Sterling Bancorp Inc (SBT) Reports Improved Earnings for Q4 and Full Year 2023
Net Income: Q4 net income of $5.1 million, a significant increase from $0.3 million in Q3.
Earnings Per Share: Q4 EPS at $0.10, up from $0.01 in the previous quarter.
Asset Quality: Recovery of credit losses of $(4.4) million in Q4, indicating improved credit quality.
Capital Ratios: Strong leverage ratio of 13.95% for the company and 13.38% for the Bank.
Balance Sheet: Total assets slightly decreased to $2.4 billion, with a notable increase in cash and securities.
Loan Portfolio: Gross loans held for investment declined by 19% year-over-year.
Deposit Growth: Total deposits increased by 3% year-over-year to $2.0 billion.
On January 24, 2024, Sterling Bancorp Inc (NASDAQ:SBT) released its 8-K filing, detailing the financial results for the fourth quarter and the full year of 2023. The company, a unitary savings and loan holding company operating primarily through its subsidiary Sterling Bank, reported a net income of $5.1 million, or $0.10 per diluted share, for Q4 2023. This marks a substantial improvement from the net income of $0.3 million, or $0.01 per diluted share, for Q3 2023. For the full year, net income was $7.4 million, or $0.15 per diluted share, compared to a net loss of $(14.2) million, or $(0.28) per diluted share, for the previous year.
Performance and Challenges
Thomas M. OBrien, Chairman, President, and CEO, highlighted the company's continued improvement in expense management following the resolution of government investigations. Despite this, Sterling Bancorp Inc faced expenses related to indemnified individuals' responses to government inquiries, which were partially offset by insurance reimbursements. The company's loan portfolio experienced a decline over the year as new lending products were not introduced, but total assets were maintained by increasing short-term liquid assets. The company's strong capital position was further enhanced by the quarter's net income.
OBrien also noted the challenges posed by the elevated interest rate environment, particularly on deposit prices, and the current economic conditions that limit the pursuit of new strategic directions. However, he expressed confidence in Sterling's ability to protect its strengths, including strong capital, liquidity, and solid credit quality.
Financial Achievements and Industry Significance
The company's financial achievements, particularly the recovery of credit losses and the strong capital ratios, are significant in the banking industry. These metrics indicate a healthy financial position and the ability to withstand economic fluctuations. The recovery of credit losses of $(4.4) million in Q4 reflects general improvement in the economic forecast and a decline in the loan portfolio from the prior period.
Key Financial Metrics
SBT's balance sheet showed a slight decrease in total assets to $2.4 billion, with cash and due from banks increasing by 52% year-over-year to $578.0 million. Debt securities available for sale also increased by 22% to $419.2 million. Total gross loans held for investment declined by 19% to $1.3 billion. Total deposits increased by 3% to $2.0 billion, with money market, savings, and NOW deposits growing by 5%. The company's leverage ratio stood strong at 13.95% for the consolidated company and 13.38% for the Bank.
"We believe we have positioned Sterling well to protect our strengths, namely: strong capital, strong liquidity and solid credit quality." - Thomas M. OBrien, Chairman, President, and CEO
Analysis of Company's Performance
SBT's performance in Q4 and the full year 2023 demonstrates resilience in a challenging economic environment. The company's ability to generate a net income after a previous year's loss shows effective management and strategic positioning. The growth in deposits and the maintenance of a strong capital base are positive indicators for future stability and potential growth.
Overall, Sterling Bancorp Inc's financial results for Q4 and the full year 2023 reflect a company that has navigated past challenges and is positioned with a solid foundation for the future. The detailed financial data and management's commentary provide valuable insights for value investors and potential members of GuruFocus.com seeking reliable and objective financial analysis.
Explore the complete 8-K earnings release (here) from Sterling Bancorp Inc for further details.
This article first appeared on GuruFocus.
