Sterling Bancorp. (NYSE:STL) Q1 2015 Earnings Conference Call - Final Transcript

Jan 28, 2015 • 10:30 am ET

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Sterling Bancorp. (NYSE:STL) Q1 2015 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Good morning. My name is Brandy, and I will be your conference operator today. At this time, I would like to welcome everyone Sterling Quarter Ended December 31, 2014 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions).

Thank you. Mr. Jack Kopnisky, CEO, you may begin your conference sir.

Executive
Jack Kopnisky

Thank you. Good morning, everyone, and thanks for joining us today to discuss our quarterly results. Joining me today on the call is Luis Massiani, our Chief Financial Officer.

And before we start, going through our results, let's begin by discussing our fiscal year-end. We will be changing our fiscal year-end from September 30th to December 31st, effective as of this fourth calendar quarter. We will file a transition 10-K in March 2015, which will include audited financial results for the quarter ended December 31st, 2014. We believe this change helps the shareholders, investors and analysts in reviewing our financial results and evaluating our performance.

Now let's discuss this quarter's results. We continue our progression of delivering strong core operating results, driven by solid revenue growth and expense controls. Excluding the impact of merger-related expenses and other charges, core earnings were $19.6 million and core earnings per diluted share were $0.23, representing an 8% increase over last quarter's earnings.

Core revenue growth was 3.2% and core expenses increased 1.9% over the linked quarter. The improvement in our core operating and profitability ratios was significant, and begins to position us as a high performing company. Our net interest margin was 3.7%, compared to 3.77% in the linked quarter and 3.58% in the fourth quarter of 2013.

Our core return on tangible equity improved 62 basis points to 14.42% and our core return on tangible assets improved by 7 basis points to a 113 basis points over the linked quarter. Core efficiency ratio improved by 70 basis points to 54% and we continue to drive positive operating leverage in this model.

We continue to experience strong loan growth across multiple commercial asset classes. Commercial loans grew $94.4 million for the quarter, representing a 9.6% annualized growth. Year-over-year commercial loans have grown by almost $700 million, which represents growth of 20.5%.

Please note that our total loan balances in the quarter were impacted by the sale of approximately $43 million of residential mortgage loans, which Luis will discuss further.

As of December 31st, 2014, total deposits were $5.2 billion. We continue to enjoy the benefits of a great deposit base with close to 90% core deposit balances and a weighted average cost of deposits of 21 basis points.

Non-interest income, excluding security gains was $14 million for the quarter, which represented approximately 18.9% of total revenue. We are very focused on diversifying and improving our revenue mix and continuing to invest in specialized lending businesses that are also fee income generators. We anticipate completing the acquisition of a specialized payroll finance service provider by February 2015. Luis