Quarterly Cash Dividend Of $0.09 Per Share Declared
NEW YORK, Aug. 7 /PRNewswire-FirstCall/ -- Sterling Bancorp (NYSE: STL), the parent company of New York City-based Sterling National Bank, today reported net income of $0.8 million, or $0.04 per diluted share, for the second quarter ended June 30, 2009. The results included an industry-wide FDIC special assessment, the provision for loan losses and an increase in pension expense, which together totaled $5.7 million after taxes, or $0.32 per diluted share. Excluding these items, Sterling's adjusted net income was $6.5 million, or $0.36 per diluted share, for the 2009 second quarter.
Second Quarter 2009 Highlights
- Rising Net Interest Margin. The net interest margin was 4.53%, up from 4.49% a year earlier, benefitting from Sterling's asset-liability management strategies.
- Higher Loan Volume. Average total loans rose 6.3% over the prior year to $1.2 billion, as Sterling continued to serve its customers and community.
- Strengthened Loan Loss Allowance. The allowance for loan losses as a percent of loans in portfolio was increased to 1.56% at June 30, 2009, from 1.33% a year ago.
- Strong Deposit Funding. Demand deposits were $441 million at June 30, 2009, or 34% of total deposits, representing a stable, cost-effective funding source.
- Solid Capital Base. The Company's capital ratios exceeded "well-capitalized" requirements, with total risk-based capital of 12.89% at June 30, 2009.
- Growth Initiative. Sterling's acquisition of a factoring, import trade finance and accounts receivable management business in April 2009 resulted in solid growth in this category.
- Expense Control. Noninterest expenses, excluding the industry-wide FDIC special assessment, additional costs associated with the acquired factoring business and the increase in pension expenses, were up only 1.8% from the same quarter of 2008.
Note: Reconciliations of GAAP net income, including per share data, and noninterest expenses to adjusted net income, including adjusted per share data, and adjusted noninterest expenses are presented on page 17.
Page 1 of 18
Management Comments
"During a period of unprecedented economic distress that has had a devastating impact on many consumers and businesses, Sterling has shown its ability to operate profitably, to grow our business by serving our customers, and to maintain a strong capital foundation," stated Louis J. Cappelli, Sterling's Chairman and Chief Executive Officer. "Our financial performance for the second quarter of 2009 was demonstrated by our adjusted net income of $6.5 million, or $0.36 per diluted share, which was 16.6% higher than adjusted net income for the year-ago period."
"From the onset of this recessionary period, we have focused on strategies designed to ensure Sterling's strength, staying power and long-term potential. We have maintained capital levels in excess of well-capitalized requirements. We have followed an asset-liability management approach that has produced cost-effective funding and a widening net interest margin. We have kept firm control of expenses. And we have used our strong balance sheet to support continued lending to businesses and individuals."
"We believe Sterling is positioned to build on and benefit from the opportunities arising from the marketplace turmoil: to capture market share based on our competitive strength, to acquire complementary operations, and to add to our team of talented professionals. For example, we see an opportunity to gain market share among small businesses due to the liquidity problems of a major lender in this space. Early in the second quarter we expanded our range of services by acquiring a factoring, import trade financing and accounts receivable management business that now operates as Sterling Trade Capital. And we continue to attract new team members who bring strong business development skills and solid management ability. We also believe that other opportunities will be available to Sterling as a result of our strong capital, sharply focused business model and commitment to superior customer service," Mr. Cappelli said.
Second Quarter 2009 Financial Results
Adjusted net income was $6.5 million, or $0.36 per diluted share, for the 2009 second quarter, before the industry-wide FDIC special assessment, loan loss provision and higher pension expense. Including these items, net income for the 2009 second quarter was $0.8 million, or $0.04 per diluted share. For the second quarter of 2008, net income was $4.2 million, or $0.23 per diluted share.
Net interest income, on a tax-equivalent basis, was $21.5 million for the 2009 second quarter, compared to $21.6 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 certificates of deposit. These benefits were offset by lower yield on loans and investment securities due to market rates, lower investment securities balances and higher borrowed funds balances.
Net interest margin increased to 4.53% for the 2009 second quarter, on a tax-equivalent basis, compared to 4.49% for the second quarter of 2008.
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Noninterest income rose to $10.8 million for the 2009 second quarter, compared to $8.6 million a year ago. Higher income from accounts receivable management and factoring services accounted for much of this increase, largely due to Sterling's acquisition of a factoring, import trade financing and accounts receivable management business early in the 2009 second quarter. Noninterest income in the 2009 period also reflected gains on sales of securities resulting from a strategy to decrease the average maturity of the securities portfolio.
Noninterest expenses totaled $24.1 million for the 2009 second quarter. The industry-wide FDIC special assessment, additional expenses associated with the acquired factoring business, and an increase in pension expense reflecting the impact of a lower return on plan assets due to market conditions accounted for $2.6 million of the $3.0 million total increase in noninterest expense versus the 2008 period. Excluding such items, noninterest expense for the 2009 second quarter increased only 1.8% from the prior year.
The provision for income taxes was $0.4 million for the 2009 second quarter, compared to $2.5 million for the same period of 2008.
First Half 2009 Financial Results
Adjusted net income was $13.6 million, or $0.75 per diluted share, for the first half of 2009, before the industry-wide FDIC special assessment, loan loss provision and higher pension expense. Including these items, net income was $4.4 million, or $0.24 per diluted share, for the first half of 2009. For the same period of 2008, net income was $8.2 million, or $0.45 per diluted share.
Net interest income, on a tax-equivalent basis, rose to $43.0 million for the first half of 2009, from $41.6 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 4.55% for the first six months of 2009, on a tax-equivalent basis, compared to 4.49% for the same period of 2008.
Noninterest income rose to $21.6 million for the first half of 2009, compared to $17.2 million a year ago. The increase was primarily due to higher income from accounts receivable management and factoring services, as well as gains on sales of securities due to a strategy to shorten the average maturity of the Company's investment portfolio.
Noninterest expenses were $44.2 million for the 2009 period. The industry-wide FDIC special assessment, additional expenses associated with the acquired factoring business, and an increase in pension expense reflecting the impact of a lower return on plan assets accounted for $2.8 million of the $2.9 million total increase in noninterest expense versus the 2008 period.
The provision for income taxes was $2.7 million for the 2009 first half, compared to $4.9 million for the same period of 2008.
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Earning Assets and Deposits
Average total loans were $1,204.6 million for the 2009 second quarter, an increase of 6.3% from a year ago. Sterling experienced growth in a range of lending areas, with particularly strong increases in asset-based lending and factoring. 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 88.9% at June 30, 2009.
Investment securities averaged $679.2 million for the second quarter of 2009, compared to $781.2 million a year earlier. The decrease reflected calls and principal repayments, as well as the sale of certain investment securities as part of the Company's strategy to decrease the average life of the portfolio, partially offset by investments made during the recent period.
Demand deposits totaled $440.6 million at June 30, 2009 and represented 34% of total deposits, one of the highest ratios of demand to total deposits in the industry.
Asset Quality
In the 2009 second quarter recessionary forces continued to impact the national economy. The recession has exerted disproportionately heavy pressure on the small and midsized businesses that constitute much of Sterling's traditional customer base and, in particular, provide most of the Company's leasing business. Consequently, while the Company has a track record of strict underwriting standards and historically strong asset quality, it has not been immune to the unprecedented economic turmoil, and since the first quarter of 2009 has experienced an uncharacteristic increase in nonperforming assets and net charge-offs in the lease finance portfolio.
During 2009 the allowance for loan losses increased $2.1 million from $16.0 million at December 31, 2008 primarily due to an increase of $4.0 million in the allowance allocated to lease financing, partially offset by a reduction of $1.0 million and $0.9 million in the allowance allocated to commercial and industrial and residential mortgage components, respectively. The allowance allocated to lease financing increased primarily as a result of increased losses and nonaccrual levels experienced in that category in 2009. The reduction in allowance allocated to commercial and industrial loans was primarily the result of lower losses experienced in that component of the portfolio in 2009. The reduction in allowance allocated to residential mortgage loans was primarily the result of lower anticipated losses based on the improved quality of loans in the portfolio.
Sterling has taken steps to respond to the challenging conditions affecting much of the lending industry. The Company increased its provision for loan losses to $6.8 million in the 2009 second quarter, from $2.2 million a year ago. The 2009 second quarter provision exceeded net charge-offs for the period by approximately $1.2 million. The allowance for loan losses has been strengthened to 1.56% of loans held in portfolio at June 30, 2009, from 1.33% of loans held in portfolio a year earlier. In addition, management has further strengthened underwriting standards and enhanced its credit
Page 4 of 18
evaluation criteria in response to the unprecedented sharp downturn in the economy, and has intensified its collection activities.
Total nonperforming assets were $21.7 million at June 30, 2009, compared to $17.6 million at March 31, 2009. The ratio of nonperforming assets to total assets was 1.02% at June 30, 2009, compared to 0.83% at March 31, 2009. Net charge-offs were $5.6 million for the 2009 second quarter, versus $5.0 million for the 2009 first quarter. As noted earlier, most of the increase in nonperforming assets during 2009 occurred in the lease financing portfolio, as worsening economic conditions have had a disproportionate impact on the small businesses that comprise a significant portion of the Company's leasing business. Sterling has historically maintained outstanding asset quality in the leasing category, reflecting the underwriting criteria that the Company has consistently employed over many years. In response to the current challenging conditions, the Company has reduced its balances in the leasing category by approximately 11%, or $32 million, since the end of 2008.
Capital
Sterling's capital ratios exceeded all regulatory requirements for well-capitalized institutions at June 30, 2009. The Tier 1 risk-based capital ratio at that date was 11.67% (compared to a requirement of 6.00%), total risk-based capital was 12.89% (requirement of 10.00%), and the Tier 1 leverage ratio was 8.53% (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.
Dividends
Sterling's Board of Directors has declared a cash dividend of $0.09 per common share, payable on September 30, 2009, to shareholders of record as of September 15, 2009. This continues a track record of cash dividends that extends to 255 consecutive quarters or more than 63 years. The dividend for the previous quarter was $0.19 per share.
"In the current environment, the ability to maintain a fortress balance sheet, buttressed by a solid capital base, is of vital importance," Mr. Cappelli noted. "Lowering our dividend was a responsible measure designed to further reinforce the strong capital foundation needed to manage, grow and prosper at a time of great economic uncertainty. In addition, the incremental capital will enhance our financial flexibility and support ongoing investments in the growth of Sterling's business, thereby contributing to our long-term shareholder value."
"As a profitable, well-capitalized and growing institution, we have made this decision from a position of strength, after giving careful consideration to the best interests of our shareholders and our desire to be optimally positioned for both the challenges and opportunities of the present business cycle. We believe that the dividend adjustment is
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consistent with our obligation and commitment to keep the Company healthy, strong and growing," said Mr. Cappelli.
Conference Call
Sterling Bancorp will host a teleconference call for the financial community on August 7, 2009, at 10:00 a.m. Eastern Daylight Time to discuss the 2009 second quarter financial results. To access the conference call live, interested parties may dial 800-230-1059 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 Friday, August 7, 2009 until 11:59 p.m. Eastern Daylight Time on Friday, August 21, 2009. To access the replay by telephone, interested parties may dial 800-475-6701 and enter the Access Code 107432.
About Sterling Bancorp
Sterling Bancorp (NYSE: STL) 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.
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 the Company is positioned to build on and benefit from the opportunities arising from the marketplace turmoil, to capture market share based on its competitive strength, to acquire complementary operations, to add to the Company's team of professionals, and to gain market share among small businesses, that other opportunities will be available to the Company as a result of its strong capital, sharply focused business model and commitment to superior customer service, and that the incremental capital resulting from reduction of the dividend on its common shares will enhance the Company's financial flexibility and support ongoing investments in the growth of its business, thereby contributing to its long-term shareholder value, 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.
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STERLING BANCORP
Consolidated Financial Highlights
(Unaudited)
(dollars and shares in thousands, except per share data)
Three Months Six Months
Ended June 30, Ended June 30,
------------ ----------------
2009 2008 2009 2008
---- ---- ---- ----
GAAP OPERATING HIGHLIGHTS
Net income $775 $4,170 $4,387 $8,172
Dividends on preferred shares
and accretion 637 0 1,479 0
Net income available to common
shareholders 138 4,170 2,908 8,172
Net income per average
common share:
Basic 0.04 0.23 0.24 0.46
Diluted 0.04 0.23 0.24 0.45
Net income available to common
shareholders, per average
common share:
Basic 0.01 0.23 0.16 0.46
Diluted 0.01 0.23 0.16 0.45
Annualized return on average
assets (1) 0.15% 0.81% 0.43% 0.81%
Annualized return on average
tangible common equity (2) 3.26% 17.14% 9.30% 16.84%
Annualized return on
average stated
common equity (3) 2.61% 13.89% 7.47% 13.64%
Net interest margin, tax-
equivalent basis 4.53% 4.49% 4.55% 4.49%
Common shares outstanding:
Period end 18,106 17,989 18,106 17,989
Average Basic 18,101 17,904 18,100 17,885
Average Diluted 18,145 18,037 18,219 18,173
NON-GAAP OPERATING HIGHLIGHTS
Adjusted net income $6,457 $5,536 $13,624 $10,760
Adjusted net income per average
common share:
Basic 0.36 0.31 0.75 0.60
Diluted 0.36 0.31 0.75 0.59
Annualized return on average
assets (1) 1.26% 1.07% 1.33% 1.07%
Annualized return on average
tangible common equity (2) 27.20% 22.76% 28.89% 22.17%
Annualized return on
average stated
common equity (3) 21.74% 18.44% 23.18% 17.96%
Net interest margin, tax-
equivalent basis 4.53% 4.49% 4.55% 4.49%
Common shares outstanding:
Period end 18,106 17,989 18,106 17,989
Average Basic 18,101 17,904 18,100 17,885
Average Diluted 18,145 18,037 18,219 18,173
(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.
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STERLING BANCORP
Consolidated Financial Highlights
(Unaudited)
(dollars in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2009 2008 2009 2008
---- ---- ---- ----
BALANCE SHEET HIGHLIGHTS
Period End Balances
Investment securities $717,731 $767,806 $717,731 $767,806
Loans held for sale 57,385 24,410 57,385 24,410
Loans held in portfolio,
net of unearned
discount 1,160,429 1,160,333 1,160,429 1,160,333
Total earning assets 1,941,156 1,955,930 1,941,156 1,955,930
Allowance for loan losses 18,134 15,480 18,134 15,480
Total assets 2,125,706 2,128,490 2,125,706 2,128,490
Demand deposits 440,626 459,279 440,626 459,279
Savings, NOW and money
market deposits 532,275 486,516 532,275 486,516
Time deposits 331,766 459,039 331,766 459,039
Customer repurchase
agreements 55,129 64,758 55,129 64,758
Other short-term
borrowings 263,001 261,090 263,001 261,090
Long-term borrowings 175,774 185,774 175,774 185,774
Shareholders' equity 157,721 119,725 157,721 119,725
Average Balances
Investment securities $679,223 $781,249 $714,570 $750,868
Loans held for sale 52,653 31,193 43,101 27,291
Loans held in portfolio,
net of unearned
discount 1,151,915 1,101,843 1,139,887 1,081,520
Total earning assets 1,910,289 1,917,116 1,916,836 1,862,826
Total assets 2,058,931 2,077,112 2,066,378 2,031,632
Demand deposits 417,509 424,658 416,847 422,814
Savings, NOW and money
market deposits 556,407 471,182 569,818 468,027
Time deposits 335,258 508,415 331,844 529,903
Customer repurchase
agreements 77,261 89,187 75,987 85,824
Other short-term
borrowings 228,019 180,870 227,156 157,355
Long-term borrowings 175,774 181,928 175,774 148,082
Shareholders' equity 158,907 120,744 158,224 120,512
ASSET QUALITY HIGHLIGHTS
Period End
Net charge-offs $5,635 $1,611 $10,632 $3,109
Nonaccrual loans 20,606 6,970 20,606 6,970
Other real estate owned 1,105 2,252 1,105 2,252
Nonperforming assets 21,711 9,222 21,711 9,222
Nonaccrual loans/loans (1) 1.69% 0.59% 1.69% 0.59%
Nonperforming assets/
assets 1.02% 0.43% 1.02% 0.43%
Allowance for loan losses/
loans (2) 1.56% 1.33% 1.56% 1.33%
Allowance for loan losses/
nonaccrual loans 88.00% 222.09% 88.00% 222.09%
CAPITAL RATIOS
Period End
Tier 1 risk based 11.67% 9.70% 11.67% 9.70%
Total risk based 12.89% 10.83% 12.89% 10.83%
Leverage 8.53% 6.57% 8.53% 6.57%
Book value per common share
(period end) $6.51 $6.66 $6.51 $6.66
(1) The term "loans" includes loans held for sale and loans held in
portfolio.
(2) The term "loans" includes loans held in portfolio only.
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STERLING BANCORP
Consolidated Balance Sheets
(Unaudited)
(in thousands, except number of shares)
June 30,
--------
2009 2008
---- ----
ASSETS
Cash and due from banks $34,816 $49,995
Interest-bearing deposits with other banks 5,611 881
Federal Funds Sold 0 2,500
Investment securities
Available for sale (at estimated fair
value) 353,736 434,700
Held to maturity (at amortized cost) 363,995 333,106
------- -------
Total investment securities 717,731 767,806
------- -------
Loans held for sale 57,385 24,410
------ ------
Loans held in portfolio, net of unearned
discounts 1,160,429 1,160,333
Less allowance for loan losses 18,134 15,480
------ ------
Loans held in portfolio, net 1,142,295 1,144,853
--------- ---------
Customers' liability under acceptances 180 328
Goodwill 22,901 22,901
Premises and equipment, net 10,041 10,869
Other real estate 1,105 2,252
Accrued interest receivable 7,772 9,877
Cash surrender value of life insurance
policies 47,805 44,379
Other assets 78,064 47,439
------ ------
$2,125,706 $2,128,490
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Demand $440,626 $459,279
Savings, NOW and money market 532,275 486,516
Time 331,766 459,039
------- -------
Total deposits 1,304,667 1,404,834
Securities sold under agreements to
repurchase - customers 55,129 64,758
Securities sold under agreements to
repurchase - dealers 0 72,833
Federal funds purchased 87,000 70,000
Commercial paper 11,739 20,544
Short-term borrowings - FHLB 0 77,000
Short-term borrowings - FRB 160,000 19,000
Short-term borrowings - other 4,262 1,713
Long-term borrowings - FHLB 150,000 160,000
Long-term borrowings - subordinated
debentures 25,774 25,774
Acceptances outstanding 180 328
Accrued interest payable 1,874 2,761
Accrued expenses and other liabilities 167,360 89,220
------- ------
Total liabilities 1,967,985 2,008,765
Shareholders' equity 157,721 119,725
------- -------
$2,125,706 $2,128,490
========== ==========
MEMORANDA
Available for sale securities
- amortized cost $352,631 $443,171
Held to maturity securities
- estimated fair value 370,844 331,037
Shares outstanding
Common issued 22,226,425 21,813,131
Common in treasury 4,119,934 3,824,161
NOTE: Certain reclassifications have been made to prior period's
financial data to conform to current financial statement presentations.
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STERLING BANCORP
Consolidated Statements of Income
(Unaudited)
(dollars in thousands, except per share data)
Three Months Six Months
Ended June 30, Ended June 30,
---------------- ----------------
2009 2008 2009 2008
---- ---- ---- ----
INTEREST INCOME
Loans $18,264 $20,001 $35,816 $40,821
Investment securities -
available for sale 4,335 5,670 9,830 10,382
Investment securities - held
to maturity 3,594 4,034 7,128 8,259
Federal funds sold 0 1 0 1
Deposits with other banks 9 7 19 19
- - -- --
Total interest income 26,202 29,713 52,793 59,482
------ ------ ------ ------
INTEREST EXPENSE
Savings, NOW and money
market deposits 943 1,089 2,068 2,699
Time deposits 2,049 4,034 4,215 9,372
Securities sold u/a/r - customers 88 442 203 1,088
Securities sold u/a/r - dealers 0 416 0 733
Federal funds purchased 7 217 41 579
Commercial paper 17 117 40 312
Short-term borrowings - FHLB 0 311 11 526
Short-term borrowings - FRB 126 1 225 1
Short-term borrowings - other 0 5 1 19
Long-term borrowings - FHLB 1,134 1,085 2,256 1,799
Long-term subordinated debentures 524 524 1,047 1,047
--- --- ----- -----
Total interest expense 4,888 8,241 10,107 18,175
----- ----- ------ ------
Net interest income 21,314 21,472 42,686 41,307
Provision for loan losses 6,800 2,200 13,000 4,150
----- ----- ------ -----
Net interest income after provision
for loan losses 14,514 19,272 29,686 37,157
------ ------ ------ ------
NONINTEREST INCOME
Accounts receivable management/
factoring commissions and
other fees 4,858 3,799 8,101 7,364
Service charges on deposit accounts 1,360 1,331 2,743 2,683
Other customer related service
charges and fees 639 737 1,319 1,412
Mortgage banking income 2,541 2,702 4,647 5,201
Trust fees 117 124 256 259
Income from life insurance policies 290 294 548 563
Gain/(Loss) on sale of OREO 22 (75) 20 (303)
Securities gains/(losses) 874 (507) 3,939 (507)
Other income 97 167 23 572
-- --- -- ---
Total noninterest income 10,798 8,572 21,596 17,244
------ ----- ------ ------
NONINTEREST EXPENSES
Salaries 9,985 9,491 19,974 18,839
Employee benefits 3,268 2,252 5,945 5,088
----- ----- ----- -----
Total personnel expense 13,253 11,743 25,919 23,927
Occupancy and equipment expenses, net 2,903 2,774 5,575 5,783
Advertising and marketing 1,026 1,353 1,680 1,988
Professional fees 1,900 1,874 3,023 3,238
Communications 435 405 866 861
Deposit insurance 1,513 185 1,864 269
Other expenses 3,113 2,796 5,268 5,230
----- ----- ----- -----
Total noninterest
expenses 24,143 21,130 44,195 41,296
------ ------ ------ ------
Income before income taxes 1,169 6,714 7,087 13,105
Provision for income taxes 394 2,544 2,700 4,933
--- ----- ----- -----
Net income 775 4,170 4,387 8,172
Dividends on preferred shares
and accretion 637 0 1,479 0
--- ----- ----- -----
Net income available to common
shareholders $138 $4,170 $2,908 $8,172
==== ====== ====== ======
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STERLING BANCORP
Consolidated Statements of Income
(Unaudited)
(dollars in thousands, except per share data)
(continued)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2009 2008 2009 2008
---- ---- ---- ----
Average number of common
shares outstanding
Basic 18,100,860 17,904,100 18,099,523 17,884,662
Diluted 18,145,090 18,037,377 18,219,450 18,173,427
Net Income per average
common share
Basic $0.04 $0.23 $0.24 $0.46
Diluted 0.04 0.23 0.24 0.45
Net income available to
common shareholders
per average common share
Basic 0.01 0.23 0.16 0.46
Diluted 0.01 0.23 0.16 0.45
Dividends per common share 0.19 0.19 0.38 0.38
NOTE: Certain reclassifications have been made to prior periods'
financial data to conform to current financial statement presentations.
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STERLING BANCORP
Consolidated Statements of Comprehensive Income
(Unaudited)
(in thousands)
Three Months Six Months
Ended June 30, Ended June 30,
------------- ------------
2009 2008 2009 2008
---- ---- ---- ----
Net income $775 $4,170 $4,387 $8,172
Other comprehensive
income, net of tax:
Unrealized holding gains
on securities, arising
during the period 1,667 (5,159) 1,688 (3,804)
Reclassification adjustment
for securities (gains)
losses included in net
income (478) 278 (2,152) 278
Amortization of:
Prior service cost 9 9 18 18
Net actuarial losses 518 230 872 461
------ ----- ------ ------
Comprehensive income $2,491 $(472) $4,813 $5,125
====== ===== ====== ======
STERLING BANCORP
Consolidated Statements of Changes in Shareholders' Equity
(Unaudited)
(in thousands)
Three Months Six Months
Ended June 30, Ended June 30,
---------------- ----------------
2009 2008 2009 2008
---- ---- ---- ----
Balance, at
beginning of period $159,160 $123,579 $160,480 $121,070
Net income for period 775 4,170 4,387 8,172
Common shares issued under
stock incentive
plan and related
tax benefits 0 33 209 6,298
Stock option
compensation expense 33 0 66 0
Cash dividends-Common shares (3,438) (3,415) (6,875) (6,824)
Cash dividends-
Preferred shares (525) 0 (828) 0
Surrender of shares
issued under incentive
compensation plan 0 0 (144) (5,218)
Change in net unrealized
holding gains on available
for sale securities 1,667 (5,159) 1,688 (3,804)
Reclassification adjustment
for securities (gains) losses
included in net income (478) 278 (2,152) 278
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 18 18
Net actuarial losses 518 230 872 461
-------- -------- -------- --------
Balance, at end of period $157,721 $119,725 $157,721 $119,725
======== ======== ======== ========
Page 12 of 18
STERLING BANCORP
Average Balance Sheets [1]
(Unaudited)
(dollars in thousands)
Three Months Ended
------------------
June 30, 2009 June 30, 2008
--------------------------- ------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
------- -------- ------- ------- -------- -------
Assets
Interest-bearing
deposits with
other banks $26,498 $9 0.14% $2,474 $7 1.14%
------- -- ---- ------ -- ----
Investment
securities -
available for
sale 351,378 4,119 4.69 417,409 5,462 5.23
Investment
securities -
held to
maturity 292,956 3,477 4.75 341,662 4,034 4.72
Investment
securities -
tax exempt [2] 34,889 536 6.15 22,178 340 6.13
------ --- ------ ---
Total
investment
securities 679,223 8,132 4.79 781,249 9,836 5.04
Federal
Funds Sold 0 0 0.00 357 1 1.79
Loans, net
of unearned
discount [3] 1,204,568 18,264 6.19 1,133,036 20,001 7.16
--------- ------ --------- ------
Total
Interest-
Earning
Assets [2] 1,910,289 26,405 5.59% 1,917,116 29,845 6.26%
------ ==== ------ ====
Cash and due
from banks 29,623 47,695
Allowance for
loan losses (17,994) (15,948)
Goodwill 22,901 22,901
Other 114,112 105,348
------- -------
Total
Assets $2,058,931 $2,077,112
========== ==========
Liabilities and
Shareholders'
Equity
Interest-
bearing
deposits
Domestic
Savings $18,080 6 0.13% $19,735 17 0.36%
NOW 196,441 126 0.26 256,316 542 0.85
Money market 341,886 811 0.95 195,131 530 1.09
Time 334,680 2,047 2.45 507,839 4,032 3.19
Foreign
Time 578 2 1.09 576 2 1.09
--- - --- -
Total
Interest-
Bearing
Deposits 891,665 2,992 1.35 979,597 5,123 2.10
------- ----- ------- -----
Borrowings
Securities
sold u/a/r
-customers 77,261 88 0.45 89,187 442 1.99
Securities
sold u/a/r
-dealers 0 0 0.00 66,527 416 2.52
Federal funds
purchased 12,309 7 0.22 39,302 217 2.19
Commercial
paper 11,101 17 0.62 19,547 117 2.42
Short-term
borrowings -
FHLB 0 0 0.00 53,758 311 2.32
Short-term
borrowings
-FRB 202,857 126 0.25 264 1 1.29
Short-term
borrowings -
other 1,752 0 0.00 1,472 5 2.27
Long-term
borrowings -
FHLB 150,000 1,134 3.03 156,154 1,085 2.78
Long-term
borrowings
-sub debt 25,774 524 8.37 25,774 524 8.37
------ --- ------ ---
Total
Borrowings 481,054 1,896 1.58 451,985 3,118 2.77
------- ----- ------- -----
Total Interest-
Bearing
Liabilities 1,372,719 4,888 1.43% 1,431,582 8,241 2.31%
--------- ----- ==== --------- ----- ====
Noninterest-
bearing demand
deposits 417,509 424,658
Other
liabilities 109,796 100,128
------- -------
Total
Liabilities 1,900,024 1,956,368
Shareholders'
equity 158,907 120,744
------- -------
Total
Liabilities
and
Shareholders'
Equity $2,058,931 $2,077,112
========== ==========
Net interest
income/spread
[2] 21,517 4.16% 21,604 3.95%
==== ====
Net yield on
interest-
earning assets 4.53% 4.49%
==== ====
Less: Tax-
equivalent
adjustment 203 132
--- ---
Net interest
income $21,314 $21,472
======= =======
[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 18
STERLING BANCORP
Average Balance Sheets [1]
(Unaudited)
(dollars in thousands)
Six Months Ended
----------------
June 30, 2009 June 30, 2008
-------------------------- ------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
------- -------- ------- ------- -------- -------
Assets
Interest-
bearing
deposits with
other banks $19,278 $19 0.21% $2,968 $19 1.26%
------- --- ---- ------ --- ----
Investment
securities -
available for
sale 389,715 9,398 4.82 381,222 9,996 5.24
Investment
securities -
held to
maturity 295,245 6,999 4.74 348,991 8,259 4.73
Investment
securities
- tax exempt
[2] 29,610 902 6.09 20,655 633 6.13
------ --- ------ ---
Total
investment
securities 714,570 17,299 4.84 750,868 18,888 5.03
Federal
funds sold 0 0 0.00 179 1 1.78
Loans, net
of unearned
discount [3] 1,182,988 35,816 6.24 1,108,811 40,821 7.55
--------- ------ --------- ------
Total Interest-
Earning Assets
[2] 1,916,836 53,134 5.64% 1,862,826 59,729 6.50%
------ ==== ------ ====
Cash and due
from banks 31,017 57,594
Allowance for
loan losses (17,445) (15,759)
Goodwill 22,901 22,901
Other 113,069 104,070
------- -------
Total Assets $2,066,378 $2,031,632
========== ==========
Liabilities and
Shareholders'
Equity
Interest-
bearing
deposits
Domestic
Savings $18,148 12 0.14% $19,192 33 0.35%
NOW 211,650 294 0.28 246,514 1,368 1.12
Money market 340,020 1,762 1.04 202,321 1,298 1.29
Time 331,266 4,212 2.56 529,327 9,369 3.56
Foreign
Time 578 3 1.09 576 3 1.09
--- - --- -
Total
Interest-
Bearing
Deposits 901,662 6,283 1.41 997,930 12,071 2.43
------- ----- ------- ------
Borrowings
Securities
sold
u/a/r -
customers 75,987 203 0.54 85,824 1,088 2.55
Securities sold
u/a/r - dealers 0 0 0.00 51,277 733 2.88
Federal
funds
purchased 34,783 41 0.23 44,129 579 2.60
Commercial
paper 11,487 40 0.70 20,349 312 3.09
Short-term
borrowings -
FHLB 6,878 11 0.31 39,813 526 2.65
Short-term
borrowings -
FRB 172,405 225 0.26 132 1 2.27
Short-term
borrowings -
other 1,603 1 0.07 1,655 19 2.29
Long-term
borrowings -
FHLB 150,000 2,256 3.03 122,308 1,799 2.94
Long-term
borrowings -
sub debt 25,774 1,047 8.38 25,774 1,047 8.38
------ ----- ------ -----
Total
Borrowings 478,917 3,824 1.61 391,261 6,104 3.13
------- ----- ------- -----
Total Interest-
Bearing
Liabilities 1,380,579 10,107 1.48% 1,389,191 18,175 2.63%
--------- ------ ==== --------- ------ ====
Noninterest-
bearing demand
deposits 416,847 422,814
Other
liabilities 110,728 99,115
------- ------
Total
Liabilities 1,908,154 1,911,120
Shareholders'
equity 158,224 120,512
------- -------
Total
Liabilities
and
Shareholders'
Equity $2,066,378 $2,031,632
========== ==========
Net interest
income/spread
[2] 43,027 4.16% 41,554 3.87%
==== ====
Net yield
on interest-
earning
assets 4.55% 4.49%
==== ====
Less: Tax-
equivalent
adjustment 341 247
--- ---
Net interest
income $42,686 $41,307
======= =======
[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 18
STERLING BANCORP
Rate/Volume Analysis [1]
(Unaudited)
(in thousands)
Increase/(Decrease)
Three Months Ended
June 30, 2009
-------------------------
Volume Rate Net [2]
------ ---- --------
INTEREST INCOME
Interest-bearing deposits with other banks $13 $(11) $2
--- ---- --
Investment securities - available for sale (813) (530) (1,343)
Investment securities - held to maturity (583) 26 (557)
Investment securities - tax exempt 195 1 196
--- - ---
Total investment securities (1,201) (503) (1,704)
------ ---- ------
Federal funds sold (1) 0 (1)
-- - --
Loans, net of unearned discounts [3] 1,190 (2,927) (1,737)
----- ------ ------
TOTAL INTEREST INCOME $1 $(3,441) $(3,440)
== ======= =======
INTEREST EXPENSE
Interest-bearing deposits
Domestic
Savings $(1) $(10) $(11)
NOW (105) (311) (416)
Money market 356 (75) 281
Time (1,181) (804) (1,985)
Foreign
Time 0 0 0
- - -
Total interest-bearing deposits (931) (1,200) (2,131)
---- ------ ------
Borrowings
Securities sold under agreements to
repurchase - customers (52) (302) (354)
Securities sold under agreements to
repurchase - dealers (416) 0 (416)
Federal funds purchased (91) (119) (210)
Commercial paper (37) (63) (100)
Short-term borrowings - FHLB (311) 0 (311)
Short-term borrowings - FRB 127 (2) 125
Short-term borrowings - other 2 (7) (5)
Long-term borrowings - FHLB (45) 94 49
Long-term borrowings -
subordinated debentures 0 0 0
- - -
Total borrowings (823) (399) (1,222)
---- ---- ------
------- ------- -------
TOTAL INTEREST EXPENSE $(1,754) $(1,599) $(3,353)
======= ======= =======
NET INTEREST INCOME $1,755 $(1,842) $(87)
====== ======= ====
[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, short-term borrowings-FRB
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 18
STERLING BANCORP
Rate/Volume Analysis [1]
(Unaudited)
(in thousands)
Increase/(Decrease)
Six Months Ended
June 30, 2009
-------------------------
Volume Rate Net [2]
------ ---- --------
INTEREST INCOME
Interest-bearing deposits
with other banks $26 $(26) $0
--- ---- --
Investment securities -
available for sale 174 (772) (598)
Investment securities -
held to maturity (1,277) 17 (1,260)
Investment securities -
tax exempt 273 (4) 269
--- -- ---
Total investment
securities (830) (759) (1,589)
---- ---- ------
Federal funds sold (1) 0 (1)
Loans, net of unearned
discounts [3] 2,449 (7,454) (5,005)
----- ------ ------
TOTAL INTEREST INCOME $1,644 $(8,239) $(6,595)
====== ======= =======
INTEREST EXPENSE
Interest-bearing deposits
Domestic
Savings $(2) $(19) $(21)
NOW (177) (897) (1,074)
Money market 750 (286) 464
Time (2,964) (2,193) (5,157)
Foreign
Time 0 0 0
- - -
Total interest-bearing
deposits (2,393) (3,395) (5,788)
------ ------ ------
Borrowings
Securities sold under
agreements to repurchase -
customers (117) (768) (885)
Securities sold under
agreements to repurchase -
dealers (733) 0 (733)
Federal funds purchased (103) (435) (538)
Commercial paper (99) (173) (272)
Short-term borrowings
- FHLB (250) (265) (515)
Short-term
borrowings - FRB 226 (2) 224
Short-term borrowings -
other 1 (19) (18)
Long-term borrowings
- FHLB 401 56 457
Long-term borrowings -
subordinated debentures 0 0 0
- - -
Total borrowings (674) (1,606) (2,280)
---- ------ ------
------- ------- -------
TOTAL INTEREST EXPENSE $(3,067) $(5,001) $(8,068)
======= ======= =======
NET INTEREST INCOME $4,711 $(3,238) $1,473
====== ======= ======
[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-
FRB 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 18
STERLING BANCORP
Reconciliation of GAAP and Adjusted
Net Income and Noninterest Expenses
(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. 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 an 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 non-GAAP financial measures of other companies
that may have the same or similar names.
Three Months Six Months
Ended June 30, Ended June 30,
---------------- ----------------
2009 2008 2009 2008
---- ---- ---- ----
Adjusted net income
GAAP net income $775 $4,170 $4,387 $8,172
---- ------ ------ ------
Adjustments to GAAP net income:
Provision for loan losses 6,800 2,200 13,000 4,150
Special FDIC assessment 1,000 0 1,000 0
Incremental pension plan
expense 770 0 922 0
--- - --- -
Total adjustments to GAAP
net income 8,570 2,200 14,922 4,150
Tax effect 2,888 834 5,685 1,562
----- --- ----- -----
Adjusted net income $6,457 $5,536 $13,624 $10,760
====== ====== ======= =======
Adjusted per share data
Adjusted net income $6,457 $5,536 $13,624 $10,760
====== ====== ======= =======
Average number of basic shares
outstanding 18,101 17,904 18,100 17,885
Basic earnings, as adjusted $0.36 $0.31 $0.75 $0.60
Average number of diluted shares
outstanding 18,145 18,037 18,219 18,173
Diluted earnings, as adjusted $0.36 $0.31 $0.75 $0.59
Adjusted noninterest expenses
Total noninterest expenses $$24,143 $$21,130 $$44,195 $$41,296
-------- -------- -------- --------
Less:
Special FDIC assessment 1,000 0 1,000 0
Incremental pension plan
expense 770 0 922 0
Acquired factoring business 854 0 854 0
--- - --- -
Total adjustments to
noninterest expenses 2,624 0 2,776 0
----- - ----- -
Adjusted noninterest expenses $21,519 $21,130 $41,419 $41,296
======= ======= ======= =======
Page 17 of 18
STERLING BANCORP
Reconciliation of Average Shareholders' Equity and Adjusted
Average Stated and Tangible Common Equity
(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 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 non-GAAP financial measures of other companies
that may have the same or similar names.
Three Months Six Months
Ended June 30, Ended June 30,
---------------- ----------------
2009 2008 2009 2008
---- ---- ---- ----
Adjusted average tangible
common equity
Average shareholders'
equity $158,907 $120,744 $158,224 $120,512
Less:
Preferred equity 39,800 0 39,719 0
Goodwill and
intangible assets 23,899 22,901 23,403 22,901
------ ------ ------ ------
Average tangible
common equity $95,208 $97,843 $95,102 $97,611
======= ======= ======= =======
Adjusted average stated
common equity
Average shareholders'
equity $158,907 $120,744 $158,224 $120,512
Less:
Preferred equity 39,800 0 39,719 0
------ - ------ -
Average stated common
equity $119,107 $120,744 $118,505 $120,512
======== ======== ======== ========
Adjusted return on average
tangible common equity
Adjusted net income $6,457 $5,536 $13,624 $10,760
------ ------ ------- -------
Average shareholders'
equity 158,907 120,744 158,224 120,512
Less:
Preferred equity 39,800 0 39,719 0
Goodwill and
intangible assets 23,899 22,901 23,403 22,901
------ ------ ------ ------
Average tangible
common equity $95,208 $97,843 $95,102 $97,611
======= ======= ======= =======
Adjusted annualized return
on average tangible
common equity 27.20% 22.76% 28.89% 22.17%
Adjusted return on
average stated common
equity
Average shareholders'
equity $158,907 $120,744 $158,224 $120,512
Less:
Preferred equity 39,800 0 39,719 0
------ - ------ -
Average stated common
equity $119,107 $120,744 $118,505 $120,512
======== ======== ======== ========
Adjusted annualized return
on average
stated common equity 21.74% 18.44% 23.18% 17.96%
Page 18 of 18
SOURCE Sterling Bancorp
