Sterling in N.Y. is making tweaks to its balance sheet

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Sterling Bancorp in Montebello, N.Y., has agreed to sell a portfolio of mortgage loans.

The $31 billion-asset company said in a press release Thursday that will sell $1.6 billion in fixed-rate loans through an agreement with a third party. The loans had a weighted average interest rate of 3.61%.

The loan sale, which is expected to be neutral to Sterling’s earnings, is expected to close in February.

Sterling said it plans to use the net proceeds from the sale to pay off about $1.6 billion of wholesale borrowings with a weighted average interest rate of 2.75%.

The company estimated that accretion income on the acquired loans will be $60 million to $65 million in 2019. Also, the loan sale and reduction in borrowings should widen Sterling’s net interest margin by up to 15 basis points next year.

“These actions are consistent with the continued execution of our strategy, and will significantly strengthen our liquidity position, accelerate the ongoing transition of our balance sheet, and improve our profitability ratios,” Jack Kopnisky, Sterling’s president and CEO, said in the release.

“We will continue allocating our substantial capital and funding to investments where we can achieve the best risk-adjusted returns, which we anticipate will include organic growth in loans and deposits, loan portfolio acquisitions and share repurchases,” Kopnisky added.

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