Sterling in N.Y. sheds nonperforming mortgage loans

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Sterling Bancorp in Montebello, N.Y., has completed two loan portfolio sales, including the remaining balance of its small business commercial transportation book and most of its nonperforming residential mortgages.

The $31 billion-asset company said in a press release Wednesday that it sold $106.1 million in equipment finance loans. In a separate transaction, it sold mortgages with a carrying value of $57.6 million. Sterling did not name the buyers.

The company said that, in aggregate, the sales included $84.5 million in nonperforming loans and resulted in net charge-offs of $55.1 million. Sterling said the majority of the charge-offs had been previously addressed with additions to its loan-loss allowance.

“With the actions we are announcing today, we continue to emphasize our intent to proactively address the impact of the pandemic on our business and loan portfolio,” Jack Kopnisky, Sterling’s president and CEO, said in the release.

"We continue to emphasize our intent to proactively address the impact of the pandemic on our business and loan portfolio,” says Jack Kopnisky, Sterling’s president and CEO.
"We continue to emphasize our intent to proactively address the impact of the pandemic on our business and loan portfolio,” says Jack Kopnisky, Sterling’s president and CEO.

The sales “include assets that did not meet our risk-adjusted return targets and were not core to our strategy of [serving] middle-market commercial clients,” he added. “Accelerating the disposition of these assets will allow us to better allocate our capital and human resources to other areas of our business that are in-line with our strategy and have higher prospects for growth and profitability.”

The sales should lower Sterling’s nonperforming loans by 33% from June 30, to $176 million. Its ratio of nonperforming loans to total loans should decrease from 1.17% to 0.80%.

Sterling also reported that loan deferrals tied to the coronavirus pandemic have fallen by 59% since June 30 to $704 million.

"While the early effects of the pandemic led many companies to defer payments under the guidance of the CARES Act, the businesses and operations of many of our commercial clients have been resilient through these difficult economic conditions,” Kopnisky said.

“While several industry sectors continue to experience meaningful challenges specific to the pandemic, we are encouraged by the decrease,” he said. Sterling “will continue to pursue mutually beneficial solutions and assist our clients as they operate their businesses through the pandemic.”

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