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Cash and due from banks increased $167.8 million, or 24%, to $878.2 million at December 31, 2024 compared to $710.4 million at September 30, 2024 primarily due to net cash inflows from maturities in the debt securities portfolio and loan repayments. Cash and due from banks increased $300.2 million, or 52% from $578.0 million at December 31, 2023. Debt securities of $338.1 million decreased $98.3 million, or 23%, from $436.4 million at September 30, 2024 and decreased $81.1 million, or 19%, from $419.2 at December 31, 2023. All debt securities are available for sale, have a relatively short duration and are considered part of our liquid assets.

Total gross loans of $1.2 billion at December 31, 2024 decreased $68.0 million, or 6%, from September 30, 2024. Residential real estate loans were $849.4 million at December 31, 2024, a decrease of $55.1 million, or 6%, from September 30, 2024. Commercial real estate loans were $296.5 million at December 31, 2024, a decrease of $10.5 million, or 3%, from September 30, 2024. Total gross loans at December 31, 2024 declined $193.2 million, or 14%, from December 31, 2023 with residential real estate loans decreasing $236.4 million, or 22%, and commercial real estate loans increasing $59.5 million, or 25%.

Total Deposits – Total deposits were $2.1 billion at December 31, 2024 and September 30, 2024 and were $2.0 billion at December 31, 2023. During the fourth quarter of 2024, money market, savings and NOW deposits increased $16.0 million, or 2% and time deposits decreased $19.1 million, or 2%. During 2024, time deposits increased $79.8 million, or 9% and money market, savings and NOW deposits decreased $15.8 million, or 1%. We continue to offer competitive interest rates on our deposit products to maintain our existing customer deposit base and maintain our liquidity.

Capital – Total shareholders’ equity was $334.0 million at December 31, 2024, a decrease of $0.6 million from September 30, 2024 primarily due to a $2.7 million increase in the unrealized loss on our debt securities portfolio included in accumulated other comprehensive loss, partially offset by the $1.2 million net income in the fourth quarter of 2024. During 2024, total shareholders’ equity increased $6.2 million, or 2%, due primarily to the $2.1 million in net income and a $1.7 million reduction in the unrealized loss on our debt securities portfolio included in accumulated other comprehensive loss.

At December 31, 2024, the consolidated Company’s and Bank’s leverage ratios were 14.08% and 13.76%, respectively. Both the Company and the Bank are required to maintain a Tier 1 leverage ratio of greater than 9.0% to have satisfied the minimum regulatory capital requirements as well as the capital ratio requirements to be considered well capitalized for regulatory purposes.

Asset Quality and Provision for (Recovery of) Credit Losses – A provision for (recovery of) credit losses of $(4.2) million was recorded for the fourth quarter of 2024 compared to $(2.3) million for the third quarter of 2024. In the fourth quarter of 2024, the recovery of credit losses was primarily due to the reduction in the commercial real estate portfolio’s allowance reflecting a decrease in criticized and classified assets. In addition, the residential mortgage portfolio’s allowance had a reduction primarily due to continued run-off of that portfolio. The allowance for credit losses was $20.8 million, $25.0 million and $29.4 million, or 1.80%, 2.04% and 2.18% of total loans at December 31, 2024, September 30, 2024 and December 31, 2023, respectively.

Recoveries of loan losses during the fourth and third quarter of 2024 were $2 thousand and $10 thousand, respectively, with no charge offs in either quarter. Recoveries of loan losses during the year ended December 31, 2024 and 2023 were $0.5 million in both years, with no charge offs in 2024 and $6.5 million in 2023 pertaining to the reclassification of $41.1 million of nonaccrual and delinquent residential loans as held for sale and charged off down to their fair value in the first quarter of 2023.

Nonperforming loans, comprised primarily of nonaccrual residential real estate loans, totaled $14.6 million, or 0.60% of total assets, at December 31, 2024 and $13.2 million, or 0.54% of total assets at September 30, 2024.

Results of Operations

Net Interest Income and Net Interest Margin – Net interest income for the fourth quarter of 2024 was $13.5 million compared to $13.6 million for the prior quarter of 2024 and $15.1 million for the fourth quarter of 2023. The net interest margin of 2.24% for the fourth quarter of 2024 decreased from the prior quarter’s net interest margin of 2.30% and decreased from the net interest margin of 2.52% for the fourth quarter of 2023. The decrease in net interest income during the fourth quarter of 2024 compared to the prior quarter was primarily due to a 23 basis point decrease in the average yield on interest-earning assets which was partially offset by a 17 basis point decrease in the average rate paid on interest-bearing deposits. The decrease in net interest income during the fourth quarter of 2024 compared to the fourth quarter of 2023 was primarily due to a 41 basis point increase in the average rate paid on interest-bearing deposits and a $186.9 million, or 14%, decline in average loans, partially offset by a 7 basis point increase in the average yield on total interest-earning assets during the same period.

Net interest income for the year ended December 31, 2024 was $56.5 million, a decrease of $8.5 million, or 13%, from the year ended December 31, 2023. The net interest margin of 2.37% decreased 31 basis points from the prior year’s net interest margin of 2.68%. The decrease in net interest income for the year ended December 31, 2024 is primarily attributable to a 100 basis point increase in the average rate paid on interest-bearing deposits and a $237.8 million, or 16%, decline in the average balance of loans. This was partially offset by the impact of a 45 basis point increase in the average yield of other interest-earning assets and the redemption of all of the Company’s subordinated notes in 2023 which decreased interest expense by $3.7 million.

Non-Interest Income – Non-interest income for the year ended December 31, 2024 was $1.1 million, a decrease of $1.7 million from $2.8 million for the year ended December 31, 2023. The decrease was primarily attributable to a $1.6 million gain on the sale of all loans that were held for sale, comprised primarily of nonperforming and chronically delinquent residential real estate loans, which occurred in the second quarter of 2023.

Non-Interest Expense – Non-interest expense of $15.9 million for the fourth quarter of 2024 reflected an increase of $0.3 million, or 2%, compared to $15.6 million for the third quarter of 2024 and an increase of $3.1 million, or 24%, compared to $12.8 million for the fourth quarter of 2023. The increase in non-interest expense from the fourth quarter versus the third quarter of 2024 was primarily due to a $0.7 million increase in other expenses, partially offset by decreases of $0.2 million in salaries and employee benefits and $0.3 million in professional fees. Professional fees for the fourth and third quarter of 2024 included Transaction related expense of $2.1 million and $1.4 million, respectively. The increase to the fourth quarter of 2024 compared to same quarter last year was primarily due to $3.8 million received in the fourth quarter of 2023 from our insurance carriers for previously incurred expenses related to the prior government investigations, offset in part by Transaction related expenses included in professional fees incurred in the fourth quarter of 2024.

Non-interest expense for the year ended December 31, 2024 was $61.8 million, inclusive of $3.5 million of expenses incurred in connection with the Transaction, a decrease of $3.9 million, or 6%, compared to $65.7 million for the year ended December 31, 2023. The decrease was primarily attributable to salaries and employee benefits which were $2.4 million, or 7% lower in 2024 as compared to 2023 due to reductions in staffing levels. Professional fees remained flat in 2024 compared to 2023, although the components of our professional fees changed significantly as compliance related professional fees declined in 2024, we received substantial reimbursements from our insurance carriers in 2023 and we incurred significant Transaction related expenses in 2024.

Income Tax Expense – The Company recorded an income tax expense of $2.1 million, a 49.7% effective rate, for the year ended December 31, 2024 and $3.1 million, or an effective rate of 29.8%, for the year ended December 31, 2023. Income tax expense includes an additional $0.6 million in the third quarter of 2024 to reverse a tax position previously taken on the deductibility of interest earned on U.S. government obligations under applicable state tax law. Our effective tax rate varies from the statutory rate primarily due to the adjustment in the third quarter of 2024 as well as the impact of non-deductible compensation-related expenses.

About Sterling Bancorp, Inc.

Sterling Bancorp, Inc. is a unitary thrift holding company. Its wholly owned subsidiary, Sterling Bank and Trust, F.S.B., has primary branch operations in the San Francisco and Los Angeles, California metropolitan areas and New York City. Sterling also has an operations center and a branch in Southfield, Michigan. Sterling offers a range of loan products as well as retail and business banking services. For additional information, please visit the Company’s website at http://www.sterlingbank.com.

Forward-Looking Statements

This Press Release contains certain statements that are, or may be deemed to be, "forward-looking statements" regarding the Company’s plans, expectations, thoughts, beliefs, estimates, goals and outlook for the future. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance, including any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions. These statements are often, but not always, made through the use of words or phrases such as "may," "might," "should," "could," "predict," "potential," "believe," "expect," "attribute," "continue," "will," "anticipate," "seek," "estimate," "intend," "plan," "projection," "goal," "target," "outlook" and "would" or the negative versions of those words or other comparable words or phrases of a future or forward-looking nature, though the absence of these words does not mean a statement is not forward-looking. All statements other than statements of historical facts, including but not limited to statements regarding expectations for the anticipated sale of the Bank and ensuing Plan of Dissolution, the economy and financial markets, credit quality, the regulatory scheme governing our industry, competition in our industry, interest rates, our liquidity, our business and our governance, are forward-looking statements. We have based the forward-looking statements in this Press Release primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, business strategy and financial needs. These forward-looking statements are not historical facts, and they are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. There can be no assurance that future developments will be those that have been anticipated. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. The risks, uncertainties and other factors detailed from time to time in our public filings, including those included in the disclosures under the headings "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 14, 2024, subsequent periodic reports and future periodic reports, could affect future results and events, causing those results and events to differ materially from those views expressed or implied in the Company’s forward-looking statements. These risks are not exhaustive. Other sections of this Press Release and our filings with the Securities and Exchange Commission include additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Press Release. Should one or more of the foregoing risks materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those projected in, or implied by, such forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. The Company disclaims any obligation to update, revise, or correct any forward-looking statements based on the occurrence of future events, the receipt of new information or otherwise.