Sterling Bancorp Reports 2009 Results
Performance Reflects Loan Growth, Increased Net Interest and Noninterest Income, Lower Expenses
NEW YORK, Feb. 1 /PRNewswire-FirstCall/ -- Sterling Bancorp (NYSE: STL), the parent company of New York City-based Sterling National Bank, today reported net income of $9.4 million, or $0.52 per diluted share, for the full year ended December 31, 2009. For the fourth quarter of 2009, Sterling’s net income was $2.6 million, or $0.15 per diluted share.
2009 Full Year and Fourth Quarter Highlights
- Net interest income increased for the year to $86.6 million from $84.7 million in 2008.
- Net interest margin was 4.63% on a tax-equivalent basis, up from 4.60% in 2008, largely due to a decrease in costs resulting from Sterling’s funding strategies.
- Expense management led to a decrease in noninterest expenses, excluding costs for the acquisition of an accounts receivable management, factoring and import trade finance business, industry-wide FDIC assessment and higher pension costs.
- Pre-tax, pre-provision income rose 26% to $42.2 million, from $33.5 million a year ago.
- New credit facility approvals totaled approximately $212 million in 2009, with drawings against those facilities of approximately $100 million; total loans in portfolio were $1.2 billion at December 31, 2009.
- Growth initiative – Sterling acquired an accounts receivable management, factoring and import trade finance business in the 2009 second quarter, driving growth in this area.
- Strong demand deposit growth of 18% brought demand deposits to $546.3 million at 2009 year-end, representing nearly 35% of total deposits.
- Capital ratios exceeded regulatory requirements for a well-capitalized institution, with total risk-based capital of 12.75% at December 31, 2009.
- Credit quality improves – Nonaccrual loans decreased in both the third and fourth quarters of 2009.
Note: Reconciliations of GAAP and non-GAAP data are presented beginning on page 17.
Management Comments
“Sterling’s results for 2009 demonstrate our Company’s fundamental earnings capacity and growth momentum. Pre-tax, pre-provision income for 2009 rose 26% from the prior year, to $42.2 million, which reflects our performance before the effect of a higher provision for loan losses due to the economic downturn. The trend in income was also positive on a sequential basis; pre-tax, pre-provision income for fourth quarter 2009 was $11.6 million, an increase of nearly $1.1 million from the 2009 third quarter. Higher net interest income and noninterest income, along with management of noninterest expenses, were the key factors contributing to income growth,” said Louis J. Cappelli, Sterling’s Chairman and Chief Executive Officer.
“We have continued to provide superior, ‘high-touch’ service throughout this turbulent economic cycle, and have been actively working to do more business with our existing customers while adding a significant number of new relationships. Sterling extended new credit facilities of more than $200 million in 2009. At the same time, lease financing balances have been reduced by $61 million since the start of the year as a prudent response to the recession’s impact on customers for this type of financing, and the leasing portfolio now represents less than 16% of total loans. Our acquisition of an accounts receivable management, factoring and import trade finance business in the 2009 second quarter expanded our presence in that market and provided added resources for our customers. Total deposits grew more than 16% from last year, to nearly $1.6 billion, as strong growth in noninterest-bearing demand deposits and our overall strategies to control funding costs contributed to a high 4.63% net interest margin for the year.”
“The economic environment remains fragile and prospects for a sustainable recovery are still uncertain at this time. In keeping with our traditional practices, Sterling will remain disciplined with respect to underwriting and credit quality.”
“We believe that the current economic cycle will present opportunities to strengthen our existing business relationships, attract new customers and selectively pursue potential acquisitions that complement our business. Sterling is well positioned to benefit from these opportunities. Our business is profitable and growing, and we have a solid capital foundation. We have supported our customers during a difficult period, as we know from experience that borrowers tend to be loyal to the bank with which they have the bulk of their relationship. At the same time, we have expanded our business franchise by extending our services to new clients at a time when our competitors have been distracted by the economic turmoil. And we have a talented, energetic and dedicated team with a sharp focus on serving the needs of businesses, professionals and individuals in the diverse NY marketplace and beyond. We will continue to build on these strengths as the year progresses, and are positioned for future growth,” Mr. Cappelli said.
Full Year 2009 Financial Results
Net income for 2009 was $9.4 million, or $0.52 per diluted share, compared to $16.0 million, or $0.88 per diluted share, for 2008. The decrease in net income was primarily due to a $19.6 million increase in the provision for loan losses and a $4.1 million increase in noninterest expenses, which more than offset a $1.9 million increase in net interest income and a $10.9 million increase in noninterest income.
Pre-tax, pre-provision income increased 26% to $42.2 million for 2009, from $33.5 million for 2008.
Net interest income, on a tax-equivalent basis, was $87.6 million for 2009 compared to $85.1 million for 2008. Net interest income benefitted from higher average loan balances, lower interest-bearing deposit balances and lower funding costs. Those benefits were partially offset by lower yield on loans and investment securities, lower investment securities balances and higher borrowed funds balances.
The net interest margin, on a tax-equivalent basis, rose to 4.63% for 2009, from 4.60% for 2008.
Noninterest income increased to $44.2 million for 2009 from $33.3 million in 2008. This increase reflected higher income from accounts receivable management, factoring and trade finance services; increases in mortgage banking income and deposit fees; and securities gains. Additionally, noninterest income in the 2008 period was offset by other-than-temporary impairment charges related to a debt security and a single-issuer, investment-grade trust preferred security.
Noninterest expenses were $88.5 million for 2009, compared with $84.5 million a year ago. In the 2009 period, the industry-wide FDIC special assessment, additional expenses of the acquired accounts receivable management, factoring and import trade finance business, and an increase in pension expense, all totaling $5.9 million. Excluding such items, noninterest expense decreased $1.9 million from 2008.
The provision for income taxes was $4.9 million for 2009, compared to $9.2 million for 2008.
Fourth Quarter 2009 Financial Results
Sterling’s net income for the 2009 fourth quarter was $2.6 million, or $0.15 per diluted share, compared to $4.0 million, or $0.22 per diluted share, for the fourth quarter of 2008. The decrease in net income was primarily due to a $5.7 million increase in the provision for loan losses, which was partially offset by increases in net interest income and noninterest income, and a decrease in noninterest expenses.
Pre-tax, pre-provision income increased 29% to $11.6 million for the fourth quarter of 2009, from $9.0 million for the year-ago period.
Net interest income, on a tax-equivalent basis, was $22.4 million for the 2009 fourth quarter, up from $21.8 million for the 2008 fourth quarter. Net interest income benefited from higher average loan and investment securities balances, lower borrowed funds 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, and higher interest-bearing deposit balances.
Net interest margin was 4.49% for the 2009 fourth quarter, on a tax-equivalent basis, compared to 4.50% for the same period of 2008.
Noninterest income rose to $10.8 million for the 2009 fourth quarter, from $8.8 million a year ago. This increase reflected higher income from accounts receivable management, factoring and import trade finance services; increases in mortgage banking income and deposit fees; and securities gains.
Noninterest expenses decreased to $21.2 million for the 2009 fourth quarter, versus $21.5 million last year. The decrease was largely due to reduced marketing and advertising expenses and a recapture of previously expensed professional fees. These decreases were partially offset by additional expenses associated with the acquired accounts receivable management, factoring and import trade finance business; higher FDIC deposit insurance premiums and an increase in pension costs. Excluding such items, noninterest expense for the 2009 fourth quarter decreased by 8.6% from the prior year, reflecting Sterling’s cost management efforts.
The provision for income taxes was $1.0 million for the 2009 fourth quarter, compared to $2.7 million for the same period of 2008.
Loans and Deposits
Total loans held in portfolio were $1.2 billion at December 31, 2009. The Company extended approximately $212 million in new credit facilities during 2009, with drawings against these facilities of approximately $100 million.
The Company believes its strong liquidity should provide capacity for further loan growth, as the ratio of portfolio loans to deposits was approximately 75.6% at December 31, 2009.
Total deposits rose 16.4% to $1.6 billion at December 31, 2009. Demand deposits totaled $546.3 million as of that date, and represented 34.6% 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 in 2009, 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 $8.0 million for the 2009 fourth quarter, compared to $7.0 million for the 2009 third quarter. Net charge-offs were $7.0 million for the 2009 fourth quarter, compared to $5.7 million for the 2009 third quarter. The 2009 fourth quarter provision exceeded net charge-offs for the period by approximately $900 thousand. The allowance for loan losses has been increased to $19.9 million or 1.66% of loans held in portfolio at December 31, 2009, from $16.0 million or 1.35% a year earlier. Management also has reduced lease financing balances, intensified collection activities, especially with respect to the lease financing portfolio, and has further strengthened underwriting standards and enhanced credit evaluation criteria.
The level of nonaccrual loans decreased to $18.0 million at December 31, 2009, from $19.8 million at September 30, 2009 and $20.6 million at June 30, 2009. Nonaccrual loans at December 31, 2008 were $7.3 million. The ratio of nonaccrual loans to total loans was 1.46% at December 31, 2009; 1.60% at September 30, 2009; and 1.69% at June 30, 2009. This ratio was 0.61% at December 31, 2008.
Capital
Sterling’s capital ratios exceeded all regulatory requirements for well-capitalized institutions at December 31, 2009. The Tier 1 risk-based capital ratio at that date was 11.50% (compared to a requirement of 6.00%), total risk-based capital was 12.75% (requirement of 10.00%), and the Tier 1 leverage ratio was 8.06% (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 February 1, 2010, at 10:00 a.m. Eastern Standard Time to discuss the 2009 financial results. To access the conference call live, interested parties may dial 800-398-9398 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 Standard Time on February 1, 2010 until 11:59 p.m. Eastern Standard Time on February 11, 2010. To access the replay by telephone, interested parties may dial 800-475-6701 and enter the Access Code 144015.
About Sterling Bancorp
Sterling Bancorp (NYSE: STL) is a New York-based banking and financial services company with assets of more than $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.
Certain statements in this press release, including but not limited to, statements as to future events, 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 economic environment, disciplined underwriting and credit quality, and the Company’s position for future growth and ability to benefit from an economic recovery, and other statements contained herein 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, and the Company makes no commitment to update or revise forward-looking statements to reflect new information or subsequent events or changes in expectations. 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 and “Cautionary Statement Regarding Forward-Looking Statements” in the Company’s Quarterly Report on form 10-Q for the quarter ended September 30, 2009.
STERLING BANCORP
Consolidated Financial Highlights
(Unaudited)
(dollars and shares in thousands, except per share data)
Three Months Twelve Months
Ended Ended
December 31, December 31,
-------------- ---------------
2009 2008 2009 2008
---- ---- ---- ----
GAAP OPERATING HIGHLIGHTS
Net income $2,637 $4,049 $9,422 $16,006
Dividends on
preferred shares
and accretion 648 102 2,773 102
Net income available to
common shareholders 1,989 3,947 6,649 15,904
Net income available to
common shareholders,
per average common share:
Basic 0.11 0.22 0.37 0.89
Diluted 0.11 0.22 0.37 0.88
Annualized return
on average assets (1) 0.48% 0.77% 0.45% 0.77%
Annualized return on
average tangible
common equity (2) 10.92% 16.86% 9.94% 16.70%
Annualized return on
average stated common
equity (3) 8.76% 13.60% 7.96% 13.48%
Net interest margin, tax-
equivalent basis 4.49% 4.50% 4.63% 4.60%
Common shares outstanding:
Period end 18,106 18,095 18,106 18,095
Average Basic 18,106 17,938 18,105 17,906
Average Diluted 18,157 18,052 18,126 18,123
NON-GAAP OPERATING HIGHLIGHTS
Adjusted net income $8,357 $5,381 $27,766 $21,297
Adjusted net income per
average
common share:
Basic 0.46 0.30 1.53 1.19
Diluted 0.46 0.30 1.53 1.18
Annualized return on
average assets (1) 1.51% 1.02% 1.31% 1.03%
Annualized return on
average tangible
common equity (2) 34.62% 22.40% 29.29% 22.22%
Annualized return on
average stated
common equity (3) 27.76% 18.07% 23.46% 17.93%
Net interest margin, tax-
equivalent basis 4.49% 4.50% 4.63% 4.60%
Common shares outstanding:
Period end 18,106 18,095 18,106 18,095
Average Basic 18,106 17,938 18,105 17,906
Average Diluted 18,157 18,052 18,126 18,123
(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 Twelve Months Ended
December 31, December 31,
------------------ -------------------
2009 2008 2009 2008
------ ------ ------ ------
BALANCE SHEET HIGHLIGHTS
Period End Balances
Investment securities $737,065 $793,924 $737,065 $793,924
Loans held for sale 33,889 23,403 33,889 23,403
Loans held in portfolio,
net of unearned
discount 1,195,415 1,184,585 1,195,415 1,184,585
Federal Reserve Bank
and Federal Home Loan
Bank stock, at cost 8,482 12,705 8,482 12,705
Total earning assets 2,011,809 2,028,566 2,011,809 2,028,566
Allowance for loan
losses 19,872 16,010 19,872 16,010
Total assets 2,165,403 2,179,101 2,165,403 2,179,101
Demand deposits 546,337 464,585 546,337 464,585
Savings, NOW and
money market deposits 592,015 564,205 592,015 564,205
Time deposits 442,315 329,034 442,315 329,034
Customer repurchase
agreements 21,048 44,334 21,048 44,334
Other short-term
borrowings 110,806 319,070 110,806 319,070
Long-term
borrowings 155,774 175,774 155,774 175,774
Shareholders' equity 161,950 160,480 161,950 160,480
Average Balances
Investment securities $741,238 $739,781 $719,485 $744,169
Loans held for sale 34,327 20,423 41,225 23,286
Loans held in portfolio,
net of unearned
discount 1,191,329 1,163,074 1,154,041 1,120,362
Federal Reserve Bank
and Federal Home Loan
Bank stock 8,854 14,201 9,487 11,908
Total earning assets 2,033,448 1,944,213 1,961,042 1,905,896
Total assets 2,192,522 2,092,964 2,114,220 2,066,628
Demand deposits 492,305 430,660 441,087 427,105
Savings, NOW and
money market deposits 583,454 577,306 562,780 522,807
Time deposits 462,183 346,035 375,742 451,031
Customer repurchase
agreements 63,200 96,779 72,892 89,602
Other short-term
borrowings 109,465 234,722 198,183 190,238
Long-term borrowings 164,035 175,774 174,981 163,479
Shareholders' equity 159,461 122,557 158,225 119,791
ASSET QUALITY HIGHLIGHTS
Period End
Net charge-offs $7,048 $1,918 $23,334 $6,388
Nonaccrual loans 17,977 7,344 17,977 7,344
Other real estate
owned 1,385 1,544 1,385 1,544
Nonperforming assets 19,362 8,888 19,362 8,888
Nonaccrual loans/
loans (1) 1.46% 0.61% 1.46% 0.61%
Nonperforming
assets/assets 0.89% 0.41% 0.89% 0.41%
Allowance for
loan losses/loans (2) 1.66% 1.35% 1.66% 1.35%
Allowance for loan
losses/nonaccrual loans 110.54% 218.00% 110.54% 218.00%
CAPITAL RATIOS
Period End
Tier 1 risk based 11.50% 12.73% 11.50% 12.73%
Total risk based 12.75% 13.89% 12.75% 13.89%
Leverage 8.06% 8.59% 8.06% 8.59%
Book value per
common share
(period end) $6.73 $6.69 $6.73 $6.69
(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)
December 31,
-----------
2009 2008
--------- ---------
ASSETS
Cash and due from banks $24,911 $31,832
Interest-bearing deposits with other banks 36,958 13,949
Investment securities
Available for sale (at estimated fair value) 346,526 492,797
Held to maturity (at amortized cost) 390,539 301,127
--------- ---------
Total investment securities 737,065 793,924
--------- ---------
Loans held for sale 33,889 23,403
--------- ---------
Loans held in portfolio, net of unearned discounts 1,195,415 1,184,585
Less allowance for loan losses 19,872 16,010
--------- ---------
Loans held in portfolio, net 1,175,543 1,168,575
--------- ---------
Federal Reserve Bank and Federal Home Loan
Bank stock, at cost 8,482 12,705
Customers' liability under acceptances 27 95
Goodwill 22,901 22,901
Premises and equipment, net 9,658 10,668
Other real estate 1,385 1,544
Accrued interest receivable 9,001 8,917
Cash surrender value of life insurance policies 49,009 45,845
Other assets 56,574 44,743
--------- ---------
$2,165,403 $2,179,101
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Demand $546,337 $464,585
Savings, NOW and money market 592,015 564,205
Time 442,315 329,034
--------- ---------
Total deposits 1,580,667 1,357,824
Securities sold under agreements to
repurchase - customers 21,048 44,334
Securities sold under agreements to
repurchase - dealers 0 0
Federal funds purchased 41,000 131,000
Commercial paper 17,297 11,732
Short-term borrowings - FHLB 0 75,000
Short-term borrowings - FRB 50,000 100,000
Short-term borrowings - other 2,509 1,338
Long-term borrowings - FHLB 130,000 150,000
Long-term borrowings - subordinated debentures 25,774 25,774
Acceptances outstanding 27 95
Accrued interest payable 1,291 2,046
Due to factored clients 82,401 50,621
Accrued expenses and other liabilities 51,439 68,857
--------- ---------
Total liabilities 2,003,453 2,018,621
Shareholders' equity 161,950 160,480
--------- ---------
$2,165,403 $2,179,101
========== ==========
MEMORANDA
Available for sale securities - amortized
cost $345,718 $489,880
Held to maturity securities - estimated
fair value 396,149 305,628
Shares outstanding
Common issued 22,226,425 22,202,419
Common in treasury 4,119,934 4,107,191
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 Twelve Months
Ended Ended
December 31, December 31,
-------------- ---------------
2009 2008 2009 2008
------ ------ ------- -------
INTEREST INCOME
Loans $17,948 $19,237 $71,788 $80,445
Investment securities -
available for sale 3,690 5,602 17,441 21,264
Investment securities - held
to maturity 4,608 3,664 16,093 15,718
FRB and FHLB stock 126 94 513 594
Federal funds sold 0 0 0 8
Deposits with other banks 39 12 85 42
------ ------ ------- -------
Total interest income 26,411 28,609 105,920 118,071
------ ------ ------- -------
INTEREST EXPENSE
Savings, NOW and money market
deposits 950 1,693 3,890 6,403
Time deposits 1,851 2,671 7,999 15,105
Securities sold u/a/r - customers 71 348 353 1,855
Securities sold u/a/r - dealers 0 12 0 1,127
Federal funds purchased 8 123 51 899
Commercial paper 12 50 67 461
Short-term borrowings - FHLB 0 313 11 1,309
Short-term borrowings - FRB 42 45 398 47
Short-term borrowings - other 0 7 0 35
Long-term borrowings - FHLB 978 1,147 4,432 4,053
Long-term subordinated debentures 524 524 2,094 2,094
------ ------ ------- -------
Total interest expense 4,436 6,933 19,295 33,388
------ ------ ------- -------
Net interest income 21,975 21,676 86,625 84,683
Provision for loan losses 7,950 2,225 27,900 8,325
------ ------ ------- -------
Net interest income after provision
for loan losses 14,025 19,451 58,725 76,358
------ ------ ------ ------
NONINTEREST INCOME
Accounts receivable management/
factoring commissions and
other fees 5,222 4,001 18,320 15,713
Service charges on deposit accounts 1,647 1,389 5,943 5,418
Trade finance income 480 412 1,891 1,670
Other customer related service
charges and fees 204 285 929 1,121
Mortgage banking income 2,324 1,949 9,476 8,619
Trust fees 84 176 450 571
Income from life insurance policies 270 275 1,098 1,127
Securities gains 401 0 5,561 0
Other than temporary losses 0 0 0 (1,684)
(Loss)/Gain on sale of OREO (71) 35 (32) (326)
Other income 252 291 514 1,071
------ ------ ------- -------
Total noninterest
income 10,813 8,813 44,150 33,300
------ ------ ------- -------
NONINTEREST EXPENSES
Salaries 9,941 10,067 39,875 38,523
Employee benefits 3,142 2,394 12,293 9,893
------ ------ ------- -------
Total personnel expense 13,083 12,461 52,168 48,416
Occupancy and equipment
expenses, net 2,897 2,663 11,278 11,365
Advertising and marketing 571 1,186 3,167 3,914
Professional fees 277 1,991 5,147 7,873
Communications 370 446 1,665 1,757
Deposit insurance 1,094 239 4,153 751
Other expenses 2,881 2,517 10,967 10,400
------ ------ ------- -------
Total noninterest
expenses 21,173 21,503 88,545 84,476
------ ------ ------- -------
Income before income taxes 3,665 6,761 14,330 25,182
Provision for income taxes 1,028 2,712 4,908 9,176
------ ------ ------- -------
Net income 2,637 4,049 9,422 16,006
Dividends on preferred shares
and accretion 648 102 2,773 102
------ ------ ------- -------
Net income available to common
shareholders $1,989 $3,947 $6,649 $15,904
====== ====== ======= =======
Page 10 of 19
STERLING BANCORP
Consolidated Statements of Income
(Unaudited)
(dollars in thousands, except per share data)
(continued)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ -------------------
2009 2008 2009 2008
--------- ------- --------- ---------
Average number of common
shares outstanding
Basic 18,106,491 17,937,557 18,104,619 17,905,997
Diluted 18,157,339 18,052,151 18,126,333 18,122,878
Net income available to
common shareholders
per average common share
Basic 0.11 0.22 0.37 0.89
Diluted 0.11 0.22 0.37 0.88
Dividends per common share 0.09 0.19 0.56 0.76
NOTE: Certain reclassifications have been made to prior period's
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 Twelve Months
Ended Ended
December 31, December 31,
--------------- ---------------
2009 2008 2009 2008
----- ------ ------- -------
Net income $2,637 $4,049 $9,422 $16,006
Other comprehensive
income, net of tax:
Unrealized holding gains
(losses) on securities,
arising during the period (1,313) 6,891 3,039 360
Reclassification adjustment
for securities (gains) losses
included in net income (219) (3) (3,037) 920
Pension liability adjustment 1,935 (7,613) 1,935 (7,613)
Amortization of:
Prior service cost 9 9 36 36
Net actuarial losses 483 161 1,887 850
----- ------ ------- -------
Comprehensive income $3,532 $3,494 $13,282 $10,559
====== ====== ======= =======
STERLING BANCORP
Consolidated Statements of Changes in Shareholders' Equity
(Unaudited)
(in thousands)
Three Months Twelve Months
Ended December 31, Ended December 31,
---------------- ------------------
2009 2008 2009 2008
------ ------- ------- -------
Balance, at beginning of
period $160,538 $118,345 $160,480 $121,071
Net income for period 2,637 4,049 9,422 16,006
Preferred shares issued
in connection with the
US Treasury Capital
Purchase Program 0 39,385 0 39,385
Warrants to purchase
common shares 0 2,615 0 2,615
Issuance costs of
preferred shares and
warrants 0 (85) 0 (85)
Common shares issued under
stock incentive plan and
related tax benefits 0 2,553 209 10,425
Stock option compensation
expense 33 33 132 132
Cash dividends-Common shares (1,628) (3,426) (10,131) (13,675)
Cash dividends-Preferred
shares (525) 0 (1,878) 0
Surrender of shares issued
under incentive compensation
plan 0 (2,434) (144) (9,221)
Change in net unrealized
holding gains (losses)
on securities (1,313) 6,891 3,039 360
Reclassification adjustment
for securities (gains)
losses included in net
income (219) (3) (3,037) 920
Pension liability adjustment 1,935 (7,613) 1,935 (7,613)
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 36 36
Net actuarial losses 483 161 1,887 850
------- -------- -------- --------
Balance, at end of period $161,950 $160,480 $161,950 $160,480
======== ======== ======== ========
Page 12 of 19
STERLING BANCORP
Average Balance Sheets [1]
(Unaudited)
(dollars in thousands)
Three Months Ended
December 31, 2009 December 31, 2008
------------------------- -------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
------------------------- -------------------------
Assets
Interest-bearing
deposits with
other banks $57,700 $39 0.26% $6,734 $12 0.74%
--------- ----- ----- -------- ----- -----
Investment
securities -
available for sale 320,955 3,471 4.33 409,403 5,389 5.26
Investment
securities -held
to maturity 346,114 4,096 4.73 307,372 3,664 4.77
Investment
securities -tax
exempt [2] 74,169 1,124 6.06 23,006 333 5.80
--------- ----- ----- -------- ----- ------
Total investment
securities 741,238 8,691 4.69 739,781 9,386 5.08
--------- ----- ----- -------- ----- ------
FRB and FHLB
stock [2] 8,854 127 5.73 14,201 95 2.67
Loans, net of
unearned
discount [3] 1,225,656 17,948 6.13 1,183,497 19,237 6.62
--------- ----- ----- -------- ------ -----
Total Interest-
Earning
Assets [2] 2,033,448 26,805 5.40% 1,944,213 28,730 5.96%
------ ====== ------ =====
Cash and due from
banks 34,187 39,061
Allowance for loan
losses (21,179) (16,457)
Goodwill 22,901 22,901
Other 123,165 103,246
---------- ----------
Total Assets $2,192,522 $2,092,964
========== ==========
Liabilities and
Shareholders'
Equity
Interest-bearing
deposits Domestic
Savings $17,736 3 0.07% $17,945 11 0.25%
NOW 240,447 220 0.36 215,619 306 0.56
Money market 325,271 727 0.89 343,742 1,376 1.59
Time 461,604 1,849 1.59 345,458 2,669 3.08
Foreign
Time 579 2 1.09 577 2 1.10
------- ----- ------- -----
Total Interest-
Bearing
Deposits 1,045,637 2,801 1.06 923,341 4,364 1.88
--------- ----- ------- -----
Borrowings
Securities sold
u/a/r -
customers 63,200 71 0.45 96,779 348 1.43
Securities sold
u/a/r - dealers 0 0 0.00 1,909 12 2.44
Federal funds
purchased 24,141 8 0.1 75,362 123 0.64
Commercial
paper 15,952 12 0.31 12,248 50 1.62
Short-term
borrowings - FHLB 0 0 0.00 108,261 313 1.15
Short-term
borrowings - FRB 67,120 42 0.25 34,587 45 0.51
Short-term
borrowings -
other 2,252 0 0.00 2,355 7 1.28
Long-term
borrowings - FHLB 138,261 978 2.81 150,000 1,147 3.04
Long-term
borrowings -
sub debt 25,774 524 8.38 25,774 524 8.38
------ --- ------ ---
Total Borrowings 336,700 1,635 1.94 507,275 2,569 2.02
------- ----- ------- -----
Total Interest-
Bearing
Liabilities 1,382,337 4,436 1.28% 1,430,616 6,933 1.93%
--------- ----- ==== --------- ----- ====
Noninterest-bearing
demand deposits 492,305 430,660
Other liabilities 158,419 109,131
------- -------
Total
Liabilities 2,033,061 1,970,407
Shareholders'
equity 159,461 122,557
------- -------
Total
Liabilities and
Shareholders'
Equity $2,192,522 $2,092,964
========== ==========
Net interest
income/spread [2] 22,369 4.12% 21,797 4.03%
==== ====
Net yield on
interest-
earning assets 4.49% 4.50%
==== ====
Less: Tax-
equivalent
adjustment 394 121
--- ---
Net interest income $21,975 $21,676
======= =======
[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)
Twelve Months Ended
December 31, 2009 December 31, 2008
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
------- -------- ------- ------- -------- -------
Assets
Interest-bearing
deposits with
other banks $36,804 $85 0.23% $5,727 $42 0.74%
-------- ------ ---- ------- ------ -----
Investment
securities -
available for sale 350,069 16,575 4.73 390,337 20,453 5.24
Investment
securities - held
to maturity 320,655 15,070 4.70 332,033 15,718 4.73
Investment
securities - tax
exempt [2] 48,761 2,907 5.96 21,799 1,268 5.82
-------- ------ ---- ------- ------ -----
Total investment
securities 719,485 34,552 4.80 744,169 37,439 5.03
-------- ------ ---- ------- ------ -----
FRB and FHLB
stock [2] 9,487 516 5.45 11,908 598 5.02
Federal funds sold 0 0 0.00 444 8 1.84
Loans, net of
unearned
discount [3] 1,195,266 71,788 6.38 1,143,648 80,445 7.37
-------- ------ ---- ------- ------ -----
Total Interest-
Earning
Assets [2] 1,961,042 106,941 5.65% 1,905,896 118,532 6.40%
-------- ------ ---- ------- ------ -----
Cash and due from
banks 31,118 49,269
Allowance for loan
losses (19,107) (16,087)
Goodwill 22,901 22,901
Other 118,266 104,649
------- -------
Total Assets $2,114,220 $2,066,628
========== ==========
Liabilities and
Shareholders'
Equity
Interest-bearing
deposits
Domestic
Savings $18,012 18 0.10% $18,460 59 0.32%
NOW 211,121 620 0.29 239,944 2,306 0.96
Money market 333,647 3,252 0.97 264,403 4,038 1.53
Time 375,164 7,993 2.13 450,455 15,099 3.35
Foreign
Time 578 6 1.09 576 6 1.09
-------- ------ ---- ------- ------ -----
Total Interest-
Bearing Deposits 938,522 11,889 1.27 973,838 21,508 2.21
-------- ------ ---- ------- ------ -----
Borrowings
Securities sold
u/a/r - customers 72,892 353 0.48 89,602 1,855 2.07
Securities sold
u/a/r - dealers 0 0 0.00 41,808 1,127 2.69
Federal funds
purchased 25,075 51 0.21 50,368 899 1.79
Commercial
paper 13,107 67 0.51 17,806 461 2.59
Short-term
borrowings - FHLB 3,411 11 0.31 69,708 1,309 1.88
Short-term
borrowings - FRB 154,726 398 0.26 8,841 47 0.53
Short-term
borrowings - other 1,864 0 0.00 1,707 35 2.04
Long-term
borrowings - FHLB 149,207 4,432 2.97 137,705 4,053 2.94
Long-term
borrowings - sub
debt 25,774 2,094 8.38 25,774 2,094 8.38
-------- ------ ---- ------- ------ -----
Total Borrowings 446,056 7,406 1.66 443,319 11,880 2.68
-------- ------ ---- ------- ------ -----
Total Interest-
Bearing
Liabilities 1,384,578 19,295 1.39% 1,417,157 33,388 2.36%
-------- ------ ==== ------- ------ -----
Noninterest-
bearing demand
deposits 441,087 427,105
Other liabilities 130,330 102,575
------- -------
Total Liabilities 1,955,995 1,946,837
Shareholders'
equity 158,225 119,791
------- -------
Total Liabilities
and Shareholders'
Equity $2,114,220 $2,066,628
========== ==========
Net interest
income/spread [2] 87,646 4.26% 85,144 4.04%
==== ====
Net yield on
interest-earning
assets 4.63% 4.60%
==== ====
Less: Tax-equivalent
adjustment 1,021 461
----- ---
Net interest income $86,625 $84,683
======= =======
[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
December 31, 2009
-----------------
Volume Rate Net [2]
------ ---- --------
INTEREST INCOME
Interest-bearing deposits with
other banks $40 $(13) $27
--- ---- ---
Investment securities - available for
sale (1,055) (863) (1,918)
Investment securities - held
to maturity 463 (31) 432
Investment securities - tax exempt 775 16 791
--- -- ---
Total investment securities 183 (878) (695)
--- ---- ----
FRB and FHLB stock (46) 78 32
Loans, net of unearned
discounts [3] 531 (1,820) (1,289)
--- ------ ------
TOTAL INTEREST INCOME $708 $(2,633) $(1,925)
==== ======= =======
INTEREST EXPENSE
Interest-bearing deposits
Domestic
Savings $0 $(8) $(8)
NOW 32 (118) (86)
Money market (71) (578) (649)
Time 728 (1,548) (820)
Foreign
Time 0 0 0
--- ------ ------
Total interest-bearing deposits 689 (2,252) (1,563)
--- ------ ------
Borrowings
Securities sold under agreements
to repurchase - customers (93) (184) (277)
Securities sold under agreements
to repurchase - dealers (12) 0 (12)
Federal funds purchased (53) (62) (115)
Commercial paper 11 (49) (38)
Short-term borrowings - FHLB (313) 0 (313)
Short-term borrowings - FRB 28 (31) (3)
Short-term borrowings - other 0 (7) (7)
Long-term borrowings - FHLB (86) (83) (169)
Long-term borrowings - subordinated
debentures 0 0 0
- - -
Total borrowings (518) (416) (934)
---- ---- ----
---- ------- -------
TOTAL INTEREST EXPENSE $171 $(2,668) $(2,497)
==== ======= =======
NET INTEREST INCOME $537 $35 $572
==== === ====
[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 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)
Twelve Months Ended
December 31, 2009
--------------------
Volume Rate Net [2]
------ ---- -------
INTEREST INCOME
Interest-bearing deposits with
other banks $90 $(47) $43
--- ---- ---
Investment securities - available for
sale (2,021) (1,857) (3,878)
Investment securities - held to
maturity (553) (95) (648)
Investment securities - tax exempt 1,607 32 1,639
----- ---- -----
Total investment securities (967) (1,920) (2,887)
----- ---- -----
FRB and FHLB stock (130) 48 (82)
Federal funds sold (8) 0 (8)
Loans, net of unearned discounts [3] 3,343 (12,000) (8,657)
----- ------- ------
TOTAL INTEREST INCOME $2,328 $(13,919) $(11,591)
====== ======== ========
INTEREST EXPENSE
Interest-bearing deposits
Domestic
Savings $(1) $(40) $(41)
NOW (252) (1,434) (1,686)
Money market 900 (1,686) (786)
Time (2,260) (4,846) (7,106)
Foreign
Time 0 0 0
----- ---- -----
Total interest-bearing deposits (1,613) (8,006) (9,619)
----- ---- -----
Borrowings
Securities sold under agreements
to repurchase - customers (297) (1,205) (1,502)
Securities sold under agreements to
repurchase - dealers (1,127) 0 (1,127)
Federal funds purchased (308) (540) (848)
Commercial paper (98) (296) (394)
Short-term borrowings - FHLB (692) (606) (1,298)
Short-term borrowings - FRB 387 (36) 351
Short-term borrowings - other 0 (35) (35)
Long-term borrowings - FHLB 337 42 379
Long-term borrowings - subordinated
debentures 0 0 0
----- ---- -----
Total borrowings (1,798) 2,676) (4,474)
----- ----- ------
------- -------- --------
TOTAL INTEREST EXPENSE $(3,411) $(10,682) $(14,093)
======= ======== ========
NET INTEREST INCOME $5,739 $(3,237) $2,502
======== ======== ========
[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 Ended Twelve Months Ended
December 31, December 31,
------------------ --------------------
2009 2008 2009 2008
------- ------- ------- --------
Adjusted net income
GAAP net income $2,637 $4,049 $9,422 $16,006
------ ------ ------ -------
Adjustments to GAAP net income:
Provision for loan losses 7,950 2,225 27,900 8,325
Tax effect 2,230 893 9,556 3,034
----- ------ ------ -------
Total adjustments to GAAP net
income: 5,720 1,332 18,344 5,291
----- ------ ------ -------
Adjusted net income $8,357 $5,381 $27,766 $21,297
====== ====== ======= =======
Adjusted per share data
Adjusted net income $8,357 $5,381 $27,766 $21,297
====== ====== ======= =======
Average number of basic shares
outstanding 18,106 17,938 18,105 17,906
Basic earnings, as adjusted $0.46 $0.30 $1.53 $1.19
Average number of diluted shares
outstanding 18,157 18,052 18,126 18,123
Diluted earnings, as adjusted $0.46 $0.30 $1.53 $1.18
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 tangible common equity excludes average preferred equity,
average goodwill and average other intangible assets. Adjusted average
stated common equity excludes average preferred equity. Adjusted return on
average tangible common equity is calculated by dividing adjusted net
income by adjusted average tangible common equity. Adjusted return on
average stated common equity is calculated by dividing adjusted net income
(annualized) by adjusted average stated 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 Ended Twelve Months Ended
December 31, December 31,
--------------- ---------------
2009 2008 2009 2008
---- ---- ---- ----
Adjusted average tangible
common equity
Average shareholders' equity $159,461 $122,557 $158,225 $119,791
Less:
Preferred equity 40,039 4,108 39,851 1,032
Goodwill and intangible assets 23,654 22,901 23,565 22,901
------- -------- -------- --------
Average tangible common equity $95,768 $95,548 $94,809 $95,858
======= ======== ======== ========
Adjusted average stated common equity
Average shareholders' equity $159,461 $122,557 $158,225 $119,791
Less:
Preferred equity 40,039 4,108 39,851 1,032
------- -------- -------- --------
Average stated common equity $119,422 $118,449 $118,374 $118,759
======== ======== ======== ========
Adjusted return on average
tangible common equity
Adjusted net income $8,357 $5,381 $27,766 $21,297
======= ======== ======== ========
Average shareholders' equity 159,461 122,557 158,225 119,791
Less:
Preferred equity 40,039 4,108 39,851 1,032
Goodwill and intangible assets 23,654 22,901 23,565 22,901
------- -------- -------- --------
Average tangible common equity $95,768 $95,548 $94,809 $95,858
======= ======== ======== ========
Adjusted annualized return on
average tangible common equity 34.62% 22.40% 29.29% 22.22%
Adjusted return on average
stated common equity
Adjusted net income $8,357 $5,381 $27,766 $21,297
======= ======== ======== ========
Average shareholders' equity $159,461 $122,557 $158,225 $119,791
Less:
Preferred equity 40,039 4,108 39,851 1,032
------- -------- -------- --------
Average stated common equity $119,422 $118,449 $118,374 $118,759
======== ======== ======== ========
Adjusted annualized return on
average stated common equity 27.76% 18.07% 23.46% 17.93%
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 and other than temporary losses exclude the effect of certain items
that are unusual and/or difficult to predict. The incremental pension
plan 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 Ended Twelve Months Ended
December 31, December 31,
------------------ -------------------
2009 2008 2009 2008
----- ---- ---- ----
Pre-tax, pre-provision income
GAAP pre-tax income $3,665 $6,761 $14,330 $25,182
Plus:
Provision for loan losses 7,950 2,225 27,900 8,325
----- ----- ------ -------
Pre-tax, pre-provision
income $11,615 $8,986 $42,230 $33,507
======= ======= ======= =======
Noninterest income excluding
securities gains and other
than temporary losses
Total noninterest income $10,813 $8,813 $44,150 $33,300
Less (Plus):
Securities gains 401 0 5,561 0
Other than temporary
losses 0 0 0 (1,684)
Noninterest income excluding
securities gains
and other than temporary ------ ------ ------- -------
losses $10,412 $8,813 $38,589 $34,984
======= ======= ======= =======
Adjusted noninterest expenses
Total noninterest expenses $21,173 $21,503 $88,545 $84,476
------- ------- -------- --------
Less:
Special FDIC assessment 0 0 978 0
Incremental pension plan
expense 765 0 2,463 0
Acquired factoring
business 744 0 2,505 0
----- ----- ------ ------
Total adjustments
to noninterest expenses 1,509 0 5,946 0
----- ----- ------ ------
Adjusted noninterest
expenses $19,664 $21,503 $82,599 $84,476
======= ======= ======= =======
Page 19 of 19
SOURCE Sterling Bancorp
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