 %10.13 %
Tier 1 leverage ratio - Bank only 3
10.11 9.99 10.09 10.48 11.33 
Tier 1 risk-based capital ratio - Bank only 3
12.32 12.19 12.24 12.39 13.38 
Total risk-based capital ratio - Bank only 3
13.63 13.80 13.85 13.86 14.73 
Tangible common equity - Company 1
9.03 8.74 8.82 9.15 9.55 
Condensed Five Quarter Income Statement
Interest and dividend income$295,474 $273,527 $253,226 $244,658 $242,610 
Interest expense67,217 61,755 39,927 26,834 20,584 
Net interest income 228,257 211,772 213,299 217,824 222,026 
Provision for credit losses10,585 138,280 56,606 30,000 27,500 
Net interest income after provision for credit losses217,672 73,492 156,693 187,824 194,526 
Non-interest income32,381 47,326 26,090 28,225 33,921 
Non-interest expense115,450 114,713 124,881 119,362 133,473 
Income before income tax expense134,603 6,105 57,902 96,687 94,974 
Income tax expense (benefit)27,905 (8,042)7,110 12,280 18,551 
Net income $106,698 $14,147 $50,792 $84,407 $76,423 
1 See a reconciliation of non-GAAP financial measures beginning on page 18.
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
(unaudited, in thousands, except share and per share data)


As of and for the Quarter Ended
Allowance for Credit Losses Roll Forward12/31/20193/31/20206/30/20209/30/202012/31/2020
Balance, beginning of period$104,735 $106,238 $326,444 $365,489 $325,943 
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 - loans10,585 136,577 56,606 31,000 27,500 
Loan charge-offs1:
Traditional C&I(470)(298)(3,988)(1,089)(17,757)
Asset-based lending(5,856)(985)(1,500)(1,297)— 
Payroll finance(168)— (560)— (730)
Factored receivables(68)(7)(3,731)(6,893)(2,099)
Equipment financing(1,739)(4,793)(7,863)(42,128)(3,445)
Commercial real estate(583)(1,275)(11)(3,650)(3,266)
Multi-family— — (154)— (430)
ADC— (3)(1)— (307)
Residential mortgage(334)(1,072)(702)(17,353)(23)
Consumer(401)(1,405)(172)(97)(62)
Total charge-offs(9,619)(9,838)(18,682)(72,507)(28,119)
Recoveries of loans previously charged-off1:
Traditional C&I232 475 116 677 194 
Payroll finance5 9 1 262 38 
Factored receivables9 4 1 185 122 
Equipment financing91 1,105 387 816 217 
Commercial real estate— 60 584 — 174 
Multi-family105 — 1 — — 
Acquisition development & construction— 105 — — — 
Residential mortgage5 — — — 1 
Consumer90 1,125 31 21 30 
Total recoveries537 2,883 1,121 1,961 776 
Net loan charge-offs(9,082)(6,955)(17,561)(70,546)(27,343)
Balance, end of period$106,238 $326,444 $365,489 $325,943 $326,100 
Asset Quality Data and Ratios
Non-performing loans (“NPLs”) non-accrual$179,051 $252,205 $260,333 $180,795 $166,889 
NPLs still accruing110 1,545 272 56 170 
Total NPLs179,161 253,750 260,605 180,851 167,059 
Other real estate owned12,189 11,815 8,665 6,919 5,347 
Non-performing assets (“NPAs”)$191,350 $265,565 $269,270 $187,770 $172,406 
Loans 30 to 89 days past due
$52,880 $69,769 $66,268 $68,979 $72,912 
Net charge-offs as a % of average loans (annualized)0.17 %0.13 %0.32 %1.27 %0.50 %
NPLs as a % of total loans0.84 1.17 1.17 0.81 0.76 
NPAs as a % of total assets0.63 0.88 0.87 0.61 0.58 
Allowance for credit losses as a % of NPLs59.3 128.6 140.2 180.2 195.2 
Allowance for credit losses as a % of total loans0.50 1.50 1.64 1.46 1.49 
Special mention loans$159,976 $132,356 $141,805 $204,267 $461,458 
Substandard loans295,428 402,393 415,917 375,427 528,760 
Doubtful loans— — — — 304 
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
Non-GAAP Financial Measures
(unaudited, in thousands, except share and per share data)

 For the Quarter Ended
 September 30, 2020December 31, 2020
 Average
balance		InterestYield/RateAverage
balance		InterestYield/Rate
 (Dollars in thousands)
Interest earning assets:
Traditional C&I and commercial finance loans$9,133,454 $83,415 3.63 %$9,114,999 $83,429 3.64 %
   Commercial real estate (includes multi-family)10,320,930 104,463 4.03 10,191,707 105,193 4.11 
ADC636,061 6,117 3.83 685,368 6,500 3.77 
Commercial loans20,090,445 193,995 3.84 19,992,074 195,122 3.88 
Consumer loans206,700 2,025 3.90 195,870 2,028 4.12 
Residential mortgage loans1,862,390 16,989 3.65 1,691,567 17,372 4.11 
Total gross loans 1
22,159,535 213,009 3.82 21,879,511 214,522 3.90 
Securities taxable2,363,059 18,623 3.14 2,191,333 15,679 2.85 
Securities non-taxable2,029,805 15,515 3.06 1,964,451 14,985 3.05 
Interest earning deposits424,249 154 0.14 331,587 105 0.13 
FHLB and Federal Reserve Bank Stock186,689 615 1.31 156,109 465 1.18 
Total securities and other earning assets5,003,802 34,907 2.78 4,643,480 31,234 2.68 
Total interest earning assets27,163,337 247,916 3.63 26,522,991 245,756 3.69 
Non-interest earning assets3,489,519 3,501,174 
Total assets$30,652,856 $30,024,165 
Interest bearing liabilities:
Demand and savings 2 deposits
$7,415,818 $4,116 0.22 %$7,582,585 $3,230 0.17 %
Money market deposits8,304,834 8,078 0.39 8,577,920 6,065 0.28 
Certificates of deposit2,559,325 6,057 0.94 2,158,348 4,122 0.76 
Total interest bearing deposits18,279,977 18,251 0.40 18,318,853 13,417 0.29 
Other borrowings1,303,849 3,378 1.03 261,787 518 0.79 
Subordinated debentures - Bank173,328 2,360 5.45 168,222 2,293 5.45 
Subordinated debentures - Company270,764 2,845 4.20 422,048 4,356 4.13 
Total borrowings1,747,941 8,583 1.95 852,057 7,167 3.35 
Total interest bearing liabilities20,027,918 26,834 0.53 19,170,910 20,584 0.43 
Non-interest bearing deposits5,385,939 5,530,334 
Other non-interest bearing liabilities708,665 731,151 
Total liabilities26,122,522 25,432,395 
Stockholders’ equity4,530,334 4,591,770 
Total liabilities and stockholders’ equity$30,652,856 $30,024,165 
Net interest rate spread 3
3.10 %3.26 %
Net interest earning assets 4
$7,135,419 $7,352,081 
Net interest margin - tax equivalent221,082 3.24 %225,172 3.38 %
Less tax equivalent adjustment(3,258)(3,146)
Net interest income217,824 222,026 
Accretion income on acquired loans9,172 8,560 
Tax equivalent net interest margin excluding accretion income on acquired loans
$211,910 3.10 %$216,612 3.25 %
Ratio of interest earning assets to interest bearing liabilities
135.6 %138.4 %
1 Average balances include loans held for sale and non-accrual loans. Interest includes prepayment fees and late charges.
2 Includes club accounts and interest bearing mortgage escrow balances.
3 Net interest rate spread represents the difference between the tax equivalent yield on average interest earning assets and the cost of average interest bearing liabilities.
4 Net interest earning assets represents total interest earning assets less total interest bearing liabilities.

16

Sterling Bancorp and Subsidiaries
Non-GAAP Financial Measures
(unaudited, in thousands, except share and per share data)
 For the Quarter Ended
 December 31, 2019December 31, 2020
 Average
balance		InterestYield/RateAverage
balance		InterestYield/Rate
 (Dollars in thousands)
Interest earning assets:
Traditional C&I and commercial finance loans$7,952,476 $97,221 4.85 %$9,114,999 $83,429 3.64 %
   Commercial real estate (includes multi-family)10,061,625 122,435 4.83 10,191,707 105,193 4.11 
ADC459,372 5,924 5.12 685,368 6,500 3.77 
Commercial loans18,473,473 225,580 4.84 19,992,074 195,122 3.88 
Consumer loans243,057 3,290 5.37 195,870 2,028 4.12 
Residential mortgage loans2,284,419 27,507 4.82 1,691,567 17,372 4.11 
Total gross loans 1
21,000,949 256,377 4.84 21,879,511 214,522 3.90 
Securities taxable2,905,545 20,367 2.78 2,191,333 15,679 2.85 
Securities non-taxable2,159,391 16,494 3.06 1,964,451 14,985 3.05 
Interest earning deposits573,861 2,423 1.68 331,587 105 0.13 
FHLB and Federal Reserve Bank stock261,693 3,276 4.97 156,109 465 1.18 
Total securities and other earning assets5,900,490 42,560 2.86 4,643,480 31,234 2.68 
Total interest earning assets26,901,439 298,937 4.41 26,522,991 245,756 3.69 
Non-interest earning assets3,448,252 3,501,174 
Total assets$30,349,691 $30,024,165 
Interest bearing liabilities:
Demand and savings 2 deposits
$6,974,290 $13,670 0.78 %$7,582,585 $3,230 0.17 %
Money market deposits7,681,491 20,867 1.08 8,577,920 6,065 0.28 
Certificates of deposit3,271,674 15,370 1.86 2,158,348 4,122 0.76 
Total interest bearing deposits17,927,455 49,907 1.10 18,318,853 13,417 0.29 
Senior notes173,601 1,369 3.15 — — — 
Other borrowings2,496,546 13,112 2.08 261,787 518 0.79 
Subordinated debentures - Bank173,142 2,358 5.45 168,222 2,293 5.45 
Subordinated debentures - Company47,118 471 4.00 422,048 4,356 4.13 
Total borrowings2,890,407 17,310 2.38 852,057 7,167 3.35 
Total interest bearing liabilities20,817,862 67,217 1.28 19,170,910 20,584 0.43 
Non-interest bearing deposits4,361,642 5,530,334 
Other non-interest bearing liabilities645,770 731,151 
Total liabilities25,825,274 25,432,395 
Stockholders’ equity4,524,417 4,591,770 
Total liabilities and stockholders’ equity$30,349,691 $30,024,165 
Net interest rate spread 3
3.13 %3.26 %
Net interest earning assets 4
$6,083,577 $7,352,081 
Net interest margin - tax equivalent231,720 3.42 %225,172 3.38 %
Less tax equivalent adjustment(3,463)(3,146)
Net interest income228,257 222,026 
Accretion income on acquired loans19,497 8,560 
Tax equivalent net interest margin excluding accretion income on acquired loans
$212,223 3.13 %$216,612 3.25 %
Ratio of interest earning assets to interest bearing liabilities
129.2 %138.4 %
1 Average balances include loans held for sale and non-accrual loans. Interest includes prepayment fees and late charges.
2 Includes club accounts and interest bearing mortgage escrow balances.
3 Net interest rate spread represents the difference between the tax equivalent yield on average interest earning assets and the cost of average interest bearing liabilities.
4 Net interest earning assets represents total interest earning assets less total interest bearing liabilities.
17

Sterling Bancorp and Subsidiaries
Non-GAAP Financial Measures
(unaudited, in thousands, except share and per share data)

The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors. See legend beginning on page 22.
As of and for the Quarter Ended
12/31/20193/31/20206/30/20209/30/202012/31/2020
The following table shows the reconciliation of pretax pre-provision net revenue to adjusted pretax pre-provision net revenue1:
Net interest income$228,257 $211,772 $213,299 $217,824 $222,026 
Non-interest income32,381 47,326 26,090 28,225 33,921 
Total net revenue260,638 259,098 239,389 246,049 255,947 
Non-interest expense115,450 114,713 124,881 119,362 133,473 
PPNR145,188 144,385 114,508 126,687 122,474 
Adjustments:
Accretion income(19,497)(10,686)(10,086)(9,172)(8,560)
Net loss (gain) on sale of securities76 (8,412)(485)(642)111 
Net loss on termination of Astoria defined benefit pension plan280 — — — — 
Loss on extinguishment of debt— 744 9,723 6,241 2,749 
Impairment related to financial centers and real estate consolidation strategy— — — — 13,311 
Charge for asset write-downs, systems integration, retention and severance5,133 — — — — 
Amortization of non-compete agreements and acquired customer list intangible assets200 172 172 172 172 
Adjusted PPNR$131,380 $126,203 $113,832 $123,286 $130,257 


18
Sterling Bancorp and Subsidiaries                                        
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)

    

The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors. See legend beginning on page 22.
As of and for the Quarter Ended
12/31/20193/31/20206/30/20209/30/202012/31/2020
The following table shows the reconciliation of stockholders’ equity to tangible common equity and the tangible common equity ratio2:
Total assets$30,586,497 $30,335,036 $30,839,893 $30,617,722 $29,820,138 
Goodwill and other intangibles(1,793,846)(1,789,646)(1,785,446)(1,781,246)(1,777,047)
Tangible assets28,792,651 28,545,390 29,054,447 28,836,476 28,043,091 
Stockholders’ equity4,530,113 4,422,424 4,484,187 4,557,785 4,590,514 
Preferred stock(137,581)(137,363)(137,142)(136,917)(136,689)
Goodwill and other intangibles(1,793,846)(1,789,646)(1,785,446)(1,781,246)(1,777,047)
Tangible common stockholders’ equity2,598,686 2,495,415 2,561,599 2,639,622 2,676,778 
Common stock outstanding at period end198,455,324 194,460,656 194,458,805 194,458,841 192,923,371 
Common stockholders’ equity as a % of total assets
14.36 %14.13 %14.10 %14.44 %14.94 %
Book value per common share$22.13 $22.04 $22.35 $22.73 $23.09 
Tangible common equity as a % of tangible assets
9.03 %8.74 %8.82 %9.15 %9.55 %
Tangible book value per common share$13.09 $12.83 $13.17 $13.57 $13.87 
The following table shows the reconciliation of reported return on average tangible common equity and adjusted return on average tangible common equity3:
Average stockholders’ equity$4,524,417 $4,506,537 $4,464,403 $4,530,334 $4,591,770 
Average preferred stock
(137,698)(137,579)(137,361)(137,139)(136,914)
Average goodwill and other intangibles
(1,780,102)(1,792,400)(1,788,200)(1,784,016)(1,779,801)
Average tangible common stockholders’ equity
2,606,617 2,576,558 2,538,842 2,609,179 2,675,055 
Net income available to common104,722 12,171 48,820 82,438 74,457 
Net income, if annualized415,473 48,951 196,353 327,960 296,209 
Reported return on avg tangible common equity
15.94 %1.90 %7.73 %12.57 %11.07 %
Adjusted net income (loss) (see reconciliation on page 20)
$108,855$(3,124)$56,926$87,682$94,323
Annualized adjusted net income (loss)431,870 (12,565)228,955 348,822 375,242 
Adjusted return on average tangible common equity
16.57 %(0.49)%9.02 %13.37 %14.03 %
The following table shows the reconciliation of reported return on average tangible assets and adjusted return on average tangible assets4:
Average assets$30,349,691 $30,484,433 $30,732,914 $30,652,856 $30,024,165 
Average goodwill and other intangibles(1,780,102)(1,792,400)(1,788,200)(1,784,016)(1,779,801)
Average tangible assets28,569,589 28,692,033 28,944,714 28,868,840 28,244,364 
Net income available to common104,722 12,171 48,820 82,438 74,457 
Net income, if annualized415,473 48,951 196,353 327,960 296,209 
Reported return on average tangible assets1.45 %0.17 %0.68 %1.14 %1.05 %
Adjusted net income (loss) (see reconciliation on page 20)
$108,855 $(3,124)$56,926 $87,682 $94,323 
Annualized adjusted net income (loss)431,870 (12,565)228,955 348,822 375,242 
Adjusted return on average tangible assets1.51 %(0.04)%0.79 %1.21 %1.33 %

19
Sterling Bancorp and Subsidiaries                                        
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)

    

The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors. See legend beginning on page 22.
As of and for the Quarter Ended
12/31/20193/31/20206/30/20209/30/202012/31/2020
The following table shows the reconciliation of the reported operating efficiency ratio and adjusted operating efficiency ratio5:
Net interest income$228,257 $211,772 $213,299 $217,824 $222,026 
Non-interest income32,381 47,326 26,090 28,225 33,921 
Total revenue260,638 259,098 239,389 246,049 255,947 
Tax equivalent adjustment on securities
3,463 3,454 3,411 3,258 3,146 
Net loss (gain) on sale of securities76 (8,412)(485)(642)111 
Loss on termination of pension plan280 — — — — 
Depreciation of operating leases— (3,492)(3,136)(3,130)(3,130)
Adjusted total revenue264,457 250,648 239,179 245,535 256,074 
Non-interest expense115,450 114,713 124,881 119,362 133,473 
Charge for asset write-downs, systems integration, retention and severance
(5,133)— — — — 
Impairment related to financial centers and real estate consolidation strategy
— — — — (13,311)
Loss on extinguishment of borrowings— (744)(9,723)(6,241)(2,749)
Depreciation of operating leases— (3,492)(3,136)(3,130)(3,130)
Amortization of intangible assets(4,785)(4,200)(4,200)(4,200)(4,200)
Adjusted non-interest expense105,532 106,277 107,822 105,791 110,083 
Reported operating efficiency ratio44.3 %44.3 %52.2 %48.5 %52.1 %
Adjusted operating efficiency ratio39.9 42.4 45.1 43.1 43.0 
The following table shows the reconciliation of reported net income (GAAP) and earnings per share to adjusted net income available to common stockholders (non-GAAP) and adjusted diluted earnings per share(non-GAAP)6:
Income before income tax expense$134,603 $6,105 $57,902 $96,687 $94,974 
Income tax expense (benefit)27,905 (8,042)7,110 12,280 18,551 
Net income (GAAP)106,698 14,147 50,792 84,407 76,423 
Adjustments:
Net loss (gain) on sale of securities76 (8,412)(485)(642)111 
Loss on termination of pension plan280 — — — — 
Loss on extinguishment of debt— 744 9,723 6,241 2,749 
Impairment related to financial centers and real estate consolidation strategy.— — — — 13,311 
Charge for asset write-downs, systems integration, retention and severance
5,133 — — — — 
Amortization of non-compete agreements and acquired customer list intangible assets
200 172 172 172 172 
Total pre-tax adjustments5,689 (7,496)9,410 5,771 16,343 
Adjusted pre-tax income (loss)140,292 (1,391)67,312 102,458 111,317 
Adjusted income tax expense (benefit)29,461 (243)8,414 12,807 15,028 
Adjusted net income (loss) (non-GAAP)
110,831 (1,148)58,898 89,651 96,289 
Preferred stock dividend
1,976 1,976 1,972 1,969 1,966 
Adjusted net income (loss) available to common stockholders (non-GAAP)
$108,855 $(3,124)$56,926 $87,682 $94,323 
Weighted average diluted shares
200,252,542 196,709,038 193,604,431 193,715,943 193,530,930 
Reported diluted EPS (GAAP)$0.52 $0.06 $0.25 $0.43 $0.38 
Adjusted diluted EPS (non-GAAP)
0.54 (0.02)0.29 0.45 0.49 

20
Sterling Bancorp and Subsidiaries                                        
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)

    

The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors. See legend beginning on page 22.
For the Year Ended December 31,
20192020
The following table shows the reconciliation of reported net income (GAAP) and earnings per share to adjusted net income available to common stockholders (non-GAAP) and adjusted diluted earnings per share (non-GAAP)6:
Income before income tax expense$539,966 $255,668 
Income tax expense (benefit)112,925 29,899 
Net income (GAAP)427,041 225,769 
Adjustments:
Net loss (gain) on sale of securities6,905 (9,428)
Net (gain) on termination of pension plan(11,817)— 
Net (gain) on sale or residential mortgage loans(8,313)— 
Impairment related to financial centers and real estate consolidation strategy14,398 13,311 
Charge for asset write-downs, systems integration, retention and severance8,477 — 
(Gain) loss on extinguishment of borrowings(46)19,462 
Amortization of non-compete agreements and acquired customer list intangible assets840 686 
Total pre-tax adjustments10,444 24,031 
Adjusted pre-tax income550,410 279,699 
Adjusted income tax expense115,586 37,759 
Adjusted net income (non-GAAP)$434,824 $241,940 
Preferred stock dividend7,933 7,883 
Adjusted net income available to common stockholders (non-GAAP)$426,891 $234,057 
Weighted average diluted shares206,131,628 194,393,343 
Diluted EPS as reported (GAAP)$2.03 $1.12 
Adjusted diluted EPS (non-GAAP)2.07 1.20 

21
Sterling Bancorp and Subsidiaries                                        
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)

    

The Company provides supplemental reporting of non-GAAP/adjusted financial measures as management believes this information is useful to investors. See legend beginning on page 23.
For the Year Ended December 31,
20192020
The following table shows the reconciliation of reported return on average tangible common equity and adjusted return on average tangible common equity3:
Average stockholders’ equity$4,463,605 $4,523,468 
Average preferred stock(138,007)(137,247)
Average goodwill and other intangibles(1,773,475)(1,786,081)
Average tangible common stockholders’ equity2,552,123 2,600,140 
Net income available to common stockholders$419,108 $217,886 
Reported return on average tangible common equity16.42 %8.38 %
Adjusted net income available to common stockholders (see reconciliation on page 21)
$426,891 $234,057 
Adjusted return on average tangible common equity16.73 %9.00 %
The following table shows the reconciliation of reported return on avg tangible assets and adjusted return on avg tangible assets4:
Average assets$30,138,390 $30,472,854 
Average goodwill and other intangibles(1,773,475)(1,786,081)
Average tangible assets28,364,915 28,686,773 
Net income available to common stockholders419,108 217,886 
Reported return on average tangible assets1.48 %0.76 %
Adjusted net income available to common stockholders (see reconciliation on page 21)
$426,891 $234,057 
Adjusted return on average tangible assets1.51 %0.82 %
The following table shows the reconciliation of the reported operating efficiency ratio and adjusted operating efficiency ratio5:
Net interest income$918,923 $864,921 
Non-interest income130,865 135,562 
Total revenues1,049,788 1,000,483 
Tax equivalent adjustment on securities14,834 13,271 
Net loss (gain) on sale of securities 6,905 (9,428)
Net (gain) on termination of pension plan(11,817)— 
(Gain) on sale of residential mortgage loans(8,313)— 
Depreciation of operating leases— (12,888)
Adjusted total net revenue1,051,397 991,438 
Non-interest expense463,837 492,429 
Charge for asset write-downs, system integration, retention and severance(8,477)— 
Impairment related to financial centers and real estate consolidation strategy(14,398)(13,311)
Gain (loss) on extinguishment of borrowings46 (19,462)
Depreciation of operating leases— (12,888)
Amortization of intangible assets(19,181)(16,800)
Adjusted non-interest expense$421,827 $429,968 
Reported operating efficiency ratio44.2 %49.2 %
Adjusted operating efficiency ratio40.1 %43.4 %


The non-GAAP/as adjusted measures presented above are used by our management and the Company’s Board of Directors on a regular basis in addition to our GAAP results to facilitate the assessment of our financial performance and to assess our performance compared to our annual budget and strategic plans. These non-GAAP/adjusted financial measures complement our GAAP reporting and are presented above
22
Sterling Bancorp and Subsidiaries                                        
NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands, except share and per share data)

    
to provide investors, analysts, regulators and others information that we use to manage and evaluate our performance each period. This information supplements our GAAP reported results, and should not be viewed in isolation from, or as a substitute for, our GAAP results. When non-GAAP/adjusted measures are impacted by income tax expense, we present the pre-tax amount for the income and expense items that result in the non-GAAP adjustments and present the income tax expense impact at the effective tax rate in effect for the period presented.

1 PPNR is a non-GAAP financial measure calculated by summing our GAAP net interest income plus GAAP non-interest income minus our GAAP non-interest expense and eliminating provision for credit losses and income taxes. We believe the use of PPNR provides useful information to readers of our financial statements because it enables an assessment of our ability to generate earnings to cover credit losses through a credit cycle. Adjusted PPNR includes the adjustments we make for adjusted earnings and excludes accretion income. We believe adjusted PPNR supplements our PPNR calculation. We use this calculation to assess our performance in the current operating environment.

2 Stockholders’ equity as a percentage of total assets, book value per common share, tangible common equity as a percentage of tangible assets and tangible book common value per share provides information to help assess our capital position and financial strength. We believe tangible book measures improve comparability to other banking organizations that have not engaged in acquisitions that have resulted in the accumulation of goodwill and other intangible assets.

3 Reported return on average tangible common equity and adjusted return on average tangible common equity measures provide information to evaluate the use of our tangible common equity.

4 Reported return on average tangible assets and adjusted return on average tangible assets measures provide information to help assess our profitability.

5 The reported operating efficiency ratio is a non-GAAP measure calculated by dividing our GAAP non-interest expense by the sum of our GAAP net interest income plus GAAP non-interest income. The adjusted operating efficiency ratio is a non-GAAP measure calculated by dividing non-interest expense adjusted for intangible asset amortization and certain expenses generally associated with discrete merger transactions and non-recurring strategic plans by the sum of net interest income plus non-interest income plus the tax equivalent adjustment on securities income and elimination of the impact of gain or loss on sale of securities. The adjusted operating efficiency ratio is a measure we use to assess our operating performance.

6 Adjusted net income available to common stockholders and adjusted diluted earnings per share present a summary of our earnings, which includes adjustments to exclude certain revenues and expenses (generally associated with discrete merger transactions and non-recurring strategic plans) to help in assessing our profitability.

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