Sterling Bancorp(US:SBT)2024-04-24 19:27Financial Data and Key Metrics Changes - The first quarter was described as a breakeven quarter, primarily impacted by legal expenses related to OCC investigations [25] - The company anticipates that legal expenses will tail off in the coming quarters as the OCC's investigations have concluded [15][29] Business Line Data and Key Metrics Changes - The company has exited high-risk commercial real estate and nonperforming loans, which has positively impacted its metrics and risk profile [26] - There are approximately $200 million of loans that will reprice upwards in the coming quarters, but increasing deposit costs may offset this [32] Market Data and Key Metrics Changes - Inflation remains high, particularly in consumables and energy, which may influence the Federal Reserve's decisions on interest rates [12] - The commercial real estate market is under pressure, especially in major U.S. cities, which could affect the company's performance [26] Company Strategy and Development Direction - The company is focused on protecting book value, liquidity, and credit amidst significant uncertainty in capital markets [26] - There is a strategic emphasis on building a more moderate cost of funds by increasing lower-cost deposits [17] Management's Comments on Operating Environment and Future Outlook - Management expressed that the overall economy remains resilient, but there are expectations of further challenges within the banking sector [10] - The company operates from a position of strength and transparency, despite the uncertain market conditions [10] Other Important Information - The company has made internal changes, including the promotion of Christine Meredith to Chief Operating Officer [8] - Legal costs related to former employees are expected to be immaterial moving forward [3][19] Q&A Session Summary Question: Will expenses continue at the current rate? - Management indicated that expenses related to legal matters will decrease as the OCC's investigations are concluded [15] Question: What is the outlook for nonaccrual loans? - Management believes that the $9 million in nonaccrual loans can be resolved in the next few quarters, with no significant loss content expected [56] Question: Will the company consider share buybacks? - Management acknowledged the strategic reasons for and against share buybacks, indicating that it is a consideration but not currently planned [35] Question: How does the company view its reserve levels? - Management stated that while the credit profile has improved, they prefer to maintain higher reserves for caution [66] Question: What is the company's stance on the residential lending business? - Management expressed reluctance to enter the residential lending market due to the associated risks and costs [49]