1
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
March 31, 1994
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, 1994 there were outstanding 6,346,212 shares of common
stock, $1.00 par value, the registrant's only class of common shares
outstanding.
2
STERLING BANCORP
PART I FINANCIAL INFORMATION Page
----
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
2
3
STERLING BANCORP AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, December 31,
ASSETS 1994 1993
------------ ------------
Cash and due from banks $ 36,341,866 $ 35,975,787
Interest-bearing deposits with other banks 2,970,000 2,970,000
Securities
Available for sale 87,563,776 91,125,104
Held to maturity (market value
$251,615,279 and $196,784,084, respectively) 257,809,109 195,690,687
------------ ------------
Total securities 345,372,885 286,815,791
------------ ------------
Loans, net of unearned discounts 227,202,500 298,750,821
Less allowance for possible loan losses 3,607,390 3,413,947
------------ ------------
Loans, net 223,595,110 295,336,874
------------ ------------
Customers' liability under acceptances 17,168 201,669
Excess cost over equity in net assets of the
banking subsidiary 21,158,440 21,158,440
Premises and equipment, net 3,075,225 2,593,890
Other assets 9,509,665 7,986,790
------------ ------------
$642,040,359 $653,039,241
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing deposits $135,807,652 $174,088,971
Interest-bearing deposits 277,893,051 298,896,955
------------ ------------
Total deposits 413,700,703 472,985,926
Securities sold under repurchase agreements 53,798,432 37,225,000
Commercial paper 13,913,700 14,320,400
Other short-term borrowings 44,306,285 13,613,964
Acceptances outstanding 17,168 201,669
Other liabilities 11,233,377 9,420,630
------------ ------------
536,969,665 547,767,589
------------ ------------
Long-term convertible subordinated debentures 26,763,000 26,892,000
Other long-term debt 25,500,000 25,500,000
------------ ------------
Total long-term debt 52,263,000 52,392,000
------------ ------------
Total liabilities 589,232,665 600,159,589
------------ ------------
Commitments and contingent liabilities
Convertible preferred stock, Series D
- market value guarantee feature 750,000 562,500
Unearned compensation - unallocated shares 719,364 539,523
Shareholders' equity
Preferred shares, $5 par value. Authorized 644,389 shares
Series B 25,760 25,760
Series D 1,750,000 1,937,500
Common shares, $1 par value. Authorized 20,000,000 shares;
issued 6,496,605 shares 6,496,605 6,496,605
Capital surplus 28,089,487 28,089,487
Retained earnings 19,513,739 18,920,583
Net unrealized appreciation on securities
available for sale, net of tax effect 69,572 734,686
------------ ------------
55,945,163 56,204,621
Less
Common shares in treasury at cost, 150,393 shares 1,489,589 1,489,589
Unearned compensation 1,678,516 1,858,357
------------ ------------
52,777,058 52,856,675
------------ ------------
$642,040,359 $653,039,241
============ ============
See Notes to Consolidated Financial Statements.
3
4
STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
Three Months Ended
March 31,
1994 1993
----------- -----------
INTEREST INCOME
Interest and fees on loans $ 4,943,022 $ 3,872,229
Interest and dividends on securities
Available for sale 987,379 --
Held to maturity 3,175,697 3,944,966
Interest on Federal funds sold 27,474 70,928
Interest on deposits with other banks 24,844 28,134
----------- -----------
Total interest income 9,158,416 7,916,257
----------- -----------
INTEREST EXPENSE
Interest on deposits 1,513,597 1,721,330
Interest on securities sold under repurchase agreements 374,643 138,267
Interest on commercial paper 101,880 102,321
Interest on other short-term borrowings 148,411 55,678
Interest on long-term debt 747,440 478,611
----------- -----------
Total interest expense 2,885,971 2,496,207
----------- -----------
Net interest income 6,272,445 5,420,050
Provision for possible loan losses 190,000 160,000
----------- -----------
Net interest income after provision for possible
loan losses 6,082,445 5,260,050
----------- -----------
NONINTEREST INCOME
Service charges on deposit accounts 303,317 242,040
Factoring and letters of credit commissions 405,053 308,064
Trust fees 144,380 217,247
Gain on sales of securities 42,361 --
Other 102,275 109,615
----------- -----------
Total other income 997,386 876,966
----------- -----------
NONINTEREST EXPENSES
Salaries and employee benefits 2,852,022 2,633,205
Occupancy 602,574 618,866
Equipment 321,676 266,109
Legal and other professional fees 253,146 192,532
Federal deposit insurance premium 243,228 228,064
Marketing 150,174 144,500
Other 905,883 672,199
----------- -----------
Total other expenses 5,328,703 4,755,475
----------- -----------
Income before income taxes 1,751,128 1,381,541
Provision for income taxes 840,661 639,777
----------- -----------
Net income $ 910,467 $ 741,764
=========== ===========
Average number of common shares outstanding 6,359,132 6,345,940
=========== =========
Per average common share
Net income $0.14 $0.12
===== =====
Average number of common shares outstanding
assuming full dilution 8,781,961 8,666,192
=========== =========
Per average common share assuming full dilution
Net income $0.13 $0.11
===== =====
Dividends paid per common share $0.05 $0.05
===== =====
See Notes to Consolidated Financial Statements.
4
5
STERLING BANCORP AND SUBSIDIARIES
Consolidated Statement of Changes in Shareholders' Equity
Three Months Ended
March 31, March 31,
1994 1993
------------ ------------
Shareholders' equity at beginning of period $ 52,856,675 $ 50,150,005
------------ ------------
Net income 910,467 741,764
Dividends declared
Common stock - $.05 per share (317,311) (317,310)
Conversion of subordinated debentures
into common stock -- 6,815
Issuance of Series D preferred shares -- 2,500,000
Unearned compensation - Series D shares -- (2,500,000)
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 effect (665,114) --
------------ ------------
Net change in shareholders' equity (79,617) 431,269
------------ ------------
Shareholders' equity at end of period $ 52,777,058 $ 50,581,274
============ ============
See Notes to Consolidated Financial Statements.
5
6
STERLING BANCORP AND SUBSIDIARIES
Statements of Cash Flows
Three Months Ended
March 31,
1994 1993
------------ ------------
OPERATING ACTIVITIES
Net income $ 910,467 $ 741,764
Adjustments to reconcile net income to net cash
from operating activities:
Provision for possible loan losses 190,000 160,000
Depreciation and amortization of premises and equipment 124,727 106,676
Deferred income tax (benefit) provision (39,046) 122,252
Gain on sale of securities (42,361) --
Amortization of premiums on securities 1,097,214 753,737
Accretion of discounts on securities (946) (9,860)
Increase in accrued interest receivable (388,665) (678,174)
Increase(Decrease) in other liabilities 1,812,747 (147,702)
Other, net (528,407) (139,529)
------------ ------------
Net cash used by operating activities 3,135,730 909,164
------------ ------------
INVESTING ACTIVITIES
Purchase of premises and equipment (606,062) (115,851)
Net decrease in interest-bearing deposits
with other banks -- 630,000
Net (increase) in Federal funds sold -- (10,000,000)
Net decrease in loans 71,551,764 61,884,189
Proceeds from sale of securities 9,955,693 --
Proceeds from prepayments, redemptions or maturities
of securities 33,340,726 33,653,872
Purchase of securities (104,139,291) (64,542,526)
------------ ------------
Net cash provided by investing activities 10,102,830 21,509,684
------------ ------------
FINANCING ACTIVITIES
Net decrease in noninterest-bearing deposits (38,281,319) (38,671,287)
Net decrease in interest-bearing deposits (21,003,904) (21,820,427)
Net increase in securities sold under
repurchase agreements 16,573,432 32,765,965
Net increase in other short-term borrowings 30,285,621 6,384,630
Cash dividends paid on common shares (317,311) (317,310)
Issuance of Series D preferred shares -- 2,500,000
Maturities and prepayments on debentures (129,000) (7,752,185)
Increase in long-term debt -- 2,500,000
Funding provided for purchase of Series D
preferred shares -- (2,500,000)
------------- ------------
Net cash used by financing activities (12,872,481) (26,910,614)
------------ ------------
Net decrease in cash and due from banks 366,079 (4,491,766)
Cash and due from banks - beginning of period 35,975,787 37,168,675
------------ ------------
Cash and due from banks - end of period $ 36,341,866 $ 32,676,909
============ ============
Supplemental disclosure of cash flow information:
Interest paid $ 2,452,331 $ 3,286,749
Income taxes paid 532,427 --
Supplemental schedule of non-cash financing activities:
Valuation account for securities available for sale,
net of tax effect $ (665,114) $ --
Conversion of debentures -- 3,815
See Notes to Consolidated Financial Statements.
6
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, 1994 and
1993 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 1993 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, 1993.
2. For purposes of reporting cash flows, cash and cash equivalents include
cash and due from banks.
3. As of December 31, 1993 the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 115 "Accounting for Certain Investments
in Debt and Equity Securities". As a result of the adoption of SFAS No.
115, the Company reclassified securities as either "held to maturity" or
"available for sale".
4. The following table presents information regarding the two issues of
convertible preferred stock issued by the parent company:
Issued & Liquidation
Authorized Outstanding Value
-------------- -------------- -----------
Series B 4,389 shares 1,288 shares $ 20
Series D 300,000 shares 250,000 shares $ 10
7
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 engaged
principally in commercial banking as well as accounts receivable financing,
factoring and other financial 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,
Universal Finance Corporation, Sterling Banking Corporation and virtually 100%
of Security 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 many other financial
institutions. At March 31, 1994, the bank's year to date average earning assets
(of which loans were 42% and securities were 57%) represented approximately 97%
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, 1994 and March 31, 1993.
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,
1994, the parent company had on hand approximately $13,664,000 in cash.
Various legal restrictions limit the extent to which the bank can supply funds
to the parent company and its non-bank 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. The bank with the Comptroller's approval paid
dividends aggregating $37,330,000 in 1992 (significantly exceeding net
profits). During 1993, with the Comptroller's approval, the bank paid
dividends aggregating $ 2,599,314; the bank's net income for 1993 was
$3,463,950. No dividends have been paid to date in 1994. In addition, from
time to time dividends are paid to the parent company by other subsidiaries
from their retained earnings without regulatory restrictions.
8
9
STERLING BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
At March 31, 1994, 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 $29,263,000.
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, 1994, the parent company's short-term debt, consisting solely of
commercial paper, was approximately $13,914,000. The parent company had cash,
interest-bearing deposits with banks and other current assets aggregating
$28,500,000 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 bank's asset-liability management program is designed to achieve acceptable
yields while managing interest rate risk, maturity distribution and credit
risk. At March 31, 1994, the bank maintained a portfolio of securities
totalling $345,328,000 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 $324,855,000. As of December 31,
1993, the bank adopted Statement of Financial Accounting Standards ("SFAS") No.
115 "Accounting for Certain Investment in Debt and Equity Securities". As a
result of the adoption of SFAS No. 115, the bank reclassified securities as
either "held to maturity" or "available for sale". The bank 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 $379,000 and $6,573,000, 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
$626,000 and gross unrealized losses of $498,000. During the quarter ended
March 31, 1994 securities in the "available for sale" portfolio with a carrying
value of $9,913,000 were sold at a net gain of $42,361.
9
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 average assets (after deducting goodwill).
At March 31, 1994, 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, 1994 and December 31, 1993, 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 borrowers. 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, 1994 were as
follows:
Company Bank
------------ ------------
(in thousands)
Domestic
Commercial and industrial $ 182,575 163,371
Real estate - mortgage 38,594 38,594
Real estate - construction 1,942 1,942
Installment - individuals 8,631 8,631
Foreign
Government and official institutions 789 789
---------- ----------
Loans, gross 232,531 213,327
Less unearned discounts 5,328 5,103
---------- ----------
Loans, net of unearned discounts $ 227,203 $ 208,224
========== ==========
The strength of the Company's commercial and industrial loan portfolio, which
represents approximately 79% of gross loans, is substantially dependent on the
borrower's ability to repay the loan out of profits and cash flows of the
borrower's business and the assets underlying the borrower's business, such as
accounts receivable, equipment, inventory and real property. The Company's
real estate loan portfolio, which represents approximately 18% 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
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, 1994, the ratio of
the allowance to loans, net of unearned discounts, was 1.6%. At March 31,
1994, the Company's allowance, was $3,607,000 and its non-accrual loans
amounted to $1,268,000. 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, 1994.
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, 1994 AND MARCH 31, 1993
Total interest income increased $1,242,000 for the three months ended March 31,
1994 when compared with the same period last year principally due to higher
average outstandings. An increase in average securities outstandings partially
offset by reduced yields, resulted in an increase in income from securities of
$218,000. Higher average outstandings employed at higher rates resulted in an
increase of $1,071,000 in interest and fees on loans.
11
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, 1994 increased
$390,000 when compared with the same period in 1993 principally due to higher
average balances. Lower rates paid resulted in a decrease of $207,000 in
interest expense on savings and time deposits. Interest expense associated
with borrowings was increased $597,000 due to higher outstandings.
Based on management's continuing evaluation of the collectibility of the loan
portfolio, $190,000 was provided for possible loan losses for the three months
ended March 31, 1994.
Other income increased $120,000 for the first quarter of 1994 when compared
with the same period in 1993 as the result of higher service charges on deposit
accounts and higher volume for letters of credit, and factoring services.
Other expenses increased $573,000 for the three months ended March 31, 1994
versus the same period last year reflecting higher costs associated with the
Company's business development efforts as well as higher general business
costs.
The provision for income taxes increased $201,000 for the first quarter 1994
when compared with the same period last year based on the level of pre-tax
profitability.
As a result of the above factors, net income increased $169,000 for the three
months ended March 31, 1994 when compared with the same period in 1993.
12
13
STERLING BANCORP AND SUBSIDIARIES
Average Balance Sheets [1]
Three Months Ended March 31,
1994 1993
------------------------------------ ------------------------------------
Average Average Average Average
ASSETS Balance Interest Rate Balance Interest Rate
-------- -------- -------- -------- -------- --------
Interest-bearing deposits
with other banks $ 2,940 $ 25 3.43% $ 3,525 $ 28 3.24%
Securities
Available for sale [2] 83,582 987 4.79 -- -- --
Held to maturity 217,229 3,176 5.93 244,174 3,945 6.55
Federal funds sold 3,333 27 3.34 9,545 71 3.01
Loans, net of unearned
discounts [3] 243,588 4,943 7.61 217,161 3,872 6.30
-------- -------- -------- --------
TOTAL EARNING ASSETS 550,672 9,158 6.47 474,405 7,916 6.34
-------- ------ -------- -----
Cash and due from banks 41,934 33,846
Allowance for possible
loan losses (3,509) (3,194)
Goodwill 21,158 21,158
Other assets 13,418 11,036
-------- --------
TOTAL ASSETS $623,673 $537,251
======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing deposits
Savings $188,460 903 1.94 $197,515 1,236 2.54
Other time 91,901 611 2.70 85,925 485 2.34
-------- -------- -------- --------
Total interest-bearing
deposits 280,361 1,514 2.19 283,440 1,721 2.46
-------- -------- -------- --------
Borrowings
Securities sold under
agreements to repurchase 53,745 375 2.83 19,016 138 2.95
Commercial paper 13,945 102 2.97 14,445 102 2.87
Other short-term debt 17,451 148 3.44 6,655 56 3.39
Long-term debt 52,263 747 5.80 28,159 479 6.53
--------- -------- -------- --------
Total borrowings 137,404 1,372 4.05 68,275 775 4.45
--------- -------- -------- --------
TOTAL INTEREST-BEARING
LIABILITIES 417,765 2,886 2.80 351,715 2,496 2.86
-------- ---- -------- -----
Noninterest-bearing deposits 142,411 126,450
Other liabilities 10,492 8,892
-------- --------
Total liabilities 570,668 487,057
Shareholders' equity 53,005 50,194
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $623,673 $537,251
======== ========
Net interest income/spread $ 6,272 3.67% $ 5,420 3.48%
======== ==== ======== =====
Net yield on earning assets
(margin) 4.62% 4.63%
==== =====
[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
14
STERLING BANCORP AND SUBSIDIARIES
Rate/Volume Analysis
Three Months Ended March 31,
(000 omitted)
Increase/(Decrease)
Three Months Ended
March 31, 1994 and 1993
----------------------------
Volume Rate Total[1]
------- ------- --------
INTEREST INCOME
Interest-bearing deposits with other banks $ (5) $ 2 $ (3)
------- ------- -------
Securities
Available for sale 494 493 987
Held to maturity [2] (342) (427) (769)
------- ------- -------
Total 152 66 218
------- ------- -------
Federal funds sold (49) 5 (44)
------- ------- -------
Loans, net of unearned discounts [3] 1,017 54 1,071
------- ------- -------
TOTAL INTEREST INCOME $ 1,115 $ 127 $ 1,242
======= ======= =======
INTEREST EXPENSE
Interest-bearing deposits
Savings $ (50) $ (283) $ (333)
Other time 36 90 126
------- ------- -------
Total (14) (193) (207)
------- ------- -------
Borrowings
Securities sold under agreements to repurchase 248 (11) 237
Commercial paper (4) 4 --
Other short-term debt 91 1 92
Long-term debt 354 (86) 268
------- ------- -------
Total 689 (92) 597
------- ------- -------
TOTAL INTEREST EXPENSE $ 675 $ (285) $ 390
======= ======= =======
NET INTEREST INCOME $ 440 $ 412 $ 852
======= ======= =======
[1] The rate/volume variance is allocated equally between changes in volume
and rate.
[2] Includes Federal Reserve Bank and other stock investments.
[3] Non-accrual loans have been included in the amounts outstanding and
income has been included to the extent accrued.
14
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.
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
--------- --------- --------- --------- --------- ---------
ASSETS
Interest-bearing deposits
with other banks $ 1,200 $ 130 $ 1,640 $ -- $ -- $ 2,970
Securities 5,256 12,507 32,281 287,367 7,962 345,373
Federal funds sold
Loans, net of unearned
discounts 195,002 932 18,898 17,473 (5,103) 227,202
Noninterest-earnings assets
and allowance for possible
loan losses -- -- -- -- 66,495 66,495
---------- ---------- ---------- ---------- --------- ---------
Total Assets 201,458 13,569 52,819 304,840 69,354 642,040
--------- --------- --------- --------- --------- ---------
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing deposits 147,458 17,203 113,211 21 -- 277,893
Securities sold under
repurchase agreements 45,428 8,370 -- -- -- 53,798
Commercial paper 13,914 -- -- -- -- 13,914
Other short-term borrowings 38,306 6,000 -- -- -- 44,306
Long-term debt 26,763 -- 24,100 1,400 -- 52,263
Noninterest-bearing
liabilities and share-
holders' equity -- -- -- -- 199,866 199,866
--------- ---------- ---------- ---------- --------- ---------
Total Liabilities and
Shareholders' Equity $ 271,869 $ 31,573 $ 137,311 $ 1,421 $ 199,866 $ 642,040
========= ========= ========= ========= ========= =========
Net Interest Rate
Sensitivity Gap $ (70,411) $ (18,004) $ (84,492) $ 303,419 $(130,512) $ --
========= ========= ========= ========= ========= ==========
Cumulative Gap at
March 31, 1994 $ (70,411) $ (88,415) $(172,907) $ 130,512 $ -- $ --
========= ========= ========= ========= ========== ==========
Cumulative Gap at
March 31, 1993 $ (32,876) $ (36,699) $ (52,335) $ 121,787 $ -- $ --
========= ========= ========= ========= ========== ==========
Cumulative Gap at
December 31, 1993 $ 29,476 $ 9,319 $ (59,671) $ 170,526 $ -- $ --
========= ========= ========= ========= ========== ==========
15
16
STERLING BANCORP AND SUBSIDIARIES
Risk-Based Capital Components and Ratios
The Company The Bank
------------------- -------------------
3/31/94 12/31/93 3/31/94 12/31/93
-------- -------- -------- ---------
($ in thousands)
COMPONENTS
Stockholders' equity $ 52,777 $ 52,857 $ 47,331 $ 46,993
Minority interest 8 8 -- --
Less
Goodwill 21,158 21,158 -- --
Net unrealized appreciation on
securities available for sale,
net of tax effect (1) 69 735 69 734
-------- -------- -------- --------
Tier 1 Capital 31,558 30,972 47,262 46,259
-------- -------- -------- --------
Allowance for possible loan losses
(limited to 1.25% of total risk-weighted
assets) 3,607 3,414 3,197 3,042
Subordinated debt (limited to 50%
of Tier 1 Capital) 15,779 15,486 -- --
-------- -------- --------- ---------
Tier 2 Capital 19,386 18,900 3,197 3,042
-------- -------- -------- --------
Total Risk-based Capital $ 50,944 $ 49,872 $ 50,459 $ 49,301
======== ======== ======== ========
RATIOS
Tier 1 Capital 10.24% 9.37% 16.41% 14.95%
======== ======== ======== ========
Total Capital 16.54% 15.08% 17.52% 15.94%
======== ======== ======== ========
Leverage 5.08% 4.90% 7.85% 7.57%
======== ======== ======== ========
Memoranda
Tier 1 Capital minimum requirement $ 12,323 $ 13,226 $ 11,521 $ 12,374
======== ======== ======== ========
Total Capital minimum requirement $ 24,646 $ 26,451 $ 23,044 $ 24,747
======== ======== ======== ========
Risk-weighted assets, net of goodwill $308,080 $330,641 $288,047 $309,343
======== ======== ======== ========
Total assets, net of goodwill $620,882 $631,881 $601,708 $611,149
======== ======== ======== ========
(1) As directed by regulatory agencies this amount must be excluded from the
computation of Tier 1 capital.
16
17
STERLING BANCORP AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibit is filed as part of this report:
(11) Statement Re: Computation of Per Share Earnings
(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)
Date May 16, 1994 \s\ Louis J. Cappelli
------------------------- -----------------------------
Louis J. Cappelli
Chairman and
Chief Executive Officer
Date May 16, 1994 \s\ John W. Tietjen
------------------------- -----------------------------
John W. Tietjen
Senior Vice President,
Treasurer and
Chief Financial Officer
17
18
STERLING BANCORP AND SUBSIDIARIES
Exhibit Index
Incorporated Sequential
Exhibit Herein By Filed Page
Number Description Reference To Herewith No.
------- ----------- ------------ -------- ---
11 Computation of X
Per Share Earnings
18