1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001
-------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER: 1-5273-1
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STERLING BANCORP
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK 13-2565216
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION)
650 FIFTH AVENUE, NEW YORK, N.Y. 10019-6108
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
212-757-3300
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
N/A
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(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.
[X] YES [] NO
AS OF JUNE 30, 2001 THERE WERE 9,250,642 SHARES OF COMMON STOCK, $1.00 PAR
VALUE, OUTSTANDING.
2
STERLING BANCORP
PART I FINANCIAL INFORMATION Page
----
Item 1. Financial Statements (Unaudited)
Consolidated Financial Statements 3
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Business 13
Results for Three Months 13
Results for Six Months 15
Balance Sheet Analysis 17
Capital 21
Average Balance Sheets 22
Rate/Volume Analysis 24
Regulatory Capital and Ratios 26
Item 3. Quantitative and Qualitative Disclosures About
Market Risk
Asset/Liability Management 27
Interest Rate Sensitivity 30
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 31
Item 6. Exhibits and Reports on Form 8-K 32
SIGNATURES 32
EXHIBIT INDEX 33
Exhibit 11 Computation of Per Share Earnings 34
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3
STERLING BANCORP AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, December 31,
ASSETS 2001 2000
--------------- ---------------
Cash and due from banks $ 49,101,280 $ 50,212,689
Interest-bearing deposits with other banks 3,512,688 2,656,678
Securities available for sale 121,067,400 62,060,656
Securities available for sale - pledged 81,321,160 90,138,534
Securities held to maturity 95,419,519 104,585,942
Securities held to maturity - pledged 149,304,989 177,011,726
--------------- ---------------
Total investment securities 447,113,068 433,796,858
--------------- ---------------
Loans, net of unearned discounts 740,685,350 750,887,822
Less allowance for credit losses 13,105,569 12,675,052
--------------- ---------------
Loans, net 727,579,781 738,212,770
--------------- ---------------
Customers' liability under acceptances 1,840,911 987,048
Excess cost over equity in net assets of the
banking subsidiary 21,158,440 21,158,440
Premises and equipment, net 6,278,899 5,469,462
Other real estate 786,046 647,994
Accrued interest receivable 5,252,117 5,195,956
Other assets 14,000,286 12,410,719
--------------- ---------------
$ 1,276,623,516 $ 1,270,748,614
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing deposits $ 311,780,082 $ 341,039,328
Interest-bearing deposits 570,376,386 525,242,856
--------------- ---------------
Total deposits 882,156,468 866,282,184
Federal funds purchased and securities
sold under agreements to repurchase 110,065,492 162,763,009
Commercial paper 40,244,800 25,655,020
Other short-term borrowings 4,941,651 17,733,482
Acceptances outstanding 1,840,911 987,048
Accrued expenses and other liabilities 71,993,569 69,611,777
--------------- ---------------
1,111,242,891 1,143,032,520
Long-term debt - FHLB 40,350,000 10,700,000
--------------- ---------------
Total liabilities 1,151,592,891 1,153,732,520
--------------- ---------------
Commitments and contingent liabilities
Shareholders' equity
Preferred stock, $5 par value. Authorized 644,389 shares
Series B, issued -0- and 1,199 shares,respectively - 23,980
Series D, issued 235,778 and 237,878 shares,respectively 2,357,780 2,378,780
--------------- ---------------
2,357,780 2,402,760
Common stock, $1 par value. Authorized 20,000,000 shares;
issued 9,777,602 and 9,563,329 shares,respectively 9,777,602 9,563,329
Capital surplus 69,478,871 67,450,110
Retained earnings 53,744,828 47,466,602
Accumulated other comprehensive income(loss), net of tax 718,605 (22,652)
--------------- ---------------
136,077,686 126,860,149
Less
Common shares in treasury at cost, 526,960 and
473,125 shares, respectively 9,389,221 7,986,763
Unearned compensation 1,657,840 1,857,292
--------------- ---------------
Total shareholders' equity 125,030,625 117,016,094
--------------- ---------------
$ 1,276,623,516 $ 1,270,748,614
=============== ===============
See Notes to Consolidated Financial Statements.
3
4
STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
-------------- -------------- -------------- ---------------
INTEREST INCOME
Loans $ 16,756,296 $ 16,488,445 $ 34,015,398 $ 31,507,552
Investment securities
Available for sale 3,048,929 2,396,050 5,610,700 4,837,071
Held to maturity 4,369,768 5,228,184 9,074,459 10,363,228
Federal funds sold 5,069 9,740 24,561 179,028
Deposits with other banks 21,484 23,378 57,928 58,863
-------------- -------------- -------------- ---------------
Total interest income 24,201,546 24,145,797 48,783,046 46,945,742
-------------- -------------- -------------- ---------------
INTEREST EXPENSE
Deposits 4,891,724 5,347,931 10,239,503 11,447,629
Federal funds purchased and
securities sold under agreements
to repurchase 1,333,599 2,465,584 3,132,964 3,618,124
Commercial paper 453,759 340,502 868,350 736,632
Other short-term borrowings 26,066 176,545 85,416 268,795
Long-term debt 466,773 107,412 761,640 302,434
-------------- -------------- -------------- ---------------
Total interest expense 7,171,921 8,437,974 15,087,873 16,373,614
-------------- -------------- -------------- ---------------
Net interest income 17,029,625 15,707,823 33,695,173 30,572,128
Provision for credit losses 1,527,800 1,626,800 3,213,600 3,039,600
-------------- -------------- -------------- ---------------
Net interest income after provision
for credit losses 15,501,825 14,081,023 30,481,573 27,532,528
-------------- -------------- -------------- ---------------
NONINTEREST INCOME
Factoring income 1,314,165 1,224,570 2,715,216 2,390,617
Mortgage banking income 2,133,709 1,695,273 3,423,116 2,890,137
Service charges on deposit accounts 1,363,578 1,197,647 2,764,797 1,996,219
Trade finance income 616,920 690,613 1,297,312 1,451,531
Trust fees 198,815 166,199 385,619 351,858
Other service charges and fees 393,541 531,888 733,421 965,273
Other income 98,986 33,208 149,356 68,949
-------------- -------------- -------------- ---------------
Total noninterest income 6,119,714 5,539,398 11,468,837 10,114,584
-------------- -------------- -------------- ---------------
NONINTEREST EXPENSES
Salaries and employee benefits 6,879,321 7,172,292 13,872,339 13,711,102
Occupancy expenses, net 1,071,640 976,208 2,198,605 1,948,678
Equipment expenses 580,986 585,899 1,152,657 1,176,072
Advertising and marketing 898,738 708,831 1,754,343 1,332,203
Professional fees 1,795,820 1,370,336 2,605,452 2,304,853
Data processing services 328,990 320,733 673,151 629,683
Other expenses 2,364,440 1,571,361 4,279,328 3,211,686
-------------- -------------- -------------- ---------------
Total noninterest expenses 13,919,935 12,705,660 26,535,875 24,314,277
-------------- -------------- -------------- ---------------
Income before income taxes 7,701,604 6,914,761 15,414,535 13,332,835
Provision for income taxes 2,996,377 2,916,103 6,173,023 5,455,618
-------------- -------------- -------------- ---------------
Net income $ 4,705,227 $ 3,998,658 $ 9,241,512 $ 7,877,217
============== ============== ============== ==============
Average number of common
shares outstanding
Basic 9,167,817 9,116,760 9,133,104 9,152,242
Diluted 9,751,198 9,442,678 9,602,798 9,480,405
Per average common share
Basic $0.51 $0.44 $1.01 $0.86
Diluted 0.49 0.42 0.96 0.83
Dividends per common share 0.16 0.14 0.32 0.28
See Notes to Consolidated Financial Statements.
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5
STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
------------ ------------ ------------ -----------
Net Income $ 4,705,227 $ 3,998,658 $ 9,241,512 $ 7,877,217
Other comprehensive income, net of tax:
Unrealized holding (losses)gains
arising during the period (216,084) 284,942 741,257 289,224
------------ ------------ ------------ -----------
Comprehensive income $ 4,489,143 $ 4,283,600 $ 9,982,769 $ 8,166,441
============ ============ ============ ===========
See Notes to Consolidated Financial Statements.
5
6
STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders' Equity
Six Months Ended
June 30,
2001 2000
------------- -------------
Preferred Stock
Balance at January 1 $ 2,402,760 $ 2,443,430
Conversions of Series B shares (580) -
Redemption of Series B shares (23,400) -
Conversions of Series D shares (21,000) (29,220)
------------- -------------
Balance at June 30 $ 2,357,780 $ 2,414,210
============= =============
Common Stock
Balance at January 1 $ 9,563,329 $ 8,723,051
Conversions of preferred shares into common shares 2,481 2,922
Options exercised 211,792 8,400
------------- -------------
Balance at June 30 $ 9,777,602 $ 8,734,373
============= =============
Capital Surplus
Balance at January 1 $ 67,450,110 $ 51,911,883
Conversions of preferred shares into common shares 19,099 26,298
Issuance of shares under incentive compensation plan - (214,369)
Options exercised 2,009,662 62,517
------------- -------------
Balance at June 30 $ 69,478,871 $ 51,786,329
============= =============
Retained Earnings
Balance at January 1 $ 47,466,602 $ 52,360,024
Net Income 9,241,512 7,877,217
Cash dividends paid - common shares (2,913,983) (2,308,040)
- preferred shares (49,303) (41,527)
------------- -------------
Balance at June 30 $ 53,744,828 $ 57,887,674
============= =============
Accumulated Other Comprehensive Income(Loss), Net of Tax
Balance at January 1 $ (22,652) $ (2,634,509)
------------- -------------
Unrealized holding gains
arising during the period
Before tax 1,370,157 534,615
Tax expense (628,900) (245,391)
------------- -------------
Net of tax 741,257 289,224
------------- -------------
Balance at June 30 $ 718,605 $ (2,345,285)
============= =============
Treasury Stock
Balance at January 1 $ (7,986,763) $ (6,515,522)
Issuance of shares under incentive compensation plan - 1,537,179
Surrender of shares issued under incentive
compensation plan (1,402,458) -
Purchase of common shares - (2,787,830)
------------- -------------
Balance at June 30 $ (9,389,221) $ (7,766,173)
============= =============
Unearned Compensation
Balance at January 1 $ (1,857,292) $ (1,048,230)
Issuance of shares under incentive compensation plan - (1,462,656)
Amortization of unearned compensation 199,452 166,212
------------- -------------
Balance at June 30 $ (1,657,840) $ (2,344,674)
============= =============
Total Shareholders' Equity
Balance at January 1 $ 117,016,094 $ 105,240,127
Net changes during period 8,014,531 3,126,327
------------- -------------
Balance at June 30 $ 125,030,625 $ 108,366,454
============= =============
See Notes to Consolidated Financial Statements.
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7
STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six Months Ended
June 30,
2001 2000
--------------- ---------------
Operating Activities
Net Income $ 9,241,512 $ 7,877,217
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Provision for credit losses 3,213,600 3,039,600
Depreciation and amortization of premises and equipment 802,235 807,385
Deferred income tax provision (119,825) (335,773)
Net change in loans held for sale (11,463,278) (6,633,994)
Amortization of unearned compensation 199,452 166,212
Amortization of premiums of securities 588,725 436,043
Accretion of discounts on securities (332,052) (558,104)
(Decrease)Increase in accrued interest receivable (56,161) 126,255
Increase(Decrease) in accrued expenses and other liabilities 2,381,792 (961,918)
(Decrease)Increase in other assets (2,098,644) 2,359,080
Other, net (1,402,458) (4,051,955)
--------------- ---------------
Net cash provided by operating activities 954,898 2,270,048
--------------- ---------------
Investing Activities
Purchase of premises and equipment (1,611,672) (494,027)
Increase in interest-bearing deposits (856,010) (676,164)
Increase in other real estate (138,052) (408,903)
Net decrease in loans 18,882,667 22,544,254
Proceeds from prepayments, redemptions or maturities
of securities - held to maturity 36,642,988 17,845,771
Purchases of securities - held to maturity - (25,217,336)
Purchases of securities - available for sale (67,733,749) (46,813,583)
Proceeds from prepayments, redemptions or maturities
of securities - available for sale 18,888,037 59,067,636
--------------- ---------------
Net cash provided by investing activities 4,074,209 25,847,648
--------------- ---------------
Financing Activities
Decrease in noninterest-bearing deposits (29,259,246) (16,294,136)
Increase(Decrease) in interest-bearing deposits 45,133,530 (57,894,676)
(Decrease)Increase in Federal funds purchased
and securities sold under agreements to repurchase (52,697,517) 72,721,086
Increase(Decrease) in commercial paper and
other short-term borrowings 1,797,949 (2,431,028)
Purchase of treasury stock - (2,787,830)
Redemption of preferred stock (23,400) -
Increase(Decrease) in other long-term debt 29,650,000 (10,350,000)
Proceeds from exercise of stock options 2,221,454 70,917
Cash dividends paid on common and preferred stock (2,963,286) (2,349,567)
--------------- ---------------
Net cash used in financing activities (6,140,516) (19,315,234)
--------------- ---------------
Net (decrease) increase in cash and due from banks (1,111,409) 8,802,462
Cash and due from banks - beginning of period 50,212,689 35,505,342
--------------- ---------------
Cash and due from banks - end of period $ 49,101,280 $ 44,307,804
=============== ===============
Supplemental schedule of non-cash financing activities:
Issuance of treasury stock $ - $ 1,537,179
Preferred stock conversions 21,000 29,220
Surrender of treasury shares issued under incentive
compensation plan (1,402,458) -
Supplemental disclosure of cash flow information:
Interest paid 15,459,001 18,128,827
Income taxes paid 6,228,875 5,407,951
See Notes to Consolidated Financial Statements.
7
8
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 and its subsidiaries ("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 June 30, 2001 and 2000 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 2000 consolidated
financial statements to conform to the current presentation. The
interim consolidated financial statements should be read in conjunction
with the Company's annual report on Form 10-K for the year ended
December 31, 2000. The Board announced 10% stock dividends as follows
on November 16, 2000, payable on December 11, 2000 to shareholders of
record on December 1, 2000. Fractional shares were cashed-out and
payments were made to shareholders in lieu of fractional shares. The
basic and diluted average number of shares outstanding and earnings per
share information for all prior reporting periods have been restated to
reflect the effect of the stock dividend.
2. For purposes of reporting cash flows, cash and cash equivalents include
cash and due from banks.
3. The Company's outstanding Preferred Shares comprise -0- Series B shares
(of 4,389 Series B shares authorized) and 238,961 Series D shares (of
300,000 Series D shares authorized). As of June 29, 2001, all
outstanding Series B shares were called for redemption by the Company.
Each Series D share (all of such shares are owned by the Company's
Employee Stock Ownership Trust) is entitled to dividends at the rate of
$0.6125 per year, is convertible into 1.1561 Common Shares, and is
entitled to a liquidation preference of $10 (together with accrued
dividends). All preferred shares are entitled to one vote per share
(voting with the Common Shares except as otherwise required by law).
4. The Financial Accounting Standards Board Statement of Financial
Accounting Standards ("SFAS") No. 131, "Disclosures about Segments of
an Enterprise and Related Information," established standards for the
way that public business enterprises report and disclose selected
information about operating segments in interim financial statements
issued to stockholders.
8
9
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The Company provides a full range of financial products and services,
including commercial loans, asset-based financing, accounts receivable
management services, trade financing, equipment leasing, corporate and consumer
deposit services, commercial and residential mortgage lending and brokerage,
trust and estate administration and investment management services. The
Company's primary source of earnings is net interest income, which represents
the difference between interest earned on interest-earning assets and the
interest incurred on interest-bearing liabilities. The Company's 2001
year-to-date average interest-earning assets were 60.6% loans (corporate lending
was 77.1% and real estate lending was 19.8% of total loans, respectively) and
39.4% investment securities and money market investments. There are no industry
concentrations exceeding 10% of loans, gross, in the corporate loan portfolio.
Approximately 75% of loans are to borrowers located in the metropolitan New York
area. The Company has determined that it has three reportable operating
segments: corporate lending, real estate lending and company-wide treasury.
The following tables provide certain information regarding the
Company's operating segments for the three and six month periods ended June 30,
2001 and 2000:
Corporate Real Estate Company-wide
Lending Lending Treasury Totals
------------- ------------- ------------- ---------------
Three Months Ended June 30, 2001
-------------------------------
Net interest income $ 7,760,864 $ 3,596,938 $ 5,190,397 $ 16,548,199
Noninterest income 3,094,816 2,246,356 30,557 5,371,729
Depreciation and amortization 45,742 52,198 86 98,026
Segment profit 4,855,752 2,957,078 6,074,439 13,887,269
Segment assets 564,957,554 152,399,842 516,524,187 1,233,881,583
Three Months Ended June 30, 2000
-------------------------------
Net interest income $ 8,932,589 $ 2,657,235 $ 3,379,524 $ 14,969,348
Noninterest income 2,978,498 1,747,675 30,275 4,756,448
Depreciation and amortization 46,559 54,234 170 100,963
Segment profit 4,650,488 2,393,846 5,591,899 12,636,233
Segment assets 528,307,089 109,116,551 525,970,164 1,163,393,804
Six Months Ended June 30, 2001
-----------------------------
Net interest income $ 15,712,651 $ 6,947,168 $ 9,997,726 $ 32,657,545
Noninterest income 6,382,005 3,567,894 72,288 10,022,187
Depreciation and amortization 86,487 98,583 170 185,240
Segment profit 9,514,112 5,554,694 11,793,572 26,862,378
Segment assets 564,957,554 152,399,842 516,524,187 1,233,881,583
Six Months Ended June 30, 2000
-----------------------------
Net interest income $ 14,873,362 $ 4,923,907 $ 9,191,108 $ 28,988,377
Noninterest income 5,625,505 3,102,363 76,825 8,804,693
Depreciation and amortization 89,408 97,819 340 187,567
Segment profit 8,181,135 4,316,246 11,660,299 24,157,680
Segment assets 528,307,089 109,116,551 525,970,164 1,163,393,804
9
10
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following table sets forth reconciliations of net interest income,
noninterest income, profits and assets of reportable operating segments to the
Company's consolidated totals:
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
-------------- -------------- -------------- -------------
Net interest income:
Total for reportable operating segments $ 16,548,199 $ 14,969,348 $ 32,657,545 $ 28,988,377
Other [1] 481,426 741,475 1,037,628 1,583,751
-------------- -------------- -------------- ---------------
Consolidated net interest income $ 17,029,625 $ 15,710,823 $ 33,695,173 $ 30,572,128
============== ============== ============== ===============
Noninterest income:
Total for reportable operating segments $ 5,371,729 $ 4,756,448 $ 10,022,187 $ 8,804,693
Other [1] 747,985 782,950 1,446,650 1,309,891
-------------- -------------- -------------- ---------------
Consolidated noninterest income $ 6,119,714 $ 5,539,398 $ 11,468,837 $ 10,114,584
============== ============== ============== ===============
Profit:
Total for reportable operating segments $ 13,887,269 $ 12,636,233 $ 26,862,378 $ 24,157,680
Other [1] (6,185,665) (5,721,472) (11,447,843) (10,824,845)
-------------- -------------- -------------- ---------------
Consolidated income before income taxes $ 7,701,604 $ 6,914,761 $ 15,414,535 $ 13,332,835
============== ============== ============== ===============
Assets:
Total for reportable operating segments $1,233,881,583 $1,163,393,804 $ 1,233,881,583 $ 1,163,393,804
Other [1] 42,741,933 44,242,605 42,741,933 44,242,605
-------------- -------------- --------------- ---------------
Consolidated assets $1,276,623,516 $1,207,636,409 $ 1,276,623,516 $ 1,207,636,409
============== ============== =============== ===============
[1] Represents operations not considered to be a reportable segment and/or
general operating expenses of the Company.
5. On September 29, 2000, the Financial Accounting Standards Board issued
SFAS No. 140, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities." SFAS No. 140 replaces SFAS
No. 125 and addresses implementation issues that were identified in
applying SFAS No. 125. SFAS No. 140 is effective for transfers of
financial assets (including securitizations) occurring after June 30,
2001. However, the provisions of SFAS No. 140 related to the
recognition and reclassification of collateral in financial statements
and disclosures related to securitization transactions and collateral
are effective for fiscal years ending after December 15, 2000.
In accordance with SFAS No. 140, the Company reports
securities pledged as collateral separately in the consolidated balance
sheets if the secured party has the right by contract or custom to sell
or repledge the collateral. Securities are pledged by the Company to
secure trust and public deposits, securities sold under agreements to
repurchase, advances from the Federal Home Loan Bank of New York and
for other purposes required or permitted by law.
10
11
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
6. SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended, is effective January 1, 2001 for the Company,
and requires the recognition of all derivatives as either assets or
liabilities measured at fair value. The accounting for derivative
instruments depends on the intended use of the derivative and its
classification as a fair value hedge, cash flow hedge, or a hedge of
foreign currency exposure.
Special hedge accounting treatment is permitted only if
specific criteria are met. One requirement is that the hedging
relationship be highly effective both at inception and on an ongoing
basis. Hedge accounting is determined based on the type of hedge-fair
value, cash flow or foreign currency hedge of a net investment in a
foreign operation. Effective hedge results are recognized in current
earnings for fair value hedges, in other comprehensive income for cash
flow hedges and as part of the cumulative translation adjustment in
other comprehensive income for foreign currency net investment hedges.
Ineffective portions of hedges are recognized immediately in current
earnings.
The Company adopted the provisions of SFAS No. 133 effective
January 1, 2001. At adoption, the Company recorded an insignificant
loss and believes that SFAS No. 133 will not have a material impact on
the Company's 2001 consolidated financial statements since the only
derivatives that the Company has are interest rate floor contracts with
a notional amount of $75 million.
7. In July 2001, the Financial Accounting Standards Board issued SFAS No.
141, "Business Combinations" and SFAS No. 142, "Goodwill and Other
Intangible Assets." These Statements will change the accounting for
business combinations and goodwill in two ways. First, SFAS No. 141
requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001. Second, SFAS
No. 142 changes the accounting for goodwill, including goodwill
recorded in past business combinations. The previous accounting
principles governing goodwill generated from a business combination
will cease upon adoption of SFAS No. 142. The effect of adopting these
standards is not expected to have a material impact on the Company's
statements of financial condition and results of operations. These
standards will become effective for the Company on January 1, 2002.
11
12
STERLING BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following commentary presents management's discussion and analysis of the
consolidated results of operations and financial condition of Sterling Bancorp
(the "parent company"), a bank holding company and a financial holding company
as defined by the Bank Holding Company Act of 1956, as amended, and its wholly-
owned subsidiaries Sterling Banking Corporation and Sterling National Bank.
Sterling National Bank, which is the principal subsidiary, owns all of the
outstanding shares of Sterling Factors Corporation ("Factors"), Sterling
National Mortgage Company, Inc.("SNMC"), Sterling National Servicing, Inc.
("SNS-Virginia") and Sterling Holding Company of Virginia, Inc. Sterling
Holding Company of Virginia, Inc. owns all of the outstanding shares of Sterling
Real Estate Holding Company, Inc. ("SREHC"). Throughout this discussion and
analysis, the term "the Company" refers to Sterling Bancorp and its subsidiaries
and the term "the bank" refers to Sterling National Bank and its subsidiaries.
This discussion and analysis should be read in conjunction with the Company's
annual report on Form 10-K for the year ended December 31, 2000.
FORWARD-LOOKING STATEMENTS
The Company may from time to time make written or oral statements that are
considered "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements may
include, but are not limited to, financial projections, statements of plans and
objectives for future operations, estimates of future economic performance and
assumptions relating thereto.
The Company may include forward-looking statements in its filings with
the Securities and Exchange Commission, including this 10-Q, in reports to
stockholders, in other written materials, and in statements made by officers and
representatives of the Company to analysts, rating agencies, institutional
investors, representatives of the media and others.
These statements are not historical facts but instead are subject to
numerous assumptions, risks and uncertainties and represent only our belief
regarding future events, many of which, by their nature, are inherently
uncertain and outside of our control. Any forward-looking statements we may make
speak only as of the date on which such statements are made. It is possible that
our actual results and financial position may differ, possibly materially, from
the anticipated results and financial condition indicated in or implied by these
forward-looking statements.
Factors that could cause our actual results to differ, possibly
materially, from those in the forward-looking statements include, but are not
limited to, the following: inflation, interest rates, market and monetary
fluctuations; the effects of, and changes in, trade, monetary and fiscal
policies and laws, including interest rate policies of the Board of Governors of
the Federal Reserve; changes, particularly declines, in general economic
conditions and in the local economies in which we operate; competitive pressures
on loan and deposit pricing and demand; changes in technology and their impact
on the marketing of products and services; the timely development and effective
marketing of competitive new products and services and the acceptance of these
products and services by new and existing customers; the willingness of
customers to substitute competitors' products and services for our products and
services; the impact of changes in financial services' laws and regulations
(including laws concerning taxes, banking, securities and insurance); changes in
accounting principles, policies and guidelines; the success of the Company at
managing the risks involved in the foregoing as well as other risks and
uncertainties detailed
12
13
from time to time in press releases and other public filings. The foregoing list
of important factors is not exclusive, and we will not update any forwarding-
looking statement, whether written or oral, that may be made from time to time.
BUSINESS
The Company provides a wide 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 deposits services, trust
and estate administration, and investment management services. The Company has
operations in metropolitan New York area, as well as Virginia and other mid-
Atlantic states and conducts business throughout the United States.
There is intense competition in all areas in which the Company conducts
its business. In addition to competing with other banks, the Company competes in
most areas of its business with other financial institutions. At June 30, 2001,
the bank's year-to-date average earning assets (of which loans were 59% and
investment securities were 40%) represented approximately 97% of the Company's
year-to-date average earning assets.
The Company regularly evaluates acquisition opportunities and conducts
due diligence activities in connection with possible acquisitions. As a result,
acquisition discussions and, in some cases negotiations, regularly take place
and future acquisitions could occur.
Results for the Three Months Ended June 30, 2001 and 2000
---------------------------------------------------------
OVERVIEW
The Company reported net income for the three months ended June 30, 2001 of $4.7
million, representing $0.49 per share, calculated on a diluted basis, compared
to $4.0 million, or $0.42 per share, calculated on a diluted basis, for the like
period in 2000. This increase reflects higher net interest income and continued
growth in noninterest income.
Net interest income, on a tax equivalent basis, increased to $17.3
million for the second quarter of 2001 compared with $16.0 million for the same
period in 2000, due to higher average earning assets outstanding coupled with
lower average cost of funding. The net interest margin, on a tax equivalent
basis, was 6.12% for the second quarter of 2001 compared to 6.03% for the like
2000 period. The net interest margin benefitted from a decrease of 80 basis
points in the average cost of funds partially offset by a decrease of 59 basis
points in the average yield on earning assets.
Noninterest income rose to $6.1 million for the three months ended June
30, 2001 compared to $5.5 million for the like 2000 period principally due to
continued growth in fees from mortgage banking, deposit services and factoring.
13
14
INCOME STATEMENT ANALYSIS
Net Interest Income
Net interest income, which represents the difference between interest earned on
interest-earning assets and interest incurred on interest-bearing liabilities,
is the Company's primary source of earnings. Net interest income can be affected
by changes in market interest rates as well as the level and composition of
assets, liabilities and shareholders' equity. The increases (decreases) in the
components of interest income and interest expense, expressed in terms of
fluctuation in average volume and rate are shown on page 24. Information as to
the components of interest income and interest expense and average rates is
provided in the Average Balance Sheets shown on page 22.
Net interest income, on a tax equivalent basis, for the three months
ended June 30, 2001 increased to $17,286,000 from $15,952,000 for the comparable
period in 2000.
Total interest income, on a tax equivalent basis, aggregated
$24,458,000 for the second quarter of 2001 up from $24,390,000 for the same
period of 2000. The tax equivalent yield on interest earning assets was 8.73%
for the three months ended June 30, 2001 compared with 9.32% for the comparable
period in 2000. The increase in interest income was due to an increase in income
earned on the Company's loan portfolio. Loan balances increased as the result of
the continued implementation of business plans designed to increase funds
employed in this asset category. The decrease in yield on earning assets was
primarily due to lower yields on loans primarily attributable to a lower
interest rate environment on average in the 2001 period.
Interest earned on the loan portfolio amounted to $16,756,000 which was
up $267,000 when compared to a year ago. Average loan balances amounted to
$704,022,000 which were up $82,485,000 from the prior year period. The increase
in the average loans was primarily in the commercial and industrial, leasing and
real estate loan segments. The decrease in the yield on the domestic loan
portfolio to 10.13% for the three months ended June 30, 2001 from 11.36% for the
comparable 2000 period was primarily attributable to a lower interest rate
environment on average in the 2001 period.
Interest expense on deposits decreased $456,000 for the three months
ended June 30, 2001 to $4,892,000 from $5,348,000 for the comparable 2000 period
principally due to lower rates paid. Average rate paid on interest-bearing
deposits was 3.54% which was 59 basis points lower than the prior year period.
The decrease in average cost of deposits reflects the lower interest rate
environment during the 2001 period.
14
15
Interest expense associated with borrowed funds decreased to $2,280,000
for the second quarter of 2001 from $3,090,000 in the comparable 2000 period as
the result of lower average balances and lower funding costs. Average amounts of
borrowed funds outstanding decreased $18,284,000 to $200,722,000 for the three
months ended June 30, 2001. The average rate paid decreased to 4.55% from 5.73%
in the prior year period reflecting the lower interest rate environment during
the 2001 period.
Noninterest Income
Noninterest income increased $580,000 for the second quarter of 2001 from
$5,539,000 in the like 2000 period primarily as a result of increased fees from
mortgage banking, deposit services and factoring.
Noninterest Expenses
Noninterest expenses were $13,920,000 for the second quarter of 2001, an
increase of $1,214,000 when compared with the like 2000 period primarily due to
increased professional fees, advertising and marketing, occupancy and various
other expenses incurred to support growing levels of business activity and
continued investment in the business franchise.
Results for the Six Months Ended June 30, 2001 and 2000
-------------------------------------------------------
OVERVIEW
The Company reported net income for the six months ended June 30,2001 of $9.2
million, representing $0.96 per share, calculated on a diluted basis, compared
to $7.9 million, or $0.83 per share calculated on a diluted basis, for the like
period in 2000. This increase reflects continued growth in both net interest
income and noninterest income as explained below.
Net interest income, on a tax equivalent basis, increased to $34.2 million
for the first six months of 2001 compared with $31.0 million for the same period
in 2000, due to higher average earning assets outstanding coupled with lower
average cost of funding. The net interest margin, on a tax equivalent basis, was
6.24% for the first six months of 2001 compared to 5.92% for the like 2000
period. The net interest margin benefitted from a decrease of 41 basis points in
the average costs of funds partially offset by a 6 basis point decrease in the
average yield on earning assets.
Noninterest income rose to $11.5 million for the six months ended June
30,2001 compared to $10.1 million for the like 2000 period principally due to
continued growth in fees from deposit services, mortgage banking and factoring.
15
16
INCOME STATEMENT ANALYSIS
Net Interest Income
Net interest income, which represents the difference between interest earned on
interest-earning assets and interest incurred on interest-bearing liabilities,
is the Company's primary source of earnings. Net interest income can be affected
by changes in market interest rates as well as the level and composition of
assets, liabilities and shareholders' equity. The increases (decreases) in the
components of interest income and interest expense for the first six months,
expressed in terms of fluctuation in average volume and rate are shown on page
25. Information as to the components of interest income and interest expense and
average rates for the first six months is provided in the Average Balance Sheets
shown on page 23.
Net interest income, on a tax equivalent basis, for the six months
ended June 30,2001 increased $3,167,000 to $34,202,000 from $31,035,000 for the
comparable period in 2000.
Total interest income, on a tax equivalent basis, aggregated
$49,290,000 up $1,881,000 for the first half of 2001 as compared to $47,409,000
for the same period of 2000. The tax equivalent yield on interest-earning assets
was 9.06% for the first six months of 2001 compared with 9.12% for the
comparable period in 2000. The increase in interest income was due to increases
in income earned on the Company's loan portfolio as a result of the continuation
of management's strategy to increase funds employed in this asset category. The
decrease in yield on earning assets was due to lower yields on loans primarily
attributable to a lower interest rate environment on average in the 2000 period.
Interest earned on the loan portfolio amounted to $34,015,000 up
$2,507,000 when compared to a year ago. Average loan balances amounted to
$691,206,000 up $80,767,000 from an average of $610,439,000 in the prior year
period. The increase in the average loans, primarily in the leasing, real estate
and commercial and industrial loan segments, accounted for the increase in
interest earned on loans. The decrease in the yield on the domestic loan
portfolio to 10.67% for the six months ended June 30,2001 from 11.11% for the
comparable 2000 period was primarily attributable to the lower interest rate
environment in the 2001 period.
Total interest expense decreased $1,286,000 to $15,088,000 for the
first six months of 2001 from $16,374,000 for the comparable period in 2000. The
decrease in interest expense was primarily due to lower average rates paid for
interest-bearing deposits.
Interest expense on deposits decreased $1,208,000 for the six months
ended June 30,2001 to $10,240,000 from $11,448,000 for the comparable 2000
period due to decreases in average outstandings and the cost of funds. Average
outstandings decreased $4,679,000 to $545,879,000 in 2001 from $550,558,000 in
2000. The average rate paid on interest-bearing deposits decreased to 3.78% in
2001 compared to 4.18% in the comparable year ago period reflecting the lower
rate environment during the 2001 period.
Interest expense associated with borrowed funds decreased to $4,848,000
for the first six months of 2001 from $4,926,000 in the comparable 2000 period
as the result of lower rates paid for borrowed funds rates paid partially offset
by higher average outstandings. The average rate paid decreased to 4.99% from
5.51% for the six months ended June 30, 2001 reflecting the lower rate
environment during the 2001 period. The average amounts outstanding increased
$13,766,000 to $195,784,000 for the prior year period.
16
17
Noninterest Income
Noninterest income increased $1,354,000 for the first six months of 2001 from
$10,115,000 in the like 2000 period primarily as a result of increased fees from
deposit services, mortgage banking and factoring.
Noninterest Expense
Noninterest expenses were $26,536,000 for the first six months of 2001, an
increase of $2,222,000 when compared with the like 2000 period primarily due to
increased advertising and marketing, professional fees, occupancy, salaries and
employee benefits and various other expenses incurred to support growing levels
of business activity and continued investments in the business franchise.
BALANCE SHEET ANALYSIS
Securities
The Company's securities portfolios are comprised of principally U.S. Government
and U.S. Government corporation and agency guaranteed mortgage-backed securities
along with other debt and equity securities. At June 30, 2001, the Company's
portfolio of securities totalled $447,113,000 of which U.S. Government and U.S.
Government corporations and agencies guaranteed mortgage-backed securities
having an average life of approximately 3.9 years amounted to $402,314,000.
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
shareholders' equity. The following table presents information regarding
securities available for sale:
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
JUNE 30, 2001 COST GAINS LOSSES VALUE
------------- ------------ ------------ ----------- ------------
U.S. Treasury securities $ 2,461,218 $ 9,273 $ 491 $ 2,470,000
Obligations of U.S. govern-
ment corporations and
agencies--mortgage-backed
securities 153,977,243 1,016,601 654,416 154,339,428
Obligations of state and
political institutions 34,554,027 912,304 4,596 35,461,735
Other debt securities 2,995,642 34,358 -- 3,030,000
Federal Reserve Bank and
other equity securities 7,072,142 15,255 -- 7,087,397
------------ ------------ ----------- ------------
Total $201,060,272 $ 1,987,791 $ 659,503 $202,388,560
============ ============ =========== ============
Given the generally high credit quality of the portfolio, management expects to
realize all of its investment upon the maturity of such instruments, and thus
believes that any market value impairment is temporary in nature.
17
18
The Company has the intent and ability to hold to maturity securities
classified as "held to maturity." These securities are carried at cost, adjusted
for amortization of premiums and accretion of discounts. The following table
presents information regarding securities held to maturity:
GROSS GROSS ESTIMATED
CARRYING UNREALIZED UNREALIZED MARKET
JUNE 30, 2001 VALUE GAINS LOSSES VALUE
------------- ------------ ------------ ----------- ------------
Obligations of U.S. government
corporations and agencies--
mortgage-backed securities $242,474,508 $ 3,404,959 $ 867,959 $245,011,508
Debt securities issued by
Foreign governments 2,250,000 -- -- 2,250,000
------------ ------------ ----------- ------------
Total $244,724,508 $ 3,404,959 $ 867,959 $247,261,508
============ ============ =========== ============
Loan Portfolio
A key management objective is to maintain the quality of the loan portfolio. The
Company seeks to achieve this objective by maintaining rigorous underwriting
standards coupled with regular evaluation of the creditworthiness and the
designation of lending limits for each borrower. The portfolio strategies seek
to avoid concentrations by industry or loan size in order to minimize credit
exposure and to originate loans in markets with which it is familiar.
The Company's commercial and industrial loan portfolio represents
approximately 63% of gross loans. Loans in this category are typically made to
small and medium sized businesses and range between $250,000 and $10 million.
The primary source of repayment is from the borrower's operating profits and
cash flows. Based on underwriting standards, loans may be secured in whole or in
part by collateral such as liquid assets, accounts receivable, equipment,
inventory or real property. The Company's real estate loan portfolio, which
represents approximately 20% of gross loans, is secured by mortgages on real
property located principally in the State of New York and the Commonwealth of
Virginia.
18
19
The Company's leasing portfolio, which consists of finance leases for various
types of business equipment, represents approximately 15% of gross loans. The
collateral securing any loan may vary in value based on market conditions.
The following table sets forth the composition of the Company's loan
portfolio:
June 30,
----------------------------------------------------
2001 2000
-------------------- ----------------------
($ in thousands)
% of % of
Balances Gross Balances Gross
-------- ----- -------- -----
Domestic
Commercial and industrial $472,941 62.5% $442,195 64.6%
Equipment lease financing 110,939 14.7 101,134 14.8
Real estate 150,871 19.9 113,058 16.5
Installment - individuals 8,764 1.2 7,783 1.1
Loans to depository institutions 12,000 1.6 20,000 2.9
Foreign
Government and official institutions 777 0.1 777 0.1
-------- ----- -------- -----
Gross loan 756,292 100.0% 684,947 100.0%
====== =====
Unearned discounts 15,607 13,994
-------- --------
Loans, net of unearned discounts $740,685 $670,953
======== ========
Asset Quality
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 may be
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 credit losses is maintained through the provision for
credit losses, which is a charge to operating earnings. The adequacy of the
provision and the resulting allowance for credit 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. The allowance reflects management's
evaluation of both loans presenting identified loss potential and of the risk
inherent in various components of the portfolio, including loans identified as
impaired as required by SFAS No. 114. Thus, an increase in the size of the
portfolio or in any of its components could necessitate an increase in the
allowance even though there may not be a decline in credit quality or an
increase in potential problem loans. A significant change in any of the
evaluation factors described above could result in future additions to the
allowance. At June 30, 2001, the ratio of the allowance to loans, net of
unearned discounts, was 1.77% and the allowance was $13,106,000. At such date,
the Company's non- accrual loans amounted to $1,551,000; $315,000 of such loans
were judged to be impaired within the scope of SFAS No. 114 and required
valuation allowances of $ 80,000. Based on the foregoing, as well as
management's judgment as to the current risks inherent in the loan portfolio,
the Company's allowance for credit
19
20
losses was deemed adequate to absorb all estimable losses on specifically known
and other possible credit risks associated with the portfolio as of June 30,
2001. Potential problem loans, which are loans that are currently performing
under present loan repayment terms but where known information about possible
credit problems of borrowers cause management to have serious doubts as to the
ability of the borrowers to continue to comply with the present repayment terms,
aggregated $676,000 at June 30, 2001.
Deposits
A significant source of funds for the Company continues to be deposits,
consisting of demand (noninterest-bearing), NOW, savings, money market and time
deposits (principally certificates of deposit).
The following table provides certain information with respect to the
Company's deposits:
June 30,
---------------------------------------------------------
2001 2000
---------------------- ----------------------
($ in thousands)
% of % of
Balances Total Balances Total
-------- ----- -------- -----
Domestic
Demand $311,780 35.4% $275,514 35.0%
NOW 86,826 9.8 69,710 8.8
Savings 28,556 3.2 25,590 3.2
Money market 181,535 20.6 144,305 18.3
Time deposits 270,484 30.7 270,382 34.3
-------- ----- -------- -----
Total domestic deposits 879,181 99.7 785,501 99.6
Foreign
Time deposits 2,975 0.3 2,830 0.4
-------- ----- -------- -----
Total deposits $882,156 100.0% $788,331 100.0%
======== ===== ======== =====
Fluctuations of balances in total or among categories at any date may occur
based on the Company's mix of assets and liabilities as well as on customer's
balance sheet strategies. Historically, however, average balances for deposits
have been relatively stable. Information regarding these average balances is
presented on pages 22 and 23.
20
21
CAPITAL
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). Information regarding the Company's
and the bank's risk-based capital is presented on page 26. 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. Among other matters, FDICIA established five
capital categories ranging from "well capitalized" to "critically under
capitalized." Such classifications are used by regulatory agencies to determine
a bank's deposit insurance premium, approval of applications authorizing
institutions to increase their asset size or otherwise expand business
activities or acquire other institutions. 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 June 30, 2001, the Company
and the bank exceeded the requirements for "well capitalized" institutions.
Under the provisions of the Gramm-Leach-Bliley Act of 1999, in order for the
parent company to maintain its status as a financial holding company, the bank
must remain "well capitalized."
21
22
STERLING BANCORP AND SUBSIDIARIES
Average Balance Sheets [1]
Three Months Ended June 30,
(dollars in thousands)
2001 2000
------------------------------------ ------------------------------------------
Average Average Average Average
ASSETS Balance Interest Rate Balance Interest Rate
----------- ---------- --------- --------- -------- -------
Interest-bearing deposits
with other banks $ 2,880 $ 22 3.32% $ 1,868 $ 23 5.29%
Investment securities:
Available for sale 162,259 2,681 6.61 124,048 2,046 6.60
Held to maturity 257,103 4,369 6.80 304,323 5,228 6.87
Tax-exempt [2] 33,825 625 7.41 32,283 594 7.40
Federal funds sold 473 5 4.24 604 10 6.38
Loans, net of unearned discounts
Domestic [3] 703,245 16,744 10.13 620,755 16,475 11.36
Foreign 777 12 6.17 782 14 7.42
----------- ------- ---------- -------
TOTAL INTEREST-EARNING ASSETS 1,160,562 24,458 8.73% 1,084,663 24,390 9.32%
------- ====== ------- ======
Cash and due from banks 43,211 39,426
Allowance for credit losses (13,423) (12,051)
Goodwill 21,158 21,158
Other assets 27,430 22,013
----------- ----------
TOTAL ASSETS $1,238,938 $1,155,209
=========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing deposits
Domestic
Savings $ 27,217 164 2.42% $ 24,254 143 2.37%
NOW 75,514 400 2.12 69,337 430 2.50
Money market 189,030 1,108 2.35 158,586 1,238 3.14
Time 259,260 3,185 4.93 265,674 3,505 5.31
Foreign
Time 2,975 35 4.77 2,830 32 4.54
----------- ------- ---------- -------
Total interest-bearing deposits 553,996 4,892 3.54 520,681 5,348 4.13
----------- ------- ---------- -------
Borrowings
Federal funds purchased and
securities sold under
agreements to repurchase 118,299 1,334 4.52 169,115 2,465 5.86
Commercial paper 39,718 453 4.58 26,463 341 5.18
Other short-term debt 2,355 26 4.44 12,728 177 5.58
Long-term debt 40,350 467 4.63 10,700 107 5.22
----------- ------- ---------- -------
Total borrowings 200,722 2,280 4.55 219,006 3,090 5.73
----------- ------- ---------- -------
TOTAL INTEREST-BEARING LIABILITIES 754,718 7,172 3.81% 739,687 8,438 4.61%
------- ====== ------- ======
Noninterest-bearing deposits 290,139 251,972
Other liabilities 72,372 58,317
----------- ----------
Total liabilities 1,117,229 1,049,976
Shareholders' equity 121,709 105,233
----------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,238,938 $1,155,209
=========== ===========
Net interest income/spread 17,286 4.92% 15,952 4.71%
====== ======
Net yield on interest-earning
assets (margin) 6.12% 6.03%
====== ======
Less: Tax equivalent adjustment 257 244
------- -------
Net interest income $17,029 $15,708
======= =======
[1] The average balances of assets, liabilities and shareholders' equity
are computed on the basis of daily averages. Average rates are
presented on a tax equivalent basis. Certain reclassifications have
been made to 2000 amounts to conform to the current presentation.
[2] Interest on tax-exempt securities is presented on a tax equivalent
basis.
[3] Nonaccrual loans are included in amounts outstanding and income has
been included to the extent earned.
22
23
STERLING BANCORP AND SUBSIDIARIES
Average Balance Sheets [1]
Six Months Ended June 30,
(dollars in thousands)
2001 2000
----------------------------------------------- ------------------------------------------
Average Average Average Average
ASSETS Balance Interest Rate Balance Interest Rate
---------------- -------------- ------------ ---------------- -------------- --------
Interest-bearing deposits
with other banks $ 2,901 $ 58 4.03% $ 2,479 $ 59 4.98%
Investment securities:
Available for sale 145,299 4,885 6.72 126,952 4,175 6.58
Held to maturity 266,286 9,074 6.82 302,333 10,363 6.86
Tax-exempt [2] 33,378 1,233 7.45 30,770 1,125 7.35
Federal funds sold 928 25 5.26 6,418 179 5.52
Loans, net of unearned discounts
Domestic [3] 690,429 33,988 10.67 609,657 31,480 11.11
Foreign 777 27 6.89 782 28 7.22
---------------- -------------- ---------------- -----------
TOTAL INTEREST-EARNING ASSETS 1,139,998 49,290 9.06% 1,079,391 47,409 9.12%
-------------- ============ ----------- ========
Cash and due from banks 44,539 37,184
Allowance for credit losses (13,317) (11,801)
Goodwill 21,158 21,158
Other assets 26,571 22,386
---------------- ----------------
TOTAL ASSETS $ 1,218,949 $ 1,148,318
================ ================
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing deposits
Domestic
Savings $ 26,081 311 2.40% $ 24,242 285 2.37%
NOW 73,888 835 2.28 70,802 875 2.49
Money market 185,370 2,419 2.63 161,014 2,537 3.17
Time 257,565 6,603 5.17 291,670 7,689 5.30
Foreign
Time 2,975 72 4.91 2,830 62 4.44
---------------- -------------- ---------------- -----------
Total interest-bearing deposits 545,879 10,240 3.78 550,558 11,448 4.18
---------------- -------------- ---------------- -----------
Borrowings
Federal funds purchased and
securities sold under
agreements to repurchase 123,898 3,133 5.10 129,600 3,618 5.61
Commercial paper 35,717 868 4.90 29,247 737 5.06
Other short-term debt 3,209 85 5.37 9,764 269 5.54
Long-term debt 32,960 762 4.62 13,407 302 5.47
---------------- -------------- ---------------- -----------
Total borrowings 195,784 4,848 4.99 182,018 4,926 5.51
---------------- -------------- ---------------- -----------
TOTAL INTEREST-BEARING LIABILITIES 741,663 15,088 4.10% 732,576 16,374 4.51%
-------------- ============ ----------- ========
Noninterest-bearing deposits 287,665 252,157
Other liabilities 70,391 59,022
---------------- ----------------
Total liabilities 1,099,719 1,043,755
Shareholders' equity 119,230 104,563
---------------- ----------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 1,218,949 $ 1,148,318
================ ================
Net interest income/spread 34,202 4.96% 31,035 4.61%
============ ========
Net yield on interest-earning
assets (margin) 6.24% 5.92%
============ ========
Less: Tax equivalent adjustment 507 463
-------------- -----------
Net interest income $ 33,695 $ 30,572
============== ===========
[1] The average balances of assets, liabilities and shareholders' equity
are computed on the basis of daily averages. Average rates are
presented on a tax equivalent basis. Certain reclassifications have
been made to 2000 amounts to conform to current presentation.
[2] Interest on tax-exempt securities is presented on a tax equivalent
basis.
[3] Nonaccrual loans are included in amounts outstanding and income has
been included to the extent earned.
23
24
STERLING BANCORP AND SUBSIDIARIES
Rate/Volume Analysis [1]
(in thousands)
Increase/(Decrease)
Three Months Ended
June 30, 2001 to June 30, 2000
--------------------------------------------------------------
Volume Rate Net [2]
------------ ------------ ------------
INTEREST INCOME
Interest-bearing deposits with other banks $ 10 $ (11) $ (1)
------------ ------------ ------------
Investment securities
Available for sale 632 3 635
Held to maturity (806) (53) (859)
Tax-exempt 30 1 31
------------ ------------ ------------
Total investment securities (144) (49) (193)
------------ ------------ ------------
Federal funds sold (2) (3) (5)
------------ ------------ ------------
Loans, net of unearned discounts
Domestic [3] 2,246 (1,977) 269
Foreign -- (2) (2)
------------ ------------ ------------
Total loans, net of unearned discount 2,246 (1,979) 267
------------ ------------ ------------
TOTAL INTEREST INCOME $ 2,110 $ (2,042) $ 68
============ ============ ============
INTEREST EXPENSE
Interest-bearing deposits
Domestic
Savings $ 18 $ 3 $ 21
NOW 38 (68) (30)
Money market 214 (344) (130)
Time (81) (239) (320)
Foreign
Time 1 2 3
------------ ------------ ------------
Total interest-bearing deposits 190 (646) (456)
------------ ------------ ------------
Borrowings
Federal funds purchased and securities sold
under agreements to repurchase (642) (489) (1,131)
Commercial paper 156 (44) 112
Other short-term debt (121) (30) (151)
Long-term debt 376 (16) 360
------------ ------------ ------------
Total borrowings (231) (579) (810)
------------ ------------ ------------
TOTAL INTEREST EXPENSE $ (41) $ (1,225) $ (1,266)
============ ============ ============
NET INTEREST INCOME $ 2,151 $ (817) $ 1,334
============ ============ ============
[1] The above table is presented on a tax equivalent basis.
[2] The change in interest income and interest expense due to both rate and
volume has been allocated to the change due to rate and the change due
to volume in proportion to the relationship of the absolute dollar
amounts of the changes in each. The effect of one extra day in 2000 has
been included in the change in volume.
[3] Nonaccrual loans have been included in the amounts outstanding and
income has been included to the extent accrued.
24
25
STERLING BANCORP AND SUBSIDIARIES
Rate/Volume Analysis [1]
(in thousands)
Increase/(Decrease)
Six Months Ended
June 30, 2001 to June 30, 2000
--------------------------------------------------------------
Volume Rate Net [2]
------------ ------------ ------------
INTEREST INCOME
Interest-bearing deposits with other banks $ 10 $ (11) $ (1)
------------ ------------ ------------
Investment securities
Available for sale 614 96 710
Held to maturity (1,234) (55) (1,289)
Tax-exempt 93 15 108
------------ ------------ ------------
Total investment securities (527) 56 (471)
------------ ------------ ------------
Federal funds sold (146) (8) (154)
------------ ------------ ------------
Loans, net of unearned discounts
Domestic [3] 3,896 (1,388) 2,508
Foreign -- (1) (1)
------------ ------------ ------------
Total loans, net of unearned discount 3,896 (1,389) 2,507
------------ ------------ ------------
TOTAL INTEREST INCOME $ 3,233 $ (1,352) $ 1,881
============ ============ ============
INTEREST EXPENSE
Interest-bearing deposits
Domestic
Savings $ 22 $ 4 $ 26
NOW 30 (70) (40)
Money market 334 (452) (118)
Time (911) (175) (1,086)
Foreign
Time 2 8 10
------------ ------------ ------------
Total interest-bearing deposits (523) (685) (1,208)
------------ ------------ ------------
Borrowings
Federal funds purchased and securities sold
under agreements to repurchase (183) (302) (485)
Commercial paper 154 (23) 131
Other short-term debt (176) (8) (184)
Long-term debt 518 (58) 460
------------ ------------ ------------
Total borrowings 313 (391) (78)
------------ ------------ ------------
TOTAL INTEREST EXPENSE $ (210) $ (1,076) $ (1,286)
============ ============ ============
NET INTEREST INCOME $ 3,443 $ (276) $ 3,167
============ ============ ============
[1] The above table is presented on a tax equivalent basis.
[2] The change in interest income and interest expense due to both rate and
volume has been allocated to the change due to rate and the change due
to volume in proportion to the relationship of the absolute dollar
amounts of the changes in each. The effect of one extra day in 2000 has
been included in the change in volume.
[3] Nonaccrual loans have been included in the amounts outstanding and
income has been included to the extent accrued.
25
26
STERLING BANCORP AND SUBSIDIARIES
REGULATORY CAPITAL AND RATIOS
RATIOS AND MINIMUMS
(dollars in thousands)
FOR CAPITAL TO BE WELL
ACTUAL ADEQUACY MINIMUM CAPITALIZED
-------------------------- ---------------------- -------------------------
AS OF JUNE 30, 2001 AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
-------------------------------------------- -------------- ---------- ------------ -------- ------------ -----------
Total Capital (to Risk Weighted Assets):
The Company $112,912 14.53% 62,182 8.00% $77,727 10.00%
The bank 95,365 12.94 58,941 8.00 73,677 10.00
Tier 1 Capital (to Risk Weighted Assets):
The Company 103,154 13.27 31,091 4.00 46,636 6.00
The bank 86,128 11.69 29,471 4.00 44,206 6.00
Tier 1 Leverage Capital (to Average Assets):
The Company 103,154 8.47 48,711 4.00 60,889 5.00
The bank 86,128 7.32 47,077 4.00 58,846 5.00
AS OF DECEMBER 31, 2000
--------------------------------------------
Total Capital (to Risk Weighted Assets):
The Company $105,503 13.35% $63,205 8.00% $79,006 10.00%
The bank 86,877 11.44 60,746 8.00 75,933 10.00
Tier 1 Capital (to Risk Weighted Assets):
The Company 95,593 12.10 31,602 4.00 47,404 6.00
The bank 77,367 10.19 30,373 4.00 45,560 6.00
Tier 1 Leverage Capital (to Average Assets):
The Company 95,593 8.11 47,141 4.00 58,926 5.00
The bank 77,367 6.73 46,015 4.00 57,519 5.00
26
27
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
ASSET/LIABILITY MANAGEMENT
The Company's primary earnings source is net interest income; therefore, the
Company devotes significant time and has invested in resources to assist in the
management of market risk, liquidity risk, capital and asset quality. The
Company's net interest income is affected by changes in market interest rates
and by the level and composition of interest-earning assets and interest-
bearing liabilities. The Company's objectives in its asset/liability management
are to utilize its capital effectively, to provide adequate liquidity and to
enhance net interest income, without taking undue risks or subjecting the
Company unduly to interest rate fluctuations.
The Company takes a coordinated approach to the management of market
risk, liquidity and capital. This risk management process is governed by
policies and limits established by senior management which are reviewed and
approved by the Asset/Liability Committee ("ALCO"). ALCO, which is comprised of
members of senior management and the Board, meets to review among other things,
economic conditions, interest rates, yield curve, cash flow projections,
expected customer actions, liquidity levels, capital ratios and repricing
characteristics of assets, liabilities and off-balance sheet financial
instruments.
Market Risk
Market risk is the risk of loss in a financial instrument arising from adverse
changes in market indices such as interest rates, foreign exchange rates and
equity prices. The Company's principal market risk exposure is interest rate
risk, with no material impact on earnings from changes in foreign exchange rates
or equity prices.
Interest rate risk is the exposure to changes in market interest rates.
Interest rate sensitivity is the relationship between market interest rates and
net interest income due to the repricing characteristics of assets and
liabilities. The Company monitors the interest rate sensitivity of its on- and
off-balance sheet positions by examining its near-term sensitivity and its
longer term gap position. In its management of interest rate risk, the Company
utilizes several tools including traditional gap analysis and sophisticated
income simulation models.
A traditional gap analysis is prepared based on the maturity and
repricing characteristics of interest-earning assets and interest-bearing
liabilities for selected time bands. The mismatch between repricings or
maturities within a time band is commonly referred to as the "gap" for that
period. A positive gap (asset sensitive) where interest-rate sensitive assets
exceed interest-rate sensitive liabilities generally will result in an
institution's net interest margin increasing in a rising rate environment and
decreasing in a falling rate environment. A negative gap (liability sensitive)
will generally have the opposite result on an institution's net interest margin.
However, the traditional gap analysis does not assess the relative sensitivity
of assets and liabilities to changes in interest rates. The Company utilizes the
gap analysis to complement its income simulations modeling.
The Company's balance sheet structure is primarily short-term in nature
with a substantial portion of assets and liabilities repricing or maturing
within one year. The Company's gap analysis at June 30, 2001, is presented on
page 30. The results of both the income simulation analysis and the gap
analysis, reveal that net interest income would increase during periods of
rising interest rates and decrease during periods of falling interest rates.
As part of its interest rate risk strategy, the Company uses certain
financial instruments (derivatives) to hedge the interest rate sensitivity of
assets with the corresponding amortization reflected in the yield of the related
on-balance sheet assets being hedged. The Company has written policy guidelines,
which have been approved by the Board of Directors based on recommendations of
the Asset/Liability Committee, governing the use of certain financial
instruments (derivatives), including approved counterparties, risk limits and
appropriate
27
28
internal control procedures. The credit risk of derivatives arises principally
from the potential for a counterparty to fail to meet its obligation to settle a
contract on a timely basis.
The Company purchased interest rate floor contracts to reduce the
impact of falling rates on its floating rate commercial loans. Interest rate
floor contracts require the counterparty to pay the Company at specified future
dates the amount, if any, by which the specified interest rate (3 month LIBOR)
falls below the fixed floor rates, applied to the notional amounts. The Company
utilizes these financial instruments to adjust its interest rate risk position
without exposing itself to principal risk and funding requirements.
At June 30, 2001, the Company utilized three interest rate floor
contracts having a notional amount totaling $75 million consisting of a contract
with a notional amount of $25 million and a final maturity of November 15, 2001
and two contracts with a notional amount of $25 million each and a final
maturity of November 15, 2002. These financial instruments are being used as
part of the Company's interest rate risk management and not for trading
purposes. At June 30, 2001, all counterparties have investment grade credit
ratings from the major rating agencies. Each counterparty is specifically
approved for applicable credit exposure.
The Company utilizes income simulation models to complement its
traditional gap analysis. While ALCO routinely monitors simulated net interest
income sensitivity over a rolling two-year horizon, it also utilizes additional
tools to monitor potential longer-term interest rate risk. The income simulation
models measure the Company's net interest income sensitivity or volatility to
interest rate changes utilizing statistical techniques that allow the Company to
consider various factors which impact net interest income. These factors include
actual maturities, estimated cash flows, repricing characteristics, deposits
growth/retention and, most importantly, the relative sensitivity of the
Company's assets and liabilities to changes in market interest rates. This
relative sensitivity is important to consider as the Company's core deposit base
is not subject to the same degree of interest rate sensitivity as its assets.
The core deposit costs are internally managed and tend to exhibit less
sensitivity to changes in interest rates than the Company's adjustable rate
assets whose yields are based on external indices and change in concert with
market interest rates.
The Company's interest rate sensitivity is determined by identifying
the probable impact of changes in market interest rates on the yields on the
Company's assets and the rates which would be paid on its liabilities. This
modeling technique involves a degree of estimation based on certain assumptions
that management believes to be reasonable. Utilizing this process, management
can project the impact of changes in interest rates on net interest margin. The
estimated effects of the Company's interest rate floors are included in the
results of the sensitivity analysis. The Company has established certain limits
for the potential volatility of its net interest margin assuming certain levels
of changes in market interest rates with the objective of maintaining a stable
net interest margin under various probable rate scenarios. Management generally
has maintained a risk position well within the policy limits. As of June 30,
2001, the model indicated the impact of a 200 basis point parallel and pro rata
rise in rates over twelve months would approximate a 2.48% ($1,635,000) increase
in net interest income, while the impact of a 200 basis point decline in rates
over the same period would approximate a 2.06% ($1,357,000) decline from an
unchanged rate environment.
28
29
The preceding sensitivity analysis does not represent a Company
forecast and should not be relied upon as being indicative of expected operating
results. These hypothetical estimates are based upon numerous assumptions
including: the nature and timing of interest rate levels including yield curve
shape, prepayments on loans and securities, deposit decay rates, pricing
decisions on loans and deposits, reinvestment/replacement of asset and liability
cash flows, and others. While assumptions are developed based upon current
economic and local market conditions, the Company cannot make any assurances as
to the predictive nature of these assumptions including how customer preferences
or competitor influences might change.
Also, as market conditions vary from those assumed in the sensitivity
analysis, actual results will also differ due to: prepayment/refinancing levels
likely deviating from those assumed, the varying impact of interest rate change
"caps" or "floors" on adjustable rate assets, the potential effect of changing
debt service levels on customers with adjustable rate loans, depositor early
withdrawals and product preference changes, and other internal/external
variables. Furthermore, the sensitivity analysis does not reflect actions that
the Asset/Liability Committee might take in responding to or anticipating
changes in interest rates.
Liquidity Risk
Liquidity is the ability to meet cash needs arising from changes in various
categories of assets and liabilities. Liquidity is constantly monitored and
managed throughout the Company. 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
markets 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.
The parent company generates income from its own operations. Its cash
requirements are supplemented from funds maintained or generated by its
subsidiaries, principally the bank. Such sources have been adequate to meet the
parent company's cash requirements.
The bank can supply funds to the parent company and its nonbank
subsidiaries subject to various legal restrictions. 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.
At June 30, 2001, the parent company's short-term debt, consisting
principally of commercial paper used to finance ongoing current business
activities, was approximately $40,595,000. The parent company had cash,
interest-bearing deposits with banks and other current assets aggregating
$43,439,000 and back-up credit lines with banks of $19,000,000. Since 1979, the
parent company has had no need to use available back-up lines of credit.
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.
29
30
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. Amounts are presented in thousands.
Repricing Date
---------------------------------------------------------------------------------------------
More than 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 $ 3,513 $ -- $ -- $ -- $ -- $ 3,513
Investment securities 3,394 2,960 40,698 392,974 7,088 447,114
Loans, net of unearned
discounts --
Commercial and industrial 470,971 2,570 2,266 132 (537) 475,402
Loans to depository
institutions 12,000 -- -- -- -- 12,000
Lease financing 33,966 3,373 64,750 8,851 (14,969) 95,971
Real estate 76,502 5,791 29,231 36,349 (51) 147,822
Installment 5,285 96 2,709 674 (50) 8,714
Foreign government and
official institutions -- 777 -- -- -- 777
Noninterest-earning
assets and allowance
for credit losses -- -- -- -- 85,311 85,311
---------- ---------- ---------- ---------- ---------- ----------
Total Assets 605,631 15,567 139,654 438,980 76,792 1,276,624
---------- ---------- ---------- ---------- ---------- ----------
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing deposits
Savings [1] -- -- 28,556 -- -- 28,556
NOW [1] -- -- 86,826 -- -- 86,826
Money market [1] 146,664 -- 34,871 -- -- 181,535
Time - domestic 163,922 73,886 32,676 -- -- 270,484
- foreign 1,795 1,180 -- -- -- 2,975
Federal funds purchased &
securities sold u/a/r 109,552 514 -- -- -- 110,066
Commercial paper 40,245 -- -- -- -- 40,245
Other short-term borrowings 4,592 350 -- -- -- 4,942
Long-term borrowings - FHLB 10,000 20,000 10,350 -- -- 40,350
Noninterest-bearing liabilities
and shareholders' equity -- -- -- -- 510,645 510,645
---------- ---------- ---------- ---------- ---------- ----------
Total Liabilities and
Shareholders' Equity 476,770 95,930 193,279 -- 510,645 1,276,624
---------- ---------- ---------- ---------- ---------- ----------
Net Interest Rate
Sensitivity Gap $ 128,861 $ (80,363) $ (53,625) $ 438,980 $ (433,853) $ --
========== ========== ========== ========== ========== ==========
Cumulative Gap
June 30, 2001 $ 128,861 $ 48,498 $ (5,127) $ 433,853 $ -- $ --
========== ========== ========== ========== ========== ==========
Cumulative Gap
June 30, 2000 $ 47,967 $ (56,055) $ (102,206) $ 368,200 $ -- $ --
========== ========== ========== ========== ========== ==========
Cumulative Gap
December 31, 2000 $ 101,033 $ 24,199 $ (9,231) $ 455,154 $ -- $ --
========== ========== ========== ========== ========== ==========
[1] Historically, balances in non-maturity deposit accounts have remained
relatively stable despite changes in levels of interest rates. Balances
are shown in repricing periods based on management's historical
repricing practices and runoff experience.
30
31
STERLING BANCORP AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 4.Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders of the Company was held on April
19, 2001.
(b) The following matters were submitted to a vote of the Shareholders
of the Company:
(1) Election of Directors
Nominee Total Votes For Total Votes Against
------- --------------- -------------------
Robert Abrams 8,081,366 741,480
Joseph M. Adamko 8,084,140 738,706
Lillian Berkman 8,141,514 681,332
Louis J. Cappelli 8,118,617 704,229
Walter Feldesman 7,977,924 844,922
Allan F. Hershfield 8,088,277 734,569
Henry J. Humphreys 8,084,581 738,265
John C. Millman 8,118,197 704,649
Maxwell M. Rabb 8,021,030 801,816
Eugene T. Rossides 8,045,280 777,566
There were no abstentions or broker nonvotes.
(2) Amendment of Stock Incentive Plan
Total Votes For 5,921,985
Total Votes Against 2,872,445
Total Abstentions 28,416
Total Broker Nonvotes -0-
(3) Adoption of Key Executive Incentive Bonus Plan
Total Votes For 8,378,441
Total Votes Against 405,249
Total Abstentions 39,156
Total Broker Nonvotes -0-
31
32
STERLING BANCORP AND SUBSIDIARIES
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
(11) Statement Re: Computation of Per Share Earnings
(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 08/13/01 /s/ Louis J. Cappelli
-----------------------------------
Louis J. Cappelli
Chairman and
Chief Executive Officer
Date 08/13/01 /s/ John W. Tietjen
-----------------------------------
John W. Tietjen
Executive Vice President, Treasurer
and Chief Financial Officer
32
33
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
33