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).

Sterling Bancorp

Wed, Jan 20, 2021, 4:15 PM31 min read

Key Performance Highlights

Adjusted PPNR excluding accretion income^{1, 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
	12/31/2019			12/31/2020			Change % / bps			12/31/2019			12/31/2020			Change % / bps
Total assets	$	30,586,497		$	29,820,138		(2.5	)	%	$	30,586,497		$	29,820,138		(2.5	)	%
Total portfolio loans, gross	21,440,212			21,848,409			1.9			21,440,212			21,848,409			1.9
Total deposits	22,418,658			23,119,522			3.1			22,418,658			23,119,522			3.1
PPNR^{1, 2}	145,188			122,474			(15.6	)		131,380			130,257			(0.9	)
Net income available to common	104,722			74,457			(28.9	)		108,855			94,323			(13.3	)
Diluted EPS available to common	0.52			0.38			(26.9	)		0.54			0.49			(9.3	)
Net interest margin	3.37		%	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
	9/30/2020			12/31/2020			Change % / bps		9/30/2020			12/31/2020			Change % / bps
PPNR^{1, 2}	$	126,687		$	122,474		(3.3	)	$	123,286		$	130,257		5.7
Net income available to common	82,438			74,457			(9.7	)	87,682			94,323			7.6
Diluted EPS available to common	0.43			0.38			(11.6	)	0.45			0.49			8.9
Net interest margin	3.19		%	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 loans	1.46		%	1.49		%	3		1.46		%	1.49		%	3
ACL to NPLs	180.2			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.

PEARL RIVER, N.Y., Jan. 20, 2021 (GLOBE NEWSWIRE) -- 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.”

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 ended									Change % / bps
	12/31/2019			9/30/2020			12/31/2020			Y-o-Y			Linked Qtr
Interest and dividend income	$	295,474		$	244,658		$	242,610		(17.9	)	%	(0.8	)	%
Interest expense	67,217			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 loans	4.84		%	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 deposits	0.89			0.31			0.22			(67	)		(9	)
Cost of interest bearing deposits	1.10			0.40			0.29			(81	)		(11	)
Cost of borrowings	2.38			1.95			3.35			97			140
Cost of interest bearing liabilities	1.28			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

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 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 ended								Change %
	12/31/2019			9/30/2020		12/31/2020			Y-o-Y			Linked Qtr
Deposit fees and service charges	$	6,506		$	5,960	$	5,975		(8.2	)	%	0.3		%
Accounts receivable management / factoring commissions and other related fees	6,572			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 fees	8,698			7,290		13,220			52.0		%	81.3		%
Investment management fees	1,597			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		)	—		—			NM			NM
Other	4,594			1,842		1,678			(63.5	)	%	(8.9	)	%
Total non-interest income	32,381			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		)	—		—			NM			NM
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.

Non-interest Expense

($ in thousands)	For the three months ended										Change % / bps
	12/31/2019				9/30/2020			12/31/2020			Y-o-Y			Linked Qtr
Compensation and benefits	$	52,453			$	55,960		$	56,563		7.8		%	1.1		%
Stock-based compensation plans	5,180				5,869			5,222			0.8			(11.0	)
Occupancy and office operations	15,886				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			NM			NM
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 end	82				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	)

⁸See 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.

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
	12/31/2019			9/30/2020			12/31/2020			Y-o-Y			Linked Qtr
Total assets	$	30,586,497		$	30,617,722		$	29,820,138		(2.5	)	%	(2.6	)	%
Total portfolio loans, gross	21,440,212			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 loans	2,210,112			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 consumer	11.4			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 deposits	22,418,658			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, net	5,075,309			4,201,350			4,039,456			(20.4	)		(3.9	)
Total borrowings	2,885,958			993,535			1,321,714			(54.2	)		33.0
Loans to deposits	95.6		%	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	)

⁹Core 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 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 ended									Change % / bps
	12/31/2019			9/30/2020			12/31/2020			Y-o-Y			Linked Qtr
Provision for credit losses	$	10,585		$	31,000		$	27,500		159.8		%	(11.3	)	%
Net charge-offs	9,082			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 loans	159,976			204,267			461,458			188.5			125.9
Substandard loans	295,428			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

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 of									Change % / bps
	12/31/2019			9/30/2020			12/31/2020			Y-o-Y			Linked 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 outstanding	198,455,324			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 share¹⁰	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 - Company	9.55			9.93			10.13			58			20
Est. Tier 1 leverage ratio - Company fully implemented	—			9.59			9.80			N/A			21
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/A			88

¹⁰See 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.

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.

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

	12/31/2019			9/30/2020			12/31/2020
Assets:
Cash and cash equivalents	$	329,151		$	437,558		$	305,002
Investment securities, net	5,075,309			4,201,350			4,039,456
Loans held for sale	8,125			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”) loans	467,331			633,166			642,943
Residential mortgage	2,210,112			1,739,563			1,616,641
Consumer	234,532			200,212			189,907
Total portfolio loans, gross	21,440,212			22,281,940			21,848,409
Allowance for credit losses	(106,238		)	(325,943		)	(326,100		)
Total portfolio loans, net	21,333,974			21,955,997			21,522,309
FHLB and Federal Reserve Bank Stock, at cost	251,805			167,293			166,190
Accrued interest receivable	100,312			102,379			97,505
Premises and equipment, net	227,070			217,481			202,555
Goodwill	1,683,482			1,683,482			1,683,482
Other intangibles	110,364			97,764			93,565
BOLI	613,848			625,236			629,576
Other real estate owned	12,189			6,919			5,347
Other assets	840,868			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 borrowings	2,245,653			397,000			382,000
Federal Funds Purchased	—			—			277,000
Paycheck Protection Program Lending Facility	—			117,497			—
Other borrowings	22,678			35,223			27,101
Senior notes	173,504			—			—
Subordinated notes - Company	270,941			270,445			491,910
Subordinated notes - Bank	173,182			173,370			143,703
Mortgage escrow funds	58,316			84,031			59,686
Other liabilities	693,452			727,038			728,702
Total liabilities	26,056,384			26,059,937			25,229,624
Stockholders’ equity:
Preferred stock	137,581			136,917			136,689
Common stock	2,299			2,299			2,299
Additional paid-in capital	3,766,716			3,761,216			3,761,993
Treasury stock	(583,408		)	(660,312		)	(686,911		)
Retained earnings	1,166,709			1,229,799			1,291,628
Accumulated other comprehensive income	40,216			87,866			84,816
Total stockholders’ equity	4,530,113			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 end	198,455,324			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.

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

	For the Quarter Ended									For the Year Ended
	12/31/2019			9/30/2020			12/31/2020			12/31/2019			12/31/2020
Interest and dividend income:
Loans and loan fees	$	256,377		$	213,009		$	214,522		$	1,029,369		$	882,874
Securities taxable	20,367			18,623			15,679			94,823			73,786
Securities non-taxable	13,031			12,257			11,839			55,802			49,924
Other earning assets	5,699			769			570			22,546			7,437
Total interest and dividend income	295,474			244,658			242,610			1,202,540			1,014,021
Interest expense:
Deposits	49,907			18,251			13,417			192,361			105,559
Borrowings	17,310			8,583			7,167			91,256			43,541
Total interest expense	67,217			26,834			20,584			283,617			149,100
Net interest income	228,257			217,824			222,026			918,923			864,921
Provision for credit losses - loans	10,585			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 losses	217,672			187,824			194,526			872,938			612,535
Non-interest income:
Deposit fees and service charges	6,506			5,960			5,975			26,398			23,903
Accounts receivable management / factoring commissions and other related fees	6,572			5,393			6,498			23,837			21,847
BOLI	4,770			5,363			4,961			20,670			20,292
Loan commissions and fees	8,698			7,290			13,220			24,129			39,537
Investment management fees	1,597			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			—
Other	4,594			1,842			1,678			15,301			9,015
Total non-interest income	32,381			28,225			33,921			130,865			135,562
Non-interest expense:
Compensation and benefits	52,453			55,960			56,563			215,766			222,067
Stock-based compensation plans	5,180			5,869			5,222			19,473			23,010
Occupancy and office operations	15,886			14,722			14,742			64,363			59,358
Information technology	9,313			8,422			9,559			35,580			33,311
Amortization of intangible assets	4,785			4,200			4,200			19,181			16,800
FDIC insurance and regulatory assessments	3,134			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 severance	5,133			—			—			8,477			—
Loss (gain) on extinguishment of borrowings	—			6,241			2,749			(46		)	19,462
Other	19,698			20,465			23,979			73,363			90,350
Total non-interest expense	115,450			119,362			133,473			463,837			492,429
Income before income tax expense	134,603			96,687			94,974			539,966			255,668
Income tax expense	27,905			12,280			18,551			112,925			29,899
Net income	106,698			84,407			76,423			427,041			225,769
Preferred stock dividend	1,976			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:
Basic	199,719,747			193,494,929			193,036,678			205,679,874			194,084,358
Diluted	200,252,542			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 share	0.52			0.43			0.38			2.03			1.12
Dividends declared per share	0.07			0.07			0.07			0.28			0.28

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 Period	12/31/2019		3/31/2020		6/30/2020		9/30/2020		12/31/2020
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 sale	3,095,648		2,660,835		2,620,624		2,419,458		2,298,618
Securities held to maturity, net	1,979,661		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 loans	21,440,212		21,709,957		22,295,267		22,281,940		21,848,409
Goodwill	1,683,482		1,683,482		1,683,482		1,683,482		1,683,482
Other intangibles	110,364		106,164		101,964		97,764		93,565
Deposits	22,418,658		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
Borrowings	2,885,958		2,598,698		2,582,609		993,535		1,321,714
Stockholders’ equity	4,530,113		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 assets	30,349,691		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
ADC	459,372		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&I	7,952,476		8,034,108		8,791,024		9,133,454		9,114,999
Residential mortgage	2,284,419		2,152,440		2,006,400		1,862,390		1,691,567
Consumer	243,057		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 assets	835,554		727,511		669,422		610,938		487,696
Total interest earning assets	26,901,439		26,980,261		27,240,114		27,163,337		26,522,991
Deposits:
Non-interest bearing demand	4,361,642		4,346,518		5,004,907		5,385,939		5,530,334
Interest bearing demand	4,359,767		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 market	7,681,491		7,691,381		8,035,750		8,304,834		8,577,920
Certificates of deposit	3,271,674		3,237,990		2,766,580		2,559,325		2,158,348
Total deposits and mortgage escrow	22,289,097		22,692,568		23,463,937		23,665,916		23,849,187
Borrowings	2,890,407		2,580,922		2,101,016		1,747,941		852,057
Stockholders’ equity	4,524,417		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.
²Loans held for sale mainly includes commercial syndication loans.
³Asset-based lending, payroll finance, warehouse lending, factored receivables, equipment finance and public sector finance comprise our commercial finance loan portfolio.
⁴Includes loans held for sale, but excludes allowance for credit losses.

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

	As of and for the Quarter Ended
Per Common Share Data	12/31/2019			3/31/2020				6/30/2020			9/30/2020			12/31/2020
Basic earnings per share	$	0.52		$	0.06			$	0.25		$	0.43		$	0.39
Diluted earnings per share	0.52			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 share	0.07			0.07				0.07			0.07			0.07
Book value per common share	22.13			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/s	198,455,324			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 assets	1.37		%	0.16			%	0.64		%	1.07		%	0.99		%
Return on average equity	9.18			1.09				4.40			7.24			6.45
Return on average tangible assets	1.45			0.17				0.68			1.14			1.05
Return on average tangible common equity	15.94			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 loans	4.84		%	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 deposits	1.10			1.00				0.61			0.40			0.29
Cost of total deposits	0.89			0.81				0.48			0.31			0.22
Cost of borrowings	2.38			2.49				2.26			1.95			3.35
Cost of interest bearing liabilities	1.28			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 basis	3.37			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 - Company¹	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 expense	67,217			61,755				39,927			26,834			20,584
Net interest income	228,257			211,772				213,299			217,824			222,026
Provision for credit losses	10,585			138,280				56,606			30,000			27,500
Net interest income after provision for credit losses	217,672			73,492				156,693			187,824			194,526
Non-interest income	32,381			47,326				26,090			28,225			33,921
Non-interest expense	115,450			114,713				124,881			119,362			133,473
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	$	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%.
³Regulatory 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
Allowance for Credit Losses Roll Forward	12/31/2019				3/31/2020				6/30/2020				9/30/2020				12/31/2020
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 - loans	10,585				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&I	232				475				116				677				194
Payroll finance	5				9				1				262				38
Factored receivables	9				4				1				185				122
Equipment financing	91				1,105				387				816				217
Commercial real estate	—				60				584				—				174
Multi-family	105				—				1				—				—
Acquisition development & construction	—				105				—				—				—
Residential mortgage	5				—				—				—				1
Consumer	90				1,125				31				21				30
Total recoveries	537				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 accruing	110				1,545				272				56				170
Total NPLs	179,161				253,750				260,605				180,851				167,059
Other real estate owned	12,189				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 loans	0.84				1.17				1.17				0.81				0.76
NPAs as a % of total assets	0.63				0.88				0.87				0.61				0.58
Allowance for credit losses as a % of NPLs	59.3				128.6				140.2				180.2				195.2
Allowance for credit losses as a % of total loans	0.50				1.50				1.64				1.46				1.49
Special mention loans	$	159,976			$	132,356			$	141,805			$	204,267			$	461,458
Substandard loans	295,428				402,393				415,917				375,427				528,760
Doubtful loans	—				—				—				—				304

¹There 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.

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

	For the Quarter Ended
	September 30, 2020								December 31, 2020
	Average balance			Interest			Yield/ Rate		Average balance			Interest			Yield/ 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
ADC	636,061			6,117			3.83		685,368			6,500			3.77
Commercial loans	20,090,445			193,995			3.84		19,992,074			195,122			3.88
Consumer loans	206,700			2,025			3.90		195,870			2,028			4.12
Residential mortgage loans	1,862,390			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 taxable	2,363,059			18,623			3.14		2,191,333			15,679			2.85
Securities non-taxable	2,029,805			15,515			3.06		1,964,451			14,985			3.05
Interest earning deposits	424,249			154			0.14		331,587			105			0.13
FHLB and Federal Reserve Bank Stock	186,689			615			1.31		156,109			465			1.18
Total securities and other earning assets	5,003,802			34,907			2.78		4,643,480			31,234			2.68
Total interest earning assets	27,163,337			247,916			3.63		26,522,991			245,756			3.69
Non-interest earning assets	3,489,519								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 deposits	8,304,834			8,078			0.39		8,577,920			6,065			0.28
Certificates of deposit	2,559,325			6,057			0.94		2,158,348			4,122			0.76
Total interest bearing deposits	18,279,977			18,251			0.40		18,318,853			13,417			0.29
Other borrowings	1,303,849			3,378			1.03		261,787			518			0.79
Subordinated debentures - Bank	173,328			2,360			5.45		168,222			2,293			5.45
Subordinated debentures - Company	270,764			2,845			4.20		422,048			4,356			4.13
Total borrowings	1,747,941			8,583			1.95		852,057			7,167			3.35
Total interest bearing liabilities	20,027,918			26,834			0.53		19,170,910			20,584			0.43
Non-interest bearing deposits	5,385,939								5,530,334
Other non-interest bearing liabilities	708,665								731,151
Total liabilities	26,122,522								25,432,395
Stockholders’ equity	4,530,334								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 equivalent				221,082			3.24	%				225,172			3.38	%
Less tax equivalent adjustment				(3,258		)						(3,146		)
Net interest income				217,824								222,026
Accretion income on acquired loans				9,172								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		%

¹Average 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 Subsidiaries
Non-GAAP Financial Measures
(unaudited, in thousands, except share and per share data)

	For the Quarter Ended
	December 31, 2019								December 31, 2020
	Average balance			Interest			Yield/ Rate		Average balance			Interest			Yield/ 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
ADC	459,372			5,924			5.12		685,368			6,500			3.77
Commercial loans	18,473,473			225,580			4.84		19,992,074			195,122			3.88
Consumer loans	243,057			3,290			5.37		195,870			2,028			4.12
Residential mortgage loans	2,284,419			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 taxable	2,905,545			20,367			2.78		2,191,333			15,679			2.85
Securities non-taxable	2,159,391			16,494			3.06		1,964,451			14,985			3.05
Interest earning deposits	573,861			2,423			1.68		331,587			105			0.13
FHLB and Federal Reserve Bank stock	261,693			3,276			4.97		156,109			465			1.18
Total securities and other earning assets	5,900,490			42,560			2.86		4,643,480			31,234			2.68
Total interest earning assets	26,901,439			298,937			4.41		26,522,991			245,756			3.69
Non-interest earning assets	3,448,252								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 deposits	7,681,491			20,867			1.08		8,577,920			6,065			0.28
Certificates of deposit	3,271,674			15,370			1.86		2,158,348			4,122			0.76
Total interest bearing deposits	17,927,455			49,907			1.10		18,318,853			13,417			0.29
Senior notes	173,601			1,369			3.15		—			—			—
Other borrowings	2,496,546			13,112			2.08		261,787			518			0.79
Subordinated debentures - Bank	173,142			2,358			5.45		168,222			2,293			5.45
Subordinated debentures - Company	47,118			471			4.00		422,048			4,356			4.13
Total borrowings	2,890,407			17,310			2.38		852,057			7,167			3.35
Total interest bearing liabilities	20,817,862			67,217			1.28		19,170,910			20,584			0.43
Non-interest bearing deposits	4,361,642								5,530,334
Other non-interest bearing liabilities	645,770								731,151
Total liabilities	25,825,274								25,432,395
Stockholders’ equity	4,524,417								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 equivalent				231,720			3.42	%				225,172			3.38	%
Less tax equivalent adjustment				(3,463		)						(3,146		)
Net interest income				228,257								222,026
Accretion income on acquired loans				19,497								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		%

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
	12/31/2019			3/31/2020			6/30/2020			9/30/2020			12/31/2020

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 income	32,381			47,326			26,090			28,225			33,921
Total net revenue	260,638			259,098			239,389			246,049			255,947
Non-interest expense	115,450			114,713			124,881			119,362			133,473
PPNR	145,188			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 securities	76			(8,412		)	(485		)	(642		)	111
Net loss on termination of Astoria defined benefit pension plan	280			—			—			—			—
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
Adjusted PPNR	$	131,380		$	126,203		$	113,832		$	123,286		$	130,257

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
	12/31/2019				3/31/2020				6/30/2020				9/30/2020				12/31/2020

The following table shows the reconciliation of stockholders’ equity to tangible common equity and the tangible common equity ratio^2:

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 assets	28,792,651				28,545,390				29,054,447				28,836,476				28,043,091
Stockholders’ equity	4,530,113				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’ equity	2,598,686				2,495,415				2,561,599				2,639,622				2,676,778
Common stock outstanding at period end	198,455,324				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 common	104,722				12,171				48,820				82,438				74,457
Net income, if annualized	415,473				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 assets	28,569,589				28,692,033				28,944,714				28,868,840				28,244,364
Net income available to common	104,722				12,171				48,820				82,438				74,457
Net income, if annualized	415,473				48,951				196,353				327,960				296,209
Reported return on average tangible assets	1.45			%	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 assets	1.51			%	(0.04		)	%	0.79			%	1.21			%	1.33			%

Sterling Bancorp and Subsidiaries
NON-GAAP FFINANCIAL 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
	12/31/2019				3/31/2020				6/30/2020				9/30/2020				12/31/2020

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 income	32,381				47,326				26,090				28,225				33,921
Total revenue	260,638				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 securities	76				(8,412		)		(485		)		(642		)		111
Loss on termination of pension plan	280				—				—				—				—
Depreciation of operating leases	—				(3,492		)		(3,136		)		(3,130		)		(3,130		)
Adjusted total revenue	264,457				250,648				239,179				245,535				256,074
Non-interest expense	115,450				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 expense	105,532				106,277				107,822				105,791				110,083
Reported operating efficiency ratio	44.3			%	44.3			%	52.2			%	48.5			%	52.1			%
Adjusted operating efficiency ratio	39.9				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 securities	76				(8,412		)		(485		)		(642		)		111
Loss on termination of pension plan	280				—				—				—				—
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 adjustments	5,689				(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

Sterling Bancorp and Subsidiaries
NON-GAAP FFINANCIAL 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,
	2019			2020

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 securities	6,905			(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 strategy	14,398			13,311
Charge for asset write-downs, systems integration, retention and severance	8,477			—
(Gain) loss on extinguishment of borrowings	(46		)	19,462
Amortization of non-compete agreements and acquired customer list intangible assets	840			686
Total pre-tax adjustments	10,444			24,031
Adjusted pre-tax income	550,410			279,699
Adjusted income tax expense	115,586			37,759
Adjusted net income (non-GAAP)	$	434,824		$	241,940
Preferred stock dividend	7,933			7,883
Adjusted net income available to common stockholders (non-GAAP)	$	426,891		$	234,057

Weighted average diluted shares	206,131,628			194,393,343
Diluted EPS as reported (GAAP)	$	2.03		$	1.12
Adjusted diluted EPS (non-GAAP)	2.07			1.20

Sterling Bancorp and Subsidiaries
NON-GAAP FFINANCIAL 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,
	2019				2020

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’ equity	2,552,123				2,600,140
Net income available to common stockholders	$	419,108			$	217,886
Reported return on average tangible common equity	16.42			%	8.38			%
Adjusted net income available to common stockholders (see reconciliation on page 21)	$	426,891			$	234,057
Adjusted return on average tangible common equity	16.73			%	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 assets	28,364,915				28,686,773
Net income available to common stockholders	419,108				217,886
Reported return on average tangible assets	1.48			%	0.76			%
Adjusted net income available to common stockholders (see reconciliation on page 21)	$	426,891			$	234,057
Adjusted return on average tangible assets	1.51			%	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 income	130,865				135,562
Total revenues	1,049,788				1,000,483
Tax equivalent adjustment on securities	14,834				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 revenue	1,051,397				991,438
Non-interest expense	463,837				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 borrowings	46				(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 ratio	44.2			%	49.2			%
Adjusted operating efficiency ratio	40.1			%	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

Sterling Bancorp and Subsidiaries
NON-GAAP FFINANCIAL 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.

²Stockholders’ 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.

STERLING BANCORP CONTACT:

Emlen Harmon, Senior Managing Director - Investor Relations

212.309.7646

http://www.sterlingbancorp.com

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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).

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