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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995 Commission File No. 1-5273-1
---------------------------
STERLING BANCORP
(Exact Name of Registrant as specified in charter)
NEW YORK 13-2565216
(State or other jurisdiction of (I.R.S. employer identification No.)
incorporation or organization)
540 MADISON AVENUE, NEW YORK, N.Y. 10022-3299
(Address of principal executive offices) (Zip Code)
(212) 826-8000
(Registrant's telephone number, including area code)
---------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ----------------------
Common Shares, $1 par value New York Stock Exchange
Floating Interest Rate Convertible Subordinated
Debentures, 4th Series, due November 1, 1998 New York Stock Exchange
Floating Interest Rate Convertible Subordinated
Debentures, Series V, due July 1, 2001 New York Stock Exchange
---------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.[ ]
On February 29, 1996 the aggregate market value of the voting stock held by
non-affiliates of the Registrant was $74,412,162.
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date:
THE REGISTRANT HAS ONE CLASS OF COMMON STOCK OF WHICH 6,479,063 SHARES WERE
OUTSTANDING AT MARCH 15, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Specified portions of the Sterling Bancorp 1995 Annual Report are
incorporated by reference in Parts I and II.
(2) Specified portions of the Sterling Bancorp definitive Proxy Statement
dated March 14, 1996 are incorporated by reference in Part III.
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STERLING BANCORP
FORM 10-K
TABLE OF CONTENTS
PAGE
------
PART I
Item 1. BUSINESS ............................................. I- 1
Item 2. PROPERTIES ........................................... I-12
Item 3. LEGAL PROCEEDINGS .................................... I-12
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS ......................................... I-12
PART II
Item 5. MARKET FOR THE REGISTRANT"S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS ..................... II-1
Item 6. SELECTED FINANCIAL DATA .............................. II-1
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ............. II-1
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA .......... II-1
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE .................. II-1
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT ...................................... III-1
Item 11. EXECUTIVE COMPENSATION ............................... III-1
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT ........................... III-1
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ....... III-1
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K........................ IV-1
SIGNATURES
Exhibits Submitted in a Separate Volume.
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PART I
ITEM 1. BUSINESS
GENERAL
Sterling Bancorp (the Registrant), organized in 1966, is a bank holding company,
as defined by the Bank Holding Company Act of 1956 (the BHCA), as amended, with
subsidiaries providing a full range of financial services, including business
and consumer loans, asset based financing, factoring, trade financing, mortgage
lending, leasing and trust and estate services. The Registrant owns all of the
outstanding shares of Sterling National Bank & Trust Company of New York (the
bank), its principal subsidiary, and of Standard Factors Corporation/Sterling
Factors, Universal Finance Corporation, Sterling Banking Corporation and
Sterling Industrial Loan Association (finance subsidiaries). Zenith Financial
Services Company operates as a division of the Registrant. As used throughout
this report, "the Company" refers to Sterling Bancorp and its subsidiaries.
There is competition in all areas in which the Company conducts its business,
including deposits, loans, domestic and international financing and trust
services. In addition to competing with other banks, the Company also competes
in certain areas of its business with other financial institutions. The
following table presents the components of the loan portfolio for both the
Company and the bank as of December 31, 1995 and 1994. Reference is made to the
information beginning on page 39 of the Company's 1995 Annual Report (pages 11
to 45 of which are incorporated by reference herein) under the caption "CREDIT
RISK".
December 31, 1995 December 31, 1994
---------------------- ---------------------
The Company The bank The Company The bank
----------- --------- ----------- --------
(in thousands)
Domestic
Commercial and industrial $337,429 $289,326 $260,869 $232,303
Real estate - mortgage 49,790 49,790 42,079 42,079
Real estate - construction 1,040 1,040 1,486 1,486
Installment - individuals 14,876 14,876 12,920 12,920
Foreign
Governments and official
institutions 789 789 789 789
-------- -------- -------- --------
Loans, gross 403,924 355,821 318,143 289,577
Less: Unearned discounts 6,695 6,357 5,374 5,104
-------- -------- -------- --------
Loans, net of unearned
discounts $397,229 $349,464 $312,769 $284,473
======== ======== ======== ========
The BHCA requires the prior approval of the Federal Reserve Board for the
acquisition by a bank holding company of more than 5% of the voting stock or
substantially all of the assets of any bank or bank holding company. Also, under
the BHCA, bank holding companies are prohibited, with certain exceptions, from
engaging in, or from acquiring more than 5% of the voting stock of any company
engaging in, activities other than banking or managing or controlling banks or
furnishing services to or performing services for their subsidiaries. The BHCA
also authorized the Federal Reserve Board to permit bank holding companies to
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engage in, and to acquire or retain shares of companies that engage in,
activities which the Federal Reserve Board determines to be so closely related
to banking or managing or controlling banks as to be a proper incident thereto.
The Federal Reserve Board has ruled on a number of activities and found some of
them to come within such standard while finding that other activities do not
fall within the permissible scope of such standard; other activities have been
proposed by the Federal Reserve Board for consideration. The effect of the
Federal Reserve Board's findings under the standard has been to expand the
financially related activities in which bank holding companies may engage.
Revisions of the Federal Reserve Board's principal regulation (Regulation Y)
affecting bank holding companies have expanded the scope of permissible
bank-related activities and liberalized procedures to allow the entry into such
activities. In addition, the BHCA prohibits the Registrant from acquiring direct
or indirect control of more than a 5% interest in a bank or bank holding company
located in a state other than New York unless the laws of such state expressly
authorize such acquisition.
There are also various requirements and restrictions imposed by the laws of the
United States and the State of New York and by regulations of the Federal
Reserve System, of which the bank is a member, affecting the operations of the
Company including the requirement to maintain reserves against deposits,
restrictions relating to: (a) the nature and amount of loans that may be made by
the bank and the interest that may be charged thereon; (b) extensions of credit
by subsidiary banks of a bank holding company to the bank holding company or
certain of its subsidiaries; (c) on investments in the stock or other securities
thereof, and on the taking of such stock or securities as collateral for loans
to any borrower; and (d) other investments, branching and other activities of
the Company and the bank. Regulatory limitations on the payment of dividends to
the Registrant by the bank are discussed in the "FINANCIAL CONDITION" section
beginning on page 37 of the Company's 1995 Annual Report. The Registrant and its
finance subsidiaries are subject to supervision and regulation by the Federal
Reserve Board (FRB); Sterling Industrial Loan Association is subject to
supervision and regulation by the Bureau of Financial Institutions of the State
Corporation Commission of the Commonwealth of Virginia; Sterling Banking
Corporation is subject to supervision and regulation by the Banking Department
of the State of New York; the bank is subject to supervision and regulation by
the Office of the Comptroller of the Currency (the Comptroller) and, by reason
of the insurance of its deposits to the extent permitted by law, to the
regulations of the Federal Deposit Insurance Corporation (FDIC).
The Company and the bank are subject to risk-based capital and leverage
guidelines issued by U.S. banking industry regulators for banks and bank holding
companies in the United States. Pursuant to provisions of FDICIA, which, among
other things, requires the federal depository institution regulatory agencies to
take specific prompt actions with respect to institutions that do not meet
minimum capital standards, the agencies have adopted regulations creating and
defining five capital tiers, the highest of which is "well capitalized". As of
December 31, 1995 the bank was "well capitalized". The capital components and
ratios for the Company and the bank are presented in the Company's 1995 Annual
Report on page 44.
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There have been a number of legislative and regulatory proposals that would have
an impact on the operations of bank holding companies and their banks. While the
changing legislation and regulatory environment does not permit forecasts to be
made with any degree of certainty, the Company is unaware of any pending
legislative reforms or regulatory activities which would materially affect its
financial position or operating results in the foreseeable future.
The Federal Reserve Board has issued regulations under the BHCA that require a
bank holding company to serve as a source of financial and managerial strength
to its subsidiary banks. As a result, the Federal Reserve Board, pursuant to
such regulations, may require the Registrant to stand ready to use its resources
to provide adequate capital funds to its banking subsidiaries during periods of
financial stress or adversity. This support may be required at times when,
absent such regulations, the bank holding company might not otherwise provide
such support.
The earnings of the Registrant and its finance subsidiaries and the bank are
affected by legislative changes and by regulations and policies of various
governmental authorities, including the Federal Reserve System, the Comptroller,
and the states in which the Registrant's subsidiaries operate. Such changes and
policies significantly affect the growth of deposits as well as the cost of
purchased funds and the return on earning assets.
Changing conditions in the national economy and in the money markets make it
impossible to predict future changes in interest rates, deposit levels, loan
demand or their effects on the business and earnings of the Registrant and its
subsidiaries. Foreign activities of the Company are not considered to be
material.
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THE BANK
Sterling National Bank & Trust Company of New York was organized in 1929 under
the National Bank Act and commenced operations in New York City. The bank
maintains six offices in New York City (three branches and an International
Banking Facility in Manhattan and two branches in Queens). The executive office
is located at 540 Madison Avenue, New York, New York. There are regional
representatives located in Los Angeles, California and Richmond, Virginia.
The bank provides a range of banking services to businesses and individuals
including checking, savings and money market accounts, certificates of deposit,
business loans, personal and installment loans, VISA/MASTERCARD, safe deposit
and night depository facilities. Business lending, depository and related
financial services are furnished to a wide range of customers in diverse
industries, including commercial, industrial and financial companies of all
sizes as well as government and non-profit agencies. Loan facilities available
to these customers include short-term revolving credit arrangements, term loans,
letters of credit, factoring, accounts receivable financing, equipment
financing, real estate and mortgage loans, leasing and lock box services.
Through its international division and International Banking Facility, the bank
offers financial services to its customers and correspondents in the world's
major financial centers. These services consist of financing import and export
transactions, issuance of letters of credit and creation of bankers acceptances.
In addition to its direct worldwide correspondent banking relationships, active
bank account relationships are maintained with leading foreign banking
institutions in major financial centers. The bank's trust division provides a
variety of fiduciary, investment management, advisory and corporate agency
services to individuals, corporations and foundations. The bank acts as trustee
for pension, profit-sharing and other employee benefit plans and personal trusts
and estates. For corporations, the bank acts as trustee, transfer agent,
registrar and in other corporate agency capacities.
There are no industry concentrations (exceeding 10% of loans, gross) in the
commercial and industrial loan portfolio. Approximately 81% of the bank's loans
are to borrowers located in the metropolitan New York area. The bank's legal
lending limit to a single borrower was approximately $7.6 million at December
31, 1995.
The composition of income from the bank's operations for the years ended: [1]
December 31, 1995 included interest and fees on commercial and other loans
(52%), interest and dividends on investment securities (38%) and other (10%);
[2] December 31, 1994 included interest and fees on commercial and other loans
(47%), interest and dividends on investment securities (44%), and other (9%);
[3] December 31, 1993 included interest on term Federal funds sold (2%),
interest and fees on commercial and other loans (44%), interest and dividends on
investment securities (43%), and other (11%).
At December 31, 1995, the bank had 183 employees, consisting of 78 officers and
105 supervisory and clerical employees. The bank considers its relations with
its employees to be satisfactory.
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REGISTRANT AND FINANCE SUBSIDIARIES
The Registrant and its finance subsidiaries engage in various types of secured
financing activities such as asset based financing, factoring, consumer
receivables financing and residential mortgage loans and service certain such
accounts for the bank.
Asset based financing services rendered by the Registrant and its finance
subsidiaries include new business referral, collection, supervisory, examination
and bookkeeping to the bank for fees; and the bank assumes all credit risks.
Standard Factors Corporation/Sterling Factors ("Factors") provides factoring
services. Factors purchases client's accounts receivable, assumes credit risk on
approved orders and handles credit and collection details and bookkeeping
requirements. Income for these services is derived from commissions charged for
receivables serviced and interest charged on advances to the client. In
addition, Factors services the bank's portfolio without assuming the credit risk
for those factored receivables managed for the bank. For these services,
Standard Factors Corporation receives a portion of factoring commissions paid by
the clients plus a portion of interest charged on advances. The accounts
receivable factored are for clients primarily engaged in the apparel and textile
industries.
The Registrant and its finance subsidiaries make business and consumer loans.
The loans are usually secured by real estate, personal property, accounts
receivable or other collateral; occasionally unsecured working capital advances
are provided to its customers.
Sterling Industrial Loan Association (S.I.L.A.), located in Richmond, Virginia,
jointly originates and services mortgage loans to homeowners funded by the bank.
S.I.L.A. receives a service fee. The loans are repayable in equal monthly
installments over periods ranging from 36 to 180 months. Loans are usually made
to allow the borrower to make home repairs, to consolidate debt or to meet
educational, medical or other expenses. The loans are secured by first or second
mortgages. The amounts loaned are less than the borrower's equity in the home,
as determined by appraisals. S.I.L.A. also originates mortgage loans with the
intention of reselling those loans, including servicing rights, with limited
recourse.
Zenith Financial Services Corporation, a nationwide provider of consumer
receivables financing, is a division of the Registrant. Zenith engages in asset
based lending with independent dealers who market products (i.e., housewares,
appliances, automobiles, educational material, et al) to consumers on an
installment basis with repayment terms between 12 and 48 months. Zenith
administers these installment contracts for the dealer, providing billing,
payment processing and other bookkeeping services. Zenith makes advances to each
dealer of up to 80% of the discounted aggregate value of the dealer's
installment contracts.
I-5
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The composition of income (excluding equity in undistributed net income of the
banking subsidiary) of the Registrant and its finance subsidiaries for the years
ended: [1] December 31, 1995 included interest and fees on loans (47%), interest
and fees on accounts receivable factored (19%), dividends, interest and service
fees (33%) and other (1%); [2] December 31, 1994 included interest and fees on
loans (46%) interest and fees on accounts receivable factored (18%), dividends,
interest and service fees (35%), and other (1%); [3] December 31, 1993 included
interest and fees on loans (32%), interest and fees on accounts receivable
factored (14%), dividends, interest and service fees (50%), and other (4%).
At December 31, 1995, the Registrant and its finance subsidiaries employed 48
persons consisting of 14 officers with the balance of the employees performing
supervisory and clerical functions. The Registrant and its finance subsidiaries
consider employee relations to be satisfactory.
SELECTED CONSOLIDATED STATISTICAL INFORMATION
I. Distribution of Assets, Liabilities and Shareholders' Equity; Interest
Rates and Interest Differential.
The information appearing on pages 42,43, and 45 of the Company's 1995 Annual
Report is incorporated by reference herein.
II. Investment Portfolio
Shown below is a summary of the Company's investment securities by type with
related book values:
December 31,
----------------------------------
1995 1994 1993
-------- -------- --------
(in thousands)
U.S. Treasury securities $ 52,373 $ 41,022 $ 40,835
Obligations of U.S. government corporations
and agencies--mortgage-backed securities 238,397 261,433 222,532
Obligations of states and political sub-
divisions -- 30 30
Debt securities issued by foreign governments 3,500 4,000 4,500
Corporate debt securities -- -- 2,005
Other debt securities -- 1,118 10,104
Federal Reserve Bank and other equity securities 4,968 4,179 6,810
-------- -------- --------
Total $299,238 $311,782 $286,816
======== ======== ========
Information regarding book values and range of maturities by type of security
and weighted average yields for totals of each category is presented in the
Company's 1995 Annual Report on pages 19 and 20 and is incorporated by reference
herein. The average yield by maturity range is not available.
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III. Loan Portfolio
The following table sets forth the composition of the Company's loan portfolio,
net of unearned discounts, at the end of each of the most recent five fiscal
years:
December 31,
---------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
% of % of % of % of % of
Balances Total Balances Total Balances Total Balances Total Balances Total
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
($ in thousands)
Domestic
Term Federal funds
sold $ -- -- % $ -- -- % $ 40,000 13.39% $ 99,000 34.28% $ 75,000 32.95%
Commercial and
industrial 333,484 83.95 258,493 82.65 216,677 72.53 149,272 51.69 114,407 50.27
Real estate -
mortgage 48,588 12.23 39,997 12.79 31,474 10.54 30,987 10.73 28,982 12.73
Real estate -
construction 1,040 0.26 1,486 0.48 1,666 0.56 1,606 0.56 1,833 0.81
Installment -
individuals 13,328 3.36 12,003 3.84 8,145 2.73 7,136 2.47 6,588 2.89
Foreign
Government and
official insti-
tutions 789 0.20 789 0.25 789 0.26 789 0.27 789 0.35
-------- ------ -------- ------ -------- ------ -------- ------ -------- ------
Loans, net of
unearned
discounts $397,229 100.00% $312,769 100.00% $298,751 100.00% $288,791 100.00% $227,598 100.00%
======== ====== ======== ====== ======== ====== ======== ====== ======== ======
The following table sets forth the maturities and sensitivity to changes in
interest rates of loans, excluding "installment - individuals" loans, of the
Company's loan portfolio at December 31, 1995:
Due One Due One Due After Total
Year to Five Five Gross
or Less Years Years Loans
------- ------- ------- --------
(in thousands)
Commercial and industrial $295,580 $40,481 $ 1,358 $337,429
Real estate - mortgage 5,413 17,783 26,594 49,790
Real estate - construction 1,040 -- -- 1,040
Foreign 789 -- -- 789
-------- ------- ------- --------
Total $302,832 $58,264 $27,952 $389,048
======== ======= ======= ========
Loans due after one year, which have:
Predetermined interest
rates $41,766 $27,952 $ 69,718
Floating or adjustable
interest rates 16,498 -- 16,498
------- ------- --------
Total $58,264 $27,952 $ 86,216
======= ======= ========
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It is the policy of the Company to consider all customer requests for
extensions of original maturity dates (rollovers), whether in whole or
in part, as though each was an application for a new loan subject to
standard approval criteria, including credit evaluation. The information
appearing in the Company's 1995 Annual Report beginning on page 39 under
the caption "CREDIT RISK", beginning on page 21 in footnote 4 and on
page 17 in footnote 1 under the caption "Loans" is incorporated by
reference herein.
The following table sets forth the aggregate amount of domestic
non-accrual, past due and restructured loans of the Company at the end
of each of the most recent five fiscal years; as of December 31, 1995,
there were no foreign loans accounted for on a nonaccrual basis or which
were troubled debt restructurings:
December 31,
----------------------------------------------------------
1995 1994 1993 1992 1991
------ ------ -------- -------- ------
(in thousands)
Nonaccrual basis loans* $ 357[1] $ 575[1] $ 2,297[1] $ 3,309[1] $4,499[1]
Past due 90 days or more
(other than the above)[2] 1,961 293 146 619 3,873
------ ------ -------- -------- ------
Total $2,318 $ 868 $ 2,443 $ 3,928 $8,372
====== ====== ======== ======== ======
Note:Includes restructured
debt of $ -- $ -- $ -- $ -- $ --
====== ====== ======== ======== ======
*Interest income that would
have been earned on non-
accrual and reduced rate
loans outstanding $ 22 $ 86 $ 169 $ 313 $ 378
====== ====== ======== ======== ======
Applicable interest income
actually realized $ -- $ 18 $ 98 $ 72 $ 16
====== ====== ======== ======== ======
Nonaccrual, past due and
restructured loans as a
percentage of total gross
loans .58% .27% .80% 1.33% 3.55%
====== ====== ======== ======== ======
[1] Includes $-0-, $-0-, $1.4, $1.9 and $2.5 million at December 31, 1995,
1994, 1993,1992 and 1991, respectively, representing the balance of a
loan to a single borrower who filed for reorganization under Chapter 11
of the U.S. Bankruptcy Code during the third quarter of 1991.
[2] Loans contractually past due 90 days or more as to principal or interest
and still accruing are loans which are both well secured or guaranteed by
financially responsible third parties and are in the process of
collection.
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IV. Summary of Loan Loss Experience
The information appearing in the Company's 1995 Annual Report beginning on page
21 in footnote 5 is incorporated by reference herein. The following table sets
forth certain information with respect to the Company's loan loss experience for
each of the most recent five fiscal years:
December 31,
----------------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
(in thousands)
Average loans outstanding, net
of unearned discounts, during
year $311,119 $255,223 $228,604 $211,917 $248,490
======== ======== ======== ======== ========
Allowance for possible loan losses:
Balance at beginning of year $ 4,136 $ 3,414 $ 3,177 $ 3,734 $ 3,373
-------- -------- -------- -------- --------
Charge-offs:
Commercial and industrial 966 401 670 1,799 7,661
Real estate 16 109 -- -- --
Installment 19 22 45 120 29
-------- -------- -------- -------- --------
Total charge-offs 1,001 532 715 1,919 7,690
-------- -------- -------- -------- --------
Recoveries:
Commercial and industrial 144 201 41 25 38
Real estate 47 -- -- -- --
Installment -- -- 11 47 13
-------- -------- -------- -------- --------
Total recoveries 191 201 52 72 51
-------- -------- -------- -------- --------
Less: Net charge-offs 810 331 663 1,847 7,639
-------- -------- -------- -------- --------
Provision for possible loan losses 1,866 1,053 690 1,290 8,000
-------- -------- -------- -------- --------
Allowance - acquired portfolio -- -- 210 -- --
-------- -------- -------- -------- --------
Balance at end of year $ 5,192 $ 4,136 $ 3,414 $ 3,177 $ 3,734
======== ======== ======== ======== ========
Ratio of net charge-offs to
average loans outstanding, net
of unearned discounts during
year .26% .13% .29% .87% 3.07%
======== ======== ======== ======== ========
On June 1, 1993 the parent company purchased for cash the assets (principally
loans) of Zenith Financial Corporation, a nationwide provider of consumer
receivables financing. The purchase price included the allowance for loan losses
of $209,627.
The Company considers its allowance for possible loan losses to be adequate
based upon the size and risk characteristics of the outstanding loan portfolio
at December 31, 1995. Net losses within the loan portfolio are not statistically
predictable and changes in conditions in the next twelve months could result in
future provisions for loan losses varying from the level taken in 1995. The
Company does not anticipate any recurrence of net credit losses of the magnitude
experienced in 1991.
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To comply with a regulatory requirement to provide an allocation of the
allowance for possible loan losses, the following table presents the Company's
allocation of the allowance. This allocation is based on subjective estimates by
management and may vary from year to year based on management's evaluation of
the risk characteristics of the loan portfolio. The information appearing in the
Company's 1995 Annual Report beginning on page 39 under the caption "CREDIT
RISK" is incorporated by reference herein. The amount allocated to a particular
loan category may not necessarily be indicative of actual future charge-offs in
a loan category. Management believes that the allowance must be viewed in its
entirety and is therefore available for future charge-offs in any loan category.
December 31,
--------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- ------
% of % of % of % of % of
Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
($ in thousands)
Domestic
Commercial and
industrial $2,812 0.84% $2,487 0.96% $1,757 0.81% $1,135 0.76% $1,802 1.58%
Real estate -
mortgage 472 0.97 434 1.09 291 0.92 323 1.04 406 1.40
Real estate -
construction 8 0.77 12 0.81 63 3.78 63 3.92 26 1.42
Installment -
individuals 167 1.25 142 1.18 94 1.15 98 1.37 92 1.40
Unallocated 1,733 -- 1,061 -- 1,209 -- 1,558 -- 1,408 --
----- ------ ----- ------ -----
Loans, net of
unearned
discounts $5,192 1.31% $4,136 1.32% $3,414 1.14% $3,177 1.10% $3,734 1.64%
====== ==== ====== ==== ====== ==== ====== ==== ====== ====
V. Deposits
Average deposits and average rates paid for each of the most recent three years
is presented in the Company's 1995 Annual Report on page 42 and is incorporated
by reference herein.
Outstanding time certificates of deposit issued from domestic offices in amounts
of $100,000 or more and interest expense on domestic and foreign deposits are
presented in the Company's 1995 Annual Report on page 22 in footnote 6 and is
incorporated by reference herein.
The following table provides certain information with respect to the Company's
deposits for each of the most recent three fiscal years:
December 31,
----------------------------------
1995 1994 1993
-------- -------- --------
(in thousands)
Domestic
Demand $224,081 $174,897 $174,089
NOW 30,150 34,055 32,253
Savings 26,967 29,201 33,078
Money Market 120,655 118,571 127,939
Time deposits, by remaining maturity
Within 3 months 68,689 58,527 67,128
After 3 months but within 1 year 49,715 23,172 23,249
After 1 but within 5 years 27,531 76,210 12,580
-------- -------- --------
Total domestic deposits 547,788 514,633 470,316
-------- -------- --------
Foreign
Time deposits, by remaining maturity
Within 3 months 2,240 1,670 1,670
After 3 months but within 1 year 1,000 1,000 1,000
-------- -------- --------
Total foreign deposits 3,240 2,670 2,670
-------- -------- --------
Total deposits $551,028 $517,303 $472,986
======== ======== ========
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Interest expense for the most recent three fiscal years is as follows:
Years Ended December 31,
1995 1994 1993
------- ------- -------
(in thousands)
NOW $ 286 $ 273 $ 394
Savings 585 685 907
Money market 3,205 2,353 2,735
Time--domestic 7,328 5,058 2,403
--foreign 155 104 79
------- ------- -------
Total interest expense $11,540 $ 8,473 $ 6,518
======= ======= =======
VI. Return on Assets and Equity
The Company's returns on average total assets and average shareholders' equity,
dividend payout ratio and average shareholders' equity to average total assets
for each of the most recent three years follow:
Years Ended December 31,
---------------------------
1995 1994 1993
----- ----- -----
Return on average total assets (Net income
divided by average total assets) .81% .61% .57%
Return on average shareholders' equity (Net
income divided by average equity) 10.00% 7.52% 6.17%
Dividend payout ratio (Dividends declared per
share divided by net income per share) 28.41% 33.33% 40.00%
Average shareholders' equity to average total
assets (Average equity divided by average
total assets) 8.11% 8.08% 9.19%
VII. Short-Term Borrowings
Balance and rate data for significant categories of the Company's Short-Term
Borrowings, for each of the most recent three years is presented in the
Company's 1995 Annual Report on page 23 in footnote 7 and is incorporated by
reference herein.
I-11
14
ITEM 2. PROPERTIES
The principal offices of the Company occupy four contiguous floors at 540
Madison Avenue at 55th Street, New York, N.Y. consisting of approximately 29,000
square feet. These are held under two leases, of which the one covering the
upper floor expires December 31, 1996. The other, covering the lower three
floors, expires December 31, 1996 with a renewal option to December 31, 2001.
Annual rental commitments approximate $876,000. Certain finance subsidiaries
maintain offices in Beverly Hills, California and Richmond, Virginia.
In addition to the principal offices, the bank maintains operating leases for
three additional branch offices, the International Banking Facility and an
Operations Center with an aggregate of approximately 43,100 square feet. The
annual office rental commitments for these premises approximates $600,000. The
leases have expiration dates ranging from 2001 through 2008 with varying
additional renewal options. The bank also maintains a branch located in Forest
Hills owned by the bank (and not subject to a mortgage).
ITEM 3. LEGAL PROCEEDINGS
Neither Registrant nor any of its subsidiaries is party to any material legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The information beginning on page 10 of the Sterling Bancorp Proxy Statement
dated March 14, 1996 under the caption "APPROVAL OF STOCK INCENTIVE PLAN
AMENDMENT" is incorporated by reference herein.
I-12
15
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information appearing on page 41 of the Sterling Bancorp 1995
Annual Report under the caption "MARKET FOR THE COMPANY'S COMMON
STOCK AND RELATED SECURITY HOLDER MATTERS" is incorporated by
reference herein.
ITEM 6. SELECTED FINANCIAL DATA
The information appearing on page 36 of the 1995 Annual Report
under the caption "SELECTED FINANCIAL DATA" is incorporated by
reference herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information appearing on pages 37 - 41 of the 1995 Annual
Report under the caption "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" is incorporated
herein by reference. Supplementary data appearing on page 34
footnote 20 of the 1995 Annual Report is incorporated by reference
herein.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements as of December 31,
1995 and 1994 and for each of the years in the three-year period
ended December 31, 1995 and the statements of condition of
Sterling National Bank & Trust Company of New York as of December
31, 1995 and 1994, notes thereto and Independent Auditors' Report
thereon appearing on pages 11 - 35 of the 1995 Annual Report, are
incorporated by reference herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
II-1
16
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information beginning on page 1 of the Sterling Bancorp Proxy Statement
dated March 14, 1996 under the caption "ELECTION OF DIRECTORS" and on page 9 of
the same proxy statement under the caption "Security Ownership of Directors and
Executive Officers and Certain Beneficial Owners" are incorporated by reference
herein.
Executive Officers - This information is included pursuant to Instruction 3 to
Item 401 (b) and (c) of Regulation S-K:
Held
Executive
Office
Name of Executive Title Age Since
----------------- ----------------------- --- ----------
Louis J. Cappelli Chairman of the Board and
Chief Executive Officer,
Director 65 1967
John C. Millman President, Director 53 1986
Jerrold Gilbert Executive Vice President, General
Counsel & Secretary 59 1974
John W. Tietjen Senior Vice President, Treasurer
and Chief Financial Officer 51 1989
John A. Aloisio Vice President 53 1992
Leonard Rudolph Vice President 48 1992
Frank J. Voso Vice President 52 1989
All executive officers are elected annually by the Board of Directors and serve
at the pleasure of the Board. There are no arrangements or understandings
between any of the foregoing officers and any other person or persons pursuant
to which he was selected as an executive officer.
ITEM 11. EXECUTIVE COMPENSATION
The information beginning on page 3 of the Sterling Bancorp Proxy Statement
dated March 14, 1996 under the caption " Executive Compensation and Related
Matters" and on page 8 of the same Proxy Statement under the caption
"Transactions with the Company and Other Matters" are incorporated by reference
herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information beginning on page 9 of the Sterling Bancorp Proxy Statement
dated March 14, 1996 under the caption "Security Ownership of Directors and
Executive Officers and Certain Beneficial Owners" is incorporated by reference
herein.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information appearing on page 8 of the Sterling Bancorp Proxy Statement
dated March 14, 1996 under the caption "Transactions with the Company and Other
Matters" is incorporated by reference herein.
III-1
17
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The documents filed as a part of this report are listed below:
1. Financial Statements
Annual Report to security holders, Sterling Bancorp
1995 Annual Report (This document is filed only to the
extent of pages 11 through 45 which are incorporated by
reference herein).
2. Financial Statement Schedules
None
3. Exhibits
3(i)(A) Amended and restated Certificate of
Incorporation filed with the State of New
York, Department of State, August 14,
1986 (Filed as Exhibit 3.3 to
Registrant's Form 10-K for the fiscal
year ended December 31, 1986 and
incorporated by reference herein).
(i)(B) Certificate of Amendment of The
Certificate of Incorporation filed with
the State of New York Department of
State, June 13, 1988 (Filed as Exhibit
3.5 to Registrant's Form 10-K for the
fiscal year ended December 31, 1988 and
incorporated by reference herein).
(i)(C) Certificate of Amendment of the
Certificate of Incorporation filed with
the State of New York Department of
State, March 5, 1993 (Filed as Exhibit
4.1 to Registrant's Form 8-K dated March
5, 1993 and incorporated by reference
herein).
(ii) By-Laws as in effect on March 15, 1993
(Filed as Exhibit 3.3 to the
Registrant's Form 10-K for the fiscal
year ended December 31, 1992 and
incorporated by reference herein).
4 (a) Indenture relating to floating interest
rate convertible subordinated debentures,
4th series, due November 1, 1998 (Filed
as Exhibit 4(a) to Registrant's
Registration Statement 33-23877 and
incorporated by reference herein).
(b) Indenture dated as of August 1, 1994
relating to floating interest rate
convertible subordinated debentures,
series V, due July 1, 2001 (Filed as
Exhibit T3C to Registrant's Application
for Qualification of Indenture No.
022-22183 and incorporated by reference
herein).
10(i) Employment Agreements, dated as of
February 19, 1993 (Filed as Exhibits
3.4(a) and 3.4(b), respectively, to the
Registrant's Form 10-K for the fiscal
year ended December 31, 1992 and
incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(ii) Amendments to Employment Agreements dated
February 14, 1995 (Filed as Exhibits
3.10(ii)(a) and 3.10(ii)(b), respectively
to the Registrant's Form 10-K for the
fiscal year ended December 31, 1994 and
incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(iii) Amendments to Employment Agreements dated
February 8, 1996
(a) For Louis J. Cappelli
(b) For John C. Millman
11 Statement re Computation of Per Share
Earnings.
IV-1
18
13 Annual Report to security holders,
Sterling Bancorp 1995 Annual Report (This
document is filed only to the extent of
pages 11 through 45 which are
incorporated by reference herein).
21 Subsidiaries of the Registrant.
27 Financial Data Schedule.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the last quarter of
the period covered by this report.
IV-2
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, The Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
STERLING BANCORP
/s/ Louis J. Cappelli
-----------------------------
Louis J. Cappelli, Chairman
(Principal Executive Officer)
March 28, 1996
--------------
Date
/s/ John W. Tietjen
-----------------------------
John W. Tietjen, Treasurer
(Principal Financial and Accounting Officer)
March 28, 1996
--------------
Date
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
March 28, 1996 /s/ Louis J. Cappelli Director
- -------------- ----------------------------------- ---------------------
(Date) (Signature) (Title)
March 28, 1996 /s/ John C. Millman Director
- -------------- ----------------------------------- ---------------------
(Date) (Signature) (Title)
March 28, 1996 /s/ Lillian Berkman Director
- -------------- ----------------------------------- ---------------------
(Date) (Signature) (Title)
March 28, 1996 /s/ Henry J. Humphreys Director
- -------------- ----------------------------------- ---------------------
(Date) (Signature) (Title)
March 28, 1996 /s/ Allan F. Hershfield Director
- -------------- ----------------------------------- ---------------------
(Date) (Signature) (Title)
March 28, 1996 /s/ Walter Feldesman Director
- -------------- ----------------------------------- ---------------------
(Date) (Signature) (Title)
20
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
DOCUMENTS FILED
AS A PART
OF THIS REPORT
ON
FORM 10-K
ANNUAL REPORT - 1995
--------------
STERLING BANCORP
21
DOCUMENT INDEX
1. Financial Statements
Annual Report to security holders, Sterling Bancorp 1995 Annual Report (This
document is filed only to the extent of pages 11 through 45 which are
incorporated by reference herein).
2. Financial Statement Schedules
None
3. Exhibits
3(i)(A) Amended and restated Certificate of Incorporation filed with the
State of New York, Department of State, August 14, 1986 (Filed as
Exhibit 3.3 to Registrant's Form 10-K for the fiscal year ended
December 31, 1986 and incorporated by reference herein).
(i)(B) Certificate of Amendment of The Certificate of Incorporation
filed with the State of New York Department of State, June 13,
1988 (Filed as Exhibit 3.5 to Registrant's Form 10-K for the
fiscal year ended December 31, 1988 and incorporated by reference
herein).
(i)(C) Certificate of Amendment of the Certificate of Incorporation
filed with the State of New York Department of State, March 5,
1993 (Filed as Exhibit 4.1 to Registrant's Form 8-K dated March
5, 1993 and incorporated by reference herein).
(ii) By-Laws as in effect on March 15, 1993 (Filed as Exhibit 3.3 to
the Registrant's Form 10-K for the fiscal year ended December 31,
1992 and incorporated by reference herein).
4 (a) Indenture relating to floating interest rate convertible
subordinated debentures, 4th series, due November 1, 1998 (Filed
as Exhibit 4(a) to Registrant's Registration Statement 33-23877
and incorporated by reference herein).
(b) Indenture dated as of August 1, 1994 relating to floating
interest rate convertible subordinated debentures, series V, due
July 1, 2001 (Filed as Exhibit T3C to Registrant's Application
for Qualification of Indenture No. 022-22183 and incorporated by
reference herein).
10(i) Employment Agreements, dated as of February 19, 1993 (Filed as
Exhibits 3.4(a) and 3.4(b), respectively, to the Registrant's
Form 10-K for the fiscal year ended December 31, 1992 and
incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(ii) Amendments to Employment Agreements dated February 14, 1995
(Filed as Exhibits 3.10(ii)(a) and 3.10(ii)(b), respectively to
the Registrant's Form 10-K for the fiscal year ended December 31,
1994 and incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(iii) Amendments to Employment Agreements dated February 8, 1996
(a) For Louis J. Cappelli
(b) For John C. Millman
11 Statement re Computation of Per Share Earnings.
13 Annual Report to security holders, Sterling Bancorp 1995 Annual
Report (This document is filed only to the extent of pages 11
through 45 which are incorporated by reference herein).
21 Subsidiaries of the Registrant.
27 Financial Data Schedule.
4. Reports on Form 8-K:
There were no reports on Form 8-K filed during the last quarter of the
period covered by this report.
22
EXHIBIT INDEX
Exhibit
Number
------
3(i)(A) Amended and restated Certificate of Incorporation filed with the
State of New York, Department of State, August 14, 1986 (Filed as
Exhibit 3.3 to Registrant's Form 10-K for the fiscal year ended
December 31, 1986 and incorporated by reference herein).
(i)(B) Certificate of Amendment of The Certificate of Incorporation
filed with the State of New York Department of State, June 13,
1988 (Filed as Exhibit 3.5 to Registrant's Form 10-K for the
fiscal year ended December 31, 1988 and incorporated by reference
herein).
(i)(C) Certificate of Amendment of the Certificate of Incorporation
filed with the State of New York Department of State, March 5,
1993 (Filed as Exhibit 4.1 to Registrant's Form 8-K dated March
5, 1993 and incorporated by reference herein).
(ii) By-Laws as in effect on March 15, 1993 (Filed as Exhibit 3.3 to
the Registrant's Form 10-K for the fiscal year ended December 31,
1992 and incorporated by reference herein).
4 (a) Indenture relating to floating interest rate convertible
subordinated debentures, 4th series, due November 1, 1998 (Filed
as Exhibit 4(a) to Registrant's Registration Statement 33-23877
and incorporated by reference herein).
(b) Indenture dated as of August 1, 1994 relating to floating
interest rate convertible subordinated debentures, series V, due
July 1, 2001 (Filed as Exhibit T3C to Registrant's Application
for Qualification of Indenture No. 022-22183 and incorporated by
reference herein).
10(i) Employment Agreements, dated as of February 19, 1993 (Filed as
Exhibits 3.4(a) and 3.4(b), respectively, to the Registrant's
Form 10-K for the fiscal year ended December 31, 1992 and
incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(ii) Amendments to Employment Agreements dated February 14, 1995
(Filed as Exhibits 3.10(ii)(a) and 3.10(ii)(b), respectively, to
the Registrant's Form 10-K for the fiscal year ended December 31,
1994 and incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(iii) Amendments to Employment Agreements dated February 8, 1996
(a) For Louis J. Cappelli
(b) For John C. Millman
11 Statement re Computation of Per Share Earnings.
13 Annual Report to security holders, Sterling Bancorp 1995 Annual
Report (This document is filed only to the extent of pages 11
through 45 which are incorporated by reference herein).
21 Subsidiaries of the Registrant.
27 Financial Data Schedule.