NEW YORK ( TheStreet) -- Following a report on Tuesday of first-quarter earnings rising 71% year-over-year, Sterling Bancorp ( STL) of New York on Wednesday announced U.S. Treasury approval for its plan to fully redeem $42 million in preferred stock held by the government for bailout funds received through the Troubled Assets Relief Program, or TARP, it received in December 2008. The TARP repayment follows the completion of a $38.6 million offering of common shares in March, and Sterling's previous common equity raise of $58.4 million, in a public offering completed last August.
Sterling National Bank president and CEO John Millman
Sterling on Tuesday reported first-quarter net income available to common stockholders of $3.3 million, or 12 cents a share, increasing from $1.9 million, or 10 cents a share, in the first quarter of 2010. The main factor in the earnings improvement was a decline in the bank's provision for loan losses to $3 million from $6 million a year earlier. With first-quarter net charge-offs - loan losses less recoveries -- of $3.2 million, Sterling "released" roughly $200,000 in loan loss reserves. The bank's annualized ratio of net charge-offs to average loans was 1.02% during the first quarter, and reserves covered 1.37% of total loans as of March 31. Nonaccrual loans totaled $7 million as of March 31, declining 59% from a year earlier. Overall asset quality was very strong, with nonperforming assets making up 0.30% of total assets as of March 31. Total loans increased by 7.8% year-over-year, to $1.3 billion as of March 31. Sterling's net interest margin - the difference between its average yield on loans and securities investments and its average cost of funds - decline slightly to 4.90% in the first quarter, from 5.03% a year earlier, "largely due to the effect on interest income of a change in the loan portfolio mix," according to the company. CFO John Tietjen said during the company's earnings conference call that Sterling had, as planned, reduced its leasing portfolio to about $140 million as of March 31, from $179 million in March 2010. Tietjen also said that Sterling was expecting loan growth at an annualized pace of 10% during 2011. Sterling's noninterest income increased to $11.4 million in the first quarter from $11.1 million a year earlier, "primarily due to growth in accounts receivable management, factoring, trade finance and mortgage banking." The company said noninterest income made up 33.5% of total revenue, which was a significant percentage for a community bank.