Sterling Bancorp : Earnings Call for Quarter End September 30, 2021

Q3 2021 Earnings Conference Call

October 21, 2021

Forward-Looking Statements and Associated Risk Factors

This presentation may contain certain forward-looking statements, including, but not limited to, certain plans, expectations, goals, projections, and statements about the Company and the benefits of the proposed transaction, between Webster Financial Corporation ("Webster") and Sterling Bancorp (the "Company"), the plans, objectives, expectations and intentions of Webster and the Company, the expected timing of completion of the transaction, and other statements that are not historical fact. Such statements are subject to numerous assumptions, risks, and uncertainties. Statements that do not describe historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements may be identified by words such as expect, anticipate, believe, intend, estimate, plan, target, goal, or similar expressions, or future or conditional verbs such as will, may, might, should, would, could, or similar variations. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995.

While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in general economic, political, or industry conditions; the magnitude and duration of the COVID-19 pandemic and its impact on the global economy and financial market conditions and our business, results of operations, and financial condition; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; movements in interest rates; reform of LIBOR; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services; the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, including those related to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III regulatory capital reforms, as well as those involving the OCC, Federal Reserve, FDIC, and CFPB; the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the merger agreement between Webster and the Company; the outcome of any legal proceedings that may be instituted against Webster or the Company; delays in completing the transaction; the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction); the failure to obtain stockholder approvals or to satisfy any of the other conditions to the transaction on a timely basis or at all; the possibility that the anticipated benefits of the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Webster and the Company do business; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management's attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction; the ability to complete the transaction and integration of Webster and the Company successfully; the dilution caused by Webster's issuance of additional shares of its capital stock in connection with the transaction; and other factors that may affect the future results of Webster and the Company. Additional factors that could cause results to differ materially from those described above can be found in Webster's Annual Report on Form 10-K for the year ended December 31, 2020, which is on file with the Securities and Exchange Commission (the "SEC") and available on Webster's investor relations website, https://webster.gcs-web.com/, under the heading "Financials" and in other documents Webster files with the SEC, and in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, which is on file with the SEC and available on the Company's investor relations website, https://sterlingbank.gcs-web.com/investor-relations, under the heading "Financials" and in other documents the Company files with the SEC.

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Forward-Looking Statements and Associated Risk Factors - con't

All forward-looking statements speak only as of the date they are made and are based on information available at that time. Neither Webster nor the Company assumes any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

Financial information contained in this release should be considered to be an estimate pending the filing with the Securities and Exchange Commission of the Company's Quarterly Report on Form 10-Q for the nine months ended September 30, 2021. While the Company is not aware of any need to revise the results disclosed in this release, accounting literature may require information received by management between the date of this release and the filing of the Quarterly Report on Form 10-Q to be reflected in the results of the fiscal period, even though the new information was received by management subsequent to the date of this release.

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Sterling Value Proposition

Strong PPNR and Robust Capital

Levels

Strong run-rate profitability and robust PPNR

• Adjusted PPNR excluding accretion income(1) of $120.7 million
• Adjusted net income available to common stockholders(1) of $99.6 million or $0.52 per diluted share
• Reported net interest margin excluding accretion income of 3.25%, a decrease of 5 bps versus the linked quarter, and an increase of 15 bps year over year
• Adjusted operating efficiency ratio(1) of 45.4%
• Commercial loan growth of $558.7 million or 2.9% over linked quarter
• TCE / TA(1) of 10.25% at 9/30/2021
• Tangible book value per common share of $15.03, up 10.8% from the prior year period

Strong Reserves and Stabilizing Asset

Quality

Appropriate reserve position given underlying credit profile

• ACL / total portfolio loans of 1.46%
• ACL / NPLs of 150.8%
• Collateralized and well-secured loan portfolio
• 
  * Multi-family @ 47% WA LTV * Other CRE @ 52% WA LTV

Continued monitoring of portfolio performance and credit trends

• Deferrals now 0.4% of total loan portfolio at 9/30/2021
• NPLs of $205.5 million, an increase of $32.1 million over the linked quarter with a single loan driving much of the increase
• Crit / class loans decreased $27.0 million vs. linked quarter
• Prudent reserve levels with $309.9 million ACL at 9/30/2021

Diverse Business Model with Proven

Record of Generating Results

Track record of delivering results

• Five-yearCAGR in tangible book value per common share of 14.5%
• Five-yearCAGR in adjusted EPS of 12.4%

Building the business model for the future

• Merging single point of contact model with contemporary digital platform
• Diversified asset and deposit origination capabilities through various distribution channels - significant synergies identified with Webster
• Investment in tech and digital partnerships through Banking as a Service platform, added seven partnerships as of Q3 21, and made a number of strategic investments in fintech companies
• Integration efforts associated with our pending merger with Webster are progressing; we are prepared to execute our transaction once regulatory approval is received

1. Adjusted PPNR excluding accretion income, adjusted net income available to common stockholders, adjusted operating efficiency ratio, tangible common equity and tangible assets are non-GAAP measures. Refer to pages 16 through 20 for details on adjusted / non-GAAP financial measures.

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Q3 2021 Highlights

Key Financial

and Operating

Results

• Diluted EPS available to common stockholders of $0.49 (as reported) / $0.52 (as adjusted)(1)
• Net income available to common of $93.7 million (as reported) / $99.6 million (as adjusted)(1)
• Adjusted pretax pre-provision net revenue ("PPNR")(1) including accretion income of $126.9 million and $120.7 million excluding accretion income
• Net interest income declined $4.7 million from linked quarter to $213.8 million due to lower loan prepayment fees and lower accretion income; tax equivalent NIM excluding accretion income of 3.25%, declined five bps compared to the linked quarter
• Total assets of $30.0 billion; total gross portfolio loans of $21.3 billion; total deposits of $23.9 billion
• Total commercial loans of $19.7 billion, an increase of $558.7 million versus linked quarter; robust origination volume in traditional C&I and public sector finance portfolios
• Core deposits of $23.4 billion, an increase of 3.5% versus linked quarter
• Total cost of funding liabilities decreased by 1 bps to 19 bps versus linked quarter
• Yield on loans decreased by 9 bps versus linked quarter to 3.79%
• Adjusted opex of $111.3 million(1); adjusted operating efficiency ratio of 45.4%(1)

Capital &

Asset Quality

• Tangible book value per common share(1) of $15.03; growth of 10.8% Y-o-Y
• TCE / TA of 10.25%(1) and estimated Tier 1 Leverage Ratio of 11.35%(2)
• ACL / portfolio loans of 1.46% and ACL / NPLs of 150.8%
• Reduction in special mention loans of $36.8 million versus linked quarter; substandard loans increased $10.1 million with loss content mitigated by strong guarantors and secondary sources of repayment
• NPLs increased $32.1 million versus linked quarter, mainly due to one CRE loan

Balance Sheet

Optimization

• Investment securities, net to earning assets of 16.5%
• Declared a dividend of $0.07 per common share payable on November 15, 2021 to holders of record as of November 1, 2021
• Growing capital into merger; suspended common stock repurchases

1. Adjusted / non-GAAP results exclude certain charges and gains. Refer to pages 16 through 20 for details on adjusted / non-GAAP financial measures.
2. Capital ratios represent estimated figures pending completion of quarterly regulatory reports.

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