Sterling Bancorp(SBT) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a profit of $0.05 per share, adjusted down to $0.03 at the operating level [15] - The net interest margin (NIM) declined by 29 basis points quarter-over-quarter to 2.64%, primarily due to increased costs associated with the deposit base [27] Business Line Data and Key Metrics Changes - The company experienced significant pressure on NIM due to the interest cost of subordinated debt, which was over 11% [4] - The impact of subordinated debt resulted in a margin compression of approximately 23 basis points in the second quarter, which is expected to improve following the redemption of the subordinated debt [18] Market Data and Key Metrics Changes - The current level of interest rates and competition for bank deposits has shifted compared to a year ago, with a continued high premium on liquidity [28] - The failures in the banking industry in March have had lasting effects, influencing the capital markets and the competitive landscape [30] Company Strategy and Development Direction - The company is entering a phase where it can begin to make strategic plans following the resolution of various investigations and the associated costs [24] - Management emphasized the importance of long-term thinking in business strategy, moving away from short-term decision-making that has historically drained shareholder value [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, indicating that the company is in the final stages of its turnaround and expects financial performance to become more predictable [5] - The company is cooperating with ongoing investigations and is in the final stages of settling with the DOJ, which is expected to clear the path for future strategic initiatives [25][26] Other Important Information - The company remains highly liquid and well-capitalized, positioning itself for future growth opportunities [24] - A special master will be appointed to determine the process for eligible shareholders to submit claims related to past issues [17] Q&A Session Questions and Answers Question: What is the impact of the current interest rates and competition for bank deposits? - Management noted that the current interest rates and competition have changed significantly, with a high premium on liquidity and careful review of tangible common equity [28] Question: How does the company view the future of capital markets? - Management indicated that there are signs of the capital markets becoming more favorable for transactions and discussions among banks [30]