Sterling Bancorp (SBT) Q3 2024 earnings summary

Executive summary

• Entered into a definitive agreement to sell Sterling Bank to EverBank for $261 million in cash, with dissolution of Sterling Bancorp, Inc. planned post-transaction, pending shareholder and regulatory approval.

• Net loss of $0.1 million for Q3 2024, compared to net income of $0.3 million in Q3 2023 and $1.3 million in Q2 2024, driven by higher deposit costs and lower net interest income.

• Transaction expected to close in Q1 2025, with initial cash distribution to shareholders after closing, subject to approvals.

• Credit quality remains strong, though nonperforming residential real estate loans increased to $13.2 million, or 0.54% of total assets.

• Total assets increased to $2.44 billion at September 30, 2024, with growth in deposits and a decline in loans.

Financial highlights

• Net interest income for Q3 2024 was $13.6 million, down 15% year-over-year and 5% sequentially; net interest margin declined to 2.30% from 2.62% in Q3 2023 and 2.44% in Q2 2024.

• Interest income rose 4% to $34.4 million, but interest expense increased 23% to $20.7 million due to higher deposit costs.

• Provision for credit losses was a recovery of $2.3 million in Q3 2024, reflecting continued strong credit quality.

• Non-interest expense was $15.6 million, up 5% sequentially due to higher professional fees, but down 12% year-over-year.

• Total deposits grew to $2.07 billion, up 3% sequentially and $63.2 million from year-end 2023; time deposits increased 11% year-over-year and 7% sequentially.

Outlook and guidance

• Pending sale of the Bank and dissolution of the Company, with initial cash distribution to shareholders expected after closing, subject to regulatory and shareholder approval.

• Transaction with EverBank expected to close in Q1 2025.

• Uncertainties remain regarding timing and amount of shareholder distributions due to potential liabilities and wind-down costs.

• Company expects to incur significant professional fees through the closing of the transaction.

• Forward-looking statements caution on risks related to transaction completion, regulatory approvals, and market conditions.