Above and


2019 Annual Report

Sterling Bancorp (NYSE: STL) (“Sterling”) is a regional bank holding company whose principal subsidiary, Sterling National Bank, specializes in the delivery of financial services and solutions to business owners, their families and consumers within the communities it serves through teams of dedicated and experienced relationship managers. Pursuing its strategic goal of building a high-performing company, Sterling is sharply focused on delivering a superior client experience, increasing shareholder value, serving its communities, and creating a workplace where talent and initiative can thrive.

To Our Shareholders:

Our company’s motto of “Above and Beyond is Standard Procedure” provides the foundation for delivering superior service to our clients, strong returns to shareholders, and an environment where our colleagues can realize their ambitions while helping all of our communities grow and prosper.
Jack L. Kopnisky President and CEO

Our results in 2019 reflect another significant step forward in executing our strategy of creating a highperforming regional bank focused on targeted client segments in the Greater New York metropolitan area and across the United States. In 2019, we generated record results on several key financial metrics, we transitioned our balance sheet mix toward our targeted business lines, we acquired new commercial finance portfolios, and we returned significant amounts of capital to shareholders through our expanded share repurchase program.


In 2019, we focused on investing in and continuing to grow our most profitable business segments. This has resulted in a substantial transition in our business mix, while allowing us to achieve record performance in adjusted annual diluted earnings per share of $2.07 and an increase in our tangible book value per share to $13.09.

Our full-year results continue the company’s history of superior growth of earnings and tangible book value. In the past five years, adjusted earnings per share has grown at a CAGR of 21% and tangible book value per share has grown at a CAGR of 15%. The company’s return on assets, return on tangible common equity, and efficiency ratio are among the top quartile of publicly traded banks in the United States. In 2019, the company’s stock generated a total return of 29.4% vs. 23.1% for our peer group.

We were able to achieve this performance despite a challenging interest rate environment and an ongoing loan portfolio and balance sheet management strategy in which we have continued to dispose of less appealing financial assets. Our success was achieved by growing our most profitable business lines, investing in targeted technology initiatives, retaining and developing our colleagues, maintaining expense discipline, and returning meaningful amounts of capital to our shareholders.

The current macroeconomic environment, with low absolute levels of interest rates and a shallow sloping yield curve, presents a significant challenge for all commercial banks. Nonetheless, we continue to generate solid performance by focusing on the fundamentals we can most effectively control: the allocation of capital to business lines with attractive risk-adjusted return characteristics, making strategic investments for the future, and focusing on initiatives that will deliver strong operating leverage.

Diluted Earnings Per Share1
Diluted EPS (GAAP)
Adjusted Diluted EPS (Non-GAAP)
FYE 2015
FYE 2016
FYE 2017
FYE 2018
FYE 2019

See reconciliation of as reported diluted earnings per share (GAAP) to as adjusted diluted earnings per share (non-GAAP) on page 22 of Form 10-K.

Tangible Book Value Per Share2
FYE 2015
FYE 2016
FYE 2017
FYE 2018
FYE 2019

See reconciliation of tangible book value per share to book value per share on page 21 of Form 10-K.

Return on Average Tangible Common Equity, Adjusted3
FYE 2015
FYE 2016
FYE 2017
FYE 2018
FYE 2019

See reconciliation of as reported return on average tangible common equity (GAAP) to as adjusted return on average tangible common equity (non-GAAP) on page 22 of Form 10-K.


In addition to strong operating performance, 2019 was a year of transition to position our company for continued success in the future. We focused our efforts on programs and initiatives that best promote our future profitability and growth by better-aligning our asset mix and infrastructure with our higher-value business lines, investing in contemporary technological capabilities, and enhancing our sources of funding.

We sold a portfolio of residential mortgage loans and lower yielding securities and reinvested the proceeds in new commercial loan originations. We also continued to consolidate financial centers across our footprint, reducing our total financial center count to 82 locations at year-end from 128 locations at closing of the Astoria merger. Reallocating the cost savings from our financial center rationalization strategy has been critical in allowing us to fund key investments in new technology and personnel while maintaining a disciplined approach to expense management.

Although we de-emphasized certain business lines, Sterling’s core commercial business showed impressive growth in 2019. We grew commercial loans by 17%, and total deposits grew by 6%. Commercial loans now comprise 89% of our loan portfolio, from 84% a year ago. Commercial banking growth reflected both growth in our New York metropolitan region commercial loan portfolio, as well as that of our diversified commercial businesses with a broader footprint. Among our newer verticals, public sector finance and affordable housing development provided particularly attractive opportunities for capital efficient and appealing risk-adjusted organic growth.

Efficiency is a hallmark of our organization. We found new avenues by which to control our operating costs through improving our business mix, process optimization and automation. We will continue to transition our operating capabilities in the years ahead. Our efficiency ratio is among the lowest in the banking industry and we believe we can still do even better. Emerging and improving technologies are fueling meaningful changes in the banking industry. Our company has made significant investments in our technology infrastructure that will allow our clients to interact with the bank in their preferred manner, will introduce new products and capabilities while also enhancing efficiency across our organization. We have developed partnerships with various technology providers to migrate the company to a cloud-based technology infrastructure, deploy robotics and automation technologies to streamline bank operations, provide enhanced digital banking applications, and deploy AI-enabled virtual assistants to enhance the customer service experience. We also launched a direct-to-consumer digital bank that provides a scalable platform for deposit generation. As banking becomes more digitally driven, these initiatives will allow the company to provide an innovative, evolving, and scalable technology experience for both our clients and our colleagues.


Continued robust internal capital generation and capital reallocated from the reduction in non-core assets provided the company with substantial capital flexibility in 2019. Over the past year, we repurchased more than 19 million shares of stock, a meaningful increase over our repurchase activity in 2018. Industrywide pressures on bank sector valuations afforded us the opportunity to repurchase these shares at what we believe to be an attractive price. The company has repurchased 28 million shares over the past two years, which amounts to 13% of total shares outstanding at the initiation of our repurchase program.

Share repurchases will continue to be a component of the company’s capital allocation strategy in the near-term, as our board of directors recently authorized a 20 million share increase to our approved share repurchase program. We will continue to execute our repurchases programmatically over time, with the objective of enhancing the trajectory of Sterling’s tangible book value per share, a key performance indicator we are focused on growing.

Return on Average Tangible Assets, Adjusted4
FYE 2015
FYE 2016
FYE 2017
FYE 2018
FYE 2019

See reconciliation of as reported return on average tangible assets (GAAP) to as adjusted return on average tangible assets (non-GAAP) on page 23 of Form 10-K.

Total Deposits ($ in Billions)
FYE 2015
FYE 2016
FYE 2017
FYE 2018
FYE 2019
Efficiency Ratio, Adjusted5($ in billions)
FYE 2015
FYE 2016
FYE 2017
FYE 2018
FYE 2019

See reconciliation of as reported operating efficiency ratio (GAAP) to as adjusted operating efficiency ratio (non-GAAP) on page 23 of Form 10-K.


As a regional bank, our business is uniquely positioned to provide expertise and capital in support of community reinvestment efforts. During the past year, Sterling provided more than $858 million in funding—including loans and qualified investments— for community development. Among our major initiatives, we provided financing for Veterans Housing in the Bronx, LGBT-friendly senior housing in Suffolk County, and economic and workforce development initiatives within an Opportunity Zone in Brooklyn. Loans from Sterling also enabled the development of 1,489 units of affordable rental housing.

The Sterling National Bank Charitable Foundation funded over $1 million in donations to various organizations across the communities in which we operate. Donations aided programs supporting college success, financial literacy, and health and human services. The Foundation also matched colleague charitable donations totaling more than $53,000.

In 2019, Sterling colleagues volunteered over 4,500 hours of service for various causes, including Junior Achievement, Year Up, Big Brothers Big Sisters, BUILD NYC, United Veterans Beacon House, Urban Pathways, the New Jersey Community Development Corporation, and The Child Center of NY.

National asset originations supported by strong deposit generation platform in NYC


We are a company that has and will continue to evolve. The needs of our clients, colleagues, shareholders, and communities continue to change, and we must continue to develop our company to ensure we will meet and exceed their needs. Our eight-year history is a reflection of our ability to adjust, change, and ultimately focus on execution. I am proud and excited by who we have become as an organization. Since year-end 2011, we have grown our assets to $31 billion from $3 billion and our deposits to $22 billion from $2 billion. Today, Sterling is the third-largest regional bank by deposits in the New York metro area.

Not only have we grown on an outright basis, we now offer a broad and sophisticated range of commercial and consumer banking services unique to a bank our size in the New York market. A diverse business model affords Sterling the ability to pursue the most appealing business opportunities across a number of business lines, while funding asset growth through a number of different channels. We have added considerable talent as we have grown. Our technology and data, risk-management, and customer service organizations are all well-positioned to both support our existing business and anticipate the operational needs of a larger institution.

I believe we have positioned Sterling to continue to be a market leader in financial performance, service, and product offerings for years to come. This outlook would not be possible without the support of our colleagues, clients, shareholders, and board of directors. Their contributions are critical to the development of Sterling. I would like to conclude by thanking them for their past and future support.

Jack L. Kopnisky
President and Chief Executive Officer