Sterling Bancorp Reports 2009 Third Quarter Results
Delivered Higher Net Interest Margin, Noninterest Income And Loan Origination Activity
- Press Release
- Source: Sterling Bancorp
- On 8:00 am EDT, Tuesday October 27, 2009
NEW YORK, Oct. 27 /PRNewswire-FirstCall/ --
Related Quotes
| Symbol | Price | Change |
|---|---|---|
| STL | 6.61 | -0.18 |
Third Quarter 2009 Highlights
- Higher Net Interest Margin. The net interest margin increased 7 basis points to 4.53%, principally due to management's disciplined approach to funding costs.
- Noninterest Income Growth. Noninterest income before securities gains rose 25%, on higher accounts receivable management/factoring and mortgage banking fees.
- Loan Originations. Sterling extended $60.6 million in new credit in the 2009 third quarter as a result of new borrower relationships; total loans in portfolio exceeded $1.2 billion at September 30, 2009.
- Strong Deposit Funding. Demand deposits were $470.4 million at September 30, 2009, or 33% of total deposits, one of the highest ratios of demand to total deposits in the industry.
- Solid Capital Base. The Company's capital ratios exceeded "well-capitalized" requirements, with total risk-based capital of 12.66% at September 30, 2009.
- Expense Control. Noninterest expenses, excluding additional costs related to the acquisition of a factoring business and higher pension expense, were virtually flat with the third quarter of 2008.
- Increased Loan Loss Allowance. The allowance for loan losses increased to $19.1 million and stood at 1.58% of portfolio loans at September 30, 2009, up from 1.33% a year ago.
Note: Reconciliations of GAAP and non-GAAP data are presented beginning on page 17.
Page 1 of 19
Sterling Bancorp (NYSE: STL - News), the parent company of New York City-based Sterling National Bank, today reported net income of $2.4 million, or $0.13 per diluted share, for the third quarter ended September 30, 2009. Adjusted net income, which excludes the tax-effected provision for loan losses, was $7.1 million, or $0.39 per diluted share, for the 2009 third quarter.
Management Comments
"Sterling has enhanced its competitive position and continued to demonstrate resiliency in the face of a global economic recession that is the most severe in recent memory. Our progress is supported by a solid capital base, a sharp focus on serving our customers, and a willingness to invest in growth opportunities. We delivered an increase in pre-tax, pre-provision income for the 2009 third quarter, to $10.5 million, which was significantly in excess of our credit costs and would have resulted in growth in capital," said Louis J. Cappelli, Sterling's Chairman and Chief Executive Officer.
"Our third quarter performance was broad-based across many of Sterling's product lines, as we focused on deepening existing customer relationships and adding new clients. We experienced growth in most of our loan portfolios as our business development efforts yielded quality new borrower relationships. We also generated higher income from our accounts receivable management and factoring services and mortgage banking operations."
"Sterling's third quarter performance comes at a time when the economic outlook remains uncertain. Taking nothing for granted, we will maintain our focus on the core strengths that have distinguished the Company during the current economic cycle. We are pursuing our traditional prudent approach to lending, distinguished by stringent underwriting and an emphasis on strong asset quality. Our capital levels remain in excess of well-capitalized requirements. We have kept tight control of expenses. And we have continued to enhance our business franchises. We believe these strengths will enable Sterling to continue to serve our marketplace and to pursue additional opportunities as they arise," Mr. Cappelli stated.
Third Quarter 2009 Financial Results
Sterling's net income for the 2009 third quarter was $2.4 million, or $0.13 per diluted share, compared to $3.8 million, or $0.21 per diluted share, for the third quarter of 2008. The decrease in net income was primarily due to a $5.0 million increase in the provision for loan losses and a $1.5 million increase in noninterest expenses, which more than offset a $4.5 million increase in noninterest income.
Adjusted net income, which excludes the tax-effected provision for loan losses, was $7.1 million, or $0.39 per diluted share, for the third quarter of 2009, compared to $5.2 million, or $0.28 per diluted share, for the year-ago period.
Net interest income, on a tax-equivalent basis, was $22.3 million for the 2009 third quarter, up from $21.8 million for the 2008 period. Net interest income benefitted from higher average loan balances, lower interest-bearing deposit balances and lower funding costs due to the Company's strategy of employing wholesale funding in lieu of higher priced deposits. These benefits were partially offset by lower yield on loans and investment securities due to market rates, lower investment securities balances and higher borrowed funds balances.
Page 2 of 19
Net interest margin increased to 4.53% for the 2009 third quarter, on a tax-equivalent basis, compared to 4.46% for the third quarter of 2008.
Noninterest income increased to $11.7 million for the 2009 third quarter, from $7.2 million a year ago. The increase reflected higher income from accounts receivable management and factoring services, largely due to Sterling's acquisition of a factoring, import trade financing and accounts receivable management business early this year, as well as higher mortgage banking income and deposit and other customer-related fees. Noninterest income also benefitted from securities gains in the 2009 third quarter, compared to securities losses in the prior year period. Excluding securities gains/losses, noninterest income rose 24.9% from the prior year.
Noninterest expenses totaled $23.2 million for the 2009 third quarter, versus $21.7 million a year ago. The increase was largely due to additional expenses associated with the acquired factoring business, higher FDIC deposit insurance premiums, and an increase in pension costs. Excluding such items, noninterest expense for the 2009 third quarter increased only 0.3% from the prior year.
The provision for income taxes was $1.2 million for the 2009 third quarter, compared to $1.5 million for the same period of 2008.
Nine Months 2009 Financial Results
Net income for the first nine months of 2009 was $6.8 million, or $0.37 per diluted share, compared to $12.0 million, or $0.66 per diluted share, for the same period of 2008. The decrease in net income was primarily due to a $13.9 million increase in the provision for loan losses and a $4.4 million increase in noninterest expenses, which more than offset a $1.6 million increase in net interest income and an $8.9 million increase in noninterest income.
Adjusted net income, which excludes the tax-effected provision for loan losses, was $19.5 million, or $1.07 per diluted share, for the first nine months of 2009, compared to $15.9 million, or $0.87 per diluted share, for the year-ago period.
Net interest income, on a tax-equivalent basis, rose to $65.4 million for the first nine months of 2009, from $63.4 million for the same 2008 period. The increase primarily reflected higher average loan balances, lower interest-bearing deposit balances and lower funding costs, partially offset by lower yield on loans and securities, lower investment securities balances and higher borrowed funds balances.
Net interest margin increased to 4.58% for the first nine months of 2009, on a tax-equivalent basis, compared to 4.53% for the same period of 2008.
Page 3 of 19
Noninterest income rose to $33.3 million for the first nine months of 2009, compared to $24.5 million a year ago. The increase was primarily due to higher income from accounts receivable management and factoring services, higher mortgage banking income, and deposit fees. Noninterest income also benefitted from securities gains in the 2009 period, compared to securities losses a year ago.
Noninterest expenses were $67.4 million for the 2009 period, compared with $63.0 million a year ago. Excluding the industry-wide FDIC special assessment, additional expenses associated with the acquired factoring business, and an increase in pension expense, which totaled $4.4 million, noninterest expense decreased slightly from the 2008 period.
The provision for income taxes was $3.9 million for the first nine months of 2009, compared to $6.5 million for the same period of 2008.
Loans and Deposits
Total loans held in portfolio were $1,207.8 million at September 30, 2009. The Company extended $60.6 million in new credit during the 2009 third quarter. At the same time, Sterling has reduced its lease financing balances by approximately $44.0 million, or 17.2%, since the end of 2008 as a prudent response to the impact of the recession on customers for this type of financing.
The Company believes its strong liquidity should provide capacity for further loan growth, as the ratio of portfolio loans to deposits at Sterling National Bank was approximately 85.7% at September 30, 2009.
Demand deposits totaled $470.4 million at September 30, 2009, and represented 33.4% of total deposits, one of the highest ratios of demand to total deposits in the industry.
Asset Quality
The recession has had a disproportionately negative impact on the small and midsized businesses that constitute much of Sterling's traditional customer base and, in particular, provide most of its lease financing business. Beginning this year, the Company has experienced elevated levels of nonaccrual loans and net charge-offs as compared with its historical experience, particularly in the lease financing portfolio.
Throughout 2009, Sterling has taken prudent action in response to the unprecedented conditions affecting much of the lending industry. The provision for loan losses was increased to $7.0 million for the 2009 third quarter, compared to $2.0 million a year ago. Net charge-offs were $5.7 million for the 2009 third quarter, compared to $5.6 million for the 2009 second quarter. The 2009 third quarter provision exceeded net charge-offs for the period by approximately $1.3 million. The allowance for loan losses has been strengthened to $19.1 million or 1.58% of loans held in portfolio at September 30, 2009, from $15.7 million or 1.33% a year earlier. Management also has intensified collection activities, especially with respect to the lease financing portfolio, and has further strengthened underwriting standards and enhanced credit evaluation criteria.
Page 4 of 19
The level of nonaccrual loans decreased to $19.8 million at September 30, 2009, from $20.6 million at June 30, 2009. Nonaccrual loans at September 30, 2008, were $6.8 million. The ratio of nonaccrual loans to total loans was 1.60% at September 30, 2009, compared to 1.69% at June 30, 2009 and 0.57% at September 30, 2008.
Capital
Sterling's capital ratios exceeded all regulatory requirements for well-capitalized institutions at September 30, 2009. The Tier 1 risk-based capital ratio at that date was 11.40% (compared to a requirement of 6.00%), total risk-based capital was 12.66% (requirement of 10.00%), and the Tier 1 leverage ratio was 8.28% (requirement of 5.00%).
The Company's capital ratios reflect the receipt in December 2008 of $42 million in proceeds from the issuance of preferred stock under the U.S. Treasury Capital Purchase Program. Excluding such proceeds, Sterling's capital ratios would continue to exceed regulatory requirements for a well-capitalized institution.
Conference Call
Sterling Bancorp will host a teleconference call for the financial community on October 27, 2009, at 10:00 a.m. Eastern Daylight Time to discuss the 2009 third quarter financial results. To access the conference call live, interested parties may dial 800-230-1951 at least 10 minutes prior to the call.
A replay of the conference call will be available beginning at approximately 1:00 p.m. Eastern Daylight Time on October 27, 2009 until 11:59 p.m. Eastern Standard Time on November 10, 2009. To access the replay by telephone, interested parties may dial 800-475-6701 and enter the Access Code 120744.
About Sterling Bancorp
Sterling Bancorp (NYSE: STL - News) is a New York-based banking and financial services company with assets of $2.1 billion. Established in 1929, the Company's principal banking subsidiary, Sterling National Bank, has successfully served the needs of businesses, professionals and individuals in the NY metropolitan area and beyond. Now in its 80th year, Sterling is well known for its focus on business customers, an extensive and diverse product portfolio and a high-touch, hands-on approach to customer service.
Sterling offers working capital lines, asset-based financing, factoring, accounts receivable financing and management, payroll funding and processing, equipment leasing and financing, commercial and residential mortgages, import trade financing, a wide array of depository products and cash management services, trust and estate administration and custodial account services.
Page 5 of 19
Certain statements in this press release, including but not limited to, statements as to future liquidity, future interest rate risk and operating expenses, statements concerning future results of operations, financial position or dividends, and plans and objectives for future operations, future capital, future liquidity and future growth, statements concerning the Company's belief that its capital levels in excess of well-capitalized requirements, tight control of expenses and continued enhancement of its business franchise will enable the Company to continue to serve its marketplace and to pursue additional opportunities as they arise and that its strong liquidity should provide capacity for further loan growth, and other statements regarding matters that are not historical facts, are "forward-looking statements" as defined in the Securities Exchange Act of 1934. These statements are not historical facts but instead are subject to numerous assumptions, risks and uncertainties, and represent only the Company's belief regarding future events, many of which, by their nature, are inherently uncertain and outside its control. Any forward-looking statements the Company may make speak only as of the date on which such statements are made. The Company's actual results and financial position may differ materially from the anticipated results and financial condition indicated in or implied by these forward-looking statements. For a discussion of some of the risks and important factors that could affect the Company's future results and financial condition, see "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements and Factors that Could Affect Future Results" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008.
Page 6 of 19
STERLING BANCORP
Consolidated Financial Highlights
(Unaudited)
(dollars and shares in thousands, except per share data)
Three Months Nine Months
Ended Ended
September 30, September 30,
-------------- ---------------
2009 2008 2009 2008
---- ---- ---- ----
GAAP OPERATING HIGHLIGHTS
Net income $2,398 $3,785 $6,785 $11,957
Dividends on preferred shares
and accretion 646 0 2,125 0
Net income available to common
shareholders 1,752 3,785 4,660 11,957
Net income per average
common share:
Basic 0.13 0.21 0.37 0.67
Diluted 0.13 0.21 0.37 0.66
Net income available to common
shareholders,
per average common share:
Basic 0.10 0.21 0.26 0.67
Diluted 0.10 0.21 0.26 0.66
Annualized return on average
assets (1) 0.45% 0.71% 0.43% 0.78%
Annualized return on average
tangible
common equity (2) 10.20% 16.24% 9.60% 16.64%
Annualized return on
average stated
common equity (3) 8.13% 13.03% 7.69% 13.44%
Net interest margin, tax-
equivalent basis 4.53% 4.46% 4.58% 4.53%
Common shares outstanding:
Period end 18,106 18,043 18,106 18,043
Average Basic 18,106 18,016 18,104 17,973
Average Diluted 18,120 18,227 18,193 18,219
NON-GAAP OPERATING HIGHLIGHTS
Adjusted net income $7,056 $5,173 $19,477 $15,916
Adjusted net income per average
common share:
Basic 0.39 0.29 1.08 0.89
Diluted 0.39 0.28 1.07 0.87
Annualized return on average
assets (1) 1.32% 0.98% 1.25% 1.03%
Annualized return on average
tangible
common equity (2) 30.01% 22.20% 27.56% 22.15%
Annualized return on
average stated
common equity (3) 23.91% 17.80% 22.06% 17.89%
Net interest margin, tax-
equivalent basis 4.53% 4.46% 4.58% 4.53%
Common shares outstanding:
Period end 18,106 18,043 18,106 18,043
Average Basic 18,106 18,016 18,104 17,973
Average Diluted 18,120 18,227 18,193 18,219
(1) Calculated by dividing net income by average assets.
(2) Average tangible common equity represents average shareholders'
equity less average preferred stock and average goodwill. Calculated
by dividing net income by average tangible common equity. See
page 18.
(3) Average stated common equity is equal to average shareholders' equity
less average preferred stock. Calculated by dividing net income by
average stated common equity. See page 18.
Page 7 of 19
STERLING BANCORP
Consolidated Financial Highlights
(Unaudited)
(dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2009 2008 2009 2008
---- ---- ---- ----
BALANCE SHEET HIGHLIGHTS
Period End Balances
Investment securities $722,617 $719,420 $722,617 $719,420
Loans held for sale 25,782 15,987 25,782 15,987
Loans held in portfolio,
net of unearned discount 1,207,788 1,182,926 1,207,788 1,182,926
Federal Reserve Bank and
Federal Home Loan
Bank stock, at cost 9,832 14,730 9,832 14,730
Total earning assets 1,987,138 1,936,837 1,987,138 1,936,837
Allowance for loan losses 19,099 15,733 19,099 15,733
Total assets 2,136,805 2,088,890 2,136,805 2,088,890
Demand deposits 470,404 452,044 470,404 452,044
Savings, NOW and money
market deposits 545,829 599,737 545,829 599,737
Time deposits 392,292 363,353 392,292 363,353
Customer repurchase
agreements 55,628 55,022 55,628 55,022
Other short-term borrowings 179,154 224,490 179,154 224,490
Long-term borrowings 185,774 175,774 185,774 175,774
Shareholders' equity 160,538 118,344 160,538 118,344
Average Balances
Investment securities $726,934 $755,355 $712,155 $745,641
Loans held for sale 44,433 18,226 43,550 24,247
Loans held in portfolio,
net of unearned discount 1,144,597 1,154,487 1,141,475 1,106,021
Federal Reserve Bank and
Federal Home Loan
Bank stock 9,769 13,640 9,700 11,139
Total earning assets 1,976,118 1,946,041 1,936,641 1,890,593
Total assets 2,126,044 2,108,263 2,086,485 2,057,360
Demand deposits 437,551 432,045 423,825 425,912
Savings, NOW and money
market deposits 528,260 576,677 555,813 504,508
Time deposits 375,666 399,994 346,612 486,285
Customer repurchase
agreements 76,495 89,900 76,159 87,192
Other short-term borrowings 229,902 210,808 228,080 175,302
Long-term borrowings 184,366 181,644 178,670 159,351
Shareholders' equity 156,990 115,602 157,808 118,863
ASSET QUALITY HIGHLIGHTS
Period End
Net charge-offs $5,654 $1,361 $16,286 $4,470
Nonaccrual loans 19,794 6,776 19,794 6,776
Other real estate owned 1,837 1,991 1,837 1,991
Nonperforming assets 21,631 8,767 21,631 8,767
Nonaccrual loans/loans (1) 1.60% 0.57% 1.60% 0.57%
Nonperforming assets/assets 1.01% 0.42% 1.01% 0.42%
Allowance for loan losses/
loans (2) 1.58% 1.33% 1.58% 1.33%
Allowance for loan losses/
nonaccrual loans 96.49% 232.19% 96.49% 232.19%
CAPITAL RATIOS
Period End
Tier 1 risk based 11.40% 9.70% 11.40% 9.70%
Total risk based 12.66% 10.84% 12.66% 10.84%
Leverage 8.28% 6.48% 8.28% 6.48%
Book value per common share
(period end) $6.66 $6.56 $6.66 $6.56
(1) The term "loans" includes loans held for sale and loans held in
portfolio.
(2) The term "loans" includes loans held in portfolio only.
Page 8 of 19
STERLING BANCORP
Consolidated Balance Sheets
(Unaudited)
(in thousands, except number of shares)
September 30,
--------------
2009 2008
---- ----
ASSETS
Cash and due from banks $31,188 $32,251
Interest-bearing
deposits with other banks 21,119 3,774
Investment securities
Available for sale
(at estimated fair value) 327,109 406,845
Held to maturity
(at amortized cost) 395,508 312,575
------- -------
Total investment
securities 722,617 719,420
------- -------
Loans held for sale 25,782 15,987
------ ------
Loans held in portfolio, net of
unearned discounts 1,207,788 1,182,926
Less allowance for loan losses 19,099 15,733
------ ------
Loans held in
portfolio, net 1,188,689 1,167,193
--------- ---------
Federal Reserve Bank and Federal
Home Loan Bank stock, at cost 9,832 14,730
Customers' liability
under acceptances 0 886
Goodwill 22,901 22,901
Premises and equipment, net 9,666 10,659
Other real estate 1,837 1,991
Accrued interest receivable 8,141 8,371
Cash surrender value of life
insurance policies 48,419 45,355
Other assets 46,614 45,372
------ ------
$2,136,805 $2,088,890
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Demand $470,404 $452,044
Savings, NOW and money market 545,829 599,737
Time 392,292 363,353
------- -------
Total deposits 1,408,525 1,415,134
Securities sold under
agreements to
repurchase - customers 55,628 55,022
Securities sold under
agreements to
repurchase - dealers 0 19,515
Federal funds purchased 25,675 55,000
Commercial paper 14,692 12,944
Short-term borrowings - FHLB 0 120,000
Short-term borrowings - FRB 135,000 15,000
Short-term borrowings - other 3,787 2,031
Long-term borrowings - FHLB 160,000 150,000
Long-term borrowings -
subordinated debentures 25,774 25,774
Acceptances outstanding 0 886
Accrued interest payable 1,529 2,223
Accrued expenses and
other liabilities 145,657 97,017
------- ------
Total liabilities 1,976,267 1,970,546
Shareholders' equity 160,538 118,344
------- -------
$2,136,805 $2,088,890
========== ==========
MEMORANDA
Available for sale
securities - amortized cost $323,127 $418,705
Held to maturity
securities - estimated
fair value 407,730 311,888
Shares outstanding
Common issued 22,226,425 21,962,295
Common in treasury 4,119,934 3,919,524
NOTE: Certain reclassifications have been made to prior period's
financial data to conform to current financial statement presentations.
Page 9 of 19
STERLING BANCORP
Consolidated Statements of Income
(Unaudited)
(dollars in thousands, except per share data)
Three Months Nine Months
Ended Ended
September 30, September 30,
--------------- ---------------
2009 2008 2009 2008
---- ---- ---- ----
INTEREST INCOME
Loans $18,024 $20,387 $53,840 $61,208
Investment securities -
available for sale 4,123 5,523 13,751 15,662
Investment securities -
held to maturity 4,357 3,795 11,485 12,054
Federal Reserve Bank and Federal
Home Loan Bank stock 191 257 387 500
Federal funds sold 0 7 0 8
Deposits with other banks 27 11 46 30
-- -- -- --
Total interest income 26,722 29,980 79,509 89,462
------ ------ ------ ------
INTEREST EXPENSE
Savings, NOW and money
market deposits 872 2,011 2,940 4,710
Time deposits 1,933 3,062 6,148 12,434
Securities sold u/a/r - customers 79 419 282 1,507
Securities sold u/a/r - dealers 0 382 0 1,115
Federal funds purchased 2 197 43 776
Commercial paper 15 99 55 411
Short-term borrowings - FHLB 0 470 11 996
Short-term borrowings - FRB 131 1 356 2
Short-term borrowings - other 0 9 1 28
Long-term borrowings - FHLB 1,197 1,107 3,453 2,906
Long-term subordinated debentures 523 523 1,570 1,570
--- --- ----- -----
Total interest expense 4,752 8,280 14,859 26,455
----- ----- ------ ------
Net interest income 21,970 21,700 64,650 63,007
Provision for loan losses 6,950 1,950 19,950 6,100
----- ----- ------ -----
Net interest income after
provision for loan losses 15,020 19,750 44,700 56,907
------ ------ ------ ------
NONINTEREST INCOME
Accounts receivable management/
factoring commissions
and other fees 4,997 4,348 13,098 11,712
Service charges on
deposit accounts 1,553 1,346 4,296 4,029
Other customer related
service charges and fees 817 682 2,136 2,094
Mortgage banking income 2,505 1,469 7,152 6,670
Trust fees 110 136 366 395
Income from life
insurance policies 280 289 828 852
Gain/(Loss) on sale of OREO 19 (58) 39 (361)
Securities gains/(losses) 1,221 (1,177) 5,160 (1,684)
Other income 233 208 262 780
--- --- --- ---
Total noninterest
income 11,735 7,243 33,337 24,487
------ ----- ------ ------
NONINTEREST EXPENSES
Salaries 9,960 9,617 29,934 28,456
Employee benefits 3,206 2,411 9,151 7,499
----- ----- ----- -----
Total personnel expense 13,166 12,028 39,085 35,955
Occupancy and equipment
expenses, net 2,806 2,919 8,381 8,702
Advertising and marketing 916 740 2,596 2,728
Professional fees 1,847 2,644 4,870 5,882
Communications 429 450 1,295 1,311
Deposit insurance 1,195 243 3,059 512
Other expenses 2,818 2,653 8,086 7,883
----- ----- ----- -----
Total noninterest
expenses 23,177 21,677 67,372 62,973
------ ------ ------ ------
Income before income taxes 3,578 5,316 10,665 18,421
Provision for income taxes 1,180 1,531 3,880 6,464
----- ----- ----- -----
Net income 2,398 3,785 6,785 11,957
Dividends on preferred
shares and accretion 646 0 2,125 0
--- ---- ----- ----
Net income available to
common shareholders $1,752 $3,785 $4,660 $11,957
====== ====== ====== =======
Page 10 of 19
STERLING BANCORP
Consolidated Statements of Income
(Unaudited)
(dollars in thousands, except per share data)
(continued)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2009 2008 2009 2008
---- ---- ---- ----
Average number of common
shares outstanding
Basic 18,106,491 18,015,871 18,104,057 17,972,517
Diluted 18,120,412 18,226,811 18,192,585 18,219,375
Net Income per average
common share
Basic $0.13 $0.21 $0.37 $0.67
Diluted 0.13 0.21 0.37 0.66
Net income available to
common shareholders
per average common share
Basic 0.10 0.21 0.26 0.67
Diluted 0.10 0.21 0.26 0.66
Dividends per
common share 0.09 0.19 0.47 0.57
NOTE: Certain reclassifications have been made to prior periods'
financial data to conform to current financial statement
presentations.
Page 11 of 19
STERLING BANCORP
Consolidated Statements of Comprehensive Income
(Unaudited)
(in thousands)
Three Months Nine Months
Ended Ended
September 30, September 30,
-------------- ---------------
2009 2008 2009 2008
---- ---- ---- ----
Net income $2,398 $3,785 $6,785 $11,957
Other comprehensive
income, net of tax:
Unrealized holding gains
on securities, arising
during the period 2,664 (2,727) 4,352 (6,531)
Reclassification
adjustment for
securities (gains)
losses included in
net income (666) 645 (2,818) 923
Amortization of:
Prior service cost 9 9 27 27
Net actuarial losses 532 229 1,404 689
------ ------ ------ ------
Comprehensive income $4,937 $1,941 $9,750 $7,065
====== ====== ====== ======
STERLING BANCORP
Consolidated Statements of Changes in Shareholders' Equity
(Unaudited)
(in thousands)
Three Months Nine Months
Ended Ended
September 30, September 30,
---------------- -----------------
2009 2008 2009 2008
---- ---- ---- ----
Balance, at
beginning of period $157,721 $119,725 $160,480 $121,070
Net income for period 2,398 3,785 6,785 11,957
Common shares issued
under stock incentive
plan and related tax
benefits 0 1,672 209 7,971
Stock option
compensation expense 33 0 99 0
Cash dividends -
Common shares (1,628) (3,425) (8,503) (10,249)
Cash dividends -
Preferred shares (525) 0 (1,353) 0
Surrender of shares
issued under incentive
compensation plan 0 (1,569) (144) (6,787)
Change in net unrealized
holding gains on available
for sale securities 2,664 (2,727) 4,352 (6,531)
Reclassification
adjustment for securities
(gains) losses included
in net income (666) 645 (2,818) 923
Adjustment to retained
earnings upon adoption of
EITF Issue 06-4
effective January 1, 2008 0 0 0 (726)
Amortization of:
Prior service cost 9 9 27 27
Net actuarial losses 532 229 1,404 689
-------- -------- -------- --------
Balance, at end
of period $160,538 $118,344 $160,538 $118,344
======== ======== ======== ========
Page 12 of 19
STERLING BANCORP
Average Balance Sheets [1]
(Unaudited)
(dollars in thousands)
Three Months Ended
------------------
September 30, 2009 September 30, 2008
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
------- -------- ---- ------- -------- ----
Assets
Interest-bearing
deposits with other
banks $50,385 $27 0.21% $2,920 $11 1.51%
------- --- ---- ------ --- ----
Investment
securities -
available for
sale 320,494 3,903 4.87 409,132 5,308 5.19
Investment
securities - held
to maturity 345,186 3,975 4.61 323,145 3,795 4.70
Investment
securities - tax
exempt [2] 61,254 969 6.33 23,078 351 6.08
------ --- ------ ---
Total investment
securities 726,934 8,847 4.87 755,355 9,454 5.01
------- ----- ------- -----
FRB and FHLB
stock [2] 9,769 192 7.87 13,640 258 7.58
Federal Funds sold 0 0 0.00 1,413 7 1.81
Loans, net of
unearned
discount[3] 1,189,030 18,024 6.25 1,172,713 20,387 6.99
--------- ------ --------- ------
Total Interest-
Earning
Assets [2] 1,976,118 27,090 5.53% 1,946,041 30,117 6.19%
------ ==== ------ ====
Cash and due
from banks 28,342 50,264
Allowance for
loan losses (20,307) (16,367)
Goodwill 22,901 22,901
Other 118,990 105,424
------- -------
Total Assets $2,126,044 $2,108,263
========== ==========
Liabilities and
Shareholders' Equity
Interest-bearing
deposits
Domestic
Savings $18,022 3 0.07% $17,527 14 0.33%
NOW 180,753 106 0.23 251,271 633 1.00
Money market 329,485 763 0.92 307,879 1,364 1.76
Time 375,087 1,931 2.04 399,417 3,060 3.05
Foreign Time 579 2 1.09 577 2 1.09
--- --- --- ---
Total Interest-
Bearing Deposits 903,926 2,805 1.23 976,671 5,073 2.07
------- ----- ------- -----
Borrowings
Securities sold
u/a/r -
customers 76,495 79 0.41 89,900 419 1.85
Securities sold
u/a/r -dealers 0 0 0.00 62,977 382 2.41
Federal funds
purchased 6,911 2 0.16 37,717 197 2.04
Commercial paper 13,448 15 0.43 18,331 99 2.15
Short-term
borrowings - FHLB 0 0 0.00 90,295 470 2.07
Short-term
borrowings - FRB 207,554 131 0.25 326 1 1.11
Short-term
borrowings -
other 1,989 0 0.00 1,162 9 2.88
Long-term
borrowings - FHLB 158,592 1,197 2.99 155,870 1,107 2.84
Long-term
borrowings -
sub debt 25,774 523 8.38 25,774 523 8.37
------ --- ------ ---
Total
Borrowings 490,763 1,947 1.58 482,352 3,207 2.65
------- ----- ------- -----
Total Interest-
Bearing
Liabilities 1,394,689 4,752 1.35% 1,459,023 8,280 2.26%
--------- ----- ==== --------- ----- ====
Noninterest-
bearing demand
deposits 437,551 432,045
Other liabilities 136,814 101,593
------- -------
Total
Liabilities 1,969,054 1,992,661
Shareholders' equity 156,990 115,602
------- -------
Total Liabilities
and Shareholders'
Equity $2,126,044 $2,108,263
========== ==========
Net interest income/
spread [2] 22,338 4.18% 21,837 3.93%
==== ====
Net yield on
interest-
earning assets 4.53% 4.46%
==== ====
Less: Tax-equivalent
adjustment 368 137
--- ---
Net interest income $21,970 $21,700
======= =======
[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 prior period amounts to conform to current presentation.
[2] Interest and/or average rates are presented on a tax-equivalent basis.
[3] Includes loans held for sale and loans held in portfolio; all loans
are domestic. Nonaccrual loans are included in amounts outstanding
and income has been included to the extent earned.
Page 13 of 19
STERLING BANCORP
Average Balance Sheets [1]
(Unaudited)
(dollars in thousands)
Nine Months Ended
-----------------
September 30, 2009 September 30, 2008
------------------ ------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
------- -------- ---- ------- -------- ----
Assets
Interest-bearing
deposits with other
banks $29,761 $46 0.21% $2,952 $30 1.34%
------- --- ---- ------ --- ----
Investment
securities -
available for
sale 359,882 13,103 4.85 383,934 15,065 5.23
Investment
securities - held
to maturity 312,075 10,974 4.69 340,313 12,054 4.72
Investment
securities - tax
exempt [2] 40,198 1,865 6.19 21,394 979 6.10
------ ----- ------ ---
Total investment
securities 712,155 25,942 4.86 745,641 28,098 5.02
------- ------ ------- ------
FRB and FHLB
stock [2] 9,700 390 5.37 11,139 503 6.02
Federal funds sold 0 0 0.00 593 8 1.81
Loans, net of
unearned
discount [3] 1,185,025 53,840 6.32 1,130,268 61,208 7.46
--------- ------ --------- ------
Total Interest-
Earning
Assets [2] 1,936,641 80,218 5.64% 1,890,593 89,847 6.45%
------ ==== ------ ====
Cash and due
from banks 30,115 55,133
Allowance for
loan losses (18,409) (15,963)
Goodwill 22,901 22,901
Other 115,237 104,696
------- -------
Total Assets $2,086,485 $2,057,360
========== ==========
Liabilities and
Shareholders' Equity
Interest-bearing
deposits
Domestic
Savings $18,105 15 0.11% $18,633 48 0.34%
NOW 201,238 400 0.27 248,112 2,001 1.08
Money market 336,470 2,525 1.00 237,763 2,661 1.50
Time 346,034 6,143 2.37 485,709 12,429 3.42
Foreign
Time 578 5 1.09 576 5 1.09
--- --- --- ---
Total Interest-
Bearing Deposits 902,425 9,088 1.35 990,793 17,144 2.31
------- ----- ------- ------
Borrowings
Securities sold
u/a/r -
customers 76,159 282 0.49 87,192 1,507 2.31
Securities sold
u/a/r -dealers 0 0 0.00 55,205 1,115 2.70
Federal funds
purchased 25,390 43 0.23 41,976 776 2.43
Commercial paper 12,148 55 0.60 19,672 412 2.79
Short-term
borrowings - FHLB 4,560 11 0.31 56,763 995 2.34
Short-term
borrowings - FRB 184,249 356 0.26 197 2 1.63
Short-term
borrowings -
other 1,733 1 0.05 1,489 28 2.45
Long-term
borrowings -
FHLB 152,896 3,453 3.02 133,577 2,906 2.90
Long-term
borrowings -
sub debt 25,774 1,570 8.38 25,774 1,570 8.38
------ ----- ------ -----
Total
Borrowings 482,909 5,771 1.60 421,845 9,311 2.95
------- ----- ------- -----
Total Interest-
Bearing
Liabilities 1,385,334 14,859 1.43% 1,412,638 26,455 2.50%
--------- ------ ==== --------- ------ ====
Noninterest-
bearing demand
deposits 423,825 425,912
Other liabilities 119,518 99,947
------- ------
Total
Liabilities 1,928,677 1,938,497
Shareholders' equity 157,808 118,863
------- -------
Total
Liabilities
and
Shareholders'
Equity $2,086,485 $2,057,360
========== ==========
Net interest income/
spread [2] 65,359 4.21% 63,392 3.95%
==== ====
Net yield on
interest-
earning assets
4.58% 4.53%
==== ===
Less: Tax-equivalent
adjustment 709 385
--- ---
Net interest income $64,650 $63,007
======= =======
[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 prior period amounts to conform to current presentation.
[2] Interest and/or average rates are presented on a tax-equivalent basis.
[3] Includes loans held for sale and loans held in portfolio; all loans
are domestic. Nonaccrual loans are included in amounts outstanding
and income has been included to the extent earned.
Page 14 of 19
STERLING BANCORP
Rate/Volume Analysis [1]
(Unaudited)
(in thousands)
Increase/(Decrease)
Three Months Ended
September 30, 2009
------------------
Volume Rate Net [2]
------ ---- --------
INTEREST INCOME
Interest-bearing deposits with other banks $34 $(18) $16
--- ---- ---
Investment securities -
available for sale (1,094) (311) (1,405)
Investment securities - held to maturity 255 (75) 180
Investment securities - tax exempt 603 15 618
--- -- ---
Total investment securities (236) (371) (607)
---- ---- ----
FRB and FHLB stock (76) 10 (66)
Federal funds sold (8) 0 (8)
Loans, net of unearned discounts [3] 233 (2,596) (2,363)
--- ------ ------
TOTAL INTEREST INCOME $(53) $(2,975) $(3,028)
==== ======= =======
INTEREST EXPENSE
Interest-bearing deposits
Domestic
Savings $0 $(11) $(11)
NOW (141) (386) (527)
Money market 90 (691) (601)
Time (175) (954) (1,129)
Foreign
Time 0 0 0
--- --- ---
Total interest-bearing deposits (226) (2,042) (2,268)
---- ------ ------
Borrowings
Securities sold under agreements to
repurchase - customers (55) (285) (340)
Securities sold under agreements to
repurchase - dealers (382) 0 (382)
Federal funds purchased (91) (104) (195)
Commercial paper (21) (63) (84)
Short-term borrowings - FHLB (469) 0 (469)
Short-term borrowings - FRB 132 (2) 130
Short-term borrowings - other 3 (12) (9)
Long-term borrowings - FHLB 22 68 90
Long-term borrowings -
subordinated debentures 0 0 0
--- --- ---
Total borrowings (861) (398) (1,259)
---- ---- ------
------- ------- -------
TOTAL INTEREST EXPENSE $(1,087) $(2,440) $(3,527)
======= ======= =======
NET INTEREST INCOME $1,034 $(535) $499
====== ===== ====
[1] This table is presented on a tax-equivalent basis.
[2] Changes in interest income and interest expense due to a combination
of both volume and rate have been allocated to the change due
to volume and the change due to rate in proportion to the relationship
of change due solely to each. The change in interest income for
Federal funds sold and in interest expense for securities sold under
agreements to repurchase-dealers and short-term borrowings-FHLB
has been allocated entirely to the volume variance.
[3] Includes loans held for sale and loans held in portfolio; all loans
are domestic. Nonaccrual loans are included in amounts outstanding,
and income has been included to the extent earned.
Page 15 of 19
STERLING BANCORP
Rate/Volume Analysis [1]
(Unaudited)
(in thousands)
Increase/(Decrease)
Nine Months Ended
September 30, 2009
------------------
Volume Rate Net [2]
------ ---- --------
INTEREST INCOME
Interest-bearing
deposits with
other banks $60 $(44) $16
--- ---- ---
Investment securities -
available for sale (937) (1,026) (1,963)
Investment securities -
held to maturity (1,007) (73) (1,080)
Investment securities -
tax exempt 873 14 887
--- -- ---
Total investment securities (1,071) (1,085) (2,156)
------ ------ ------
FRB and FHLB stock (63) (50) (113)
Federal funds sold (8) 0 (8)
Loans, net of unearned discounts[3] 2,689 (10,057) (7,368)
----- ------- ------
TOTAL INTEREST INCOME $1,607 $(11,236) $(9,629)
====== ======== =======
INTEREST EXPENSE
Interest-bearing deposits
Domestic
Savings $(1) $(32) $(33)
NOW (327) (1,274) (1,601)
Money market 905 (1,041) (136)
Time (3,060) (3,226) (6,286)
Foreign
Time 0 0 0
--- --- ---
Total interest-bearing deposits (2,483) (5,573) (8,056)
------ ------ ------
Borrowings
Securities sold under agreements
to repurchase - customers (174) (1,051) (1,225)
Securities sold under agreements
to repurchase - dealers (1,115) 0 (1,115)
Federal funds purchased (224) (509) (733)
Commercial paper (118) (239) (357)
Short-term borrowings - FHLB (508) (476) (984)
Short-term borrowings - FRB 358 (4) 354
Short-term borrowings - other 0 (27) (27)
Long-term borrowings - FHLB 423 124 547
Long-term borrowings -
subordinated debentures 0 0 0
------ ------ ------
Total borrowings (1,358) (2,182) (3,540)
------ ------ ------
------- ------- --------
TOTAL INTEREST EXPENSE $(3,841) $(7,755) $(11,596)
======= ======= ========
NET INTEREST INCOME $5,448 $(3,481) $1,967
====== ======= ======
[1] This table is presented on a tax-equivalent basis.
[2] Changes in interest income and interest expense due to a combination
of both volume and rate have been allocated to the change due
to volume and the change due to rate in proportion to the relationship
of change due solely to each. The change in interest income for
Federal funds sold and in interest expense for securities sold under
agreements to repurchase-dealers, and short-term borrowings-
other has been allocated entirely to the volume variance. The effect
of the extra day in 2008 has also been allocated entirely to the
volume variance.
[3] Includes loans held for sale and loans held in portfolio; all loans
are domestic. Nonaccrual loans are included in amounts outstanding,
and income has been included to the extent earned.
Page 16 of 19
STERLING BANCORP
Reconciliation of GAAP and Adjusted
Net Income
(Unaudited)
(dollars in thousands, except per share data)
This press release contains certain supplemental financial information,
described in the following tables, which has been determined by methods
other than U. S. generally accepted accounting principles ("GAAP"). These
non-GAAP financial measures provide useful supplemental information to
both management and investors in evaluating Sterling's financial results.
Adjusted net income excludes the effect of certain items that are unusual
and/or difficult to predict. These non-GAAP measures should not be
considered a substitute for GAAP basis measures and results, and Sterling
strongly encourages investors to review its consolidated statements in
their entirety and not to rely on any single financial measure. Non-GAAP
financial measures are not standardized, and, therefore, it may not be
possible to compare these financial measures with other companies'
non-GAAP financial measures that may have the same or similar names.
Three Months Nine Months
Ended Ended
September 30, September 30,
------------ ---------------
2009 2008 2009 2008
---- ---- ---- ----
Adjusted net income
GAAP net income $2,398 $3,785 $6,785 $11,957
------ ------ ------ -------
Adjustments to GAAP net income:
Provision for loan losses 6,950 1,950 19,950 6,100
Tax effect 2,292 562 7,258 2,141
----- --- ----- -----
Total adjustments
to GAAP net income: 4,658 1,388 12,692 3,959
----- ----- ------ -----
Adjusted net income $7,056 $5,173 $19,477 $15,916
====== ====== ======= =======
Adjusted per share data
Adjusted net income $7,056 $5,173 $19,477 $15,916
====== ====== ======= =======
Average number of basic
shares outstanding 18,106 18,016 18,104 17,973
Basic earnings, as adjusted $0.39 $0.29 $1.08 $0.89
Average number of diluted
shares outstanding 18,120 18,227 18,193 18,219
Diluted earnings, as
adjusted $0.39 $0.28 $1.07 $0.87
Page 17 of 19
STERLING BANCORP
Reconciliation of Average Shareholders' Equity and Adjusted
Average Stated and Tangible Common Equity
(Unaudited)
(dollars in thousands)
This press release contains certain supplemental financial information,
described in the following tables, which has been determined by methods
other than U. S. generally accepted accounting principles ("GAAP"). These
non-GAAP financial measures provide useful supplemental information to
both management and investors in evaluating Sterling's financial
results. Adjusted average stated common equity excludes average preferred
equity. Adjusted average tangible common equity excludes average preferred
equity, average goodwill and average other intangible assets. Adjusted
return on average stated common equity is calculated by dividing adjusted
net income (annualized) by adjusted average stated common equity.
Adjusted return on average tangible common equity is calculated by
dividing adjusted net income by adjusted average tangible common equity.
These non-GAAP measures should not be considered a substitute for GAAP
basis measures and results, and Sterling strongly encourages investors to
review its consolidated statements in their entirety and not to rely on
any single financial measure. Non-GAAP financial measures are not
standardized, and, therefore, it may not be possible to compare these
financial measures with other companies' non-GAAP financial measures that
may have the same or similar names.
Three Months Nine Months
Ended Ended
September 30, September 30,
---------------- ---------------
2009 2008 2009 2008
---- ---- ---- ----
Adjusted average tangible
common equity
Average shareholders'
equity $156,990 $115,602 $157,808 $118,863
Less:
Preferred equity 39,922 0 39,787 0
Goodwill and
intangible assets 23,793 23,899 23,534 22,901
------ ------ ------ ------
Average tangible
common equity $93,275 $91,703 $94,487 $95,962
======= ======= ======= =======
Adjusted average stated
common equity
Average
shareholders' equity $156,990 $115,602 $157,808 $118,863
Less:
Preferred equity 39,922 0 39,787 0
------ --- ------ ---
Average stated
common equity $117,068 $115,602 $118,021 $118,863
======== ======== ======== ========
Adjusted return on
average tangible
common equity
Adjusted net income $7,056 $5,173 $19,477 $15,916
------ ------ ------- -------
Average shareholders'
equity 156,990 115,602 157,808 118,863
Less:
Preferred equity 39,922 0 39,787 0
Goodwill and
intangible assets 23,793 23,899 23,534 22,901
------ ------ ------ ------
Average tangible
common equity $93,275 $91,703 $94,487 $95,962
======= ======= ======= =======
Adjusted annualized
return on average
tangible common equity 30.01% 22.44% 27.56% 22.15%
Adjusted return on
average stated
common equity
Average shareholders'
equity $156,990 $115,602 $157,808 $118,863
Less:
Preferred equity 39,922 0 39,787 0
------ --- ------ ---
Average stated
common equity $117,068 $115,602 $118,021 $118,863
======== ======== ======== ========
Adjusted annualized
return on average
stated common
equity 23.91% 17.80% 22.06% 17.89%
Page 18 of 19
STERLING BANCORP
Reconciliation of GAAP and Adjusted
Pre-tax Income
Noninterest Income and Noninterest Expense
(Unaudited)
(dollars in thousands)
This press release contains certain supplemental financial information,
described in the following tables, which has been determined by methods
other than U. S. generally accepted accounting principles ("GAAP"). These
non-GAAP financial measures provide useful supplemental information to
both management and investors in evaluating Sterling's financial results.
Pre-tax, pre-provision income and noninterest income excluding securities
gains (losses) exclude the effect of certain items that are unusual and/or
difficult to predict. The incremental pension expense is calculated by
subtracting the pension expense for the 2008 period from the pension
expense for the 2009 period. These non-GAAP measures should not be
considered a substitute for GAAP basis measures and results, and Sterling
strongly encourages investors to review its consolidated statements in
their entirety and not to rely on any single financial measure. Non-GAAP
financial measures are not standardized, and, therefore, it may not be
possible to compare these financial measures with other companies'
non-GAAP financial measures that may have the same or similar names.
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- ---------------
2009 2008 2009 2008
---- ---- ---- ----
Pre-tax, pre-provision income
GAAP pre-tax income $3,578 $5,316 $10,665 $18,421
Plus:
Provision for
loan losses 6,950 1,950 19,950 6,100
----- ----- ------ -----
Pre-tax, pre-provision
income $10,528 $7,266 $30,615 $24,521
======= ====== ======= =======
Noninterest income excluding
securities gains (losses)
Total noninterest income $11,735 $7,243 $33,337 $24,487
Less (Plus):
Securities
gains (losses) 1,221 (1,177) 5,160 (1,684)
Noninterest income
excluding securities
gains (losses) $10,514 $8,420 $28,177 $26,171
======= ====== ======= =======
Adjusted noninterest expenses
Total noninterest
expenses $$23,177 $$21,677 $$67,372 $$62,973
-------- -------- -------- --------
Less:
Special FDIC
assessment 0 0 978 0
Incremental pension
plan expense 775 0 1,697 0
Acquired factoring
business 657 0 1,761 0
--- --- ----- ---
Total adjustments to
noninterest expenses 1,432 0 4,436 0
----- --- ----- ---
Adjusted noninterest
expenses $21,745 $21,677 $62,936 $62,973
======= ======= ======= =======
Page 19 of 19
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