Sterling Bancorp (STL) 23 Jan 202019 Q4 Earnings call transcript

Good day, and welcome to the Sterling Bancorp Q4 2019 Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Jack Kopnisky. Please go ahead.

Good morning, everyone and thanks for joining us to present and discuss our results for the fourth quarter and fiscal year 2019.

call Harmon, Massiani, of our the Officer; Chief Investor on Emlen and newly me is our Luis Financial Relations. Joining appointed, Director

with detailed a press and have presentation our which We on year-end results. release on information along provides our quarterly website, our

from we growth, resulting solid superior continued credit targeted the fee financial call, quarterly levels year-end growth, quality, and controls. highlight income, will During commercial significant of strong loan our and metrics strong deposit cost capital diversified strong

quarter, able enable the earnings were several to XXXX actions fourth execute the remix In and increased to that we in balance strategic to and operating produce will the leverage continue beyond. positive to sheet Company

at quarter, $XXX shares reposition a targeted to we earning portfolio, our million balance the sheet issued mix stock. acquired million rates, of $X favorable and repurchased and continued finance During sub-debt asset of equipment $XXX million

quarter common adjusted quarter income on X% Adjusted common per an X% tangible was shareholders results linked Adjusted were Adjusted linked-quarter. $X.XX On strong. share and than this basis the return $XXX fourth fourth quarter earnings was of equity basis, available assets the was to $X.XX operating points of over or the was net million, our for increase on quarter tangible higher average average XX.X%. and XXX XXXX. return a

Our efficiency ratio XX%. industry be among at continues to leaders the

December EPS of our share The $XX.XX per quarter X.X% over for record of over XX.X% increased book levels value Company. $XX.XX book tangible Our $X.XX XXXX. were and value linked and of tangible the

is achieve balance that higher to us. in increased we Total to grow remix the are repositioning position the now During behind most balance and by the quarter the portfolios during assets loan continue returns. sheet the given overall quarter, to as securities of sheet risk-adjusted a $XXX million we

to growth. produce strong continue loan We

loans grew commercial annual grew the $X.X For quarter, commercial inclusive XX.X%. On basis, linked or an quarter. acquisition, or $XXX the portfolio over finance million targeted of loans the equipment X.X% billion

XXXX, growth than reduced and low residential and real organically billion yielding year-over-year. in by have lender total portfolio XX% consumer warehouse, in of finance, Commercial portfolios we more finance $X.X loans grown resulting all mortgage public XX.X%. by During loans estate, $XXX million, or

We quarter increased deposits quarter. basis a by growth. year-end. had million linked balances $X.X for the deposit Average a strong Total billion spot $XXX deposit increased by at over on

balances, more September X deposits municipal in broker we quarter, seasonal average grow XX, were points. the from and As replace declined Deposit the consumer able and basis balances XX favorable points direct XXXX, cost overall by declined and at declined core commercial costs basis weighted to rates. bank and by funding

We in portfolio are CD targeted reducing and XX, that a high-cost XXXX. billion March on the costs $X.X will deposit consumer by relationships reprice municipal focusing

XX quarter X basis costs to to XXXX. We by of in deposit first the expect lower points

Our and mix funding lower sources, costs. flexibility products, of balances, provide we channels funding while to grow

comprise approximately core asset Our accretion income our environment and our securities acquired in one-third yields rate excluding quarter. points of declining on floating-rate basis that resulted has interest XXX the on for loans, was net lower The loans interest assets. margin,

focus has over margin net of net core as remixing a the with past our for a months maintain been controlling interest result our earning on deposits, to deposit we stable margin our Coupled able been interest and but assets competition XX have pressured, our costs.

will XXX anticipate to a we that outlook, remain interest XXX basis core XXXX. rate the in changes margin point range into in our net no Assuming

would XXX purchase the have Just been quarter points. significant then cash basis the a to invested, balances core cash in portfolio. We the on margin. approximately If these finance have equipment interest balances the held note would margin

and fee result $XX solid income, and fees, $XXX XX% fee swap over treasury be to grew improvements. of continued Adjusted million growth income management portfolio XXXX. commercial million fees, the year was full fee fee as Core by or a loan a income

exclusive of year-ago up X%. a million increased to quarter or amortization $XXX.X Core from of the modestly intangibles expenses

continue the reductions reduce support risk We to and commercial to technology in growth staffing reallocated the enterprise teams, of aggressively portion our and network and a management. have financial center

financial In XXXX, centers resulting we in consolidated any XX centers year-end. at financial two

level Overall, expect We financial million. to centers in XX annualized under be to for operating expense equates an the XXXX. run rate our quarter $XXX expense of

XXXX. in indicated our will expenses $XXX we million be As range presentation, in to the expect operating for we $XXX million earnings

charge-offs Credit points non-performing as of Charge-offs this quarter. disposition quality million by $X The The delinquency decreased and and XX $X.X loans annualized remained previously basis. we over the loans. equipment basis of on an strong. capital linked-quarter of levels represent identified, million levels loans levels improved

increases secured represent loan loans. these and increased but appropriately marked performing Substandard categories

economy, XXXX. rate strong mix regulatory Given the environment, expect the a see in oversight stable portfolio, low we to to our of credit and continue quality

to equity tangible bank capital common was and XX.X%. assets was tangible Total X%, at the total strong at risk-based

remaining repurchased shares our we repurchase shares have and quarter, in X.X million X During the million authorization.

to for were favorable to continue Astoria will into a debt and payouts. of capital debt from the We million our able and execute in use We $XXX that quarter transaction refinance existing our business, mid-XXXX the due core evaluate provide growth in Company. repurchases dividend the for excess investment capital share issuance

meet constantly culture our great improve companies elements our One Company. of on and and clients, demands of our is reinventing focus adjust fundamental We colleagues. change, the to shareholders, the believe of core that constantly our

rates regardless the changes to competition. a Our of high-performance to position Company objective always the be has economy, in been or the organization,

of from steps of number the would rate questions receive of highlight taken steady continued to of majority we growth. relate some that have us cycle for across lower position to I a we to investors later areas the like dynamics The growth environments. in

book low balance also sheet asset loans. C&I EPS tangible and targeted the and classes, the higher-yielding CRE with replacing past value the producing While multi-family asset have exiting we residential record remixed year, side and non-relationship, yielding relationship-oriented by and them of over successfully

total loan a record XXXX. commercial billion organic through portfolios originations in commercial and acquiring billion by our $X.X for transition portfolios. XX targeted teams originated this loan relationship loans and organically made have growth two acquired in of We commercial totaling billion $X.X this year We high-quality $X.X by

We have to now of complete. ability commercial the of revenues that transition Company side the majority the continue is grow related and this to the

a we despite reductions, to deposits. maintain and of The liabilities our year-over-year manage environment efforts combination yield points core to basis have have a steady our curve steps sheet margin, a taken these Fed for successfully of net repositioned interest balance flatter and competitive funds XX

funding we commercial fund channels us enable have rate and cost, that volume, The and attributes. have have options growth. digital how and developed We teams, centers, wholesale multiple distinct financial sources term to

a our quarter despite of by points. runoff, capability illustration basis nearly of this by X we as in our also lowering overall fourth good million provided deposits while deposits cost municipal The $XXX seasonal grew $XXX million

We will to refine continue channels and existing new seek funding channels.

strong. credit has exceptionally Our quality remained

risk resources years, a For have program. best-in-class management focused significant we on creating eight the past

Over credit with the enhanced credit have past to year, cycles. group we growth significant and acquiring by deal our technology talent future support and

CRE a X.XX loan-to-value a than portfolio has our and of of XX% debt less Overall, times. service coverage

inventory for and believe will industry. a rate the equipment. secured economy, Our given We near tightened within C&I strong environment the portfolio is margin by low stable or future, be credit standards quality accounts regulatory XX% across receivable,

past future, changes in ability due and rate the and rate confident even yield environment. meet a The was the growth flatness our to exceed year lower and our in to in return the of curve. our model challenging are the and We targets

points or XXX We in average basis to value earnings ratios and tangible successfully of positive on deliver and tangible strong of book in on beyond efficiency Company than leverage return greater, repositioned assets per XX% return less common average the or XX% growth of growth, greater XXXX than and operating equity of tangible XX%. share greater,

to the results information of presentation that of X actions on to the our the overall reflects past Page several continue We point over years. the

earnings - past XXXX, five XX%, tangible December annual share at compounded the ending an of share at adjusted ended growth common year rate our per growth XX%. book Over has grown value and XX, per period our

questions. let's now for And open Thanks. up

Casey will [Operator go question first Instructions] ahead. now take from Jefferies. We our Please from Haire

minimum guide start I for amount says of know authorization. same a X.X the wanted million the The that's of pure and shares, to on I buyback.

little to buyback I the bit of that confusion that in poised market think the a is slow. there's -

as Just capital that total XXXX in your thoughts XXXX. XXX to to we'd versus million return the ratio in level get like

Yes.

to So the X.X so that the in we through, going is about we talked - see as million have we're what have remaining, and we past.

buyback We are currently on authority. increasing working that

we - what to providing so we're exactly that's do And that without from going specific perspective. numbers,

authority have increase an assume our done buyback to have that in and XXXX. going in what should XXXX we similar to we're You

be to as assume front. active you long and the in the see as that generation internal progression generate capital and continued and to outlined that safely the can on we've will growth we of continue presentation, continue And buyback we quite

year the the do we progressing the XX, road. XX opportunities shares growth, the of potential you pipeline us, buying they acquisitions how show this ' will that course on depend if when numbers portfolio build, of balance It is Now, will the see things of about think the sheet over back year, million down same. course from over if that the up,

continue the So quite there active buyback but flexibility we will will be forward. to on there, some going be

past. what So in million year XX opportunities we better we see repeat this there like is that to is year - than because unlikely a have - growth had we don't did the this we

this shares that the why capacity did to to some is of One capital as excess we when year we sold create bought residential had. so billion close many $X.X reasons mortgages, which of we that

back $X.X X million that every active But on we'll it very assume we quarter. being continue be million between buying and to somewhere should we'll million average, shares $X actively in -

cut. so assume forecast your off, did What that NIM, to if NIM Fed switching first a Fed - we So like not clarify, cut? X.XX% get guys to a X.XX% you would look to does just

the pretty We're from cut. Fed - - neutral it pretty of at perspective as the we're

higher slightly So about where very or there the shift is direction. no in don't I We in think at end higher feel cut you'd environment, projections have midpoint either of none? again much the a be the if rate sooner. just a have but to good range, relatively getting you it of one benign

have now the is But that time. and cut no what we over we'll this would reprice rate assets - deposit is doubt, of immediately we and happened what catch have will you and back happen of billion some the period $X.X one do fundings year, the side then to if similar see

the no see ability to don't to of higher that from the environment. the cut it's meaningfully with we the easier end higher a to But any the midpoint think to outlook perspective different So of I get range. range,

layered quarter the core your in below the what's looks loan It just digging that's fourth the And little - NIM money a forecast? yields Do originated XX NIM like yield. deeper outlook, in expect bps year about the yield X.XX%. were on the new that's today you

Yes. relative There's There in it's always so some better on number X.XX%. to to - whichever volatility that has another. business is line X.XX% quarter always based a

we're be good. that the yields. will it the yield year over pretty right of be feel on confident course But loan we So - run-off with so new the over in origination of in course the existing of and average at, XXXX, will the mind

Okay.

don't cuts, levels. to no around talking we there pipeline So assuming see rate no, those so - that about, the we're at environment the cut building confident we in is again right? are right, that very So that - is one

this X.XX% four around this vary but around it So will - level.

average, average, be will On around that. On correct. it

XXXX, think - just of which like are guys And to of the that There funding all borrowings. - you are it's guys just it switching them of and the provide obviously, to Is stability to to outlined parts? achieve the which you appears on this last beta moving online, try a I number the accelerating, that for drivers - guys lot that help given most going costs number deposit NIM components in funding or side a you are year. be relief help possible consumer is to Slide big to going XX, CDs one, a just

components, think Casey. of I those all

Yes.

Yes.

this there last is over couple of guided quarters. to a - I think we've the

you roughly approximately basis assessing it's there so We is are stack of did in we component year, funding of a quarter-over-quarter. the think big of so that in down outlined continue stages see funding of - kind the From fourth this result in deposit step I stack points wholesale that side. the repricing happen third and X of kind of somewhere as borrowings there, perspective, the the quarter early will to should repricing,

course when deposit had across CDs - quarter - it already see the none repriced in of But of slide as started on side, cost have been in commercial guiding at that the really CD point. we we especially consumer that January. you'll to in reprice the the side, progression at it's board. call, saying you over this look that to We've commercial the and the that last on

again - were don't you the certain the is lowest - are those - more commercial as we well. board there know lowest if is if that I what's certainty that to fruit, and So is are hanging how fruit across think is there the around hanging probably those a as broader reprice. going But - will is to opportunity consumer here the on those because

still in stages these said, We're as of the - relationships. early we full

the protect deposit so the of rates stages right the mindful very early relationships, applecart still those But been We of are very managing not we've that. going kind upsetting of we're way. in to and

is times, approximately consumer side XX%. XX% on many was XX% which we've deposit about The up way beta talked commercial to that as only and on the

is going to again, will it there of And plenty there. smartly. we're room - manage So we

very same there are but as substantial relationships, at we're We we in confident on time, decreases room progress is retaining those for focused XXXX. continue the to that

Great. Thank you.

the reprice month areas will significantly really XX this and of side deposits to thing, have very distinct the come to down, we that coming are kind The the the balances. work and nine that this thing that $X.X that relationship transaction-oriented of is rates we a reprice CD retain Yes. then range, to time billion in we CD due work are balances need municipal on we have a muni two as

Steve from will now question Please next B. from FBR. Riley our ahead. Moss go take We

about basis from of liquidity. up following it I to decline quarter. X said looking probably seems margin think, on the so as Jack, first like like margin then sounds a basis fair? core and quarter here, our margin, point the margin in point And start here, funding at it think Just you you by were we costs, core Is it but linked-quarter that just the X.XX%-ish probably impact the the X.XX%, XX

I'd So do is the cost first that going you thing factor that is quarter. bit us a have say issuance little one in it's that debt so - to have witnessed, subordinated to in we

and notes various alternatives So senior right take actively working evaluating on maturity. we're than now to sooner out the

half over kind anticipate confident second up more, feel and it any that then end you So the stack, that is of in the cost the you and first you a We'll in senior in we then we that range. it's continue of asset to to we not fundings perspective X.XX%. given seen rightsize year X.X% and fourth of that and the start quarter going we build the end have the abating essentially not to the quarter, be - the going fundings do going of reprice that at But notes at back decreasing lower lower be the we as down, the course yields year. range pretty from the fact eliminate the

loan to this loan why about quarter are loan then organic growth talk wondering little this didn't growth just down here, loan growth I'm And bit. organic pretty the quarter, through deck, what growth more - we flattish but see here? on dynamics the just saw a and wondering

Yes, good question.

One, million I So include growth, we couple of about There that asset worth of million. about in lease affected category. that quarter about included are that. guided last $X.X the we commercial - leased in factors to other realized and is think there this, $XXX a billion we we loan assets $XXX don't of

the bought was of pay Mortgage and loans faster, million about worth We sold mortgage the down additional million some the non-relationship $XXX turn quarter. warehouse balance warehouse side because payoffs and just was down. $XXX people off about off then in the of

of a from So good we organic in million of billion well basis originations. over actually $XXX had loan off quarter and $XXX growth between million $X

So but organic have loan there of bit because these wasn't there extraordinary, items some growth, fairly - that's organic growth. a the of why like meaningful is been was loan - looks it there little

about what's here? the purchases as M&A whether just forward, think going for we bank then acquisitions portfolio - And appetite versus

change always are We acquisitions alternative banks asset on sources. side. history portfolio gone mix find risk-adjusted this, returns the to acquire We for looking enhance funding and revenue the our We've through dictates. the to

So to continue the to for went do and constantly we that. through we Company, my are looking opportunities to in comments, I - and will reinvent

some think We some sense. sense in cases, prices and, make in cases, don't make prices

does Some - quality the asset in and, in quality acquisitions. cases, in the make many portfolio doesn't the asset cases, make some sense sense

see constantly along to look at other both banks, of portfolios kind frankly, we sources way. So and opportunities other the funding and

Piper take Please our Alex ahead. now will next Sandler. question from from Twerdahl go We

that on understand acquisitions. to question wanted last just I on

I look says organic it XXXX, Just as on it loan focuses targets loan for that growth the at growth.

So of of the low in be and range? - top to along hands contemplated of towards that kind that should Or not at loan should organically, end pushes an end, is the of all that at acquisition portfolios the much is, assumption come just acquisitions pretty that in least guidance? on the kind you that

is Your number, this. the first - way an is presented it's we true, organic comment this

that that it that be guidance over over would the above - So would will the net. and be do that on we guidance. above and be Anything

Okay.

as then the you as $XXX that doesn't $XXX And see that's it have So sort in number the to million, that today, no that expense any contemplate - past? number million of of acquisitions might acquisitions. similarly,

That's correct.

a expansion Are little X.XX% a on X.XX% somewhere quarter? the going X.XX% the we're to see at that saying first the just margin? margin to certainly least of you be - quarter that range margin, for bit each that in is in the of to implying then that about you some range, X.XX%, talked range And full-year of kind should

It's the latter, yes.

Yes.

range the that out. essentially, we quarterly NIM the where of it's shaking see So

to because start progression to of year. like - full-year NIM we that rate stack, X.XX% lower start of stable maintain are that going of at not - seeing environment, should the at right? yields and that not regarding of to level. to asset disclaimer. and that expansion that of course is then relatively the some going unlikely big that kind again, assuming, - we NIM always are year to nice throughout at we're with a caveat NIM, - anticipate full-year again So a range, we're NIM which there's going as be the that - start end the to benign So and be we're going the We the start But continue funding we we - reprice over the expansion we and the the

Right.

it quarter to fourth on sounds So just NIM are me you bottom based calling you the like guys on what the in the said?

Yes.

Yes.

cost remember - going again, have of be some the some the so NIM retiring especially, that higher senior bit that how we to little short-term we a we of volatility of So of out with there in notes. driver debt to is the have - a are successful

So million X% we issue so short-term impact. a will did a have that $XXX obviously, rate sub-debt it at

factor get take essentially think kind I longer-term when that the that a to senior - that the you that's the you duration then out to longer debt position notes, the going that's But the on in perspective from the we're essentially books. net-net neutral of of

then on started - they've leveled the to we very of to good yields have But second have seen down very quite continue nice out, yes, confident we've feel half they of a kind the what of in see funding again fourth they've and the asset settled we stack. - that repricing progression quarter and in based

close. and not we're the - you're pretty darn we're right, bottom So pretty at

that's around color the where us XXXX. of in been that out that any helpful. clear the accretion $XX you finally past zero on Perfect. kind of for in next up right $XX of can basically targeting purchase guidance you've any And give then to million might where trend to That's go extremely accounting to towards XXXX? year? Is for And million, just confusion there, sort going

No.

have to million XXXX, $XX you're or going still to another so. in $XX So million

to every another flowing there's But to you're it going $XX million in some year. accretion accretion So to through million, the $XX you call pretty accretion see going step-down, to so XXXX. $XX step-downs see or the be is tail million the on long, to income income continue million $XX But side. of still

ahead. will next Bishop now from We Please Dave take D.A. Davidson. go from our question

the of appreciate in breakdown. disclosure I terms deposit

initiative, about grows flowing that a And from puzzle marketing online from curious, bank think funding that big piece we all-in Just to that some source the guess the think benchmark all-in how cost? how the what the a any perspective you that's this should of way I to? from of sort cost an cost of is? quarter; through of

Sure.

- spending to incremental the - So the the online on we - channel. rate we're XX approximately points out building are basis on interest of

don't misleading I Now, want did - it of online we I have right. it's caveat from don't infrastructure to is that saying that that uses built, bank shared by number that the right? the just - there that say know perspective not It's because other services are say, I fact obviously a also

originating that So when cost about associated in expenses think interest half points. - that's - direct XX rate was you of deposits channel, originating that through it basis second of what with kind but the its XXXX. - That there approximately the

fact that going to more cognizant again it's realized cost and are are sensitive. interest higher - that perspective, rate So an they're deposits we be rate to of be from and the going

very and environment, is environment to it benign efficient allows efficiency very decreasing But efficient in is from level today way further there. potentially to And that a ratio that generate generally good we way a to our feel low to - it very from the generate or a rate funding it continue a worded rate us funding. manage

originally that time expectations to a worked learn was had much the we very about for far, exceeding so very to the test be we and So out line going has and function test we've and like And learn channel. in this talked this that some much thought. funding

in fact spot between the good that are pretty So convey, - the were saw points quarter, a we growth basis perspective of you and will third that fourth the move the to from balanced we by quarter, messages XX darn yet still started. that you wanted the deposits able that down see that in key of cost to approximately was what page there we end where that from

like direction headed. that the we business So is

of it function going how by of perspective so anticipate learn continue it's between test should it a tweak XXXX, $X.XX to be we we we're $XX and based the time represent billion, should dial rough. about And X% just that a billion and should the will pricing From deposits somewhere to gets, on billion up down, big to to need to we're end that X% again, have to is somewhere going to somewhere $XX we of - what tell. stack, deposits and of so whatever the see funding Roughly, billion be think it's and you between that be seeing. $X between,

depending perspective has we almost to the overall very move basis on intermediate the and - up what acquisition deposit the of And based the so this how are. But - other the up kind are channel what and also that we relationships are driven are channels channel that and that's again, we and how far, like - on grow. is funding kind through of being much cost that needs down that down dial ability types we - from and we to customer an that pricing much think like responded dial accounts the of today the very pricing going and of

a very channel. So efficient

market, terms maybe of core into talk estate perspective? about some the real should move commentary and opportunities maybe from relationship-driven commercial the XXXX maybe And a growth you in

Yes.

a We many commercial metropolitan New real continue things the of is to country. look in around opportunities great there of anywhere estate estate the the York out about options variations as commercial of projects. variety there, are at as It's real different being one

So it may are people be around rent-controlled a obviously projects. the lot multi-family of concerned

There are risk-adjusted to we in that they standpoint types returns of from this of available are a projects get that can us out real estate many other market. very the

this real very metropolitan commercial estate we on path area. the opportunities So think in on clear is

will Instructions] go Gilbert from [Operator We Collyn question KBW. next take our now ahead. from Please

this and to It bit looks guys Just quarter, looks in hung if growth this wanted saw a portfolio. it third a the bit to in at yields dig looking kind little little I'm like relative to loan correctly, well. of you as the like multi-family quarter

how wanted about to then that - City sort was the New What is of has you're drive just going So growth? portfolio? rent-stabilized driving to the portion been understand what's how York trending? thinking or And

Yes.

are multi-family lot So options relationship-oriented that tended unlike on And to situations, we've there and multi-family - relationship-oriented a projects. on again, multiple deals of do to this. focus what tended frankly, other deals, we've do only

originate different of most that - projects origination our many of we many, many clients So the multi-family we have from investing. real in and many - do own many, direct basis estate do types

not is, transaction do do So we have the you thing is the of transaction. projects part the it, broker originated multi-family where the only

multi-family is - in estate there but direct brokers, are done multi-family, with lot way. a real owners that done it's out the have big we them there the basis a are a category are of - the So through and along on a so some developers

by So projects you of other and enhanced other types client. business are in the and has to stabilize started that from have they market pricing

on you've there lower-yielding and some So means that the the hang the that's deals yields higher-yielding It that staff why of multi-family seen period off kind also in we're relationship-oriented adding some of of time. running of

of balance broker City what the currently of growth what York New the I color, the have is going of understand, you portion? do kind that's that balance Jack, the - originated multi-family then on good And forward, but a

or You ranking the total originated total mean broker multi-family? the

No, Yes. rent-controlled.

you When yes, which you say, mean one.

Yes.

Sorry.

Okay.

book? New balances York of City rent-controlled multi-family, that what - the the outstanding balance

about it's to… XXX it's It's And million. $XXX about - subject

much changed changed have balances those And has quarters? - few has - okay. And that the in last

I yes, of of $XXX $XXX have - had that seen third book runoff half million the we quarters. Some over them second million of off, guess, so fourth in to and paid approximately we've

far, in have we any in the delinquencies. trends performance in not And business major changes of so seen book any and changes or

a we don't lot of it. So have

coming the - we're time, we for We and of of kind work to going some of it. actively best course And in up period of renewals is that lot forward. portfolio XXXX, over XXXX action what anticipate of out monitoring half of begin going for are loans into kind figuring second and the a and closely refinance on those that

Right.

cause we is right concern. point now, anything that would to say But can't for a we

Yes. loans be loan than tend and older value. XX% These to to less to to tend portfolio loans be they

concerned the loans there and as loan So the the service matured value we have that's debt are of so why, we're because not of the with of are that more very coverages general strong. rent-controlled aspect portfolio today, repayments because the to

vast the that we it the if all from to when way it portfolio acquired and of dating back I vast majority comes it of think the Valley. probably Astoria, Hudson all of of The majority not but does, acquisition all of -

So from not perspective, about we and not that - does that portfolio. an concerned are LTV underwriting an

and and look, to when just are core performance-oriented you've guys shifting just down about hold then last? And we OpEx at operating - all to leverage the that OpEx can going or and you and think kind so to efficiency, if that's But million come since be of investments just is and be to OpEx, Just long $XXX we trying XXXX. change this has of a Jack, that. impressive again held wonder sort of going pike? that where how it's And an there I to going point to there is your

can view our that whatever. for last Yes. I is mean,

And the we right we investments. make what is level that. XX% So for believe is

way, and out that we balancing We along of in costs other taking constantly by the people areas. are but are investments making technology

constantly mix. changing are So that we

at denominator So that the is it's our a or to change continue too, view to be Remember or continue will consistent numerator issue. that XX%.

just expense issue. also of and along expense, revenue numerator's the operating the creating the denominator's way. that an leverage so the revenue generation and not So It's

and this couple right significantly the said I higher than take earnings some and this revenue a less that get FTE produce way money. But paid higher this frankly per So have of times more FTE per people actually people and pure some we wrong.

the of So we want. that in believe efficiencies creates it model we and type that

system. management we're There a a like One, are efficient. why not or in like branch we inefficient more reasons like are asset big mortgage big or businesses two

we're reason one that's efficient. So

just the second that The dynamic is mentioned. I

frankly FTE We earnings numbers and have higher lower produce more. people peers, than that paid per of that get and revenue

kind today. dynamic So ratio that keep about works to is efficiency the it of where

Okay.

think don't get XX% the range. or I it don't can that think - into I below

So if another a follow-on. just - that's

a is in efficient and ongoing an services. kind thing, you I to it that on as is think XX% how limit be there target - think in targeted I XX% with can XX% But this range to financial of

just you, then for one item Luis. last And housekeeping

trajectory there million of significantly guys On how there this the if million, posted guide and than pay you about just that that number I obviously, you that end thinking to is going see - of - reconcile patterns that accretion slow $XX I'm And of the just year. there what I I what less being down anticipating mean well. because accretion $XX higher up as mean sort higher? for then stating that guess, the originally could trying obvious, - in Just XXXX than think I to you came were

Yes.

the year. was residential thought reason course in a book the substantially fact so driven was pay-offs - we the yes, Astoria on 'XX pay mortgage for the mortgage mark that lot the downs of of and over what being the by so the the remaining book higher the pretty So accelerated than

So running 'XX, year had bucks 'XX, call million to right? million of runoff, $XXX and we've to then been $XXX million $XXX a it in we in at close

perspective there's going have that of time. that was period bit based the what to you're book certainly is accretion be over of overall one of of performance to drivers is as - it's key that's which some little than on that to guide, So a income higher there why on always going from a we thought. providing was the And risk

multi-family so today but much ball, residential have do not on so more on the a remains efficient as - actually portfolio, we little perspective is it And crystal because obviously side, have repayments the mortgage a having residential is that - a mortgage it side. is. without but sensitive visibility What on magic rate as so bit forth, marketplace more is is as too it from not of a not and we

behave seven not five, side in mortgage multi-family seeing side points as does start CRE and pickup you start the you one XX side house yields a increases. seeing the pay-offs The a origination below that and the where substantial of they and as minute in that mortgage. The XX were, basis residential residential efficiently drop

higher - a about gets pretty you about tail million are it of level. year. very it confident - happens of lower the think these the $XX we And $XX always as because So good it never pretty being The perspective the course we over to don't feel go tail. million. feel remember from the over level the - There's year

happened million million, last So years what's million, million. we of started $XX with the where $XX $XX moves income that per to and about see similar moves that accretion in then of you'll to quarter, $XX to couple

million. $XX about was quarter Third

This in because specific some big transactions. that's $XX quarter was and million pay-offs

- seeing start off going the XXXX. type we be it's we'll at going the follow to the of course over which it's into is the type well. it's to year pattern of pattern of and higher then XXXX, fall follow same going of beginning And But then same as to the

pretty we good pretty we the number. on that on it, feel pretty has that should mix that is $XX number. million based close of be business should we that remains But But - confident the mark to it feel

from RBC We will from our Capital Markets. next Steve question take now Duong

going Just on little that high. expense to - that Is expenses, the correct? marketing was think the plans. other line, - a and retirement That I in higher just was quarter, was it back

correct. is That

- So

is and marketing that cost XX% - was retirement benefits. half on About the or by increase about pension that - about increase Out the $X of was the net and half XX% million. of million driven $X.X of other or

that much at down to level how of to possible? or gravitate expect maybe you $XX do all And million

see to a you're closer - third rate going was run what that's to QX. That's to versus going quarter be a much Yes.

- advertising discussion or of having are volatile regarding. that promotional to little a either before item, the the those to So do is from marketing bit on depending line we what - be perspective we're always will always going - a

yes. - if so And

Go ahead.

that you below little could to goes a if so get possibly that a down line? your XXXX guess, I $XXX bit, then do million expense you think

anything is I think Is possible. probable? it No. that

to we of want officers, teams make, perspective on a and a from I good business the development and hiring we banking think the pretty investments that we're that handle credential have commercial - legal side building that with the deposit out and property the team innovation finance the channels services, the we a on and management especially lot hired. and on gathering on

that So see we feel dynamic you're right line expense everything that we - forward item going that related to flat now pretty the the to if that held to going the going kind you're to which consolidations are maintain that that things one pace same center alone you in financial for you the And now that good relatively that our is seen flat. of us be end not factor are see in rate years relatively going to past past, X/XX, financial the has is of XX the to have we've three Astoria. up reduce and that OpEx by resulted get and of - about of that centers in

kind but top the getting to We of again, and are side roughly invest gathering that And see year low-end, more want deposit that the particularly, and continue of of really on the needs to require investment $XXX back kind with line concerned we to we this of growing maintaining the kind meaningfully revenue also side. house. does again much million

looking So kind get actively on again. more and folks the and broader we deposit side, to to will hire getting of channels back robust be distribution

good the - million? that going and Unlikely, but be about range. it to to kind that we is of of feel the lower end $XXX midpoint good feel So below range, we about very

then on that us in ex-Santander, just just quarter portfolio? the the some were color you at was on what your if loan moving to just looking And equipment portfolio can give finance portfolio, we in going

In which one, in equipment, in particular?

Equipment, yes.

origination that which we're tight. The gotten for and good that have in are flat. relatively we higher been of It's the that flat. of business higher seeing borrowers been credit originate middle-market yields new credit quality - type kind It's market commercial Yes. extremely

going not to see in organic you're So finance. growth equipment

better as components spreads the portfolio, lines. sector and CRE, diversified of see affordable in risk-adjusted more the all well We we're credit doing and public the side, of the on of projects commercial other other as better diverse housing that returns mainly some

- commitments nice the is exactly some today. billion was, it's fundings funding just we as is $X over portfolio what that the respects, - we've equipment We what it - many the a actually grow it's have what equipment had acquired not we've course growing and from actually - from we relationships some to right since the not - given because we point we well, then quarter in going bit does - little Santander want thought them So has be able to not better there Santander and we inherited finance we focal which forward are over because of well But it. on spreads been very out slightly we - those now. the closed are worked actually really credit

the is on And your similarly story same that ABL side?

not think of organically not just to is universe that a of XXX%. we you're that's because that's And is that see the broad Absolutely, sector competitors, going market, market growing a a but into what don't that - game. a banks, the, into a seeing And and pricing more so perspective credit perspective, funds the like companies spread jumped and there. alternative ABL we're have asset managers we from and that insurance there

that - into kind to on than some creeping ABL to so what we're the business more side, market that value of of enterprise a don't But starting some adding we've combination see really that lending lot seen on traditional of participants we like. pricing a are

not grow So business to going you're that see organic.

just moving in you to year were line, And commitments a then where warehouse ago? to have today how your relative on you much

usage in range. always been perspective. has facility a always commitments of well, approximately about the percentage So that the grown - has portfolio to Facilities XX% year-over-year XX% from XX%,

use use you - high short and have a where your to the it rate. be a You warehouse for relationship to able They its lending or has used be relationship a your lender utilization fullest to to to of capability loan it period never want might been the where time expect.

about XX%. that commitments increased of amount But warehouse committed are the want XX% on has - in lending the that about really diversified rate you that book in to sources that have somewhere business, it to the client focus facilities on call managing and average but utilization year-over-year

guys in did somewhat Yes, still that like XXXX. seeing you continuing continue

you of provide things we, independent financing obviously as good were - slightly bigger can and when well. to being Yes, we the that than bank one about go originators before larger

are most realized thing So and that I the not know we - that favorite quarter-over-quarter had that of book like it the is to cognizant fact let's we see. some folks volatility say which

it so is we a - all. get And therefore business mortgage after

in that there X business last but that very steadily. years have a is volatility When Sterling record we it we the of some very inherited track XXXX the So in over growing in to consistent merger business it's just do business million this that in outstanding quarter, average about so. nicely X.X had continue had $XXX outstanding billion bucks has grown and to business to very that going $X.X in XXXX under we late

because size understand disproportionate but we lot, volatility get going allows business or again it's sheet bank balance that. about - larger growth of scalable six been the paper, like it’s five a never that size originators is ago. inherited years top of an has in larger efficient. our not book Because which We that the the very be on it essentially same to investor provide us to financing and The very infrastructure we independent that not a it's we of to aspect

earning Understood, one year book? assets, off run me on from XX% expect last far one as it end securities can looking and you're like we the book in get your the to down just quarterly to at what the of

it's to any of get of there perspective of then growing want rest we it. component the the off So the in so, particular mostly more sheet balance running

we're of unrealized which $X.X flow basis, given continue particularly much the book However, been past on the does we a environment The we because trend saying we two said cash the we've with have because that to a on billion had. sitting for really gains book quarters, MBS like municipal substantial about book that rate that monthly the securities not the see amount lot, a of there.

million at MBS per cancels But book of between quarter. the $XXX some $XX million to

- but in intention. the course reinvest between did grown have bucks up XXX security have approximately not in book So to absolutely the a would XXX million the year did single the of we million you if you we nothing. somewhere And not that that's

balance maintaining sheet securities that The intention target rest level to get by just growing to is the of the flat. the

they be million will if So, about did nothing, reinvesting, would we loss. you but $XXX if have we -

ahead. Incorporation. go now will Breese take question Stephens Matthew our next Please We from from

focused in on related comment couple questions. regards credit late-stage to your just Jack of

for So, the here. the look at portfolio first and a you've review deals the we I bit is was done. of tape little hoping as we wind-back all ever

how So the the credit of for give they where the idea way today stand where do expectations. some balances us them And a on comfort? versus books these stand when balances remarks you was in perform versus totality portfolio along the you the your mark if purchased average purchases credit from what for just perspective initial could

I portfolio because do but It’s - mix a the acquisitions we've and acquired from a long in through a for tell a macro go What time, eight over portfolios of would list is we and tried What Matt, there types do are of create tried part. the start I’ll the the diversified different standpoint. that’s times. each that long we - have portfolio to to most not we've you period can then sure - really there, list. I'm of company

risk-adjusted They be the in to to favorable relative more are going frankly rates less those portfolios. and or growth returns the

worth year's a of equipment. equipment essentially looked of portfolio the one just good good dynamics initially compared we a the would this we the at quality market on be we where given we ABL, through So, to about in yield had year of reasons conversation able the Santander what really really at at bought production

years. So basically of side. the yield Luis returns - are expected bought very on and people - the the diminished really the market. buying have volume with the have portfolio credit worth year's of last mentioned the things ABL, structure we would we several that deals that it there the by on we in quality whole the ABL non-banks opportunistic the equipment were on the over doing Mostly

look which we as tried purchased to at portfolios. portfolios. to tried We've we've So,

there, buy We we continue we most frankly believe adjusted example from use the one of an have the with as out risk most some again buy a because one-time to down the to diversify returns them, it We portfolio. to right opportunity grow a was current to platform and of expand. them and we Santander

We the go to believe banking that and portfolio the us allow that both on other clients the to services. relationship, were and incumbent side expand those relationships equipment in back that

each are acquired - portfolio take they portfolio the risk So a right adjusted this has by forward. return going and need a to end of day dynamic both to at But out organic trying different the the banks and acquired mix we're there. create different

marks some taken you we've the these average picture on on big To give stats that portfolios. credit

these different rate whatever rate been interest So have at the interest portfolios the on was environment time. just on the marks based

have are average we rates been the - perspective have interest X.X% portfolios that on a for replaced. From perspective kind interest all for - marks about of the So credit all have acquired. rate the been it’s

business than it Each one of of what we much those book thought. originally or portfolios, the we has when acquired line existing performed very better had in

purchase as the one they better what had they accretion XXXX lost than credit we fact level of a that income particularly performed as so, And having a that some thought impaired for in assets you us of loans. higher originally were going these reasons were the us is for anticipated

to on pays in you're get to accrete that accretion because they the something volatility what the better of side performed you had income you money right. Because mark then actually always amount you going it some lose had didn't income that's to in originally than marked that result and you in that back as thing off

net outperformed one originally has has fact income - So thought. to the that the been than higher is had it why accretion reasons that's as we of the what

transaction. in existing did we calls anticipated, very we line go we portfolio in originally the and The acquired to fact that was had The that performed performed favor not have slightly actually in in much we better in - March transaction advantage the portfolio better transportation portfolio our have moved if the when what or that XXXX. - Is one the has and than expectations. that back line we finance of the a but lot than announced that earnings when

credit inherited fact essentially tweak that there We further like perspective. going from - talking origination we always to we engine X of that not component years about because guided the either focused little And we advantage or the that what going to they had the a that were course have we upstream did equipment what with line credits a was the we're of side. we're to the from that last move the found advantage quality it over on bit in

portfolio Is stand to sense that did don't the fact so that it. million industry if we and portfolio that credit spreads acquired ask in lower about was you to us make $XXX actually and where today were that

$XXX So design. million over or at when it. balances acquired it million was remaining so by just $XXX that in outstanding we’re we Today portfolio

the see kind have the We throttle what of spreads returns we from we essentially don't of in off perspective risk-adjusted because stepped business. and like credit the

performance for kind of the have that we speaks lines other Other than I that have that, financial the portfolios other acquired the we business itself. think that and

expense not hiccups what that seen of in big from seen credit portfolio perspective. have result we've going an kind of from You to from an progression of perspective, incoming pretty those guided perspective to you've a steady what are

fact months transaction in the portfolio working past Santander, on of that So we M&A we've had to that as acquiring we were we've the a is talked going benefit the about again, essentially talked very in the today's that had select acquired. that's to the world that what back review that feel we the - wanted. and past. we We about had every we under in the asset assets underwriting We comfortable opportunity are we opportunity to X

from we perspective acquisitions exact would of these the organic and marketing portfolio us. realizing benefit originations we go very of us of for through that do they any are because risk origination diligence To due a - not upfront. same They essentially organic end the are level to it they get

I that much as So consider an - everybody that's debate we an better why like some origination know organic it. wants. that can we than acquisition like as folks

and the underwrite feel the and the that's We being good portfolio we and continue allocate entirety grow of a ability aspect us way the like capital and liquidity. to very We to upfront. to it to the business marking of able much

make is depend price other you this what on add I’d now The upon pay.

your there sure the far be, what want you dynamic credit that you going buying that want ongoing you're quality price. business to it is So the that but make at want you're to is it to a - sure is point you make marking a it's certain certain think to the be exactly what you you it get then at where price and to

portfolios - made different each - So is a the return net to some question bought one from of is them answer in be a in some initial first cycle. or a at because or like quality because the price wise, return discounts we the the We've exceeded performed it result but of out standpoint. than through the met a got, it targeted there different we every that have is a worked better designed it's we may cases, sense ways of cases the credit

that very And there about again, thing, into all So we're - this it's is comfortable multiple things. these factors with go

progression extremely of mention, it's increase the this expectations, saw from were a categories helpful. tying do acquired No, end what think resolve. And or books Were the should those any see we workout substandard those your you what from special we and maybe then just standpoint. and loan timeframe what into

Yes.

couple ABL and of commercial So, the by a credits. driven increase credit, real was estate

good an from two we talked we alluded us credits fully ABL Jack perspective that now credit, in 'XX the as the in very had ABL different behind got an of that about acquired to One we other comments. have credits was about the - in his feel

books are the are off is and of situations loan we fully very there and well one secured. and are our those relationships - they exited so assets the performing are And and every

of a combination collateral. have we good So

of work We feel relatively these we to combination in time have good good economies, a being out able a of on short about marks and frame.

we perspective. makes and two, or impact out or that a quarter confident work to should these a next be credit able that big feel way going in exit to feel, We’ll pretty from sense, the a it in perspective we charge-off have a we're So relationships. quality not

near-term, Innovation long-term. over announcements, are do have a talk good what the about Innovation is it handle just these don't and poised these X year I impacts Deloitte think of you you Two bit Could Group? a Finance little and the from I two to or partnership recent understand me on years might help Can Group? what kind - the be next the Finance

Deloitte intelligence kind was what now us, the working thing, have artificial of which done been with they for XX areas. probably least or so. us months for of provided and used a side Deloitte AI tools the the we’ve so place put this on in different of not there to as a we've variety side, Yes, They the we've number things with machines used of of

of But is Deloitte areas. multiple side it

of a up the in all we So simple before. Again we mechanism. rather were frankly the with desk using were laptops what help Deloitte large like the very the on thing is started before a where one, simple over a their and are the fulfillment technology very, We now years performance the them have process all things dramatically built by devices doing support They metrics do, we than IT it us company different. with fragmented we way, them versus fulfilled IT desk. the help on provided do

look Third helping at is, they cloud. the put us into everything

we're continued voice-activated a like go internally, support cloud like centers. them to that mechanisms that kind and call on internal projects external that the their things support - artificial using of activated provides the using intelligence do So we're into voice and then

them. this people, if you come performance area pieces outsourcing frankly, many, we is doing the we cost, or that no, where one total were basically bake will more to are we there the question are The in levels experiencing - a other lot answer costs because from moving other is to significantly in than are essentially already are all cost performance And higher. expensive. more and the So much we're the up many is what we we same were are another at using and ourselves different

technology big banks these things - spends levels or all of providing answer very and we in answer that to themselves, how of partially the unlike building on is where our capital contemporary and the So they're can our actuation this go of spending right they're can an to be terms dollars. technology

And continue blocks processes manual the the So, AI we'll provide company outsource that's final how forward. as part this on to works. or to the we and our going automate work them partnership the processes all again, of take out of them

to a - efficiencies So technology question another answer bit we're ultimately efficiency an Collyn's create better the about - of down down using costs along to drive way. the to drive little and

specific very gathering types of stream. it's earning that and niche team have is team that is of focused to a technology The deposit that residual kind actually lending on we a and have companies

software So flows lending, it a cash companies lending in and variety venture this they not is of lending, that coming have. the from it's have against spec is contracts not

they a successful the start really gathering side, for lending has on already couple deposit worked off recognized the good also on technology highly both that's again side are and the group that a So - a of businesses to different side. and very

the side us give team they're the of follow-up both there. recapture? book and loan looking you hired from a on for their the prior to that a institution their Could sense Just deposit size you

I a by this the people. or XX not team is To person - And three honest, XX way, be know. it's don't it's

the we of assets. get repurchases, as talk essentially get to about Is share might the should think long-term terms repurchases, okay. to plug they, help Last to perhaps tangible as regards there as in should to regards in one goal we perhaps to a around to still repurchases common equity you tool extent share share X.XX% and an is Luis tangible X% goals a is capital on just Understood, in we see to

in is that for of all guidance to happened the one we is of the answer from The but and away bit moving of generate lot above, yes us a that similar capital XXXX. providing of reasons a - type kind of that little that

capital sufficient capital of share had we - generated So activity, the ratio. robust that didn't do repurchase much into we too we that really we don't

sales we balance which assets earlier that capital So year this excess any Remember like of mortgages sheet. relative again had growing that we anticipating we were residential with year, the the of in a the XXXX. lot on not starts the major anticipate balance sheet created

So outlook the kind gets of sheet that the balance why more on for growing bit little a that's we buyback. being the think we're to to reason and conservative as back the

to use get that as So is X.XX% tool going opportunity do longer-term by barring of meaningful. I I growth this organic get to going it's But to that not front, target. will still envision either you the longer-term to to We're a see acquisition or we still target. scenario it a be the year. some on that a don't substantial end

end would to like host. session. This the call is of turn over question-and-answer I now to our our the

the here, Thanks kind XXXX our attention to investors. where and of us you and environment a XXXX, in getting to just the the obviously, in a attention lot enabled for We colleagues repositioning sheet growing our And rates. all it's sheet you increases in then on kind the to and thank are back positive to through turn an seriousness, our from our clients add it's our in we're revenues want the shareholders than expenses. that XXXX turning - a Actually steady leverage decreases And creating in now year. of the following faster reversal balance we and really reposition buy operating in where us and that hope balance stock. three company

lot. So day. you a we great if following a call. us questions, appreciate you all Have any us. And have Thanks give a

today's This you for call. participation. concludes your Thank

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