Sterling Bancorp(US:SBT)2023-01-30 19:17Financial Data and Key Metrics Changes - The company reported a loss of $200,000 for the quarter, but a profit of $4 million for the full year, with a margin of 3.09% in the quarter, which improved compared to earlier in the year [7][19] - Non-performing assets decreased slightly quarter-over-quarter to $38.3 million [44] Business Line Data and Key Metrics Changes - The bank's balance sheet remained relatively stable with a $3 million reduction quarter-over-quarter, and deposits were stabilized [25] - The company purchased a pool of high balance, conforming or jumbo residential loans, indicating a focus on quality assets [12] Market Data and Key Metrics Changes - The bank has seen a significant increase in the cost of funds due to rising interest rates, which has affected the overall margin [26] - The company has developed a demand deposit product, which has shown some success, although it is still in the early stages [32] Company Strategy and Development Direction - The company aims to maintain a high capital ratio to protect itself and its shareholders amid ongoing uncertainties [8] - There is a focus on derisking the loan portfolio, particularly in commercial real estate, which has been a significant area of concern [14] Management's Comments on Operating Environment and Future Outlook - Management expressed a strong sense of urgency to resolve ongoing investigations and emphasized their cooperation with authorities [22] - The company believes that the derisking efforts made in 2022 will continue to pay off in 2023, despite challenges in the operating environment [14] Other Important Information - Professional fees related to ongoing investigations accounted for about two-thirds of the total non-interest expenses, which are expected to decrease once the investigations are resolved [24] - The bank has a significant number of employees in its BSA department, reflecting the ongoing compliance requirements [31] Q&A Session Summary Question: What is the status of the CECL implementation given the pending government liability? - Management indicated that the CECL implementation would not significantly impact the reserve for penalties and that they do not expect major concerns from the CECL adjustment [38] Question: How will rising deposit costs affect the bank's margin? - Management acknowledged that while liability costs will increase, the bank's proactive liquidity management has positioned it well to handle these changes [39] Question: What is the strategy regarding large depositors and competitive rates? - The bank is not aggressively chasing higher rates but is maintaining a status quo approach in line with market rates [32]