| 650 FIFTH AVENUE | ||
| NEW YORK, NY 10019-6108 | ||
| PHONE 212-757-3300 | ||
| www.sterlingbancorp.com |
Via U.S. Mail and fax to 202-772-9208
November 5, 2007
Mr. Kevin W. Vaughn
Branch Chief
Mail Stop 4561
Division of Corporation Finance
Securities and Exchange Commission
Washington, D.C. 20549
Branch Chief
Mail Stop 4561
Division of Corporation Finance
Securities and Exchange Commission
Washington, D.C. 20549
Re:Sterling Bancorp — File No. 001-05273
Dear Mr. Vaughn:
This is in response to the request from Rebekah Blakely Moore that we supplement our letter of September 29, 2007 by providing samples of the disclosures we intend to include in future filings in response to your letter, dated September 19, 2007, regarding staff comments on the Company’s Form 10-K for the fiscal year ended December 31, 2006 and Form 10-Q for the fiscal quarter ended June 30, 2007. For your convenience, we have reproducedin boldface typethe specific comments included in your letter.
Form 10-K
Loan portfolio, page 26
| 1. | Please revise, here and in similar disclosures elsewhere in your filing, to separately present the balances attributable to your receivable factoring business. |
Response: As previously indicated, the Company will include this requested revision in future filings on Form 10-K and Form 10-Q, commencing with our quarterly report on Form 10-Q for the quarter ending September 30, 2007. Enclosed are revised versions of the following portions of our Annual Report on Form 10-K for the year ended December 31, 2006: the tables in the subsection entitled “Loan Portfolio” on page 26, the subsection entitled “Asset Quality” on pages 27, 28 and 29 and Note 6 to Consolidated Financial Statements on page 57, and the Assets portion of the Repricing Date table in the subsection entitled “Consolidated Interest Rate Sensitivity” on page 36.
Mr. Kevin W. Vaughn
Division of Corporation Finance
Securities and Exchange Commission
November 5, 2007
Page 2
Division of Corporation Finance
Securities and Exchange Commission
November 5, 2007
Page 2
Form 10-Q for June 30, 2007
| 2. | Please revise to include the disclosures required by Item IV.A of Industry Guide 3 for each quarterly period presented. |
Response: As previously indicated, the Company will include this requested revision in future quarterly reports on Form 10-Q, commencing with our report on Form 10-Q for the quarter ended September 30, 2007. The disclosures will be in a table that is, except for the periods covered, identical to the enclosed revised version of the table on page 28 of our Annual Report on Form 10-K for the year ended December 31, 2006.
In connection with our responses to your comments on the Company’s filing, the Company acknowledges that
| • | the Company is responsible for the adequacy and accuracy of the disclosure in the filing; | |
| • | staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and | |
| • | the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. |
If you have any questions regarding the foregoing or the enclosed revised tables or have any additional comments, please do not hesitate to call me at 212-757-8035.
| Very truly yours, | ||||||
| STERLING BANCORP | ||||||
| By | /s/ John W. Tietjen | |||||
| John W. Tietjen | ||||||
| Executive Vice President and | ||||||
| Chief Financial Officer | ||||||
| cc: | Mr. Paul V. Jensen, Jr. (KPMG LLP) | |||||
| Daniel Dunson, Esq. (Sullivan & Cromwell LLP) | ||||||
[Revised version of the tables on page 26 of Sterling Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2006]
The following table, restated to reflect the disposition of Sterling Financial (see Note 2 beginning on page 49) sets forth the composition of the Company’s loans held for sale and loans held in portfolio, net of unearned discounts, at the end of each of the five most recent fiscal years:
| December 31, | 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||||||||||||||||||||||
| Balances | % of Total | Balances | % of Total | Balances | % of Total | Balances | % of Total | Balances | % of Total | |||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||
| Domestic | ||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | $ | 521,992 | 45.55 | % | $ | 414,952 | 39.40 | % | $ | 386,557 | 40.96 | % | $ | 334,547 | 41.12 | % | $ | 318,839 | 43.22 | % | ||||||||||||||||||||
| Lease financing | 207,771 | 18.13 | 190,391 | 18.08 | 162,961 | 17.27 | 148,737 | 18.29 | 128,749 | 17.45 | ||||||||||||||||||||||||||||||
| Factored receivables | 100,156 | 8.74 | 100,663 | 9.56 | 93,186 | 9.87 | % | 101,653 | 12.50 | 73,296 | 9.93 | |||||||||||||||||||||||||||||
| Real estate-residential mortgage | 153,376 | 13.39 | 188,723 | 17.92 | 149,387 | 15.83 | 107,766 | 13.25 | 110,484 | 14.98 | ||||||||||||||||||||||||||||||
| Real estate-commercial mortgage | 93,215 | 8.13 | 110,871 | 10.53 | 113,933 | 12.07 | 94,145 | 11.57 | 74,928 | 10.16 | ||||||||||||||||||||||||||||||
| Real estate- construction | 30,031 | 2.62 | 2,309 | 0.22 | 2,320 | 0.24 | 2,368 | 0.29 | 2,400 | 0.32 | ||||||||||||||||||||||||||||||
| Installment-individuals | 12,381 | 1.08 | 13,125 | 1.25 | 15,477 | 1.64 | 14,259 | 1.75 | 9,041 | 1.23 | ||||||||||||||||||||||||||||||
| Loans to depository institutions | 27,000 | 2.36 | 32,000 | 3.04 | 20,000 | 2.12 | 10,000 | 1.23 | 20,000 | 2.71 | ||||||||||||||||||||||||||||||
| Total | $ | 1,145,922 | 100.00 | % | $ | 1,053,034 | 100.00 | % | $ | 943,821 | 100.0 | % | $ | 813,475 | 100.00 | % | $ | 737,737 | 100.00 | % | ||||||||||||||||||||
The following table sets forth the maturities of the Company’s commercial and industrial loans, factored receivables and real estate-construction loans, as of December 31, 2006:
| Due One Year | Due One to Five | Due After Five | Total Gross | |||||||||||||
| or Less | Years | Years | Loans | |||||||||||||
| (in thousands) | ||||||||||||||||
| Commercial and industrial | $ | 400,706 | $ | 104,555 | $ | 16,749 | $ | 522,010 | ||||||||
| Factored receivables | $ | 100,467 | $ | — | $ | — | $ | 100,467 | ||||||||
| Real estate-construction | $ | — | $ | 30,031 | $ | — | $ | 30,031 | ||||||||
All commercial and industrial loans due after one year have predetermined interest rates.
All real estate- construction loans due after one year have floating or adjustable interest rates.
[Revised version of the table on page 27 of Sterling Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2006]
The following table, restated to reflect the disposition of Sterling Financial (see Note 2 beginning on page 49), sets forth the amount of domestic nonaccrual and past due loans of the Company at the end of each of the five most recent fiscal years; there were no foreign loans accounted for on a nonaccrual basis, and there was no troubled debt restructurings for any types of loans. Loans contractually past due 90 days or more as to principal or interest and still accruing are loans that are both well-secured or guaranteed by financially responsible third parties and are in the process of collection.
| December 31, | 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Gross loans | $ | 1,177,705 | $ | 1,081,701 | $ | 967,184 | $ | 833,675 | $ | 755,553 | ||||||||||
| Nonaccrual loans | ||||||||||||||||||||
| Commercial and industrial | $ | 1,490 | $ | 611 | $ | 67 | $ | 1,695 | $ | 156 | ||||||||||
| Lease financing | 2,933 | 2,109 | 1,304 | 783 | 275 | |||||||||||||||
| Factored receivables | — | — | — | — | — | |||||||||||||||
| Real estate-residential mortgage | 1,011 | 740 | 704 | 489 | 949 | |||||||||||||||
| Installment-individuals | 427 | 397 | 72 | 49 | 155 | |||||||||||||||
| Total nonaccrual loans | 5,861 | 3,857 | 2,147 | 3,016 | 1,535 | |||||||||||||||
| Past due 90 days or more (other than the above) | 989 | 821 | 1,672 | 127 | 286 | |||||||||||||||
| Total | $ | 6,850 | $ | 4,678 | $ | 3,819 | $ | 3,143 | $ | 1,821 | ||||||||||
| Interest income that would have been earned on nonaccrual loans outstanding | $ | 545 | $ | 294 | $ | 185 | $ | 146 | $ | 123 | ||||||||||
| Applicable interest income actually realized on nonaccrual loans outstanding | $ | 335 | $ | 95 | $ | 92 | $ | 93 | $ | 71 | ||||||||||
| Nonaccrual and past due loans as a percentage of total gross loans | 0.58 | % | 0.43 | % | 0.39 | % | 0.38 | % | 0.24 | % | ||||||||||
[Revised version of the table on page 28 of Sterling Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2006]
The following table, restated to reflect the disposition of Sterling Financial (see Note 2 beginning on page 49), sets forth certain information with respect to the Company’s loan loss experience for each of the five most recent fiscal years:
| December 31, | 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Average loans held in portfolio, net of unearned discounts, during year | $ | 1,002,688 | $ | 890,085 | $ | 778,272 | $ | 673,412 | $ | 600,475 | ||||||||||
| Allowance for loan losses: | ||||||||||||||||||||
| Balance at beginning of year | $ | 15,369 | $ | 14,437 | $ | 12,730 | $ | 10,644 | $ | 10,814 | ||||||||||
| Charge-offs: | ||||||||||||||||||||
| Commercial and industrial | 1,075 | 446 | 1,784 | 1,588 | 6,864 | |||||||||||||||
| Lease financing | 4,618 | 3,732 | 2,446 | 1,155 | 930 | |||||||||||||||
| Factored receivables | 223 | 369 | 552 | 478 | 1,074 | |||||||||||||||
| Real estate-residential mortgage | 24 | 13 | 8 | 547 | 856 | |||||||||||||||
| Installment | — | — | 9 | 38 | 58 | |||||||||||||||
| Total charge-offs | 5,940 | 4,560 | 4,799 | 3,806 | 9,782 | |||||||||||||||
| Recoveries: | ||||||||||||||||||||
| Commercial and industrial | 786 | 219 | 737 | 480 | 669 | |||||||||||||||
| Lease financing | 310 | 76 | 44 | 25 | 69 | |||||||||||||||
| Factored receivables | 32 | 39 | 63 | 72 | 202 | |||||||||||||||
| Real estate-residential mortgage | — | — | — | — | 16 | |||||||||||||||
| Installment | 38 | 39 | 43 | 61 | 69 | |||||||||||||||
| Total recoveries | 1,166 | 373 | 887 | 638 | 1,025 | |||||||||||||||
| Subtract: | ||||||||||||||||||||
| Net charge-offs | 4,774 | 4,187 | 3,912 | 3,168 | 8,757 | |||||||||||||||
| Provision for loan losses | 4,503 | 5,214 | 6,139 | 5,412 | 8,823 | |||||||||||||||
| Add allowance from acquisition | 1,845 | — | — | — | — | |||||||||||||||
| Less loss on transfers to other real estate owned | 655 | 95 | 520 | 158 | 236 | |||||||||||||||
| Balance at end of year | $ | 16,288 | $ | 15,369 | $ | 14,437 | $ | 12,730 | $ | 10,644 | ||||||||||
| Ratio of net charge-offs to average loans held in portfolio, net of unearned discounts, during year | 0.48 | % | 0.47 | % | 0.50 | % | 0.47 | % | 1.46 | % | ||||||||||
[Revised version of the first table on page 29 of Sterling Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2006]
The following table, restated to reflect the disposition of Sterling Financial (see Note 2 beginning on page 49) presents the Company’s allocation of the allowance for loan losses. This allocation is based on estimates by management and may vary from year to year based on management’s evaluation of the risk characteristics of the loan portfolio. The amount allocated to a particular loan category of the Company’s loans held in portfolio may not necessarily be indicative of actual future charge-offs in a loan category.
| December 31, | 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amount | % of Loans | Amount | % of Loans | Amount | % of Loans | Amount | % of Loans | Balances | % of Loans | |||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Domestic | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | $ | 6,488 | 1.24 | % | $ | 7,017 | 1.69 | % | $ | 6,674 | 1.73 | % | $ | 5,316 | 1.59 | % | $ | 3,685 | 1.16 | % | ||||||||||||||||||||||||||||||||||||||
| Loans to depository institutions | 135 | 0.50 | 112 | 0.35 | 120 | 0.60 | 80 | 0.80 | 150 | 0.75 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Lease financing | 6,356 | 2.66 | 4,636 | 2.43 | 4,073 | 2.50 | 2,686 | 1.80 | 1,961 | 1.52 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Factored receivables | 1,127 | 1.13 | 1,260 | 1.25 | 1,071 | 1.15 | % | 1,592 | 1.57 | 1,387 | 1.89 | |||||||||||||||||||||||||||||||||||||||||||||||
| Real estate-residential mortgage | 1,468 | 1.23 | 1,437 | 0.76 | 1,412 | 0.94 | 1,228 | 1.13 | 1,241 | 1.12 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Real estate-commercial mortgage | 501 | 0.50 | 509 | 0.45 | 772 | 0.67 | 1,082 | 1.14 | 759 | 1.01 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Real estate- construction | 150 | 0.50 | 10 | 0.43 | 15 | 0.65 | 24 | 1.01 | 23 | 0.96 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Installment-individuals | — | — | 110 | 0.45 | 100 | 0.64 | 14 | 0.10 | 10 | 0.11 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Unallocated | 63 | — | 278 | — | 200 | — | 708 | — | 1,428 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 16,288 | 1.46 | % | $ | 15,369 | 1.52 | % | $ | 14,437 | 1.59 | % | $ | 12,730 | 1.65 | % | $ | 10,644 | 1.56 | % | ||||||||||||||||||||||||||||||||||||||
[Revised version of the table in Note 6 to Consolidated Financial Statements on page 57 of Sterling Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2006]
The major components of domestic loans held for sale and loans held in portfolio are as follows:
| December 31, | 2006 | 2005 | ||||||
| Loans held for sale | ||||||||
| Real estate-residential mortgage | $ | 33,319,789 | $ | 40,977,538 | ||||
| Loans held in portfolio | ||||||||
| Commercial and industrial | $ | 522,009,835 | $ | 414,984,661 | ||||
| Lease financing | 239,225,533 | 218,700,981 | ||||||
| Factored receivables | 100,467,090 | 100,987,053 | ||||||
| Real estate-residential mortgage | 120,056,900 | 147,745,576 | ||||||
| Real estate-commercial mortgage | 93,214,668 | 110,871,291 | ||||||
| Real estate-construction | 30,030,684 | 2,309,103 | ||||||
| Installment | 12,380,848 | 13,125,085 | ||||||
| Loans to depository institutions | 27,000,000 | 32,000,000 | ||||||
| Loans held in portfolio, gross | 1,144,385,558 | 1,040,723,750 | ||||||
| Less unearned discounts | 31,783,938 | 28,666,815 | ||||||
| Loans held in portfolio, net of unearned discounts | $ | 1,112,601,620 | $ | 1,012,056,935 | ||||
[Revised version of the Assets portion of the table on page 36 of Sterling Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2006]
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 classified based on the earliest repricing period. Amounts are presented in thousands. 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.
| Repricing Date | ||||||||||||||||||||||||
| More than | More than | |||||||||||||||||||||||
| 3 Months | 3 Months | 1 Year to | Over | Nonrate | ||||||||||||||||||||
| or Less | to 1 Year | 5 Years | 5 Years | Sensitive | Total | |||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||
| Interest-bearing deposits with other banks | $ | 1,261 | $ | — | $ | — | $ | — | $ | — | $ | 1,261 | ||||||||||||
| Federal funds sold | 20,000 | — | — | — | — | 20,000 | ||||||||||||||||||
| Investment securities | 5,860 | 19,855 | 91,266 | 448,167 | 4,176 | 569,324 | ||||||||||||||||||
| Commercial and industrial loans | 361,474 | 39,232 | 104,555 | 16,749 | (18 | ) | 521,992 | |||||||||||||||||
| Equipment lease financing | 1,075 | 7,731 | 218,562 | 11,858 | (31,455 | ) | 207,771 | |||||||||||||||||
| Factored receivables | 100,467 | — | — | — | (311 | ) | 100,156 | |||||||||||||||||
| Real estate—residential mortgage | 32,250 | 9,209 | 88,099 | 23,818 | — | 153,376 | ||||||||||||||||||
| Real estate—commercial mortgage | 8,120 | 7,728 | 63,451 | 13,916 | — | 93,215 | ||||||||||||||||||
| Real estate—construction loans | — | — | 30,031 | — | — | 30,031 | ||||||||||||||||||
| Installment-individuals | 12,381 | — | — | — | — | 12,381 | ||||||||||||||||||
| Loans to depository institutions | 27,000 | — | — | — | — | 27,000 | ||||||||||||||||||
| Noninterest-earning assets & | — | |||||||||||||||||||||||
| allowance for loan losses | — | — | — | — | 148,498 | 148,498 | ||||||||||||||||||
| Total Assets | $ | 569,888 | $ | 83,755 | $ | 595,964 | $ | 514,508 | $ | 120,890 | $ | 1,885,005 | ||||||||||||