Sterling Bancorp(US:SBT)2022-10-31 15:36Financial Data and Key Metrics Changes - The company reported a small profit in Q3 2022, with credit conditions continuing to improve, including no delinquencies or non-performing assets in the commercial portfolio for the first time [3][4] - The margin improved to 3.19% during the quarter, driven by higher interest rates and interest recoveries from loans that paid off [5] Business Line Data and Key Metrics Changes - The company sold $22 million worth of weaker commercial real estate credits, contributing to the improvement in credit quality [4] - There was a notable decline in residential non-accruals and delinquencies due to payoffs and reinstatements [4] Market Data and Key Metrics Changes - The company anticipates continued increases in liability costs as interest rates rise, impacting the entire industry [5][6] Company Strategy and Development Direction - The company has undergone a complete transformation of its IT platform, risk platform, and credit management systems, incurring expenses for legal and professional fees [11][12] - The company is focused on resolving outstanding regulatory issues, including a $6 million civil money penalty from the OCC and ongoing discussions with the DOJ [7][9] Management's Comments on Operating Environment and Future Outlook - Management expressed limited visibility into the timing of the final resolution of ongoing legal matters but remains hopeful for a resolution in the coming months [9][10] - The company is committed to addressing the interests of public shareholders and stakeholders while pushing forward to resolve remaining issues [29] Other Important Information - The company has settled a derivative shareholder action, which is now complete [8] - The remaining outstanding issue involves the Justice Department and SEC, with no clear timeline for resolution [9] Q&A Session Summary Question: Can you share thoughts on the reduction in professional fees and expectations for near-term expenses? - Management indicated that the timing of the resolution of the OCC investigation will significantly impact expenses, and they are unable to provide a specific estimate [17][20] Question: Is there potential to pay down variable rate sub-debt to alleviate funding pressures? - Management stated that it is unlikely to pay down the sub-debt in the near term due to liquidity constraints at the holding company [22][23] Question: How much remains in the mortgage repurchase liability allowance and future purchases? - Management reported that only $45 million remains outstanding in Advantage Program Loans, with minimal reserves set aside for potential repurchases [24][25]