Key Performance Highlights for the Three Months ended March 31, 2017 vs. March 31, 2016
($ in thousands except per share amounts) GAAP / As Reported   Non-GAAP / As Adjusted 1
  2016   2017   Change  % / bps   2016   2017   Change  % / bps
Total revenue 2 $ 108,940     $ 121,626     11.6 %   $ 111,312     $ 125,751     13.0 %
Net income 23,766     39,067     64.4     32,159     41,461     28.9  
Diluted EPS 0.18     0.29     61.1     0.25     0.31     24.0  
Net interest margin 3 3.46 %   3.42 %   (4 )   3.53 %   3.55 %   2  
Return on average tangible equity 10.18     14.31     413     13.78     15.19     141  
Return on average tangible assets 0.85     1.20     35     1.15     1.27     12  
Operating efficiency ratio 4 63.3     49.6     (1,370 )   48.9     43.7     (520 )
                                   
  • GAAP diluted earnings per share increased by 61.1% and adjusted diluted earnings per share increased by 24.0% relative to the same quarter last year.
  • Annualized loan growth of 10.1% (end of period balances, including acquired loans) and 0.6% (average balances, including acquired loans) over the linked quarter.
  • Weighted average yield on loans for the first quarter of 2017 was 4.57%, which represented an eight basis points increase over the linked quarter.
  • Total deposits increased $183.5 million over the linked quarter mainly due to growth in commercial deposits and seasonal inflows in municipal deposits.  Total commercial and retail demand deposits grew $153.8 million over the linked quarter, or an annualized growth rate of 8.4%.
  • Core deposits 5 increased $281.8 million over the linked quarter and $551.8 million relative to the same quarter a year ago, which represented annualized growth of 13.0% and 6.5%, respectively.
  • The loans to deposits ratio was 95.2% and the weighted average cost of deposits was 0.38%, which represented an increase of two basis points relative to the linked quarter.
  • Total revenue was $121.6 million, a decrease of $1.7 million in the linked quarter due to two fewer days in the period and the sale of the trust division in the fourth quarter of 2016.  Adjusted total revenue increased $739 thousand relative to the linked quarter.
  • Adjusted operating leverage, which is defined as the ratio of growth in adjusted total revenue to growth in adjusted non-interest expense, relative to the same quarter a year ago, was 11.8.
  • Announced definitive agreement to merge with Astoria Financial Corporation ("Astoria") on March 7, 2017.  The merger is expected to create a high performing regional bank focused on serving commercial and consumer clients in the Greater New York metropolitan area.  The combined company will have approximately $29 billion in assets, $20 billion in loans, and $19 billion in deposits.  The transaction is expected to close in the fourth quarter of 2017, subject to stockholder and regulatory approval, and is expected to be immediately accretive to tangible book value and earnings per share.

1. Non-GAAP / as adjusted measures are defined in the non-GAAP tables beginning on page 16.2. Total revenue as adjusted is equal to tax equivalent net interest income plus non-interest income excluding securities gains and losses. 3. Net interest margin as adjusted is equal to net interest margin plus the tax equivalent adjustment for tax exempt securities. 4. See page 17 for an explanation of the operating efficiency ratio. 5. Core deposits include retail, commercial and municipal transaction, money market and savings accounts and exclude certificates of deposit and brokered deposits, except for reciprocal Certificate of Deposit Account Registry balances.

MONTEBELLO, N.Y., April 25, 2017 (GLOBE NEWSWIRE) -- Sterling Bancorp (NYSE:STL) (the "Company"), the parent company of Sterling National Bank (the "Bank"), today announced results for the three months ended March 31, 2017.  Net income for the quarter ended March 31, 2017 was $39.1 million, or $0.29 per diluted share, compared to net income of $41.0 million, or $0.31 per diluted share, for the linked quarter ended December 31, 2016 and net income of $23.8 million, or $0.18 per diluted share, for the first quarter of 2016.

President's CommentsJack Kopnisky, President and Chief Executive Officer, commented: "Our positive momentum in operating performance continued in the first quarter of 2017, as we reached new records in loans, deposits, revenues and adjusted profitability.  As of March 31, 2017, our total assets reached $14.7 billion, compared to $12.9 billion a year ago.  Our total portfolio loans were $9.8 billion, compared to $8.3 billion a year ago and our total deposits were $10.3 billion, compared to $9.3 billion a year ago. We continue to make progress in building a high performing regional bank that focuses on serving commercial middle market clients and consumers in the most attractive markets in the Greater New York metropolitan area.

"We had strong earnings performance in the quarter.  Our GAAP net income was $39.1 million, or $0.29 per diluted share. Our adjusted net income was $41.5 million and adjusted diluted earnings per share were $0.31, compared to $32.2 million and $0.25, respectively, for the first quarter of 2016. This represents growth in adjusted net income and adjusted diluted earnings per share of 28.9% and 24.0%, respectively. We continue to focus on controlling our operating expenses and improving our operating efficiency. During the quarter, our reported operating efficiency ratio was 49.6% and our adjusted operating efficiency ratio was 43.7%.  This represents a decrease of 1,370 and 520 basis points, respectively, relative to the same quarter a year ago.  We also continue to increase our operating leverage as, for the quarter ended March 31, 2017, adjusted total revenues grew 13.0% while adjusted non-interest expenses grew 1.1% relative to the same quarter a year ago.

"We have a strong balance sheet with a loan portfolio that has a balanced mix of 42.8% commercial and industrial loans, 44.8% commercial real estate loans, 2.5% acquisition development and construction loans and 9.9% consumer loans. Our diversified loan portfolio and businesses position us well for a rising interest rate environment.  During the quarter, the weighted average yield on loans was 4.57%, an increase of eight basis points over the linked quarter.  We continue to maintain a strong funding profile with a loans to deposits ratio of approximately 95.2% and a weighted average cost of deposits of 0.38%.  Our net interest margin was 3.55% on a tax equivalent basis, which represented an increase of two basis points over the same period a year ago and three basis points over the linked quarter.

"In March 2017, we announced that we entered into a definitive agreement to merge with Astoria, which is the next step in the continued growth and evolution of our company.  Astoria operates in highly attractive markets in New York City and Long Island, has a premier low cost deposit base and will allow us to further accelerate our strategy of building a high performing regional bank.  The combined company will have approximately $29 billion in assets and $19 billion in deposits in the Greater New York metropolitan area. We anticipate the merger will close in the fourth quarter of 2017, subject to among other items, stockholder and regulatory approvals, and will be immediately accretive to tangible book value and earnings per share.

"Lastly, we have declared a dividend on our common stock of $0.07 per share payable on May 22, 2017 to holders of record as of May 8, 2017. Thank you to all of our clients, colleagues and stockholders for your continued support, and we welcome our new partners at Astoria as we work together to build a stronger, more diversified and more profitable company in 2017 and beyond."

Reconciliation of GAAP Results to Adjusted Results (non-GAAP)GAAP net income of $39.1 million, or $0.29 per diluted share, for the first quarter of 2017, included a pre-tax net loss on sale of securities of $23 thousand, a pre-tax charge of $3.1 million due to merger-related expense associated with the pending merger with Astoria and the pre-tax amortization of non-compete agreements and acquired customer list intangibles of $396 thousand.  Excluding the impact of these items and their corresponding tax adjustment at the Company's estimated effective tax rate of 32.5% for full year 2017, adjusted net income was $41.5 million, or $0.31 per diluted share.

Non-GAAP financial measures include references to the terms "adjusted" or "excluding".  See the reconciliation of the Company's non-GAAP financial measures beginning on page 16.

Net Interest Income and Margin
($ in thousands) For the three months ended   Change % / bps
  3/31/2016   12/31/2016   3/31/2017   Y-o-Y   Linked Qtr
Interest income $ 106,006     $ 123,075     $ 126,000     18.9 %   2.4 %
Interest expense 12,496     15,827     17,210     37.7     8.7  
Net interest income $ 93,510     $ 107,248     $ 108,790     16.3     1.4  
                   
Accretion income on acquired loans $ 5,613     $ 4,504     $ 3,482     (38.0 )%   (22.7 )%
Yield on loans 4.62 %   4.49 %   4.57 %   (5 )   8  
Tax equivalent yield on investment securities 2.65     2.81     2.97     32     16  
Tax equivalent yield on interest earning assets 4.00     4.02     4.09     9     7  
Cost of total deposits 0.29     0.36     0.38     9     2  
Cost of interest bearing deposits 0.44     0.53     0.55     11     2  
Cost of borrowings 1.92     1.72     1.74     (18 )   2  
Tax equivalent net interest margin 3.53     3.52     3.55     2     3  
                   
Average loans, includes loans held for sale $ 7,745,467     $ 9,267,290     $ 9,281,516     19.8 %   0.2 %
Average investment securities 2,733,324     2,973,410     3,273,658     19.8     10.1  
Average total earning assets 10,880,356     12,566,281     12,889,578     18.5     2.6  
Average deposits and mortgage escrow 8,916,617     10,161,022     10,186,615     14.2     0.3  

First quarter 2017 compared with first quarter 2016 Net interest income was $108.8 million, an increase of $15.3 million compared to the first quarter of 2016.  This was mainly due to an increase in average loans originated through our commercial banking teams and the acquisition of NewStar Business Credit LLC ("NSBC Acquisition"), which closed on March 31, 2016, and the franchise finance loan portfolio acquired from GE Capital, which closed in September 2016. Other key components of the changes in net interest income were the following:
  • The yield on loans was 4.57%, compared to 4.62% for the three months ended March 31, 2016.  The decline in yield on loans  was mainly due to lower accretion income on acquired loans between the periods.
  • Yield on loans included $3.5 million of accretion income on loans associated with prior acquisitions compared to $5.6 million in the first quarter of 2016.
  • Average commercial loans were $8.3 billion compared to $6.7 billion in the first quarter of 2016, an increase of $1.6 billion or 24.0%.
  • The tax equivalent yield on investment securities increased 32 basis points to 2.97%.  This was mainly due to an increase in the proportion of  tax exempt securities in the investment portfolio and increase in market interest rates.  Average tax exempt securities balances grew to $1.3 billion for the quarter ended March 31, 2017, compared to $593.8 million in the first quarter of 2016.
  • The tax equivalent yield on interest earning assets increased nine basis points from the first quarter of 2016 to 4.09% for the first quarter of 2017.
  • The cost of total deposits was 38 basis points and the cost of borrowings was 1.74%, compared to 29 basis points and 1.92%, respectively, for the same period a year ago.
  • Tax equivalent net interest margin was 3.55% compared to 3.53% for the same period a year ago. 

First quarter 2017 compared with linked quarter ended December 31, 2016 Net interest income increased $1.5 million, or 5.7% annualized, compared to the linked quarter ended December 31, 2016.  Net interest income performance in the first quarter of 2017 relative to the linked quarter was negatively impacted given there are 90 days in the first quarter compared to 92 days in the linked quarter.  Key components of the changes in net interest income in the linked quarter were the following:
  • The yield on loans was 4.57% compared to 4.49% for the linked quarter, an increase of eight basis points, which was mainly due to an increase in market interest rates.
  • Accretion of income on acquired loans was $3.5 million in the first quarter of 2017 compared to $4.5 million in the linked quarter. 
  • The average balance of loans increased $14.2 million for the first quarter of 2017 compared to the linked quarter. Based on end of period balances, total loans increased by $236.7 million, or 10.1% annualized relative to the linked quarter.  The majority of the loan growth was originated in March 2017; as a result, average loans should increase in the second quarter of 2017.
  • The tax equivalent yield on investment securities increased 16 basis points to 2.97% in the first quarter of 2017.  This was mainly the result of increases in market interest rates and purchases of securities.  Average securities increased $300.2 million compared to the linked quarter, as we have begun to reposition our securities portfolio in anticipation of the merger with Astoria.
  • The tax equivalent yield on interest earning assets increased seven basis points to 4.09% in the quarter. 
  • The cost of total deposits increased two basis points to 38 basis points in the quarter. The total cost of borrowings increased two basis points to 1.74%.
  • Average interest bearing deposits increased by $65.3 million and average borrowings increased $281.7 million relative to the linked quarter, which resulted in an increase of $1.4 million in interest expense.
  • Tax equivalent net interest margin was 3.55% compared to 3.52% in the linked quarter.

Non-interest Income
($ in thousands) For the three months ended   Change %
  3/31/2016   12/31/2016   3/31/2017   Y-o-Y   Linked Qtr
Total non-interest income $ 15,430     $ 16,057     $ 12,836     (16.8 )%   (20.1 )%
Net (loss) gain on sale of securities (283 )   (102 )   (23 )   (91.9 )   NM  
Net gain on sale of trust division     2,255         NM     NM  
Adjusted non-interest income $ 15,713     $ 13,904     $ 12,859     (18.2 )   (7.5 )

First quarter 2017 compared with first quarter 2016 Excluding net (loss) gain on sale of securities, adjusted non-interest income declined $2.9 million in the first quarter of 2017 to $12.9 million compared to $15.7 million in the same quarter last year.  The change was mainly due to a decrease in mortgage banking fee income of $1.7 million resulting from the sale of our residential mortgage originations business, which was completed in the third quarter of 2016; a decrease of $1.2 million in deposit fees and service charges, associated mainly with the impact of the Durbin Amendment, which decreased our interchange revenue effective July 1, 2016; and a decline in investment management fees of $893 thousand, associated mainly with the sale of our trust division in the fourth quarter of 2016.  Partially offsetting these decreases was an increase in other non-interest income of $1.6 million, which was due to an increase in letters of credit fees, higher other commissions and loan fees, syndication fees and loan swap fees mainly generated by our commercial banking teams and the NSBC Acquisition.

First quarter 2017 compared with linked quarter ended December 31, 2016 Excluding net (loss) gain on sale of securities and net gain on sale of the trust division (which was $2.3 million and recorded in other non-interest income for the quarter ended December 31, 2016), adjusted non-interest income decreased $1.0 million from $13.9 million in the linked quarter ended December 31, 2016 to $12.9 million in the first quarter of 2017.  This was mainly due to lower accounts receivable and factoring commissions of $379 thousand given seasonality in the factoring business; lower mortgage banking fee income of $380 thousand as a result of the sale of our residential mortgage originations business; lower investment management fees of $334 thousand due to the sale of the trust division; and lower other non-interest income of $157 thousand due mainly to lower loan participation activity.  These declines were partially offset by an increase in deposit fees and service charges of $168 thousand.

Non-interest Expense
($ in thousands) For the three months ended   Change % / bps
  3/31/2016   12/31/2016   3/31/2017   Y-o-Y   Linked Qtr
Compensation and benefits $ 30,020     $ 32,060     $ 31,391     4.6 %   (2.1 )%
Occupancy and office operations 9,282     8,372     8,134     (12.4 )   (2.8 )
Merger-related expense 265         3,127     NM     NM  
Loss on extinguishment of borrowings 8,716             NM      
Charge for asset write-downs and severance 2,485             NM     NM  
Other real estate owned, net 582     206     1,676     188.0     713.6  
Other expenses 17,581     16,434     16,022     (8.9 )   (2.5 )
Total non-interest expense $ 68,931     $ 57,072     $ 60,350     (12.4 )   5.7  
Full time equivalent employees ("FTEs") at period end 1,078     970     978     (9.3 )   0.8  
Financial centers at period end 48     42     42     (12.5 )    
Efficiency ratio, as reported 63.3 %   46.3 %   49.6 %   1,370     (330 )
Efficiency ratio, as adjusted 48.9     43.3     43.7     520     (40 )

First quarter 2017 compared with first quarter 2016 Total non-interest expense decreased $8.6 million relative to the first quarter of 2016, from $68.9 million to $60.4 million, in the first quarter of 2017.  Contributing to the decline in non-interest expense was a decrease of $1.1 million in occupancy and office operations, which was mainly due to the consolidation of financial centers and other locations in 2016.  Expenses related to the loss on extinguishment of borrowings and charge for asset write-downs and severance were associated with the prepayment of FHLB debt and the NSBC Acquisition and did not recur in the first quarter of 2017.  Other expenses declined mainly due to lower amortization of intangible assets of $824 thousand, as certain non-compete intangible assets from prior acquisitions are now fully amortized, and regulatory fees and assessments decreased by $370 thousand, as FDIC deposit insurance fees assessed to the Bank were reduced.  Partially offsetting these declines was an increase in compensation and benefits expense of $1.4 million in the first quarter of 2017, which was mainly due to an increase in the accrual for self-funded medical insurance. The total FTE count declined by 100 between the first quarter of 2017 and the year earlier period, mainly due to the completion of the merger integration with Hudson Valley Holding Corp., the sale of the residential mortgage originations business and the sale of the trust division.  However, we have continued hiring new commercial banking teams, risk management personnel and acquired personnel through the NSBC Acquisition and will continue to do so in 2017. Merger-related expense in the first quarter of 2016 were incurred in connection with the NSBC Acquisition; merger-related expense in the first quarter of 2017 were incurred in connection with the Astoria merger and consisted mainly of financial and legal advisory fees.

First quarter 2017 compared with linked quarter ended December 31, 2016 Total non-interest expense increased $3.3 million from $57.1 million in the linked quarter to $60.4 million in the first quarter of 2017. The increase was mainly related to the increase in merger-related expense, as described above, and an increase in other real estate owned, net ("OREO") expense.  In the first quarter of 2017 we incurred $1.7 million of OREO expense, of which $1.3 million represented the write-down of properties to their fair value based on updated appraisals and pending and completed sales. OREO balances decreased by $4.0 million, or 29.3%, in the first quarter of 2017 relative to the linked quarter. Partially offsetting these increases was a decrease in compensation and benefits expense of $669 thousand between the periods. Occupancy and office operations also declined in the quarter by $238 thousand due to the ongoing consolidation of our real estate footprint and locations.

TaxesWe recorded income tax expense at an effective tax rate of 31.2% for the first quarter of 2017, compared to 34.0% in the first quarter of 2016.  The effective tax rate in the linked quarter ended December 31, 2016 was 32.5%.

The adoption of a new accounting standard in the first quarter of 2017 requires that tax benefits in excess of compensation costs associated with our stock-based compensation plans be included in income tax expense as a discrete item.  In the first quarter of 2017, we recorded a tax benefit of $742 thousand associated with the vesting of stock-based compensation which reduced our tax rate by 1.3% for the period. We anticipate our effective income tax rate, excluding the impact of income tax expense associated with vested stock-based compensation plans in 2017 will remain between 32% and 33%. However, the effective income tax rate may change materially should changes to current tax law be enacted in 2017.  Any changes to current tax law may also have an impact on our deferred tax position. 

Key Balance Sheet Highlights as of March 31, 2017

($ in thousands) As of   Change % / bps
  3/31/2016   12/31/2016   3/31/2017   Y-o-Y   Linked Qtr
Total assets $ 12,865,356     $ 14,178,447     $ 14,659,337     13.9 %   3.4 %
Total portfolio loans, gross 8,286,163     9,527,230     9,763,967     17.8     2.5  
Commercial & industrial ("C&I") loans 3,416,538     4,171,950     4,181,818     22.4     0.2  
Commercial real estate loans 3,676,214     4,144,018     4,376,645     19.1     5.6  
Acquisition, development and construction loans 179,517     230,086     238,966     33.1     3.9  
Total commercial loans 7,272,269     8,546,054     8,797,429     21.0     2.9  
Total deposits 9,328,622     10,068,259     10,251,725     9.9     1.8  
Core deposits 8,535,384     8,805,301     9,087,137     6.5     3.2  
Investment securities 2,847,742     3,118,838     3,416,395     20.0     9.5  
Total borrowings 1,675,508     2,056,612     2,328,576     39.0     13.2  
Loans to deposits 88.8 %   94.6 %   95.2 %   640     60  
Core deposits to total deposits 91.5     87.5     88.6     (290 )   110  
Investment securities to total assets 22.1     22.0     23.3     120     130  

Highlights in balance sheet items as of March 31, 2017 were the following:
  • C&I loans (which include traditional C&I, asset-based lending, payroll finance, warehouse lending, factored receivables, equipment financing and public sector finance loans) represented 42.8%, commercial real estate loans represented 44.8%, consumer and residential mortgage loans combined represented 9.9%, and acquisition, development and construction loans represented 2.5% of the total loan portfolio.
  • Commercial loan growth, which includes all C&I loans, commercial real estate and acquisition, development and construction loans, was $1.5 billion for the twelve months ended March 31, 2017. Commercial loan growth was $251.4 million relative to the linked quarter.
  • Mortgage warehouse lending balances were $486.4 million at March 31, 2017, a decline of $130.6 million, or 21.2%, compared to December 31, 2016.  As anticipated, the decrease in balances was due to an increase in residential mortgage lending interest rates which negatively impacted mortgage refinance activity and origination volumes in the period.
  • Aggregate exposure to taxi medallion relationships was $49.8 million, which represented 0.51% of total loans as of March 31, 2017, a decline of $1.9 million from $51.7 million as of December 31, 2016.  The decline was due to repayments.
  • Total deposits at March 31, 2017 increased $183.5 million, or 1.8%, compared to December 31, 2016, and increased $923.1 million, or 9.9%, over March 31, 2016.  The increase in deposits was mainly due to seasonal inflows in municipal deposits and growth in commercial deposits.
  • Core deposits at March 31, 2017 increased $281.8 million, compared to December 31, 2016.  The increase was mainly due to growth in commercial deposits and seasonal inflows in municipal deposits. Core deposits increased $551.8 million, or 6.5%, over March 31, 2016.

Credit Quality
($ in thousands) For the three months ended   Change % / bps
  3/31/2016   12/31/2016   3/31/2017   Y-o-Y   Linked Qtr
Provision for loan losses $ 4,000     $ 5,500     $ 4,500     12.5 %   (18.2 )%
Net charge-offs 1,131     1,283     1,183     4.6     (7.8 )
Allowance for loan losses 53,014     63,622     66,939     26.3     5.2  
Non-performing loans 85,438     78,853     72,924     (14.6 )   (7.5 )
Net charge-offs annualized 0.06 %   0.06 %   0.05 %   (1 )   (1 )
Allowance for loan losses to total loans 0.64     0.67     0.69     5     2  
Total valuation balances recorded against portfolio loans to adjusted gross portfolio loans 6 1.17     1.05     1.03     (14 )   (2 )
Allowance for loan losses to non-performing loans 62.0     80.7     91.8     2,980     1,110  

6 See a reconciliation of this non-GAAP financial measure on page 18.

Provision for loan losses was $4.5 million for the first quarter of 2017 compared to $5.5 million in the linked quarter and $4.0 million in the same period a year ago. In the first quarter of 2017, provision for loan losses was $3.3 million in excess of net charge-offs of $1.2 million.  Allowance coverage ratios increased to 0.69% of total loans and 91.8% of non-performing loans.  The decrease in non-performing loans at March 31, 2017 compared to December 31, 2016 was mainly due to improvements in borrower performance as non-performing loans decreased by $5.9 million to $72.9 million.

As a result of purchase accounting, a substantial portion of the loans acquired in prior merger transactions do not have an allocation in the allowance for loan losses as the performance of these loans remains satisfactory. The total valuation balances recorded against portfolio loans to adjusted gross portfolio loans 6 was 1.05% and 1.03% at December 31, 2016 and March 31, 2017, respectively. 

Aggregate exposure to taxi medallion relationships as of March 31, 2017 was $49.8 million.  This represented a decrease of $1.9 million relative to the linked quarter.

Capital
($ in thousands, except share and per share data)   As of   Change % / bps
  3/31/2016   12/31/2016   3/31/2017   Y-o-Y   Three months
Total stockholders' equity $ 1,698,133     $ 1,855,183     $ 1,888,613     11.2 %   1.8 %
Goodwill and intangible assets 772,390     762,953     760,698     (1.5 )   (0.3 )
Tangible stockholders' equity $ 925,743     $ 1,092,230     $ 1,127,915     21.8     3.3  
Common shares outstanding 130,548,989     135,257,570     135,604,435     3.9     0.3  
Book value per share $ 13.01     $ 13.72     $ 13.93     7.1     1.5  
Tangible book value per share 7.09     8.08     8.32     17.3     3.0  
Tangible equity to tangible assets 7.66 %   8.14 %   8.12 %   46     (2 )
Estimated Tier 1 leverage ratio - Company 8.60     8.95     8.89     29     (6 )
Estimated Tier 1 leverage ratio - Bank 9.16     9.08     8.99     (17 )   (9 )

The increase in stockholders' equity of $33.4 million to $1.9 billion as of March 31, 2017 compared to December 31, 2016 was mainly due to net income of $39.1 million and a decrease in accumulated other comprehensive loss of $2.9 million.  The decrease in accumulated other comprehensive loss was due to an increase in the fair value of our available for sale securities portfolio.  Stock option exercises and stock-based compensation, which totaled $885 thousand also contributed to the increase.  These increases were partially offset by declared dividends of $9.4 million.

Total goodwill and other intangible assets were $760.7 million at March 31, 2017, a decrease of $2.3 million compared to December 31, 2016, which was due to amortization of intangibles.

For the quarter ended March 31, 2017, basic and diluted weighted average common shares outstanding increased to 135.2 million and 135.8 million, respectively, compared to 132.3 million basic shares and 133.0 million diluted shares, respectively, for the quarter ended December 31, 2016.  The increase in the diluted weighted average shares was mainly due to our common equity raise completed on November 22, 2016. Total common shares outstanding at March 31, 2017 were approximately 135.6 million.

Conference Call InformationSterling Bancorp will host a teleconference and webcast on Wednesday, April 26, 2017 at 10:30 AM Eastern Time to discuss the Company's results. Interested parties are invited to listen to the webcast and view accompanying slides on the Company's website at www.sterlingbancorp.com. Analysts are invited to listen by dialing (877) 874-1570, Conference ID #9380814.  A replay of the teleconference can be accessed through the Company's website.

About Sterling BancorpSterling Bancorp, whose principal subsidiary is Sterling National Bank, specializes in the delivery of service 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.

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, plans, operations and prospects and involve certain risks, including the following: our ability to obtain regulatory approvals and meet other closing conditions to the merger with Astoria, including approval by Sterling Bancorp and Astoria Financial Corporation stockholders, on the expected terms and schedule; delay in closing the Astoria merger; difficulties and delays in integrating Astoria's business or fully realizing cost savings and other benefits; business disruption following the proposed transaction; 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; including our ability to effectively deploy recently raised capital; 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 Quarterly Report on Form 10-Q for the three months ended March 31, 2017. 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.

Sterling Bancorp and SubsidiariesCONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION(unaudited, in thousands, except share and per share data)      
  3/31/2016   12/31/2016   3/31/2017
Assets:
Cash and cash equivalents $ 486,730     $ 293,646     $ 253,703  
Investment securities 2,847,742     3,118,838     3,416,395  
Loans held for sale 27,237     41,889     2,559  
Portfolio loans:          
Commercial and industrial 3,416,538     4,171,950     4,181,818  
Commercial real estate 3,676,214     4,144,018     4,376,645  
Acquisition, development and construction 179,517     230,086     238,966  
Residential mortgage 718,733     697,108     695,398  
Consumer 295,161     284,068     271,140  
Total portfolio loans, gross 8,286,163     9,527,230     9,763,967  
Allowance for loan losses (53,014 )   (63,622 )   (66,939 )
Total portfolio loans, net 8,233,149     9,463,608     9,697,028  
Federal Home Loan Bank ("FHLB") and Federal Reserve Bank Stock, at cost 118,330     135,098     148,030  
Accrued interest receivable 33,392     43,319     48,974  
Premises and equipment, net 62,432     57,318     57,567  
Goodwill 696,600     696,600     696,600  
Other intangibles 75,790     66,353     64,098  
Bank owned life insurance 197,615     199,889     201,259  
Other real estate owned 14,527     13,619     9,632  
Other assets 71,812     48,270     63,492  
Total assets $ 12,865,356     $ 14,178,447     $ 14,659,337  
Liabilities:          
Deposits $ 9,328,622     $ 10,068,259     $ 10,251,725  
FHLB borrowings 1,444,817     1,791,000     2,035,000  
Other borrowings 23,571     16,642     44,472  
Senior notes 98,996     76,469     76,551  
Subordinated notes 108,124     172,501     172,553  
Mortgage escrow funds 14,972     13,572     13,153  
Other liabilities 148,121     184,821     177,270  
Total liabilities 11,167,223     12,323,264     12,770,724  
Stockholders' equity:          
Common stock 1,367     1,411     1,411  
Additional paid-in capital 1,501,417     1,597,287     1,590,293  
Treasury stock (70,142 )   (66,188 )   (62,046 )
Retained earnings 261,332     349,308     382,676  
Accumulated other comprehensive income (loss) 4,159     (26,635 )   (23,721 )
Total stockholders' equity 1,698,133     1,855,183     1,888,613  
  Total liabilities and stockholders' equity $ 12,865,356     $ 14,178,447     $ 14,659,337  
           
Shares of common stock outstanding at period end 130,548,989     135,257,570     135,604,435  
Book value per share $ 13.01     $ 13.72     $ 13.93  
Tangible book value per share 1 7.09     8.08     8.32  

1 See reconciliation of non-GAAP financial measures beginning on page 16.

Sterling Bancorp and SubsidiariesCONSOLIDATED CONDENSED INCOME STATEMENTS(unaudited, in thousands, except share and per share data)
   For the Quarter Ended
  3/31/2016   12/31/2016   3/31/2017
Interest and dividend income:
Loans and loan fees $ 89,034     $ 104,651     $ 104,570  
Securities taxable 12,016     9,993     12,282  
Securities non-taxable 3,879     7,168     7,618  
Other earning assets 1,077     1,263     1,530  
Total interest and dividend income 106,006     123,075     126,000  
Interest expense:          
Deposits 6,409     9,252     9,508  
Borrowings 6,087     6,575     7,702  
Total interest expense 12,496     15,827     17,210  
Net interest income 93,510     107,248     108,790  
Provision for loan losses 4,000     5,500     4,500  
Net interest income after provision for loan losses 89,510     101,748     104,290  
Non-interest income:          
Accounts receivable / factoring commissions and other fees 4,494     4,148     3,769  
Mortgage banking income 2,002     651     271  
Deposit fees and service charges 4,496     3,167     3,335  
Net (loss) gain on sale of securities (283 )   (102 )   (23 )
Bank owned life insurance 1,327     1,333     1,370  
Investment management fees 1,124     565     231  
Other 2,270     6,295     3,883  
Total non-interest income 15,430     16,057     12,836  
Non-interest expense:          
Compensation and benefits 30,020     32,060     31,391  
Stock-based compensation plans 1,540     1,557     1,736  
Occupancy and office operations 9,282     8,372     8,134  
Amortization of intangible assets 3,053     2,881     2,229  
FDIC insurance and regulatory assessments 2,258     1,531     1,888  
Other real estate owned, net 582     206     1,676  
Merger-related expenses 265         3,127  
Charge for asset write-downs, retention and severance 2,485          
Loss on extinguishment of borrowings 8,716          
Other 10,730     10,465     10,169  
Total non-interest expense 68,931     57,072     60,350  
Income before income tax expense 36,009     60,733     56,776  
Income tax expense 12,243     19,737     17,709  
Net income $ 23,766     $ 40,996     $ 39,067  
Weighted average common shares:          
Basic 129,974,025     132,271,761     135,163,347  
Diluted 130,500,975     132,995,762     135,811,721  
Earnings per common share:          
Basic earnings per share $ 0.18     $ 0.31     $ 0.29  
Diluted earnings per share 0.18     0.31     0.29  
Dividends declared per share 0.07     0.07     0.07  
                 

Sterling Bancorp and SubsidiariesSELECTED FINANCIAL DATA(unaudited, in thousands, except share and per share data)
  As of and for the Quarter Ended
  End of Period 3/31/2016   6/30/2016   9/30/2016   12/31/2016   3/31/2017
Total assets $ 12,865,356     $ 13,065,248     $ 13,617,228     $ 14,178,447     $ 14,659,337  
Tangible assets 1 12,092,966     12,296,123     12,851,370     13,415,494     13,898,639  
Securities available for sale 1,894,820     1,613,013     1,417,617     1,727,417     1,941,671  
Securities held to maturity 952,922     1,367,046     1,380,100     1,391,421     1,474,724  
Portfolio loans 8,286,163     8,594,295     9,168,741     9,527,230     9,763,967  
Goodwill 696,600     696,600     696,600     696,600     696,600  
Other intangibles 75,790     72,525     69,258     66,353     64,098  
Deposits 9,328,622     9,785,556     10,197,253     10,068,259     10,251,725  
Municipal deposits (included above) 1,285,264     1,184,231     1,551,147     1,270,921     1,391,221  
Borrowings 1,675,508     1,309,954     1,451,526     2,056,612     2,328,576  
Stockholders' equity 1,698,133     1,735,994     1,765,160     1,855,183     1,888,613  
Tangible equity 1 925,743     966,869     999,302     1,092,230     1,127,915  
Quarterly Average Balances                  
Total assets 12,001,370     12,700,038     13,148,201     13,671,676     14,015,953  
Tangible assets 1 11,253,958     11,929,107     12,380,448     12,907,133     13,253,877  
Loans, gross:                  
  Commercial real estate (includes multi-family) 3,587,341     3,694,162     3,823,853     3,963,216     4,190,817  
  Acquisition, development and construction 179,517     197,489     215,798     224,735     237,451  
Commercial and industrial:                  
  Traditional commercial and industrial 1,201,960     1,229,473     1,274,194     1,383,013     1,410,354  
  Asset-based lending 304,779     636,383     640,931     700,285     713,438  
  Payroll finance 192,428     187,887     162,938     218,365     217,031  
  Warehouse lending 248,831     301,882     404,156     551,746     379,978  
  Factored receivables 181,974     183,051     200,471     231,554     184,859  
  Equipment financing 616,995     630,922     652,531     586,078     595,751  
  Public sector finance 179,147     226,929     350,244     361,339     370,253  
  Total commercial and industrial 2,926,114     3,396,527     3,685,465     4,032,380     3,871,664  
  Residential mortgage 755,564     729,685     727,304     729,834     700,934  
  Consumer 297,028     295,666     292,088     287,267     280,650  
Loans, total 2 7,745,467     8,313,529     8,744,508     9,267,290     9,281,516  
Securities (taxable) 2,139,547     2,032,518     1,838,775     1,789,553     2,016,752  
Securities (non-taxable) 593,777     837,133     1,098,933     1,183,857     1,256,906  
Other interest earning assets 401,565     375,244     333,622     325,581     334,404  
Total earning assets 10,880,356     11,558,424     12,015,838     12,566,281     12,889,578  
Deposits:                  
  Non-interest bearing demand 3,009,085     3,059,562     3,196,204     3,217,156     3,177,448  
  Interest bearing demand 1,607,227     2,016,365     2,107,669     2,116,708     1,950,332  
  Savings (including mortgage escrow funds) 814,485     809,123     827,647     798,090     797,386  
  Money market 2,866,666     3,056,188     3,174,536     3,395,542     3,681,962  
  Certificates of deposit 619,154     620,759     609,438     633,526     579,487  
Total deposits and mortgage escrow 8,916,617     9,561,997     9,915,494     10,161,022     10,186,615  
Borrowings 1,274,605     1,304,442     1,324,001     1,517,482     1,799,204  
Stockholders' equity 1,686,274     1,711,902     1,751,414     1,805,790     1,869,085  
Tangible equity 1 938,862     940,971     983,661     1,041,247     1,107,009  
1 See a reconciliation of this non-GAAP financial measure on page 16. 
2 Includes loans held for sale, but excludes allowance for loan losses.            
             

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

  As of and for the Quarter Ended
  3/31/2016   6/30/2016   9/30/2016   12/31/2016   3/31/2017
Per Share Data
Basic earnings per share $  0.18     $ 0.29    $   0.29      $  0.31     $  0.29
Diluted earnings per share 0.18     0.29     0.29     0.31     0.29  
Adjusted diluted earnings per share, non-GAAP 1 0.25     0.27     0.29     0.30     0.31  
Dividends declared per share 0.07     0.07     0.07     0.07     0.07  
Book value per share 13.01     13.29     13.49     13.72     13.93  
Tangible book value per share 1 7.09     7.40     7.64     8.08     8.32  
Shares of common stock o/s 130,548,989     130,620,463     130,853,673     135,257,570     135,604,435  
Basic weighted average common shares o/s 129,974,025     130,081,465     130,239,193     132,271,761     135,163,347  
Diluted weighted average common shares o/s 130,500,975     130,688,729     130,875,614     132,995,762     135,811,721  
Performance Ratios (annualized)                  
Return on average assets 0.80 %   1.20 %   1.13 %   1.19 %   1.13 %
Return on average equity 5.67 %   8.87 %   8.50 %   9.03 %   8.48 %
Return on average tangible assets, as reported 1 0.85 %   1.27 %   1.20 %   1.26 %   1.20 %
Return on average tangible equity, as reported 1 10.18 %   16.14 %   15.13 %   15.66 %   14.31 %
Return on average tangible assets, as adjusted 1 1.15 %   1.19 %   1.21 %   1.23 %   1.27 %
Return on average tangible equity, as adjusted 1 13.78 %   15.14 %   15.28 %   15.27 %   15.19 %
Efficiency ratio, as adjusted 1 48.88 %   47.19 %   45.76 %   43.35 %   43.73 %
Analysis of Net Interest Income                  
Yield on loans 4.62 %   4.68 %   4.57 %   4.49 %   4.57 %
Yield on investment securities - tax equivalent 2 2.65 %   2.76 %   2.74 %   2.81 %   2.97 %
Yield on interest earning assets - tax equivalent 2 4.00 %   4.09 %   4.03 %   4.02 %   4.09 %
Cost of total deposits 0.29 %   0.35 %   0.37 %   0.36 %   0.38 %
Cost of borrowings 1.92 %   1.73 %   1.75 %   1.72 %   1.74 %
Cost of interest bearing liabilities 0.70 %   0.72 %   0.74 %   0.74 %   0.79 %
Net interest rate spread - tax equivalent basis 2 3.30 %   3.37 %   3.29 %   3.28 %   3.30 %
Net interest margin - GAAP basis 3.46 %   3.49 %   3.41 %   3.40 %   3.42 %
Net interest margin - tax equivalent basis 2 3.53 %   3.60 %   3.53 %   3.52 %   3.55 %
Capital                  
Tier 1 leverage ratio - Company 3 8.60 %   8.36 %   8.31 %   8.95 %   8.89 %
Tier 1 leverage ratio - Bank only 3 9.16 %   8.84 %   8.72 %   9.08 %   8.99 %
Tier 1 risk-based capital ratio - Bank only 3 10.89 %   10.70 %   10.42 %   10.87 %   10.77 %
Total risk-based capital ratio - Bank only 3 12.60 %   12.37 %   12.66 %   13.06 %   12.93 %
Tangible equity to tangible assets - Company 1 7.66 %   7.86 %   7.78 %   8.14 %   8.12 %
Condensed Five Quarter Income Statement                  
Interest and dividend income $ 106,006     $ 114,309     $ 118,161     $ 123,075     $ 126,000  
Interest expense 12,496     13,929     15,031     15,827     17,210  
Net interest income 93,510     100,380     103,130     107,248     108,790  
Provision for loan losses 4,000     5,000     5,500     5,500     4,500  
Net interest income after provision for loan losses 89,510     95,380     97,630     101,748     104,290  
Non-interest income 15,430     20,442     19,039     16,057     12,836  
Non-interest expense 68,931     59,640     62,256     57,072     60,350  
Income before income tax expense 36,009     56,182     54,413     60,733     56,776  
Income tax expense 12,243     18,412     16,991     19,737     17,709  
Net income $ 23,766     $ 37,770     $ 37,422     $ 40,996     $ 39,067  
                                       
1 See a reconciliation of non-GAAP financial measures beginning on page 16.
2 Tax equivalent basis represents interest income earned on municipal securities divided by the applicable Federal tax rate of 35%.
3 Regulatory capital amounts and ratios are preliminary estimates pending filing of the Company's and Bank's regulatory reports.
 

Sterling Bancorp and Subsidiaries    ASSET QUALITY INFORMATION(unaudited, in thousands, except share and per share data)                                                                                                                                    
  As of and for the Quarter Ended
  3/31/2016   6/30/2016   9/30/2016   12/31/2016   3/31/2017
Allowance for Loan Losses Roll Forward
Balance, beginning of period $ 50,145    $    53,014   $    55,865      59,405   $    63,622
Provision for loan losses 4,000     5,000     5,500     5,500     4,500  
Loan charge-offs 1:                      
Traditional commercial & industrial (489 )   (429 )   (570 )   (219 )   (687 )
Payroll finance     (28 )            
Factored receivables (81 )   (792 )   (60 )   (267 )   (296 )
Equipment financing (457 )   (572 )   (377 )   (576 )   (471 )
Commercial real estate (4 )   (100 )   (630 )   (225 )   (83 )
Multi-family     (18 )   (399 )        
Residential mortgage (224 )   (209 )   (338 )   (274 )   (158 )
Consumer (511 )   (532 )   (259 )   (313 )   (114 )
Total charge offs (1,766 )   (2,680 )   (2,633 )   (1,874 )   (1,809 )
Recoveries of loans previously charged-off 1:                  
Traditional commercial & industrial 313     153     381     152     139  
Asset-based lending 16     46             3  
Payroll finance 4     28              
Factored receivables 24     17     10     10     16  
Equipment financing 108     102     123     227     140  
Commercial real estate 21     53     111     168     2  
Multi-family 2                  
Acquisition development & construction     104             136  
Residential mortgage 28     1         1     149  
Consumer 119     27     48     33     41  
Total recoveries 635     531     673     591     626  
Net loan charge-offs (1,131 )   (2,149 )   (1,960 )   (1,283 )   (1,183 )
Balance, end of period $ 53,014     $ 55,865     $ 59,405     $ 63,622     $ 66,939  
Asset Quality Data and Ratios                  
Non-performing loans ("NPLs") non-accrual $ 84,436     $ 79,036     $ 77,794     $ 77,163     $ 72,136  
NPLs still accruing 1,002     528     3,273     1,690     788  
Total NPLs 85,438     79,564     81,067     78,853     72,924  
Other real estate owned 14,527     16,590     16,422     13,619     9,632  
Non-performing assets ("NPAs") $ 99,965     $ 96,154     $ 97,489     $ 92,472     $ 82,556  
Loans 30 to 89 days past due $ 19,168     $ 18,653     $ 17,683     $ 15,100     $ 15,611  
Net charge-offs as a % of average loans (annualized) 0.06 %   0.10 %   0.09 %   0.06 %   0.05 %
NPLs as a % of total loans 1.03     0.93     0.88     0.83     0.75  
NPAs as a % of total assets 0.78     0.74     0.72     0.65     0.56  
Allowance for loan losses as a % of NPLs 62.0     70.2     73.3     80.7     91.8  
Allowance for loan losses as a % of total loans 0.64     0.65     0.65     0.67     0.69  
Total valuation balances recorded against portfolio loans to adjusted gross portfolio loans 2 1.17     1.11     1.10     1.05     1.03  
Special mention loans $ 101,560     $ 103,710     $ 101,784     $ 104,569     $ 110,832  
Substandard loans 131,919     125,571     112,551     95,152     101,496  
Doubtful loans 556     330     932     442     902  
1 There were no charge-offs or recoveries on warehouse lending or public sector finance loans during the periods presented.
2 See a reconciliation of this non-GAAP financial measure on page 18.
 

Sterling Bancorp and SubsidiariesQUARTERLY YIELD TABLE (unaudited, in thousands, except share and per share data)
  For the Quarter Ended
  December 31, 2016   March 31, 2017
  Average balance   Interest   Yield/Rate   Average balance   Interest   Yield/Rate
                             
  (Dollars in thousands)
Interest earning assets:
Commercial loans $ 8,250,189     $ 94,043     4.53 %   $ 8,299,932     $ 94,548     4.62 %
Consumer loans 287,267     3,187     4.41 %   280,650     3,132     4.53 %
Residential mortgage loans 729,834     7,422     4.07 %   700,934     6,890     3.93 %
Total net loans 1 9,267,290     104,652     4.49 %   9,281,516     104,570     4.57 %
Securities taxable 1,789,553     9,993     2.22 %   2,016,752     12,282     2.47 %
Securities non-taxable 1,183,857     11,027     3.73 %   1,256,906     11,720     3.73 %
Interest earning deposits 215,120     200     0.37 %   210,800     254     0.49 %
FHLB and Federal Reserve Bank stock 110,461     1,063     3.83 %   123,604     1,276     4.19 %
Total securities and other earning assets 3,298,991     22,283     2.69 %   3,608,062     25,532     2.87 %
Total interest earning assets 12,566,281     126,935     4.02 %   12,889,578     130,102     4.09 %
Non-interest earning assets 1,105,395             1,126,375          
Total assets $ 13,671,676             $ 14,015,953          
Interest bearing liabilities:                      
Demand deposits $ 2,116,708     $ 1,763     0.33 %   $ 1,950,332     $ 1,960     0.41 %
Savings deposits 2 798,090     1,285     0.64 %   797,386     1,226     0.62 %
Money market deposits 3,395,542     4,693     0.55 %   3,681,962     4,944     0.54 %
Certificates of deposit 633,526     1,511     0.95 %   579,487     1,378     0.96 %
Total interest bearing deposits 6,943,866     9,252     0.53 %   7,009,167     9,508     0.55 %
Senior notes 76,415     1,113     5.79 %   76,497     1,141     6.05 %
Other borrowings 1,268,591     3,113     0.98 %   1,550,183     4,212     1.10 %
Subordinated notes 172,476     2,349     5.45 %   172,524     2,349     5.45 %
Total borrowings 1,517,482     6,575     1.72 %   1,799,204     7,702     1.74 %
Total interest bearing liabilities 8,461,348     15,827     0.74 %   8,808,371     17,210     0.79 %
Non-interest bearing deposits 3,217,156             3,177,448          
Other non-interest bearing liabilities 187,382             161,049          
Total liabilities 11,865,886             12,146,868          
Stockholders' equity 1,805,790             1,869,085          
Total liabilities and stockholders' equity $ 13,671,676             $ 14,015,953          
Net interest rate spread 3         3.28 %           3.30 %
Net interest earning assets 4 $ 4,104,933             $ 4,081,207          
Net interest margin - tax equivalent     111,108     3.52 %       112,892     3.55 %
Less tax equivalent adjustment     (3,860 )           (4,102 )    
Net interest income     $ 107,248             $ 108,790      
Ratio of interest earning assets to interest bearing liabilities 148.5 %           146.3 %        

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.

Sterling Bancorp and SubsidiariesQUARTERLY YIELD TABLE(unaudited, in thousands, except share and per share data)
  For the Quarter Ended
  March 31, 2016   March 31, 2017
  Average balance   Interest   Yield/Rate   Average balance   Interest   Yield/Rate
                         
  (Dollars in thousands)
Interest earning assets:
Commercial loans $ 6,692,875     $ 78,137     4.70 %   $ 8,299,932     $ 94,548     4.62 %
Consumer loans 297,028     3,296     4.46 %   280,650     3,132     4.53 %
Residential mortgage loans 755,564     7,601     4.02 %   700,934     6,890     3.93 %
Total net loans 1 7,745,467     89,034     4.62 %   9,281,516     104,570     4.57 %
Securities taxable 2,139,547     12,016     2.26 %   2,016,752     12,282     2.47 %
Securities non-taxable 593,777     5,968     4.02 %   1,256,906     11,720     3.73 %
Interest earning deposits 296,668     311     0.42 %   210,800     254     0.49 %
FHLB and Federal Reserve Bank stock 104,897     766     2.94 %   123,604     1,276     4.19 %
Total securities and other earning assets 3,134,889     19,061     2.45 %   3,608,062     25,532     2.87 %
Total interest earning assets 10,880,356     108,095     4.00 %   12,889,578     130,102     4.09 %
Non-interest earning assets 1,121,014             1,126,375          
Total assets $ 12,001,370             $ 14,015,953          
Interest bearing liabilities:                      
Demand deposits $ 1,607,227     $ 1,004     0.25 %   $ 1,950,332     $ 1,960     0.41 %
Savings deposits 2 814,485     606     0.30 %   797,386     1,226     0.62 %
Money market deposits 2,866,666     3,672     0.52 %   3,681,962     4,944     0.54 %
Certificates of deposit 619,154     1,127     0.73 %   579,487     1,378     0.96 %
Total interest bearing deposits 5,907,532     6,409     0.44 %   7,009,167     9,508     0.55 %
Senior notes 98,928     1,478     6.01 %   76,497     1,141     6.05 %
Other borrowings 1,172,112     4,560     1.56 %   1,550,183     4,212     1.10 %
Subordinated notes 3,565     49     5.50 %   172,524     2,349     5.45 %
Total borrowings 1,274,605     6,087     1.92 %   1,799,204     7,702     1.74 %
Total interest bearing liabilities 7,182,137     12,496     0.70 %   8,808,371     17,210     0.79 %
Non-interest bearing deposits 3,009,085             3,177,448          
Other non-interest bearing liabilities 123,874             161,049          
Total liabilities 10,315,096             12,146,868          
Stockholders' equity 1,686,274             1,869,085          
Total liabilities and stockholders' equity $ 12,001,370             $ 14,015,953          
Net interest rate spread 3         3.30 %           3.30 %
Net interest earning assets 4 $ 3,698,219             $ 4,081,207          
Net interest margin - tax equivalent     95,599     3.53 %       112,892     3.55 %
Less tax equivalent adjustment     (2,089 )           (4,102 )    
Net interest income     $ 93,510             $ 108,790      
Ratio of interest earning assets to interest bearing liabilities 151.5 %           146.3 %        

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.

Sterling Bancorp and SubsidiariesNON-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 on page 18.
   
  As of and for the Quarter Ended
  3/31/2016   6/30/2016   9/30/2016   12/31/2016   3/31/2017
                   
The following table shows the reconciliation of stockholders' equity to tangible equity and the tangible equity ratio 1 :
 
Total assets $ 12,865,356     $ 13,065,248     $ 13,617,228     $ 14,178,447     $ 14,659,337  
Goodwill and other intangibles (772,390 )   (769,125 )   (765,858 )   (762,953 )   (760,698 )
Tangible assets 12,092,966     12,296,123     12,851,370     13,415,494     13,898,639  
Stockholders' equity 1,698,133     1,735,994     1,765,160     1,855,183     1,888,613  
Goodwill and other intangibles (772,390 )   (769,125 )   (765,858 )   (762,953 )   (760,698 )
Tangible stockholders' equity 925,743     966,869     999,302     1,092,230     1,127,915  
                             
Common stock outstanding at period end 130,548,989     130,620,463     130,853,673     135,257,570     135,604,435  
Stockholders' equity as a % of total assets 13.20 %   13.29 %   12.96 %   13.08 %   12.88 %
Book value per share $ 13.01     $ 13.29     $ 13.49     $ 13.72     $ 13.93  
Tangible equity as a % of tangible assets 7.66 %   7.86 %   7.78 %   8.14 %   8.12 %
Tangible book value per share $ 7.09     $ 7.40     $ 7.64     $ 8.08     $ 8.32  
                   
 
The following table shows the reconciliation of reported return on average tangible equity and adjusted return on average tangible equity 2 :
                   
Average stockholders' equity $ 1,686,274     $ 1,711,902     $ 1,751,414     $ 1,805,790     $ 1,869,085  
Average goodwill and other intangibles (747,412 )   (770,931 )   (767,753 )   (764,543 )   (762,076 )
Average tangible stockholders' equity 938,862     940,971     983,661     1,041,247     1,107,009  
Net income 23,766     37,770     37,422     40,996     39,067  
Net income, if annualized 95,586     151,910     148,874     163,093     158,438  
Reported return on average tangible equity 10.18 %   16.14 %   15.13 %   15.66 %   14.31 %
Adjusted net income (see reconciliation on page 17) $ 32,159     $ 35,414     $ 37,793     $ 39,954     $ 41,461  
Annualized adjusted net income 129,343     142,434     150,350     158,947     168,147  
Adjusted return on average tangible equity 13.78 %   15.14 %   15.28 %   15.27 %   15.19 %
                   
The following table shows the reconciliation of reported return on tangible assets and adjusted return on tangible assets 3 :
                   
Average assets $ 12,001,370     $ 12,700,038     $ 13,148,201     $ 13,671,676     $ 14,015,953  
Average goodwill and other intangibles (747,412 )   (770,931 )   (767,753 )   (764,543 )   (762,076 )
Average tangible assets 11,253,958     11,929,107     12,380,448     12,907,133     13,253,877  
Net income 23,766     37,770     37,422     40,996     39,067  
Net income, if annualized 95,586     151,910     148,874     163,093     158,438  
Reported return on average tangible assets 0.85 %   1.27 %   1.20 %   1.26 %   1.20 %
Adjusted net income (see reconciliation on page 17) $ 32,159     $ 35,414     $ 37,793     $ 39,954     $ 41,461  
Annualized adjusted net income 129,343     142,434     150,350     158,947     168,147  
Adjusted return on average tangible assets 1.15 %   1.19 %   1.21 %   1.23 %   1.27 %
                   
                   

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 on page 18.
   
  As of and for the Quarter Ended
  3/31/2016   6/30/2016     9/30/2016   12/31/2016   3/31/2017
The following table shows the reconciliation of the reported operating efficiency ratio and adjusted operating efficiency ratio 4:
                                       
Net interest income $ 93,510     $ 100,380     $ 103,130     $ 107,248     $ 108,790  
Non-interest income 15,430     20,442     19,039     16,057     12,836  
Total net revenue 108,940     120,822     122,169     123,305     121,626  
Tax equivalent adjustment on securities 2,089     3,162     3,635     3,860     4,102  
Net loss (gain) on sale of securities 283     (4,474 )   (3,433 )   102     23  
Net (gain) on sale of trust division             (2,255 )    
Adjusted total net revenue 111,312     119,510     122,371     125,012     125,751  
Non-interest expense 68,931     59,640     62,256     57,072     60,350  
Merger-related expense (265 )               (3,127 )
Charge for asset write-downs, retention and severance (2,485 )       (2,000 )        
Loss on extinguishment of borrowings (8,716 )       (1,013 )        
Amortization of intangible assets (3,053 )   (3,241 )   (3,241 )   (2,881 )   (2,229 )
Adjusted non-interest expense 54,412     56,399     56,002     54,191     54,994  
Reported operating efficiency ratio 63.3 %   49.4 %   51.0 %   46.3 %   49.6 %
Adjusted operating efficiency ratio 48.9     47.2     45.8     43.3     43.7  
                   
The following table shows the reconciliation of reported net income (GAAP) and adjusted net income (non-GAAP) and adjusted diluted earnings per share 5 :
                   
Income before income tax expense $ 36,009     $ 56,182     $ 54,413     $ 60,733     $ 56,776  
Income tax expense 12,243     18,412     16,991     19,737     17,709  
Net income (GAAP) 23,766     37,770     37,422     40,996     39,067  
                   
Adjustments:                  
Net loss (gain) on sale of securities 283     (4,474 )   (3,433 )   102     23  
Net (gain) on sale of trust division             (2,255 )    
Merger-related expense 265                 3,127  
Charge for asset write-downs, retention and severance 2,485         2,000          
Loss on extinguishment of borrowings 8,716         1,013          
Amortization of non-compete agreements and acquired customer list intangible assets 968     969     970     610     396  
Total adjustments 12,717     (3,505 )   550     (1,543 )   3,546  
Income tax (benefit) expense (4,324 )   1,149     (179 )   501     (1,152 )
Total adjustments net of taxes 8,393     (2,356 )   371     (1,042 )   2,394  
Adjusted net income (non-GAAP) $ 32,159     $ 35,414     $ 37,793     $ 39,954     $ 41,461  
                   
Weighted average diluted shares 130,500,975     130,688,729     130,875,614     132,995,762     135,811,721  
Diluted EPS as reported (GAAP) $ 0.18     $ 0.29     $ 0.29     $ 0.31     $ 0.29  
Adjusted diluted EPS (non-GAAP) 0.25     0.27     0.29     0.30     0.31  
                     
                     

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 below.
 
  As of and for the Quarter Ended
  3/31/2016   6/30/2016   9/30/2016   12/31/2016     3/31/2017
The following table shows a reconciliation of the allowance for loan losses and remaining purchase accounting adjustments to portfolio loans 6:
Allowance for loan losses $ 53,014     $ 55,865     $ 59,405     $ 63,622     $ 66,939  
Remaining purchase accounting adjustments:                  
Acquired performing loans 27,340     23,802     26,003     22,199     19,733  
Purchased credit impaired loans 16,862     15,955     15,513     14,813     14,450  
Total remaining purchase accounting adjustments 44,202     39,757     41,516     37,012     34,183  
Total valuation balances recorded against portfolio loans $ 97,216     $ 95,622     $ 100,921     $ 100,634     $ 101,122  
                   
Total portfolio loans, gross $ 8,286,163     $ 8,594,295     $ 9,168,741     $ 9,527,230     $ 9,763,967  
Remaining purchase accounting adjustments:                  
Acquired performing loans 27,340     23,802     26,003     22,199     19,733  
Purchased credit impaired loans 16,862     15,955     15,513     14,813     14,450  
Adjusted portfolio loans, gross $ 8,330,365     $ 8,634,052     $ 9,210,257     $ 9,564,242     $ 9,798,150  
Allowance for loan losses to total portfolio loans, gross 0.64 %   0.65 %   0.65 %   0.67 %   0.69 %
Total valuation balances recorded against portfolio loans to adjusted gross portfolio loans 1.17 %   1.11 %   1.10 %   1.05 %   1.03 %

The non-GAAP / adjusted measures presented above are used by our management and 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 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 Stockholders' equity as a percentage of total assets, book value per share, tangible equity as a percentage of tangible assets and tangible book 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.2 Reported return on average tangible equity and adjusted return on average tangible equity measures provide information to evaluate the use of our tangible equity.3 Reported return on tangible assets and adjusted return on tangible assets measures provide information to help assess our profitability.4 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.5 Adjusted net income and adjusted 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. Historically we have imputed income tax expense on adjusted earnings at our GAAP earnings effective tax rate.  Due to the adoption of a new accounting standard in the first quarter of 2017 that requires vesting of share-based compensation awards be treated as a discrete item in income tax expense, our effective tax rate for GAAP earnings decreased from our estimate for full year 2017 of 32.5% to 31.2% for the quarter ended March 31, 2017.  Therefore, for purposes of calculating adjusted net income, we recognized income tax expense at our 2017 anticipated effective tax rate of 32.5%.6 The reconciliation of the allowance for loan losses and remaining purchase accounting adjustments to portfolio loans provides information to evaluate the impact of purchase accounting adjustments and the allowance for loan losses on our portfolio loans.  In purchase accounting, the prior allowance for loan losses is not carried over, and in place, we are required to estimate the fair value of the loan, which includes an estimate of life of loan losses on the portfolio, which is included as a purchase discount within the acquired loan portfolio.

STERLING BANCORP CONTACT:Luis Massiani, SEVP & Chief Financial Officer845.369.8040http://www.sterlingbancorp.com

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