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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended December 31, 1998 Commission File No. 1-5273-1
STERLING BANCORP
(Exact Name of Registrant as specified in charter)
NEW YORK 13-2565216
(State or other jurisdiction of (I.R.S. employer identification No.)
incorporation or organization)
430 PARK AVENUE, NEW YORK, N.Y. 10022-3505
(Address of principal executive offices) (Zip Code)
(212) 826-8000
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -------------------
Common Shares, $1 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.[ ]
On March 10, 1999 the aggregate market value of the voting stock held by
non-affiliates of the Registrant was $149,535,613.
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date:
THE REGISTRANT HAS ONE CLASS OF COMMON STOCK OF WHICH 8,167,991 SHARES WERE
OUTSTANDING AT MARCH 10, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Specified portions of the Sterling Bancorp 1998 Annual Report are
incorporated by reference in Parts I and II.
(2) Specified portions of the Sterling Bancorp definitive Proxy Statement
dated March 10, 1999 are incorporated by reference in Part III.
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STERLING BANCORP
FORM 10-K
TABLE OF CONTENTS
PAGE
----
PART I
Item 1. BUSINESS........................................... I- 1
Item 2. PROPERTIES......................................... I-12
Item 3. LEGAL PROCEEDINGS.................................. I-12
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS........................................ I-12
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.................... II-1
Item 6. SELECTED FINANCIAL DATA............................ II-1
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS............ II-1
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK.............................. II-1
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA........ II-1
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE............ II-1
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT..................................... III-1
Item 11. EXECUTIVE COMPENSATION............................. III-1
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT.......................... III-1
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..... III-1
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K........................ IV-1
SIGNATURES
Exhibits Submitted in a Separate Volume.
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PART I
ITEM 1. BUSINESS
GENERAL
Sterling Bancorp ("the parent company" or "the Registrant") is a bank holding
company, as defined by the Bank Holding Company Act of 1956("the BHCA"), as
amended. Sterling provides a full range of financial products and services,
including business and consumer loans, commercial and residential mortgage
lending and brokerage, asset-based financing, accounts receivable management
services, trade financing, equipment leasing, corporate and consumer deposit
services, trust and estate administration and investment management services.
Sterling has operations in New York and Virginia and conducts business
throughout the United States. The parent company owns all of the outstanding
shares of Sterling National Bank ("the bank") - its principal subsidiary, and
all of the outstanding shares of Sterling Industrial Loan Association and
Sterling Banking Corporation ("finance subsidiaries"). Sterling National
Mortgage Company, Inc. ("SNMC-New York"), Sterling National Mortgage Corp.
("SNMC-Virginia"), Sterling Factors Corporation ("Factors") and Sterling Holding
Company of Virginia, Inc. are wholly owned subsidiaries of the bank. Until 1997,
Factors was a finance subsidiary of the Registrant. Sterling Holding Company of
Virginia, Inc. was formed as of December 21, 1998 and owns all of the
outstanding common shares of Sterling Real Estate Holding Company, Inc. which
was formed as of March 1, 1997. Throughout the report, the terms "the Company"
or "Sterling" refers to Sterling Bancorp and its subsidiaries. Segment
information appearing in Footnote 21 beginning on page 36 of the 1998 Annual
Report is incorporated by reference herein.
GOVERNMENT MONETARY POLICY
The Company is affected by the credit policies of monetary authorities,
including the Board of Governors of the Federal Reserve System. An important
element of the Federal Reserve System is to regulate the national supply of bank
credit. Among the instruments of monetary policy used by the Federal Reserve are
open market operations in U.S. Government securities, changes in the discount
rate, reserve requirements on member bank deposits, and funds availability
regulations. The monetary policies of the Federal Reserve have in the past had a
significant effect on operations of financial institutions, including the bank,
and will continue to do so in the future. Changing conditions in the national
economy and in the money markets make it impossible to predict future changes in
interest rates, deposit levels, loan demand or their effects on the business and
earnings of the Company. Foreign activities of the Company are not considered to
be material.
COMPETITION
There is intense competition in all areas in which the Company conducts its
business. The Company competes with banks and other financial institutions.
THE BANK
Sterling National Bank was organized in 1929 under the National Bank Act and
commenced operations in New York City. The bank maintains six offices in New
York City (three branches and an International Banking Facility in Manhattan and
two branches in Queens). The executive office is located at 430 Park Avenue, New
York, New York. There are regional representatives located in Richmond,
Virginia.
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The bank provides a range of banking services to businesses and
individuals including checking, savings and money market accounts, certificates
of deposit, business loans, personal and installment loans, VISA/MASTERCARD,
safe deposit and night depository facilities. Business lending, depository and
related financial services are furnished to a wide range of customers in diverse
industries, including commercial, industrial and financial companies of all
sizes as well as government and non-profit agencies. Loan facilities available
to these customers include short-term revolving credit arrangements, term loans,
letters of credit,accounts receivable management services, asset-based
financing, equipment financing, real estate and mortgage loans, leasing and lock
box services.
Through its international division and International Banking Facility, the
bank offers financial services to its customers and correspondents in the
world's major financial centers. These services consist of financing import and
export transactions, issuance of letters of credit and creation of bankers
acceptances. In addition to its direct worldwide correspondent banking
relationships, active bank account relationships are maintained with leading
foreign banking institutions in major financial centers.
The bank's trust division provides a variety of fiduciary, investment
management, advisory and corporate agency services to individuals, corporations
and foundations. The bank acts as trustee for pension, profit-sharing and other
employee benefit plans and personal trusts and estates. For corporations, the
bank acts as trustee, transfer agent, registrar and in other corporate agency
capacities.
Factors provides accounts receivable management services. Factors
purchases clients' accounts receivable, assumes credit risk on approved orders
and handles credit and collection details and bookkeeping requirements. Income
for these services is derived from commissions charged for receivables serviced
and interest charged on advances to the client. For these services, Factors
receives a portion of factoring commissions paid by the clients plus a portion
of interest charged on advances. The accounts receivable factored are for
clients primarily engaged in the apparel and textile industries.
Sterling's mortgage banking and brokerage business is conducted through
companies located in Virginia and New York. SNMC-Virginia, with offices in
Virginia and North Carolina, originates and services non-conforming mortgages,
for its own portfolio and resale, on residential properties in Virginia and
several adjoining states. SNMC-New York, with offices in New York (on Long
Island and in Westchester County) and New Jersey (in Mercer County), originates
for resale conforming, residential mortgage loans throughout the tri-state
metropolitan area, and has offices on Long Island and in Westchester.
There are no industry concentrations exceeding 10% of loans, gross in the
commercial and industrial loan portfolio. Approximately 70% of the bank's loans
are to borrowers located in the metropolitan New York area.
The composition of income from the operations of the bank and its
subsidiaries for the years ended: [1] December 31, 1998 included interest and
fees on commercial and other loans (54%), interest and dividends on investment
securities (25%) and other (21%); [2] December 31, 1997 included interest and
fees on commercial and other loans (55%), interest and dividends on investment
securities (28%), and other (17%); [3] December 31, 1996 included interest and
fees on commercial and other loans (52%), interest and dividends on investment
securities (35%), and other (13%).
At December 31, 1998, the bank and its subsidiaries had 334 employees,
consisting of 115 officers and 219 supervisory and clerical employees. The bank
considers its relations with its employees to be satisfactory.
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PARENT COMPANY AND FINANCE SUBSIDIARIES
The parent company makes loans that are secured by personal property,
accounts receivable or other collateral; occasionally unsecured advances are
provided to its customers.
Sterling Financial Services Company("Sterling Financial"), a division of
the parent company, is a nationwide provider of consumer receivables financing.
Sterling Financial engages in asset based lending with independent dealers who
market products, such as housewares, appliances, automobiles, and educational
material to consumers on an installment basis with repayment terms between 12
and 48 months. Sterling Financial administers these installment contracts for
the dealer, providing billing, payment processing and other bookkeeping
services. Sterling Financial makes advances to each dealer of up to 80% of the
discounted aggregate value of the dealer's installment contracts.
The composition of income (excluding equity in undistributed net income of
the bank) of the parent company and its finance subsidiaries for the years
ended: [1] December 31, 1998 included interest and fees on loans (72%),
dividends, interest and service fees (24%) and other (4%); [2] December 31, 1997
included interest and fees on loans (61%), dividends, interest and service fees
(25%), and other (14%); [3] December 31, 1996 included interest and fees on
loans (42%), interest and fees on accounts receivable factored (20%), dividends,
interest and service fees (31%), and other (7%). For the year ended December 31,
1996, Factors was a finance subsidiary, and the results of its operations were
included in the foregoing and in all financial statements relating to that year.
At December 31, 1998, the parent company and its finance subsidiaries
employed 25 persons consisting of 8 officers with the balance of the employees
performing supervisory and clerical functions. The parent company and its
finance subsidiaries consider employee relations to be satisfactory.
SUPERVISION AND REGULATION
GENERAL
Sterling Bancorp is a registered bank holding company under the BHCA and is
subject to supervision, examination and reporting requirements of the Board of
Governors of The Federal Reserve System ("FRB").
The BHCA requires the prior approval of the Federal Reserve Board for the
acquisition by a bank holding company of more than 5% of the voting stock or
substantially all of the assets of any bank or bank holding company. Also, under
the BHCA, bank holding companies are prohibited, with certain exceptions, from
engaging in, or from acquiring more than 5% of the voting stock of any company
engaging in, activities other than banking or managing or controlling banks or
furnishing services to or performing services for their subsidiaries. The BHCA
also authorizes the Federal Reserve Board to permit bank holding companies to
engage in, and to acquire or retain shares of companies that engage in,
activities which the Federal Reserve Board determines to be so closely related
to banking or managing or controlling banks as to be a proper incident thereto.
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The Federal Reserve Board has ruled on a number of activities and found some of
them to come within such standard while finding that other activities do not
fall within the permissible scope of such standard; other activities have been
proposed by the Federal Reserve Board for consideration. The effect of the
Federal Reserve Board's findings under the standard has been to expand the
financially related activities in which bank holding companies may engage.
Revisions of the Federal Reserve Board's principal regulation (Regulation Y)
affecting bank holding companies have expanded the scope of permissible
bank-related activities and liberalized procedures to allow the entry into such
activities.
As a federally insured national bank, the bank is subject to supervision,
examination and reporting requirements of the Office of the Comptroller of the
Currency ("OCC") and the Federal Deposit Insurance Corporation ("FDIC").
Sterling Industrial Loan Association is subject to supervision and
regulation by the Bureau of Financial Institutions of the State Corporation
Commission of the Commonwealth of Virginia. Sterling Banking Corporation is
subject to supervision and regulation by the Banking Department of the State of
New York.
PAYMENT OF DIVIDENDS
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 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. In addition, from time to time dividends are paid to the parent
company by the finance subsidiaries from their retained earnings without
regulatory restrictions.
CAPITAL ADEQUACY
The Company and the bank are subject to risk-based capital regulations. The
purpose of these regulations is to quantitatively 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 for capital
adequacy purposes. Supplementing these regulations is a leverage requirement.
This requirement establishes a minimum leverage ratio, (at least 3% to 5%) which
is calculated by dividing Tier 1 capital by adjusted quarterly average assets
(after deducting goodwill). In addition, the Company and the bank are subject to
the provisions of the Federal Deposit Insurance Corporation Improvement Act of
1981 ("FDICIA") which imposes a number of mandatory supervisory measures and
establishes a system of prompt corrective action to resolve the problems of
undercapitalized institutions. Among other matters, FDICIA establishes five
capital categories of "well capitalized", "adequately capitalized",
"undercapitalized", "significantly undercapitalized", and "critically
undercapitalized". Such classifications are used by regulatory agencies to
determine a bank's deposit insurance premium, and to consider applications
authorizing institutions to increase their asset size or otherwise expand
business activities or acquire other institutions.
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Under the provisions of FDICIA, a "well capitalized" institution must maintain
minimum leverage, Tier 1 and Total Capital ratios of 5%, 6% and 10%,
respectively. At December 31, 1998, the capital ratios for the Company and the
bank exceeded the requirements for "well capitalized" institutions.
The table presenting capital and ratios for the Company and the bank as of
December 31, 1998 and 1997 appears in footnote 20 on page 36 of the Company's
1998 Annual Report and is incorporated by reference herein.
TRANSACTIONS WITH AFFILIATES
There are also various requirements and restrictions imposed by the laws of the
United States and the State of New York and by regulations of the Federal
Reserve System, of which the bank is a member, affecting the operations of the
Company including the requirement to maintain reserves against deposits,
restrictions relating to: (a) the nature and amount of loans that may be made by
the bank and the interest that may be charged thereon; (b) extensions of credit
by subsidiary banks of a bank holding company to the bank holding company or
certain of its subsidiaries; (c) investments in the stock or other securities
thereof, and on the taking of such stock or securities as collateral for loans
to any borrower; and (d) other investments, branching and other activities of
the Company and the bank.
SUPPORT OF THE BANK
The Federal Reserve Board has issued regulations under the BHCA that require a
bank holding company to serve as a source of financial and managerial strength
to its subsidiary banks. As a result, the Federal Reserve Board, pursuant to
such regulations, may require the parent company to stand ready to use its
resources to provide adequate capital funds to its banking subsidiaries during
periods of financial stress or adversity. This support may be required at times
when, absent such regulations, the bank holding company might not otherwise
provide such support.
In addition, the Financial Institutions Reform, Recovery, and Enforcement
Act of 1984 provides that a depository institution insured by the FDIC can be
held liable by the FDIC for any loss incurred or reasonably expected to be
incurred in connection with the default of a commonly controlled FDIC insured
depository institution or in connection with any assistance provided by the FDIC
to a commonly controlled institution "in danger of default" (as defined).
In its resolution of the problems of an insured depository institution in
default or in danger of default, the FDIC is generally required to satisfy its
obligations to insured depositors at the least possible cost to the deposit
insurance fund. In addition, the FDIC may not take any action that would have
the effect of increasing the losses to the deposit insurance fund by protecting
depositors for more than the insured portion of deposits (generally $100,000) or
creditors other than depositors. Under the provisions of FDICIA, the FDIC is
authorized to settle all uninsured and unsecured claims in the insolvency of an
insured bank by making a final settlement payment after the declaration of
insolvency. Such a payment would constitute full payment and satisfaction of the
FDIC's obligations to claimants. The rate of such final settlement payment is to
be a percentage rate determined by the FDIC reflecting an average of the FDIC's
receivership recovery experience.
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FDIC INSURANCE
Under the FDIC's risk related insurance assessment system, insured depository
institutions may be required to pay annual assessments to the FDIC. An
institution's risk classification is based on assignment of the institution by
the FDIC to one of three capital groups and to one of three supervisory
subgroups. The three supervisory subgroups are Group "A"- financially solid
institutions with only a few minor weaknesses, Group "B"- institutions with
weaknesses which, if uncorrected, could cause substantial deterioration of the
institution and increased risk to the insurance fund and Group "C"- institutions
with a substantial probability of loss to the fund absent effective corrective
action. The three capital categories are well capitalized; adequately
capitalized; and undercapitalized. These three categories are substantially the
same as the prompt corrective action categories previously described, with the
undercapitalized category including institutions that are undercapitalized,
significantly undercapitalized, and critically undercapitalized for prompt
corrective action purposes.
Under current FDIC practices, the bank was required to pay deposit
insurance premiums during 1998. Future assessment rates will be based on capital
levels and bank regulators' ratings as is required by FDCIA. In addition, the
bank will be required to make payments for the servicing of obligations of the
Financing Corporation (FICO) issued in connection with the resolution of savings
and loan associations, so long as such obligations remain outstanding.
Under the Federal Deposit Insurance Act, insurance of deposits may be
terminated by the FDIC upon a finding that the institution has engaged in unsafe
and unsound practices, is in an unsafe or unsound condition to continue
operations, or has violated any applicable law, regulation, rule, order, or
condition imposed by the FDIC.
SAFETY AND SOUNDNESS STANDARDS
Federal banking agencies promulgate safety and soundness standards relating to
internal controls, information systems and internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth,
compensation, fees, and benefits. With respect to internal controls, information
systems and internal audit systems, the standards describe the functions that
adequate internal controls and information systems must be able to perform,
including: (i) monitoring adherence to prescribed policies; (ii) effective risk
management; (iii) timely and accurate financial, operations, and regulatory
reporting; (iv) safeguarding and managing assets; and (v) compliance with
applicable laws and regulations. The standards also include requirements that:
(i) those performing internal audits be qualified and independent; (ii) internal
controls and information systems be tested and reviewed; (iii) corrective
actions be adequately documented; and (iv) that results of an audit be made
available for review of management actions.
LEGISLATIVE PROPOSALS
Because of concerns relating to the competitiveness and the safety and soundness
of the industry, Congress and other regulatory authorities continue to consider
a number of wide-ranging proposals for altering the structure, regulation, and
competitive relationships of the nation's financial institutions. Among such
bills are proposals to prohibit depository institutions and bank holding
companies from conducting certain types of activities, to subject depository
institutions to increased disclosure and reporting requirements, to alter the
statutory separations of commercial and investment banking, and to further
expand the powers of depository institutions, bank holding companies, and
competitors of depository institutions It cannot be predicted whether or in what
form any of these proposals will be adopted or the extent to which the business
of the Company may be affected thereby.
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SELECTED CONSOLIDATED STATISTICAL INFORMATION
I. Distribution of Assets, Liabilities and Shareholders' Equity; Interest
Rates and Interest Differential.
The information appearing on pages 55, 56, and 57 of the Company's 1998 Annual
Report is incorporated by reference herein.
II. Investment Portfolio
A summary of the Company's investment securities by type with related carrying
values at the end of each of the most recent three fiscal years appears on page
46 of the Company's 1998 Annual Report and is incorporated herein by reference.
Information regarding book values and range of maturities by type of security
and weighted average yields for totals of each category is presented in the
Company's 1998 Annual Report on pages 23 and 24 and is incorporated by reference
herein. The average yield by maturity range is not available.
III. Loan Portfolio
A table setting forth the composition of the Company's loan portfolio, net of
unearned discounts, at the end of each of the most recent five fiscal years
appears on page 47 of the Company's 1998 Annual Report and is incorporated
herein by reference.
The following table sets forth the maturities and sensitivity to changes in
interest rates of the Company's commercial and industrial and foreign loans.
Due One Due One Due After Total
Year to Five Five Gross
or Less Years Years Loans
------- ----- ----- -----
(in thousands)
Commercial and industrial $437,208 $ 28,131 $ 383 $465,722
Foreign 787 -- -- 787
-------- -------- -------- --------
Total $437,995 $ 28,131 $ 383 $466,509
======== ======== ======== ========
Loans due after one year, which have:
Predetermined interest
rates $ 1,217 $ 102 $ 1,319
Floating or adjustable
interest rates 26,914 281 27,195
-------- -------- --------
Total $ 28,131 $ 383 $ 28,514
======== ======== ========
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It is the policy of the Company to consider all customer requests for
extensions of original maturity dates (rollovers), whether in whole or in part,
as though each was an application for a new loan subject to standard approval
criteria, including credit evaluation. The information appearing in the
Company's 1998 Annual Report beginning on page 46 under the caption "Loan
Portfolio", page 25 in footnote 6 and on page 20 in footnote 1 under the caption
"Loans" is incorporated by reference herein.
A table setting forth the aggregate amount of domestic non-accrual, past
due and restructured loans of the Company at the end of each of the most recent
five fiscal years appears on page 47 of the Company's 1998 Annual Report and is
incorporated herein by reference; there were no foreign loans accounted for on a
nonaccrual basis and there were 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 which are both well-secured or guaranteed by
financially responsible third parties and are in the process of collection.
IV. Summary of Loan Loss Experience
The information appearing in the Company's 1998 Annual Report beginning on page
25 in footnote 7 and beginning on page 47 under the caption "Asset Quality" is
incorporated by reference herein. A table setting forth certain information with
respect to the Company's loan loss experience for each of the most recent five
fiscal years appears on page 48 of the Company's 1998 Annual Report and is
incorporated herein by reference.
The Company considers its allowance for loan losses to be adequate based
upon the size and risk characteristics of the outstanding loan portfolio at
December 31, 1998. Net losses within the loan portfolio are not statistically
predictable and changes in conditions in the next twelve months could result in
future provisions for loan losses varying from the level taken in 1998.
To comply with a regulatory requirement to provide an allocation of the
allowance for possible loan losses, a table presenting the Company's allocation
of the allowance appears on page 49 of the Company's 1998 Annual Report and is
incorporated herein by reference. This allocation is based on subjective
estimates by management and may vary from year to year based on management's
evaluation of the risk characteristics of the loan portfolio. The information
appearing in the Company's 1998 Annual Report beginning on page 47 under the
caption "Asset Quality" is incorporated by reference herein. The amount
allocated to a particular loan category may not necessarily be indicative of
actual future charge-offs in a loan category.
V. Deposits
Average deposits and average rates paid for each of the most recent three years
is presented in the Company's 1998 Annual Report on page 55 and is incorporated
by reference herein.
Outstanding time certificates of deposit issued from domestic offices in
amounts of $100,000 or more and interest expense on domestic and foreign
deposits are presented in the Company's 1998 Annual Report on page 26 in
footnote 8 and is incorporated by reference herein.
The table providing selected information with respect to the Company's
deposits for each of the most recent three fiscal years appears on page 49 of
the Company's 1998 Annual Report and is incorporated by reference herein.
Interest expense for the most recent three fiscal years is presented in
footnote 8 on page 26 of the Company's 1998 Annual Report and is incorporated by
reference herein.
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VI. Return on Assets and Equity
The Company's returns on average total assets and average shareholders' equity,
dividend payout ratio and average shareholders' equity to average total assets
for each of the most recent three years follow:
Years Ended December 31,
--------------------------------------
1998 1997 1996
---- ---- ----
Return on average total assets (Net income
divided by average total assets) 1.37% 1.30% 1.06%
Return on average shareholders' equity (Net
income divided by average equity) 13.24% 13.20% 12.55%
Dividend payout ratio (Dividends declared per
share divided by net income per share) 27.47% 26.64% 26.95%
Average shareholders' equity to average total
assets (Average equity divided by average
total assets) 10.33% 9.84% 8.46%
VII. Short-Term Borrowings
Balance and rate data for significant categories of the Company's Short-Term
Borrowings, for each of the most recent three years is presented in the
Company's 1998 Annual Report on page 27 in footnote 9 and is incorporated by
reference herein.
ITEM 2. PROPERTIES
The principal offices of the Company occupy one floor at 430 Park Avenue, New
York, N.Y. consisting of approximately 15,000 square feet. The lease for these
premises expires June 29, 2001. Annual rental commitments approximate $444,000.
Certain finance subsidiaries maintain offices in Great Neck, New York and
Richmond, Virginia.
In addition to the principal offices, the bank maintains operating leases
for four branch offices, the International Banking Facility, an Operations
Center, and additional office space in New York City, Westchester, Nassau and
Suffolk counties (New York), in Mercer County (New Jersey) and in Richmond and
Virginia Beach (Virginia) with an aggregate of approximately 97,200 square feet.
The annual office rental commitments for these premises approximates $1,647,000.
The leases have expiration dates ranging from 1999 through 2015 with varying
additional renewal options. The bank also maintains a branch located in Forest
Hills owned by the bank (and not subject to a mortgage).
ITEM 3. LEGAL PROCEEDINGS
Neither Registrant nor any of its subsidiaries is party to any material legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The information beginning on page 10 of the Sterling Bancorp Proxy Statement
dated March 10, 1999 under the caption "APPROVAL OF STOCK INCENTIVE PLAN
AMENDMENT" is incorporated by reference herein.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information appearing on page 53 of the Sterling Bancorp 1998
Annual Report under the caption "MARKET FOR THE COMPANY'S COMMON STOCK
AND RELATED SECURITY HOLDER MATTERS" is incorporated by reference
herein.
ITEM 6. SELECTED FINANCIAL DATA
The information appearing on page 44 of the 1998 Annual Report under
the caption "SELECTED FINANCIAL DATA" is incorporated by reference
herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information appearing on pages 44 - 57 of the 1998 Annual Report
under the caption "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" is incorporated by reference
herein. Supplementary data appearing on page 42 footnote 24 of the 1998
Annual Report is incorporated by reference herein.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information appearing on pages 50 - 52 of the 1998 Annual Report
under the caption "ASSET/LIABILITY MANAGEMENT" IS INCORPORATED BY
REFERENCE HEREIN.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements as of December 31, 1998
and 1997 and for each of the years in the three-year period ended
December 31, 1998 and the statements of condition of Sterling National
Bank as of December 31, 1998 and 1997, notes thereto and Independent
Auditors' Report thereon appearing on pages 14 - 43 of the 1998 Annual
Report, are incorporated by reference herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information beginning on page 1 of the Sterling Bancorp Proxy
Statement dated March 10, 1999 under the caption "ELECTION OF
DIRECTORS" and beginning on page _ of the same proxy statement under
the caption "Security Ownership of Directors and Executive Officers and
Certain Beneficial Owners" are incorporated by reference herein.
Executive Officers - This information is included pursuant to
Instruction 3 to Item 401 (b) and (c) of Regulation S-K:
Held
Executive
Office
Name of Executive Title Age Since
----------------- ----- --- -----
Louis J. Cappelli Chairman of the Board and
Chief Executive Officer,
Director 68 1967
John C. Millman President, Director 56 1986
Jerrold Gilbert Executive Vice President, General
Counsel & Secretary 62 1974
John W. Tietjen Executive Vice President, Treasurer
and Chief Financial Officer 54 1989
John A. Aloisio Senior Vice President 56 1992
All executive officers are elected annually by the Board of Directors
and serve at the pleasure of the Board. There are no arrangements or
understandings between any of the foregoing officers and any other
person or persons pursuant to which he was selected as an executive
officer.
ITEM 11. EXECUTIVE COMPENSATION
The information beginning on page 3 of the Sterling Bancorp Proxy
Statement dated March 10, 1999 under the caption " Executive
Compensation and Related Matters" and on page 8 of the same Proxy
Statement under the caption "Transactions with the Company and Other
Matters" are incorporated by reference herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information beginning on page 9 of the Sterling Bancorp Proxy
Statement dated March 10, 1999 under the caption "Security Ownership of
Directors and Executive Officers and Certain Beneficial Owners" is
incorporated by reference herein.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information appearing on page 8 of the Sterling Bancorp Proxy
Statement dated March 10, 1999 under the caption "Transactions with the
Company and Other Matters" is incorporated by reference herein.
III-1
14
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
(a) The documents filed as a part of this report are listed below:
1. Financial Statements
Annual Report to security holders, Sterling Bancorp 1998
Annual Report (This document is filed only to the extent of
pages 14 through 57 which are incorporated by reference
herein).
2. Financial Statement Schedules
None
3. Exhibits
3(i)(A) Amended and restated Certificate of Incorporation
filed with the State of New York, Department of
State, August 14, 1986 (Filed as Exhibit 3.3 to
Registrant's Form 10-K for the fiscal year ended
December 31, 1986 and incorporated by reference
herein).
(i)(B) Certificate of Amendment of The Certificate of
Incorporation filed with the State of New York
Department of State, June 13, 1988 (Filed as Exhibit
3.5 to Registrant's Form 10-K for the fiscal year
ended December 31, 1988 and incorporated by reference
herein).
(i)(C) Certificate of Amendment of The Certificate of
Incorporation filed with the State of New York
Department of State, March 5, 1993 (Filed as Exhibit
4.1 to Registrant's Form 8-K dated March 5, 1993 and
incorporated by reference herein).
(ii)(A) By-Laws as in effect on March 15, 1993 (Filed as
Exhibit 3.3 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1992 and incorporated
by reference herein).
(ii)(B) Amendments to By-Laws adopted May 21, 1998 (Filed as
Exhibit 3 to the Registrant's Form 10-Q for the six
months ended June 30, 1998 and incorporated by
reference herein).
4(a) Indenture relating to floating interest rate
convertible subordinated debentures, 4th series, due
November 1, 1998 (Filed as Exhibit 4(a) to
Registrant's Registration Statement 33-23877 and
incorporated by reference herein).
(b) Indenture dated as of August 1, 1995 relating to
floating interest rate convertible subordinated
debentures, series V, due July 1, 2001 (Filed as
Exhibit T3C to Registrant's Application for
Qualification of Indenture No. 022-22183 and
incorporated by reference herein).
IV-1
15
10(i) Employment Agreements, dated as of February 19, 1993
(Filed as Exhibits 3.4(a) and 3.4(b), respectively,
to the Registrant's Form 10-K for the fiscal year
ended December 31, 1992 and incorporated by reference
herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(ii) Amendments to Employment Agreements dated February
14, 1995 (Filed as Exhibits 3.10(ii)(a) and
3.10(ii)(b), respectively to the Registrant's Form
10-K for the fiscal year ended December 31, 1994 and
incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(iii) Amendments to Employment Agreements dated February 8,
1996 (Filed as Exhibits 3.10(iii)(a) and
3.10(iii)(b), respectively to the Registrant's Form
10-K for the fiscal year ended December 31, 1995 and
incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(iv) Amendments to Employment Agreements dated February
28, 1997 (Filed as Exhibits 3.10(iv)(a) and
3.10(iv)(b), respectively to the Registrant's Form
10-K for the fiscal year ended December 31, 1996 and
incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(v) Amendments to Employment Agreements dated February
19, 1998 (Filed as Exhibits 3.10(v)(a) and
3.10(v)(b), respectively to the Registrant's Form
10-K for the fiscal year ended December 31, 1997 and
incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(vi) Amendments to Employment Agreements dated May 22,
1998 (Filed as Exhibits 10(i)(a) and 10(i)(b),
respectively, to the Registrant's Form 10-Q for the
six months ended June 30, 1998 and incorporated by
reference herein).
(vii) Form of change of Control Severance agreement entered
in on May 21, 1998 between the Registrant and each of
six executives (Filed as Exhibit 10(ii) to the
Registrant's Form 10-Q for the six months ended June
30, 1998 and incorporated by reference herein).
(viii) Amendments to Employment Agreements dated March 9,
1999
(a) For Louis J. Cappelli
(b) For John C. Millman
11 Statement re: Computation of Per Share Earnings.
13 Annual Report to security holders, Sterling Bancorp
1998 Annual Report (This document is filed only to
the extent of pages 14 through 57, which are
incorporated by reference herein).
21 Subsidiaries of the Registrant.
23 Consent of KPMG LLP Independent Certified Public
Accountants.
27 Financial Data Schedule.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the last quarter
of the period covered by this report.
IV-2
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
/s/ Louis J. Cappelli
---------------------
Louis J. Cappelli, Chairman
(Principal Executive Officer)
March 26, 1999
--------------
Date
/s/ John W. Tietjen
-------------------
John W. Tietjen, Treasurer
(Principal Financial and Accounting Officer)
March 26, 1999
--------------
Date
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
March 26, 1999 /s/ Louis J. Cappelli Director
- -------------- ----------------------------- ---------
(Date) (Signature) (Title)
March 26, 1999 /s/ John C. Millman Director
- -------------- ----------------------------- ---------
(Date) (Signature) (Title)
March 26, 1999 /s/ Lillian Berkman Director
- -------------- ----------------------------- ---------
(Date) (Signature) (Title)
March 26, 1999 /s/ Joseph M. Adamko Director
- -------------- ----------------------------- ---------
(Date) (Signature) (Title)
March 26, 1999 /s/ Henry J. Humphreys Director
- -------------- ----------------------------- ---------
(Date) (Signature) (Title)
March 26, 1999 /s/ Walter Feldesman Director
- -------------- ----------------------------- ---------
(Date) (Signature) (Title)
17
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
DOCUMENTS FILED
AS A PART
OF THIS REPORT
ON
FORM 10-K
ANNUAL REPORT - 1998
STERLING BANCORP
18
DOCUMENT INDEX
1. Financial Statements
Annual Report to security holders, Sterling Bancorp
1998 Annual Report (This document is filed only to the
extent of pages 14 through 57 which are
incorporated by reference herein).
2. Financial Statement Schedules
None
3. Exhibits
3(i)(A) Amended and restated Certificate of Incorporation
filed with the State of New York, Department of
State, August 14, 1986 (Filed as Exhibit 3.3 to
Registrant's Form 10-K for the fiscal year ended
December 31, 1986 and incorporated by reference
herein).
(i)(B) Certificate of Amendment of The Certificate of
Incorporation filed with the State of New York
Department of State, June 13, 1988 (Filed as
Exhibit 3.5 to Registrant's Form 10-K for the
fiscal year ended December 31, 1988 and
incorporated by reference herein).
(i)(C) Certificate of Amendment of The Certificate of
Incorporation filed with the State of New York
Department of State, March 5, 1993 (Filed as
Exhibit 4.1 to Registrant's Form 8-K dated March
5, 1993 and incorporated by reference herein).
(ii)(A) By-Laws as in effect on March 15, 1993 (Filed as
Exhibit 3.3 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1992 and
incorporated by reference herein).
(ii)(B) Amendments to By-Laws adopted May 21, 1998 (Filed
as Exhibit 3 to the Registrant's Form 10-Q for the
six months ended June 30, 1998 and incorporated by
reference herein).
4(a) Indenture relating to floating interest rate
convertible subordinated debentures, 4th series,
due November 1, 1998 (Filed as Exhibit 4(a) to
Registrant's Registration Statement 33-23877 and
incorporated by reference herein).
(b) Indenture dated as of August 1, 1995 relating to
floating interest rate convertible subordinated
debentures, series V, due July 1, 2001 (Filed as
Exhibit T3C to Registrant's Application for
Qualification of Indenture No. 022-22183 and
incorporated by reference herein).
10(i) Employment Agreements, dated as of February 19,
1993 (Filed as Exhibits 3.4(a) and 3.4(b),
respectively, to the Registrant's Form 10-K for
the fiscal year ended December 31, 1992 and
incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(ii) Amendments to Employment Agreements dated February
14, 1995 (Filed as Exhibits 3.10(ii)(a) and
3.10(ii)(b), respectively to the Registrant's Form
10-K for the fiscal year ended December 31, 1994
and incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(iii) Amendments to Employment Agreements dated February
8, 1996 (Filed as Exhibits 3.10(iii)(a) and
3.10(iii)(b), respectively to the Registrant's
Form 10-K for the fiscal year ended December 31,
1995 and incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
19
(iv) Amendments to Employment Agreements dated February
28, 1997 (Filed as Exhibits 3.10(iv)(a) and
3.10(iv)(b), respectively to the Registrant's Form
10-K for the fiscal year ended December 31, 1996
and incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(v) Amendments to Employment Agreements dated February
19, 1998 (Filed as Exhibits 3.10(v)(a) and
3.10(v)(b), respectively to the Registrant's Form
10-K for the fiscal year ended December 31, 1997
and incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(vi) Amendments to Employment Agreements dated May 22,
1998 (Filed as Exhibits 10(i)(a) and 10(i)(b),
respectively, to the Registrant's Form 10-Q for
the six months ended June 30, 1998 and
incorporated by reference herein).
(vii) Form of change of Control Severance agreement
entered in on May 21, 1998 between the Registrant
and each of six executives (Filed as Exhibit
10(ii) to the Registrant's Form 10-Q for the six
months ended June 30, 1998 and incorporated by
reference herein).
(viii) Amendments to Employment Agreements dated March 9,
1999
(a) For Louis J. Cappelli
(b) For John C. Millman
11 Statement re: Computation of Per Share Earnings.
13 Annual Report to security holders, Sterling
Bancorp 1998 Annual Report (This document is filed
only to the extent of pages 14 through 57, which
are incorporated by reference herein).
21 Subsidiaries of the Registrant.
23 Consent of KPMG LLP Independent Certified Public
Accountants.
27 Financial Data Schedule.
4. Reports on Form 8-K:
There were no reports on Form 8-K filed during the last
quarter of the period covered by this report.
20
EXHIBIT INDEX
Exhibit
Number
3(i)(A) Amended and Restated Certificate of Incorporation
filed with the State of New York, Department of
State, August 14, 1986 (Filed as Exhibit 3.3 to
Registrant's Form 10-K for the fiscal year ended
December 31, 1986 and incorporated by reference
herein
(i)(B) Certificate of Amendment of The Certificate of
Incorporation filed with the State of New York
Department of State, June 13, 1988 (Filed as
Exhibit 3.5 to Registrant's Form 10-K for the
fiscal year ended December 31, 1988 and
incorporated by reference herein).
(i)(C) Certificate of Amendment of The Certificate of
Incorporation filed with the State of New York
Department of State, March 5, 1993 (Filed as
Exhibit 4.1 to Registrant's Form 8-K dated March
5, 1993 and incorporated by reference herein).
(ii) By-Laws as in effect on March 15, 1993 (Filed as
Exhibit 3.3 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1992 and
incorporated by reference herein).
4(a) Indenture relating to floating interest rate
convertible subordinated debentures, 4th series,
due November 1, 1998 (Filed as Exhibit 4(a) to
Registrant's Registration Statement 33-23877 and
incorporated by reference herein).
(b) Indenture dated as of August 1, 1995 relating to
floating interest rate convertible subordinated
debentures, series V, due July 1, 2001 (Filed as
Exhibit T3C to Registrant's Application for
Qualification of Indenture No. 022-22183 and
incorporated by reference herein).
10(i) Employment Agreements, dated as of February 19,
1993 (Filed as Exhibits 3.4(a) and 3.4(b),
respectively, to the Registrant's Form 10-K for
the fiscal year ended December 31, 1992 and
incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(ii) Amendments to Employment Agreements dated February
14, 1995 (Filed as Exhibits 3.10(ii)(a) and
3.10(ii)(b), respectively, to the Registrant's
Form 10-K for the fiscal year ended December 31,
1994 and incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(iii) Amendments to Employment Agreements dated February
8, 1996 (Filed as Exhibits 3.10(iii)(a) and
3.10(iii)(b), respectively to the Registrant's
Form 10-K for the fiscal year ended December 31,
1995 and incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
21
(iv) Amendments to Employment Agreements dated February
28, 1997 (Filed as Exhibits 3.10(iv)(a) and
3.10(iv)(b), respectively to the Registrant's Form
10-K for the fiscal year ended December 31, 1996
and incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(v) Amendments to Employment Agreements dated February
19, 1998 (Filed as Exhibits 3.10(v)(a) and
3.10(v)(b), respectively to the Registrant's Form
10-K for the fiscal year ended December 31, 1997
and incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(vi) Amendments to Employment Agreements dated May 22,
1998 (Filed as Exhibits 10(i)(a) and 10(i)(b),
respectively, to the Registrant's Form 10-Q for
the six months ended June 30, 1998 and
incorporated by reference herein).
(vii) Form of change of Control Severance agreement
entered in on May 21, 1998 between the Registrant
and each of six executives (Filed as Exhibit
10(ii) to the Registrant's Form 10-Q for the six
months ended June 30, 1998 and incorporated by
reference herein).
(viii) Amendments to Employment Agreements dated March 9,
1999
(a) For Louis J. Cappelli
(b) For John C. Millman
11 Statement re: Computation of Per Share Earnings.
13 Annual Report to security holders, Sterling
Bancorp 1998 Annual Report (This document is filed
only to the extent of pages 14 through 57, which
are incorporated by reference herein).
21 Subsidiaries of the Registrant.
23 Consent of KPMG LLP Independent Certified Public
Accountants.
27 Financial Data Schedule.