Sterling Bancorp(US:SBT)2024-03-14 15:55Financial Performance - The estimated net interest income for 2023 is projected to be $62,356,000 under a 200 basis points increase in interest rates, compared to $83,587,000 in 2022, reflecting a decrease of 25%[441]. - The company reported a 3% decrease in net interest income under a 100 basis points decrease in interest rates, amounting to $60,057,000 for 2023[441]. - Net interest income after provision for credit losses was $73,486 thousand for the year ended December 31, 2023, down from $88,736 thousand in 2022, a decrease of about 17.2%[465]. - Interest income increased to $126,789 thousand in 2023, up from $99,932 thousand in 2022, reflecting a growth of approximately 26.9%[465]. - Net income for the year ended December 31, 2023, was $7,413 thousand, compared to a net loss of $14,194 thousand in 2022, marking a significant turnaround[465]. - Total comprehensive income for 2023 was $11,714,000, compared to a loss of $32,822,000 in 2022[468]. - The company reported a basic income per share of $0.15 for 2023, recovering from a loss of $0.28 per share in 2022[465]. Asset and Liability Management - Total assets decreased to $2,416,003 thousand as of December 31, 2023, from $2,444,735 thousand in 2022, representing a decline of approximately 1.2%[463]. - The allowance for credit losses for loans decreased by $1.7 million upon the adoption of the current expected credit loss (CECL) model on January 1, 2023[457]. - The total allowance for credit losses was $29,404 thousand as of December 31, 2023, down from $45,464 thousand in 2022, a decrease of approximately 35.4%[463]. - The allowance for credit losses as of December 31, 2023, totaled $29,404, with a beginning balance of $45,464, reflecting a decrease of approximately 35.3%[585]. - The provision for credit losses for the year ended December 31, 2023, was a recovery of $8,844, compared to a provision of $9,934 for the previous year[586]. Credit and Operational Risks - The company faces significant liquidity risks due to deposit account balances exceeding FDIC insurance limits[18]. - The prolonged suspension of the residential loan origination function has impacted the company's strategic execution and liquidity[17]. - The company is exposed to credit risks from lending activities, including potential increases in delinquencies and nonperforming assets due to economic conditions[17]. - The company has experienced operational risks related to increased reliance on technology and cybersecurity threats, which may affect its financial stability[22]. Changes in Accounting Standards - The company adopted a new accounting standard for credit losses effective January 1, 2023, which may impact future financial reporting and credit loss estimations[450]. - The company adopted the CECL model, which estimates credit losses over the expected life of loans, reflecting a shift in accounting standards effective January 1, 2023[457]. - The company recorded a cumulative effect adjustment of $276, net of tax, to decrease the opening balance of retained earnings as of January 1, 2023, due to the adoption of ASU 2022-02[555]. - Upon the adoption of ASU 2016-13, the allowance for credit losses for loans decreased by $1,651, primarily driven by the construction loan portfolio[557]. Deposits and Funding - Total deposits rose to $2,003,986 thousand in 2023, compared to $1,954,037 thousand in 2022, indicating an increase of about 2.5%[463]. - The net increase in deposits for 2023 was $49,949,000, a recovery from a decrease of $(307,698,000) in 2022[474]. - Time deposits increased to $873,220 thousand at December 31, 2023, from $861,733 thousand at December 31, 2022, representing a growth of 1.4%[608]. - The Company has unused borrowing capacity of $65,000 thousand under the Bank Term Funding Program as of December 31, 2023[616]. - The Company had additional borrowing capacity with the FHLB of $311,183 thousand at December 31, 2023, based on collateral and holdings of FHLB stock[614]. Loan Portfolio and Performance - As of December 31, 2023, residential real estate loans accounted for 80% of total gross loans, down from 84% in 2022, with approximately 80% of gross loans originated in California[489]. - The Advantage Loan Program, which required a down payment of at least 35%, represented 58% of gross residential loans at December 31, 2023, down from 63% in 2022, totaling $628,245[490]. - Loans held for investment totaled $1,348,972 as of December 31, 2023, down from $1,658,849 in 2022, with a decrease in the allowance for credit losses from $45,464 to $29,404[578]. - The total charge-offs for the year ended December 31, 2023, amounted to $6,478, while recoveries were $533, resulting in a net charge-off of $5,945[585]. - The aging analysis of past due loans as of December 31, 2023, shows a total of $27,912 past due loans, with $1,321,060 in current loans, resulting in a total of $1,348,972[593]. Investment and Securities - The fair value of U.S. Treasury and Agency securities was $175,019 as of December 31, 2023, with unrealized losses of $(4,176)[569]. - The total amortized cost of available for sale debt securities was $440,211, with a fair value of $419,213, reflecting a gross unrealized loss of $(21,082)[563]. - The company sold debt securities for proceeds of $9,578 in 2023, resulting in total net realized losses of $(113)[566]. - The company has not recorded an allowance for credit losses for its available for sale debt securities as of December 31, 2023, due to the expectation of no credit losses from U.S. government-backed securities[571]. Equity and Shareholder Information - The bank's total shareholders' equity increased to $327,723,000 by the end of 2023, up from $312,627,000 in 2022[471]. - The company redeemed all outstanding Subordinated Notes on July 15, 2023, for a total cash payment of $66,821 thousand, recording a gain of $234 thousand on extinguishment[617]. - The interest expense on Subordinated Notes was $3,727 thousand for the year ended December 31, 2023, compared to $4,969 thousand in 2022, indicating a decrease of 25%[618].