<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
March 31, 1995
For Quarter Ended..............................................................
1-5273-1
Commission file number.........................................................
Sterling Bancorp
...............................................................................
(Exact name of registrant as specified in its charter)
New York 13-2565216
...............................................................................
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
540 Madison Avenue, New York, N.Y. 10022-3299
...............................................................................
(Address of principal executive offices) (Zip Code)
212-826-8000
...............................................................................
(Registrant's telephone number, including area code)
N/A
...............................................................................
(Former name, former address and former fiscal year, if
changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X . No .
--- ---
As of March 31, 1995 there were outstanding 6,346,262 shares of common
stock, $1.00 par value, the registrant's only class of common shares
outstanding.
<PAGE> 2
STERLING BANCORP
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION Page
----
<S> <C>
Item 1. Financial Statements
Consolidated Financial Statements 3
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Business 8
Financial Condition 8
Credit Risk 10
Results of Operations 11
Average Balance Sheets 13
Rate/Volume Analysis 14
Interest Rate Sensitivity 15
Risk-Based Capital Components and Ratios 16
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 17
EXHIBIT INDEX 18
Exhibit 11 Computation of Per Share Earnings 19
Exhibit 27 Financial Data Schedule 20
</TABLE>
2
<PAGE> 3
STERLING BANCORP AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1995 1994
------------ ------------
<S> <C> <C>
Cash and due from banks $ 33,324,173 $ 39,224,764
Interest-bearing deposits with other banks 3,000,000 2,970,000
Federal funds sold 5,000,000 8,000,000
Securities
Available for sale 72,375,492 67,335,889
Held to maturity (market value
$227,443,482 and $227,248,000, respectively) 237,914,322 244,445,988
------------ ------------
Total securities 310,289,814 311,781,877
------------ ------------
Loans, net of unearned discounts 298,928,935 312,769,179
Less allowance for possible loan losses 4,312,023 4,135,810
------------ ------------
Loans, net 294,616,912 308,633,369
------------ ------------
Customers' liability under acceptances 603,870 624,083
Excess cost over equity in net assets of the
banking subsidiary 21,158,440 21,158,440
Premises and equipment, net 3,328,002 3,423,320
Other assets 11,207,319 10,819,866
------------ ------------
$682,528,530 $706,635,719
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing deposits $156,463,261 $174,897,143
Interest-bearing deposits 330,884,164 342,405,372
------------ ------------
Total deposits 487,347,425 517,302,515
Securities sold under repurchase agreements 45,330,054 44,050,836
Commercial paper 17,319,300 14,672,800
Other short-term borrowings 4,772,359 7,104,224
Acceptances outstanding 603,870 624,083
Other liabilities 23,295,850 20,137,453
------------ ------------
578,668,858 603,891,911
------------ ------------
Long-term convertible subordinated debentures 26,162,000 26,446,000
Other long-term debt 22,250,000 22,500,000
------------ ------------
Total long-term debt 48,412,000 48,946,000
------------ ------------
Total liabilities 627,080,858 652,837,911
------------ ------------
Commitments and contingent liabilities
Convertible preferred stock, Series D
- market value guarantee feature 875,000 875,000
Less unearned compensation - unallocated shares 796,506 796,506
Shareholders' equity
Preferred shares, $5 par value. Authorized 644,389 shares
Series B 25,760 25,760
Series D 1,625,000 1,625,000
Common shares, $1 par value. Authorized 20,000,000 shares;
issued 6,496,605 shares 6,496,605 6,496,605
Capital surplus 28,089,137 28,089,137
Retained earnings 22,468,199 21,592,244
Net unrealized depreciation on securities
available for sale, net of tax (367,060) (1,140,969)
------------ ------------
58,337,641 56,687,777
Less
Common shares in treasury at cost, 150,343 shares 1,489,239 1,489,239
Unearned compensation 1,479,224 1,479,224
------------ ------------
Total shareholders' equity 55,369,178 53,719,314
------------ ------------
$682,528,530 $706,635,719
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE> 4
STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------------
1995 1994
----------- -----------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 7,365,176 $ 4,943,022
Interest and dividends on securities
Available for sale 1,163,234 987,379
Held to maturity 3,922,410 3,175,697
Interest on Federal funds sold 119,157 27,474
Interest on deposits with other banks 41,718 24,844
----------- -----------
Total interest income 12,611,695 9,158,416
----------- -----------
INTEREST EXPENSE
Interest on deposits 2,804,342 1,513,597
Interest on Federal funds purchased and
securities sold under repurchase agreements 648,824 374,643
Interest on commercial paper 219,274 101,880
Interest on other short-term borrowings 75,705 148,411
Interest on long-term debt 884,337 747,440
----------- -----------
Total interest expense 4,632,482 2,885,971
----------- -----------
Net interest income 7,979,213 6,272,445
Provision for possible loan losses 315,000 190,000
----------- -----------
Net interest income after provision for possible
loan losses 7,664,213 6,082,445
----------- -----------
NONINTEREST INCOME
Service charges on deposit accounts 426,394 303,317
Factoring and letters of credit commissions 513,519 405,053
Trust fees 168,189 144,380
Gain on sales of securities -- 42,361
Other 178,348 102,275
----------- -----------
Total noninterest income 1,286,450 997,386
----------- -----------
NONINTEREST EXPENSES
Salaries and employee benefits 3,377,331 2,852,022
Occupancy 723,392 602,574
Equipment 363,166 321,676
Legal and other professional fees 343,462 253,146
Federal deposit insurance premium 273,734 243,228
Marketing 247,463 150,174
Other 943,585 905,883
----------- -----------
Total noninterest expenses 6,272,133 5,328,703
----------- -----------
Income before income taxes 2,678,530 1,751,128
Provision for income taxes 1,421,456 840,661
----------- -----------
Net income $ 1,257,074 $ 910,467
=========== ===========
Average number of common shares outstanding 6,369,450 6,359,132
=========== =========
Per average common share
Net income $0.20 $0.14
===== =====
Average number of common shares outstanding
assuming full dilution 8,951,177 8,781,981
=========== =========
Per average common share assuming full dilution
Net income $0.18 $0.13
===== =====
Dividends paid per common share $0.06 $0.05
===== =====
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE> 5
STERLING BANCORP AND SUBSIDIARIES
Consolidated Statement of Changes in Shareholders' Equity
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------------
March 31, March 31,
1995 1994
------------ ------------
<S> <C> <C>
Shareholders' equity at beginning of period $53,719,314 $52,856,675
----------- -----------
Net income 1,257,074 910,467
Dividends declared
Common stock - $.06 and $.05 per share respectively (380,776) (317,311)
Preferred stock - at prescribed rates (343) --
Change in market value guarantee feature
Convertible preferred stock,Series D -- (187,500)
Unearned compensation - unallocated shares -- 179,841
Change in valuation account for securities
available for sale, net of tax 773,909 (665,114)
----------- -----------
Net change in shareholders' equity 1,649,864 (79,617)
----------- -----------
Shareholders' equity at end of period $55,369,178 $52,777,058
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE> 6
STERLING BANCORP AND SUBSIDIARIES
Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------------
1995 1994
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,257,074 $ 910,467
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for possible loan losses 315,000 190,000
Depreciation and amortization of premises and equipment 238,504 124,727
Deferred income tax provision (benefit) 123,256 (39,046)
Gain on sale of securities -- (42,361)
Amortization of premiums on securities 354,036 1,097,214
Accretion of discounts on securities (20,944) (946)
Increase in accrued interest receivable (317,879) (388,665)
Increase in other liabilities 3,158,397 1,812,747
Other, net (849,687) (528,407)
------------ ------------
Net cash provided by operating activities 4,257,757 3,135,730
------------ ------------
INVESTING ACTIVITIES
Purchase of premises and equipment (143,186) (606,062)
Net increase in interest-bearing deposits
with other banks (30,000) --
Net decrease in Federal funds sold 3,000,000 --
Net decrease in loans 13,701,457 71,551,764
Proceeds from sale of securities available for sale -- 9,955,693
Proceeds from prepayments, redemptions or maturities
of securities 7,797,659 33,340,726
Purchase of securities (5,207,922) (104,139,291)
------------ ------------
Net cash provided by investing activities 19,118,008 10,102,830
------------ ------------
FINANCING ACTIVITIES
Net decrease in noninterest-bearing deposits (18,433,882) (38,281,319)
Net decrease in interest-bearing deposits (11,521,208) (21,003,904)
Net increase in securities sold under
repurchase agreements 1,279,218 16,573,432
Net increase in commercial paper
and other short-term borrowings 314,635 30,285,621
Cash dividends paid (381,119) (317,311)
Maturities and prepayments on debentures (534,000) (129,000)
------------ ------------
Net cash used by financing activities (29,276,356) (12,872,481)
------------ ------------
Net (decrease) increase in cash and due from banks (5,900,591) 366,079
Cash and due from banks - beginning of period 39,224,764 35,975,787
------------ ------------
Cash and due from banks - end of period $ 33,324,173 $ 36,341,866
============ ============
Supplemental disclosure of cash flow information:
Interest paid $ 4,622,324 $ 2,452,331
Income taxes paid 641,088 532,427
</TABLE>
See Notes to Consolidated Financial Statements.
6
<PAGE> 7
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. The consolidated financial statements include the accounts of Sterling
Bancorp ("the parent company") and its subsidiaries, principally Sterling
National Bank & Trust Company of New York ("the bank"), after elimination
of material intercompany transactions. The term "the Company" refers to
Sterling Bancorp and its subsidiaries. The consolidated financial
statements as of and for the interim periods ended March 31, 1995 and 1994
are unaudited; however, in the opinion of management, all adjustments,
consisting of normal recurring accruals, necessary for a fair presentation
of such periods have been made. Certain reclassifications have been made
to the 1994 financial statements to conform to current presentation. The
interim financial statements should be read in conjunction with the
Company's annual report on Form 10-K for the year ended December 31, 1994.
2. For purposes of reporting cash flows, cash and cash equivalents include
cash and due from banks.
3. The Company's outstanding Preferred Shares comprise 1,288 Series B shares
(of 4,389 authorized) and 250,000 Series D Shares (of 300,000 authorized).
Each Series B share is entitled to cumulative dividends at the rate of
$0.10 per year, to one vote per share and upon liquidation or redemption
to an amount equal to accrued and unpaid dividends to the date of
redemption or liquidation plus an amount which is $20 in the case of
involuntary liquidation and $28 otherwise; each Series D share (all of
such shares are owned by the Company's Employee Stock Ownership Trust) is
entitled to dividends at the rate of $0.6125 per year, is convertible into
one Common Share, and is entitled to a liquidation preference of $10
(together with accrued dividends). All preferred shares are entitled to
one vote per share (voting with the Common Shares except as otherwise
required by law).
4. On January 1, 1995, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 114 "Accounting by Creditors for Impairment of a
Loan," as amended by SFAS No. 118 "Accounting by Creditors for Impairment
of a Loan - Income Recognition and Disclosures."
SFAS No. 114 required all creditors to account for impaired loans (except
for those loans that are accounted for at fair value or at the lower of
cost or fair value) at the present value of the expected future cash
flows, discounted at the loan's effective interest rate, or at the fair
value of the loan's collateral if the loan is collateral dependent. SFAS
No. 114 also provides that in-substance foreclosed loans should not be
included in Real Estate Owned for financial reporting purposes, but,
rather, in the loan portfolio.
SFAS No. 114 was amended by SFAS No. 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosure." SFAS No. 118
allows for existing income recognition practices to continue.
As of March 31, 1995, these statements did not have a material effect on
the Company's financial condition or results of operations.
7
<PAGE> 8
STERLING BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
BUSINESS
Sterling Bancorp (the parent company) is a bank holding company, as defined by
the Bank Holding Company Act of 1956, as amended, with subsidiaries providing a
full range of financial services, including business and consumer loans, asset
based financing, factoring, trade financing, mortgage lending, leasing, and
trust and estate services. The parent company owns virtually 100% of Sterling
National Bank & Trust Company of New York (the bank), its principal subsidiary,
all of the outstanding shares of Standard Factors Corporation/Sterling Factors,
Universal Finance Corporation, Sterling Banking Corporation and Sterling
Industrial Loan Association (finance subsidiaries). As used throughout this
report, "the Company" refers to Sterling Bancorp and its subsidiaries.
There is intense competition in all areas in which the Company conducts its
business, including deposits, loans, domestic and international financing and
trust services. In addition to competing with other banks, the Company also
competes in certain areas of its business with other financial institutions. At
March 31, 1995, the bank's year to date average earning assets (of which loans
were 44% and securities were 54%) represented approximately 95% of the
Company's year to date average earning assets. See page 13 for the composition
of the Company's average balance sheets for the three months ended March 31,
1995 and March 31, 1994.
FINANCIAL CONDITION
Liquidity is the ability to meet cash needs arising from changes in various
categories of assets and liabilities. Liquidity is constantly monitored and
managed at both the parent company and the bank levels. Liquid assets consist
of cash and due from banks, interest-bearing deposits in banks and Federal
funds sold and securities available for sale. Primary funding sources include
core deposits, capital market funds and other money market sources. Core
deposits include domestic noninterest-bearing and interest-bearing retail
deposits, which historically have been relatively stable. The parent company
and the bank have significant unused borrowing capacity. Contingency plans
exist and could be implemented on a timely basis to minimize the impact of any
dramatic change in market conditions.
While the parent company generates income from its own operations, it also
depends for its cash requirements on funds maintained or generated by its
subsidiaries, principally the bank. Such sources have been adequate to meet
the parent company's cash requirements throughout its history. At March 31,
1995, the parent company had on hand approximately $10,614,000 in cash.
Various legal restrictions limit the extent to which the bank can supply funds
to the parent company and its nonbank subsidiaries. All national banks are
limited in the payment of dividends without the approval of the Comptroller of
the Currency (the Comptroller) to an amount not to exceed the net profits (as
defined) for that year to date combined with its retained net profits for the
preceding two calendar years. During 1994 and 1993, with the Comptroller's
approval, the bank paid dividends aggregating $3,639,038 and $2,599,314, the
bank's net income for 1994 and 1993 was $4,222,664 and $3,463,950. In 1995, the
bank declared and paid a dividend of approximately $663,300. In addition, from
time to time dividends are paid to the parent company by the finance
subsidiaries from their retained earnings without regulatory restrictions.
8
<PAGE> 9
STERLING BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
At March 31, 1995, the parent company's outstanding long-term debt, consisting
principally of convertible subordinated debentures (originally issued pursuant
to rights offerings to shareholders of the Company), aggregated $28,662,000.
To the extent convertible subordinated debentures are converted to common stock
of the parent company (as has been the case with $11,000,000 principal amount
since 1982), the subordinated debt related thereto is retired and becomes part
of shareholders' equity. The parent company's long-term indebtedness is also
met through funds generated from profits and new financing. Since becoming a
public company in 1946, the parent company and its predecessors have been able
to obtain the financing required and have paid at maturity all outstanding
long-term indebtedness. The parent company expects to continue to meet its
obligations in accordance with their terms.
At March 31, 1995, the parent company's short-term debt, consisting solely of
commercial paper, was approximately $17,319,000. The parent company had cash,
interest-bearing deposits with banks and other current assets aggregating
$33,266,000 and back-up credit lines with banks of $15,000,000. The parent
company and its predecessor have issued and repaid at maturity approximately
$12 billion of commercial paper since 1955. Since 1979, the parent company has
had no need to use available back-up lines of credit.
The Company's asset-liability management program is designed to achieve
acceptable yields while managing interest rate risk, maturity distribution and
credit risk. At March 31, 1995, the Company maintained a portfolio of
securities totalling $310,290,000 of which U.S. Government and U.S. Government
corporation and agency guaranteed mortgage backed securities having an average
life of approximately 3 1/2 years amounted to $301,359,000. The Company has
the intent and ability to hold to maturity securities classified "held to
maturity". These securities are carried at cost, adjusted for amortization of
premiums and accretion of discounts. The gross unrealized gains and losses on
"held to maturity" securities were $143,000 and $10,613,000, respectively.
Securities classified as "available for sale" may be sold in the future, prior
to maturity. These securities are carried at market value. Net aggregate
unrealized gains or losses on these securities are included in a valuation
allowance account and are shown net of taxes, as a component of shareholder's
equity. "Available for sale" securities included gross unrealized gains of
$198,000 and gross unrealized losses of $877,000.
9
<PAGE> 10
STERLING BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company and the bank are subject to risk-based capital regulations. The
purpose of these regulations is to measure capital against risk-weighted
assets, including off-balance sheet items. These regulations define the
elements of total capital into Tier 1 and Tier 2 components and establish
minimum ratios of 4% for Tier 1 capital and 8% for Total Capital.
Supplementing these regulations, is a leverage requirement. This requirement
establishes a minimum leverage ratio, (at least 3%) which is calculated by
dividing Tier 1 capital by adjusted quarterly average assets (after deducting
goodwill). At March 31, 1995, the risk-based capital ratios and the leverage
ratio for the Company and the bank exceeded the most stringent requirements
contemplated by these guidelines. Information regarding the Company's and the
bank's risk-based capital, at March 31, 1995 and December 31, 1994, is
presented on page 16.
While the past performance is no guarantee of the future, management believes
that the Company's funding sources (including dividends from all its
subsidiaries) and the bank's funding sources will be adequate to meet their
liquidity and capital requirements in the future.
CREDIT RISK
A key management objective is to maintain the quality of the loan portfolio.
This objective is achieved by maintaining high underwriting standards coupled
with regular evaluation of the creditworthiness of and the designation of
lending limits for each borrower. The portfolio strategies seek to avoid
concentrations by industry or loan size in order to minimize credit exposure
and to originate loans in markets with which it is familiar. The composition
of the Company's and the bank's loan portfolio at March 31, 1995 were as
follows:
<TABLE>
<CAPTION>
Company Bank
---------- ----------
(in thousands)
<S> <C> <C>
Domestic
Commercial and industrial $ 248,242 $ 215,173
Real estate - mortgage 43,059 43,059
Real estate - construction 1,355 1,355
Installment - individuals 11,396 11,396
Foreign
Government and official institutions 789 789
---------- ----------
Loans, gross 304,841 271,772
Less unearned discounts 5,912 5,637
---------- ----------
Loans, net of unearned discounts $ 298,929 $ 266,135
========== ==========
</TABLE>
The Company's commercial and industrial loan portfolio represents approximately
82% of gross loans. Loans in this category are typically made to small and
medium sized businesses and range between $250,000 and $10 million. The
primary source of repayment is from the borrower's operating profits and cash
flows. Based on underwriting standards, loans may be secured in whole or in
part by collateral such as liquid assets, accounts receivable, equipment,
inventory or real property. The Company's real estate loan portfolio, which
represents approximately 15% of gross loans, is secured by mortgages on real
property located principally in the City of New York and the State of Virginia.
The collateral securing any loan may vary in value based on the success of the
business and economic conditions.
10
<PAGE> 11
STERLING BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Intrinsic to the lending process is the possibility of loss. In times of
economic slowdown, the risk inherent in the Company's portfolio of loans is
increased. While management endeavors to minimize this risk, it recognizes
that loan losses will occur and that the amount of these losses will fluctuate
depending on the risk characteristics of the loan portfolio which in turn
depends on current and expected economic conditions, the financial condition of
borrowers and the credit management process.
The allowance for possible loan losses is maintained through the provision for
possible loan losses, which is a charge to operating earnings. The adequacy of
the provision and the resulting allowance for possible loan losses is
determined by management's continuing review of the loan portfolio, including
identification and review of individual problem situations that may affect the
borrower's ability to repay, review of overall portfolio quality through an
analysis of current charge-offs, delinquency and nonperforming loan data,
estimates of the value of any underlying collateral, review of regulatory
examinations, an assessment of current and expected economic conditions and
changes in the size and character of the loan portfolio. Thus, the allowance
level reflects identified loss potential and inherent risk in the portfolio. A
significant change in any of the evaluation factors described above could
result in future additions in the allowance. At March 31, 1995, the ratio of
the allowance to loans, net of unearned discounts, was 1.5%. At March 31,
1995, the Company's allowance, was $4,312,000 and its non-accrual loans
amounted to $525,000. Based on the foregoing, as well as management's
judgement as to the current risks inherent in the loan portfolio, the Company's
allowance for possible loan losses was deemed adequate to absorb all reasonably
anticipated losses on specifically known and other possible credit risks
associated with the portfolio as of March 31, 1995.
RESULTS OF OPERATIONS
The Company's earnings are primarily dependent on net interest income which can
be affected by changes in interest rates. An analysis of the Company's
interest rate sensitivity is presented on page 15. Net interest income varies
with the mix of interest- earning assets and interest-bearing liabilities and
their respective yields earned and rates paid. The increases (decreases) for
the components of interest income and interest expense, expressed in terms of
fluctuation in average volume and rate are shown on page 14. Information as to
the components of interest income and interest expense and average rates is
provided in the Average Balance Sheets shown on page 13.
COMPARISON OF YEARS ENDED MARCH 31, 1995 AND MARCH 31, 1994
Total interest income increased $3,453,000 for the three months ended March 31,
1995 when compared with the same period last year principally due to improved
yields as well as higher average outstandings. An increase in average
securities outstandings coupled with higher yields, resulted in an increase in
income from securities of $922,000. Higher average outstandings employed at
higher rates resulted in an increase of $2,422,000 in interest and fees on
loans.
11
<PAGE> 12
STERLING BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Total interest expense for the three months ended March 31, 1995 increased
$1,746,000 when compared with the same period in 1994 principally due to higher
interest rates paid. Interest expense on interest-bearing deposits rose
$1,290,000 as a result of increased rates coupled with an increase in average
outstandings. Interest expense on borrowings increased $456,000 for the three
months ended March 31, 1995 versus the like period a year ago. The increase is
attributable to an increase in rates paid partially offset by lower average
outstandings.
Based on management's continuing evaluation of the collectibility of the loan
portfolio, $315,000 was provided for possible loan losses for the three months
ended March 31, 1995.
Noninterest income increased $289,000 for the first quarter of 1995 when
compared with the same period in 1994 as a result of higher service charges on
deposit accounts and increased fees from letters of credit and factoring
services.
Noninterest expenses increased $943,000 for the three months ended March 31,
1995 versus the same period last year reflecting higher salary and employee
benefit costs associated with the Company's higher levels of business
activities as well as higher general business costs.
The provision for income taxes increased $581,000 for the first quarter 1995
when compared with the same period last year principally based on the level of
pre-tax profitability.
As a result of the above factors, net income increased $347,000 for the three
months ended March 31, 1995 when compared with the same period in 1994.
12
<PAGE> 13
STERLING BANCORP AND SUBSIDIARIES
Average Balance Sheets [1]
Three Months Ended March 31,
<TABLE>
<CAPTION>
1995 1994
------------------------------------ ------------------------------------
Average Average Average Average
ASSETS Balance Interest Rate Balance Interest Rate
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Interest-bearing deposits
with other banks $ 2,972 $ 42 5.28% $ 2,940 $ 25 3.43%
Securities
Available for sale [2] 71,328 1,163 6.57 83,582 987 4.79
Held to maturity 241,296 3,922 6.51 217,229 3,176 5.93
Federal funds sold 7,856 119 6.07 3,333 27 3.34
Loans, net of unearned
discounts [3] 286,502 7,365 10.79 243,588 4,943 7.61
-------- -------- -------- --------
TOTAL EARNING ASSETS 609,954 12,611 8.48 550,672 9,158 6.47
-------- ------ -------- ------
Cash and due from banks 39,692 41,934
Allowance for possible
loan losses (4,229) (3,509)
Goodwill 21,158 21,158
Other assets 12,447 13,418
-------- --------
TOTAL ASSETS $679,022 $623,673
======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing deposits
Savings $179,347 997 2.26 $188,460 903 1.94
Other time 153,063 1,807 4.78 91,901 611 2.70
-------- -------- -------- --------
Total interest-bearing
deposits 332,410 2,804 3.42 280,361 1,514 2.19
-------- -------- -------- --------
Borrowings
Securities sold under
agreements to repurchase 48,327 649 5.46 53,745 375 2.83
Commercial paper 16,586 219 5.36 13,945 102 2.97
Other short-term debt 6,554 76 4.58 17,451 148 3.44
Long-term debt 48,705 884 7.36 52,263 747 5.80
-------- -------- -------- --------
Total borrowings 120,172 1,828 6.17 137,404 1,372 4.05
-------- -------- -------- --------
TOTAL INTEREST-BEARING
LIABILITIES 452,582 4,632 4.15 417,765 2,886 2.80
-------- ---- -------- ----
Noninterest-bearing deposits 150,535 142,411
Other liabilities 21,723 10,492
-------- --------
Total liabilities 624,840 570,668
Shareholders' equity 54,182 53,005
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $679,022 $623,673
======== ========
Net interest income/spread $ 7,979 4.33% $ 6,272 3.67%
======== ==== ======== =====
Net yield on earning assets
(margin) 5.35% 4.62%
==== =====
</TABLE>
- --------------
[1] The average balances of assets, liabilities and shareholders' equity are
computed on the basis of daily averages for the bank and monthly averages
for the parent company and its finance subsidiaries. Dollars are presented
in thousands.
[2] Based on amortized or historical cost with the FASB 115 market value
adjustment included in other assets.
[3] Non-accrual loans are included in the average balance which reduces the
average yields.
13
<PAGE> 14
STERLING BANCORP AND SUBSIDIARIES
Rate/Volume Analysis
Three Months Ended March 31,
(000 omitted)
<TABLE>
<CAPTION>
Increase/(Decrease)
Three Months Ended
March 31, 1995 and 1994
------------------------------------
Volume Rate Total(1)
------- ------- --------
<S> <C> <C> <C>
INTEREST INCOME
Interest-bearing deposits with other banks $ 2 $ 15 $ 17
------- ------- -------
Securities
Available for sale (2) (169) 345 176
Held to maturity 396 350 746
------- ------- -------
Total 227 695 922
------- ------- -------
Federal funds sold 53 39 92
------- ------- -------
Loans, net of unearned discounts (3) 602 1,820 2,422
------- ------- -------
TOTAL INTEREST INCOME $ 884 $ 2,569 $ 3,453
======= ======= =======
INTEREST EXPENSE
Interest-bearing deposits
Savings $ (48) $ 142 $ 94
Other time 563 633 1,196
------- ------- -------
Total 515 775 1,290
------- ------- -------
Borrowings
Securities sold under agreements to repurchase (56) 330 274
Commercial paper 27 90 117
Other short-term debt (107) 35 (72)
Long-term debt (58) 195 137
------- ------- -------
Total (194) 650 456
------- ------- -------
TOTAL INTEREST EXPENSE $ 321 $ 1,425 $ 1,746
======= ======= =======
NET INTEREST INCOME $ 563 $ 1,144 $ 1,707
======= ======= =======
</TABLE>
- ---------------
(1) The rate/volume variance is allocated equally between changes in volume
and rate.
(2) Includes Federal Reserve Bank and other stock investments.
(3) Nonaccrual loans have been included in the amounts outstanding and income
has been included to the extent accrued.
14
<PAGE> 15
STERLING BANCORP AND SUBSIDIARIES
Interest Rate Sensitivity
To mitigate the vulnerability of earnings to changes in interest rates, the
Company manages the repricing characteristics of assets and liabilities in an
attempt to control net interest rate sensitivity. Management attempts to
confine significant rate sensitivity gaps predominantly to repricing intervals
of a year or less so that adjustments can be made quickly. Assets and
liabilities with predetermined repricing dates are placed in a time of the
earliest repricing period. Based on the interest rate sensitivity analysis
shown below, the Company's net interest income would decrease during periods of
rising interest rates and increase during periods of falling interest rates.
Amounts are presented in thousands.
<TABLE>
<CAPTION>
Repricing Date
---------------------------------------------------------------------------------------
More than Non
3 months 3 months 1 year to Over Rate
or less to 1 year 5 years 5 years Sensitive Total
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits
with other banks $ 1,200 $ 1,800 $ -- $ -- $ -- $ 3,000
Securities -- 28,260 60,585 217,360 4,085 310,290
Federal funds sold 5,000 -- -- -- -- 5,000
Loans, net of unearned
discounts 249,963 2,837 29,390 22,289 (5,550) 298,929
Noninterest-earnings assets
and allowance for possible
loan losses -- -- -- -- 65,310 65,310
--------- -------- --------- --------- --------- --------
Total Assets 256,163 32,897 89,975 239,649 63,845 682,529
--------- -------- --------- --------- --------- --------
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing deposits 145,451 37,437 147,996 -- -- 330,884
Securities sold under
repurchase agreements 37,995 7,335 -- -- -- 45,330
Commercial paper 16,990 329 -- -- -- 17,319
Other short-term borrowings 1,522 3,250 -- -- -- 4,772
Long-term debt 26,162 -- 21,200 1,050 -- 48,412
Noninterest-bearing
liabilities and share-
holders' equity -- -- -- -- 235,812 235,812
--------- --------- --------- --------- --------- --------
Total Liabilities and
Shareholders' Equity $ 228,120 $ 48,351 $ 169,196 $ 1,050 $ 235,812 $682,529
========= ======== ========= ========= ========= ========
Net Interest Rate
Sensitivity Gap $ 28,043 $(15,454) $ (79,221) $ 238,599 $(171,967) $ --
========= ======== ========= ========= ========= ========
Cumulative Gap at
March 31, 1995 $ 28,043 $ 12,589 $ (66,632) $ 171,967 $ -- $ --
========= ======== ========= ========= ========= ========
Cumulative Gap at
March 31, 1994 $ (70,411) $(88,415) $ 172,907 $ 130,512 $ -- $ --
========= ======== ========= ========= ========= ========
Cumulative Gap at
December 31, 1994 $ 38,812 $ 10,115 $ (87,710) $ 179,179 $ -- $ --
========= ======== ========= ========= ========= ========
</TABLE>
15
<PAGE> 16
STERLING BANCORP AND SUBSIDIARIES
Risk-Based Capital Components and Ratios
<TABLE>
<CAPTION>
The Company The Bank
------------------------ -------------------------
3/31/95 12/31/94 3/31/95 12/31/94
-------- -------- -------- ---------
($ in thousands)
<S> <C> <C> <C> <C>
COMPONENTS
Stockholders' equity $ 55,369 $ 53,719 $ 47,016 $ 45,700
Add/(Subtract):
Minority interest 8 8 -- --
Goodwill (21,158) (21,158) -- --
Net unrealized depreciation on
securities available for sale,
net of tax effect (1) 367 1,141 368 1,142
-------- -------- -------- --------
Tier 1 Capital 34,586 33,710 47,384 46,842
-------- -------- -------- --------
Allowance for possible loan losses
(limited to 1.25% of total risk-
weighted assets) 4,312 4,136 3,502 3,435
Subordinated debt (limited to 50%
of Tier 1 Capital) 16,579 16,690 -- --
-------- --------- --------- ---------
Tier 2 Capital 20,891 20,826 3,502 3,435
-------- -------- -------- --------
Total Risk-based Capital $ 55,477 $ 54,536 $ 50,886 $ 50,277
======== ======== ======== ========
RATIOS
Tier 1 Capital 9.67% 8.73% 14.58% 13.09%
======== ======== ======== ========
Total Capital 15.51% 14.12% 15.66% 14.05%
======== ======== ======== ========
Leverage 5.26% 5.12% 7.54% 7.42%
======== ======== ======== ========
Memoranda
Tier 1 Capital minimum requirement $ 14,312 $ 15,450 $ 13,000 $ 14,318
======== ======== ======== ========
Total Capital minimum requirement $ 28,624 $ 30,900 $ 26,000 $ 28,636
======== ======== ======== ========
Risk-weighted assets, net of goodwill $357,796 $386,241 $325,006 $357,946
======== ======== ======== ========
Quarterly average assets, net of goodwill $657,864 $658,976 $628,528 $630,932
======== ======== ======== ========
</TABLE>
- ---------------
(1) As directed by regulatory agencies this amount must be excluded from the
computation of Tier 1 capital.
16
<PAGE> 17
STERLING BANCORP AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
(11) Statement Re: Computation of Per Share Earnings
(27) Financial Data Schedule
(b) No reports on Form 8-K have been filed during the quarter.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
STERLING BANCORP
.............................
(Registrant)
/s/ Louis J. Cappelli
Date -----------------------------
------------------------- Louis J. Cappelli
Chairman and
Chief Executive Officer
/s/ John H. Tietjen
Date -----------------------------
-------------------------- John W. Tietjen
Senior Vice President, Treasurer and
Chief Financial Officer
17
<PAGE> 18
STERLING BANCORP AND SUBSIDIARIES
Exhibit Index
<TABLE>
<CAPTION>
Incorporated Sequential
Exhibit Herein By Filed Page
Number Description Reference To Herewith No.
- ------- ----------- ------------ -------- ---
<S> <C> <C> <C> <C>
11 Computation of X 19
Per Share Earnings
27 Financial Data X 20
Schedule
</TABLE>
18
<PAGE> 1
Exhibit (11)
STERLING BANCORP AND SUBSIDIARIES
Statement Re: Computation of Per Share Earnings
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1995 1994
----------- -----------
<S> <C> <C>
Income for primary earnings per share:
Net income A $1,257,074 $ 910,467
========== ===========
Income for fully diluted earnings
per share:
Net income $1,257,074 $ 910,467
Add expenses, net of tax effect
on assumed conversion of
Convertible Subordinated
Debentures:
Interest 310,691 223,006
Amortization of bond discount
and expense 3,742 3,310
---------- -----------
Income for fully diluted shares B $1,571,507 $ 1,136,783
========== ===========
Common shares for primary earnings
per share:
Average shares issued 6,496,605 6,496,605
Add assumed conversion at the beginning
of the period or issuance date if later:
Stock options -- 1,945
ESOP shares allocated 23,188 10,975
Less Average Treasury shares 150,343 150,393
---------- -----------
Average common shares for compu-
tation of primary earnings
per share (See Note below) C 6,369,450 6,359,132
========== ===========
Common shares for fully diluted
earnings per share:
Average common shares 6,369,450 6,359,132
Add assumed conversion at the beginning of
the period or issuance date if later:
Convertible Subordinated Debentures 2,352,339 2,180,990
Series B preferred shares 2,576 2,576
ESOP shares unallocated 226,812 239,025
Stock options -- 238
---------- -----------
Average common shares for computation
of fully diluted earnings per
share (See Note below)
D 8,951,177 8,781,961
========== ===========
Per average common share:
Net income (A divided by C) $0.20 $0.14
===== =====
Net income assuming full dilution (B divided by D) $0.18 $0.13
===== =====
</TABLE>
Note: Based on shares at end of each month.
19
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 33,324
<INT-BEARING-DEPOSITS> 3,000
<FED-FUNDS-SOLD> 5,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 72,375
<INVESTMENTS-CARRYING> 237,914
<INVESTMENTS-MARKET> 227,443
<LOANS> 298,929
<ALLOWANCE> 4,312
<TOTAL-ASSETS> 682,529
<DEPOSITS> 487,347
<SHORT-TERM> 67,422
<LIABILITIES-OTHER> 23,900
<LONG-TERM> 48,412
<COMMON> 6,497
0
1,651
<OTHER-SE> 47,222
<TOTAL-LIABILITIES-AND-EQUITY> 682,529
<INTEREST-LOAN> 7,365
<INTEREST-INVEST> 5,086
<INTEREST-OTHER> 161
<INTEREST-TOTAL> 12,612
<INTEREST-DEPOSIT> 2,804
<INTEREST-EXPENSE> 4,632
<INTEREST-INCOME-NET> 7,979
<LOAN-LOSSES> 315
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 6,272
<INCOME-PRETAX> 2,679
<INCOME-PRE-EXTRAORDINARY> 1,258
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,258
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.18
<YIELD-ACTUAL> 5.35
<LOANS-NON> 525
<LOANS-PAST> 955
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,136
<CHARGE-OFFS> 194
<RECOVERIES> 55
<ALLOWANCE-CLOSE> 4,312
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 4,312
</TABLE>
