On July 24, 2024, Sterling Bancorp Inc (SBT, Financial) released its 8-K filing detailing its unaudited financial results for the second quarter ended June 30, 2024. Sterling Bancorp Inc is a unitary thrift holding company, primarily operating through its wholly-owned subsidiary, Sterling Bank, offering a range of loan products and retail banking services.
Performance Overview
Sterling Bancorp Inc reported a net income of $1.3 million, or $0.03 per diluted share, for Q2 2024, missing the analyst estimate of $0.04 per share. This is a significant improvement from the net loss of $0.2 million, or $0.00 per diluted share, reported in Q1 2024. However, it falls short of the $2.5 million net income reported in Q2 2023.
Net interest income for Q2 2024 was $14.4 million, down from $14.9 million in Q1 2024 and $16.2 million in Q2 2023. The net interest margin also decreased to 2.44% from 2.52% in the previous quarter and 2.64% in the same quarter last year.
Key Financial Metrics
| Metric | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Net Income (Loss) | $1.3 million | $(0.2) million | $2.5 million |
| Net Interest Income | $14.4 million | $14.9 million | $16.2 million |
| Net Interest Margin | 2.44% | 2.52% | 2.64% |
| Non-Interest Income | $0.4 million | $0.2 million | $1.9 million |
| Non-Interest Expense | $14.9 million | $15.4 million | $17.3 million |
| Total Deposits | $2.0 billion | $2.0 billion | $2.0 billion |
| Total Gross Loans | $1.3 billion | $1.3 billion | $1.4 billion |
Balance Sheet and Asset Quality
Total assets were $2.4 billion at the end of Q2 2024, a decrease of $39.8 million, or 2%, from Q1 2024. Cash and due from banks decreased by $46.4 million to $599.8 million. Total gross loans decreased by $39.0 million to $1.3 billion, with residential real estate loans declining by $68.1 million and commercial real estate loans increasing by $32.7 million.
Nonperforming loans increased to $12.2 million, or 0.51% of total assets, up from $9.3 million, or 0.39% of total assets, in Q1 2024. The allowance for credit losses was $27.6 million, or 2.18% of total loans, compared to $29.3 million, or 2.24% of total loans, in the previous quarter.
Management Commentary
"Our focus remains fixed on protecting book value and Sterling’s financial position while we continue to explore opportunities to prudently reposition the Company and increase net income. The margin compression experienced by Sterling is generally consistent with what is being felt in much of the community banking industry. Additionally, our substantial level of liquidity continues to exert some downward pressure on earnings. Credit quality remains strong as do our capital ratios," said Thomas M. O’Brien, Chairman, President, and Chief Executive Officer.
Analysis
Sterling Bancorp Inc's Q2 2024 earnings report highlights several challenges, including a decrease in net interest income and margin compression. The increase in nonperforming loans and the decline in residential real estate loans are areas of concern. However, the company has managed to maintain strong credit quality and capital ratios, which are crucial for its stability and future growth.
For value investors, the focus will likely be on Sterling Bancorp Inc's ability to navigate these challenges while exploring opportunities to enhance net income and reposition the company strategically. The company's efforts to maintain liquidity and competitive interest rates on deposit products are positive signs for its long-term prospects.
For more detailed financial information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Sterling Bancorp Inc for further details.
