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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, 1996 Commission File No. 1-5273-1
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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)
430 Park Avenue, New York, N.Y. 10022-3505
(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
----------
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 (ss229.405 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 28, 1997 the aggregate market value of the voting stock held by
non-affiliates of the Registrant was $120,089,385.
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 7,743,859 shares were
outstanding at March 14, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Specified portions of the Sterling Bancorp 1996 Annual Report are
incorporated by reference in Parts I and II.
(2) Specified portions of the Sterling Bancorp definitive Proxy Statement dated
March 14, 1997 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 parent company") is a bank holding company, as
defined by the Bank Holding Company Act of 1956 ("the BHCA"), as amended.
Throughout the report, the term "the Company" refers to Sterling Bancorp and
its subsidiaries. The Sterling companies provide a full range of products and
services, including business and consumer loans, commercial and residential
mortgage lending and brokerage, asset-based financing, factoring, trade
financing, leasing, trust and estate administration and investment management
services. Sterling has operations in New York and Virginia and conducts
business throughout the United States. The parent company owns all of the
outstanding shares of Sterling National Bank ("the bank"), its principal
subsidiary, and all of the outstanding shares of Universal Finance Corporation,
Sterling Industrial Loan Association and Sterling Banking Corporation ("finance
subsidiaries"). On January 1, 1997, a new subsidiary - Sterling National
Mortgage Corp ("SNMC - Virginia") - was formed. Sterling National Mortgage
Company, Inc. ("SNMC-New York"), Sterling National Mortgage Corp.
("SNMC-Virginia") and Sterling Factors Corporation ("Factors") are wholly owned
subsidiaries of the bank. Until 1997, Factors was a finance subsidiary of the
Registrant. There is intense competition in all areas in which the Company
conducts its business. In addition to competing with other banks, the Company
competes in 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, 1996 and 1995. Reference is made to the
information beginning on page 43 of the Company's Annual Report (pages 11 to 49
of which are incorporated by reference herein) under the caption "CREDIT RISK".
December 31, 1996 December 31, 1995
------------------------------ -----------------------------
The Company The bank The Company The bank
----------- --------- ----------- --------
(in thousands)
Domestic
Commercial and industrial $351,281 $307,705 $313,118 $265,015
Lease Financing 40,489 40,489 24,311 24,311
Real estate - mortgage 64,368 64,368 49,790 49,790
Real estate - construction 1,136 1,136 1,040 1,040
Installment - individuals 15,537 15,537 14,876 14,876
Foreign
Governments and official
institutions 789 789 789 789
-------- -------- -------- --------
Loans, gross 473,600 430,024 403,924 355,821
Less: Unearned discounts 8,083 7,820 6,695 6,357
-------- -------- -------- --------
Loans, net of unearned
discounts $465,517 $422,204 $397,229 $349,464
======== ======== ======== ========
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.
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 40 of the Company's 1996 Annual Report. The Registrant and its
finance subsidiaries are subject to supervision and regulation by the Federal
Reserve Board; 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.
The Company and the bank are subject to risk-based capital regulations. The
purpose of these regulations is to quantitatively measure capital against
risk-weighted assets, including off-balance sheet items. These regulations
define the elements of total capital into Tier 1 and Tier 2 components and
establish minimum ratios of 4% for Tier 1 capital and 8% for Total Capital for
capital adequacy purposes. Supplementing these regulations is a leverage
requirement. This requirement establishes a minimum leverage ratio, (at least
4%) which is calculated by dividing Tier 1 capital by adjusted quarterly average
assets (after deducting goodwill). In addition, the Company and the bank are
subject to the provisions of the Federal Deposit Insurance Corporation
Improvement Act of 1981 ("FDICIA") which imposes a number of mandatory
supervisory measures. Among other
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matters, FDICIA established five capital categories ranging from "well
capitalized" to "critically under capitalized". Such classifications are used by
regulatory agencies to determine a bank's deposit insurance premium, and to
consider applications authorizing institutions to increase their asset size or
otherwise expand business activities or acquire other institutions. Under the
provisions of FDICIA, a "well capitalized" institution must maintain minimum
leverage, Tier 1 and Total Capital ratios of 5%, 6% and 10%, respectively. At
December 31, 1996, the Company and the bank exceeded the requirements for "well
capitalized" institutions. The capital components and ratios for the Company and
the bank are presented in the Company's 1996 Annual Report on page 35.
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 parent company 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 parent company 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 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 430 Park 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.
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. For these services, Factors 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.
Sterling's mortgage banking and brokerage business is conducted through
companies located in Virginia and New York. SNMC-Virginia originates and
services non-conforming mortgages, for its own portfolio and resale, on
residential properties in Virginia and several adjoining states. SNMC-New York
originates conforming, residential mortgage loans throughout the tri-state
metropolitan area, and has offices on Long Island and in Westchester.
Loans to companies in the textile and apparel industry represent 14% of the
commercial and industrial loan portfolio. There are no other industry
concentrations (exceeding 10% of loans, gross) in the commercial and industrial
loan portfolio. Approximately 75% of the bank's loans are to borrowers located
in the metropolitan New York area.
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The composition of income from the operations of the bank and its subsidiaries
for the years ended: [1] December 31, 1996 included interest and fees on
commercial and other loans (52%), interest and dividends on investment
securities (35%) and other (13%); [2] December 31, 1995 included interest and
fees on commercial and other loans (52%), interest and dividends on investment
securities (38%), and other (10%); [3] December 31, 1994 included interest and
fees on commercial and other loans (47%), interest and dividends on investment
securities (44%), and other (9%).
At December 31, 1996, the bank had 242 employees, consisting of 96 officers and
146 supervisory and clerical employees. The bank considers its relations with
its employees to be satisfactory.
Parent Company and Finance Subsidiaries
The parent company and its finance subsidiaries engage in various types of
secured financing activities such as asset based financing, consumer receivables
financing 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.
The parent company 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 Financial Services Company("Sterling Financial"), a nationwide provider
of consumer receivables financing, is a division of the parent company. Sterling
Financial 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. Sterling Financial administers these installment contracts for the
dealer, providing billing, payment processing and other bookkeeping services.
Sterling Financial makes advances to each dealer of up to 80% of the discounted
aggregate value of the dealer's installment contracts.
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The composition of income (excluding equity in undistributed net income of the
banking subsidiary) of the parent company and its finance subsidiaries for the
years ended: [1] December 31, 1996 included interest and fees on loans (42%),
interest and fees on accounts receivable factored (20%), dividends, interest and
service fees (31%) and other (7%); [2] 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%); [3] 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%). During these years, Factors and SNMC-Virginia were finance subsidiaries,
and the results of their operations were included in the foregoing and in all
financial statements relating to these years.
At December 31, 1996, the parent company and its finance subsidiaries employed
73 persons consisting of 18 officers with the balance of the employees
performing supervisory and clerical functions. The parent company 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 47, 48, and 49 of the Company's 1996 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 carrying values:
December 31,
------------------------------
1996 1995 1994
-------- -------- --------
(in thousands)
U.S. Treasury securities $ 41,246 52,373 $ 41,022
Obligations of U.S. government corporations
and agencies--mortgage-backed securities 254,243 238,397 261,433
Obligations of states and political sub-
divisions -- -- 30
Debt securities issued by foreign governments 2,750 3,500 4,000
Other debt securities -- -- 1,118
Federal Reserve Bank and other equity securities 6,092 4,968 4,179
-------- -------- --------
Total $304,331 $299,238 $311,782
======== ======== ========
Information regarding book values and range of maturities by type of security
and weighted average yields for totals of each category is presented in the
Company's 1996 Annual Report on pages 20 and 21 and is incorporated by reference
herein. The average yield by maturity range is not available.
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III. Loan Portfolio
The following table sets forth the composition of the Company's loan portfolio,
net of unearned discounts, at the end of each of the most recent five fiscal
years:
December 31,
-------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------------- ------------------- ------------------- ------------------- -------------------
% of % of % of % of % of
Balances Total Balances Total Balances Total Balances Total Balances Total
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
($ in thousands)
Domestic
Term Federal funds
sold $ -- -- $ -- --% $ -- --% $ 40,000 13.39% $ 99,000 34.28%
Commercial and
industrial 350,641 75.32 309,173 77.83 258,494 82.65 216,677 72.53 149,273 51.69
Lease financing 34,750 7.46 24,311 6.12 -- -- -- -- -- --
Real estate -
mortgage 63,633 13.67 48,588 12.23 39,997 12.79 31,474 10.54 30,987 10.73
Real estate -
construction 1,136 0.25 1,040 0.26 1,486 0.48 1,666 0.56 1,606 0.56
Installment -
individuals 14,568 3.13 13,328 3.36 12,003 3.84 8,145 2.73 7,136 2.47
Foreign
Government and
official insti-
tutions 789 0.17 789 0.20 789 0.25 789 0.26 789 0.27
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Loans, net of
unearned
discounts $465,517 100.00% $397,229 100.00% $312,769 100.00% $298,751 100.00% $288,791 100.00%
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
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, 1996:
Due One Due One Due After Total
Year to Five Five Gross
or Less Years Years Loans
-------- -------- -------- --------
(in thousands)
Commercial and industrial $344,367 $ 855 $ 6,059 $351,281
Lease financing 1,514 38,975 -- 40,489
Real estate - mortgage 19,378 8,592 36,398 64,368
Real estate - construction 1,136 -- -- 1,136
Foreign 789 -- -- 789
-------- -------- -------- --------
Total $367,184 $ 48,422 $ 42,457 $458,063
======== ======== ======== ========
Loans due after one year, which have:
Predetermined interest
rates $ 38,975 $ 42,457 $ 81,432
Floating or adjustable
interest rates 9,447 -- 9,447
-------- -------- --------
Total $ 48,422 $ 42,457 $ 90,879
======== ======== ========
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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 1996
Annual Report beginning on page 43 under the caption "CREDIT RISK", beginning on
page 22 in footnote 6 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 nonaccrual,
past due and restructured loans of the Company at the end of each of the most
recent five fiscal years; as of December 31, 1996, there were no foreign loans
accounted for on a nonaccrual basis or which were troubled debt restructurings:
December 31,
------------------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ------
(in thousands)
Nonaccrual basis loans* $ 442 $ 357 $ 575 $2,297[1] $3,309[1]
Past due 90 days or more
(other than the above)[2] 390 1,961 293 146 619
--------- --------- --------- --------- ------
Total $ 832 $ 2,318 $ 868 $ 2,443 $3,928
========= ========= ========= ========= ======
Note:Includes restructured
debt of $ -- $ -- $ -- $ -- $ --
========= ========= ========= ========= ======
*Interest income that would
have been earned on non-
accrual and reduced rate
loans outstanding $ 13 $ 22 $ 86 $ 169 $ 313
========= ========= ========= ========= ======
Applicable interest income
actually realized $ -- $ -- $ 18 $ 98 $ 72
========= ========= ========= ========= ======
Nonaccrual, past due and
restructured loans as a
percentage of total gross
loans .18% .58% .27% .80% 1.33%
========= ========= ========= ========= ======
[1] Includes $1.4 and $1.9 million at December 31, 1993, and 1992,
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 1996 Annual Report beginning on page
23 in footnote 7 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,
-----------------------------------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
(in thousands)
Average loans outstanding, net
of unearned discounts, during
year $ 376,879 $ 311,119 $ 255,223 $ 228,604 $ 211,917
========= ========= ========= ========= =========
Allowance for possible loan losses:
Balance at beginning of year $ 5,192 $ 4,136 $ 3,414 $ 3,177 $ 3,734
--------- --------- --------- --------- ---------
Charge-offs:
Commercial and industrial 561 622 401 670 1,461
Lease financing 49 344 -- -- 338
Real estate 71 16 109 -- --
Installment 57 19 22 45 120
--------- --------- --------- --------- ---------
Total charge-offs 738 1,001 532 715 1,919
--------- --------- --------- --------- ---------
Recoveries:
Commercial and industrial 1,456 144 196 28 20
Lease financing 37 -- 5 13 5
Real estate -- 47 -- -- --
Installment 9 -- -- 11 47
--------- --------- --------- --------- ---------
Total recoveries 1,502 191 201 52 72
--------- --------- --------- --------- ---------
(Add)/Subtract:
Net (recovery) charge-offs (764) 810 331 663 1,847
--------- --------- --------- --------- ---------
Provision for possible loan losses 2,047 1,866 1,053 690 1,290
--------- --------- --------- --------- ---------
Allowance - acquired portfolio -- -- -- 210 --
--------- --------- --------- --------- ---------
Balance at end of year $ 8,003 $ 5,192 $ 4,136 $ 3,414 $ 3,177
========= ========= ========= ========= =========
Ratio of net charge-offs to
average loans outstanding, net
of unearned discounts during
year -0-% .26% .13% .29% .87%
========= ========= ========= ========= =========
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 $209,627.
The Company considers its allowance for possible loan losses to be adequate
based upon the size and risk characteristics of the outstanding loan portfolio
at December 31, 1996. Net losses within the loan portfolio are not statistically
predictable and changes in conditions in the next twelve months could result in
future provisions for loan losses varying from the level taken in 1996.
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To comply with a regulatory requirement to provide an allocation of the
allowance for possible loan losses, the following table presents the Company's
allocation of the allowance. This allocation is based on subjective estimates by
management and may vary from year to year based on management's evaluation of
the risk characteristics of the loan portfolio. The information appearing in the
Company's 1996 Annual Report beginning on page 43 under the caption "CREDIT
RISK" is incorporated by reference herein. The amount allocated to a particular
loan category may not necessarily be indicative of actual future charge-offs in
a loan category. Management believes that the allowance must be viewed in its
entirety and is therefore available for future charge-offs in any loan category.
December 31,
-------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
--------------- --------------- -------------- -------------- ---------------
% of % of % of % of % of
Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
($ in thousands)
Domestic
Commercial and
industrial $3,369 0.96% $2,457 0.79% $2,487 0.96% $1,757 0.81% $1,135 0.76%
Lease financing 508 1.46 355 1.46 -- -- -- -- -- --
Real estate -
mortgage 566 0.89 472 0.97 434 1.09 291 0.92 323 1.04
Real estate -
construction 8 0.70 8 0.77 12 0.81 63 3.78 63 3.92
Installment -
individuals 279 1.92 167 1.25 142 1.18 94 1.15 98 1.37
Unallocated 3,273 -- 1,733 -- 1,061 -- 1,209 -- 1,558 --
------ ------ ------ ------ ------
Loans, net of
unearned
discounts $8,003 1.72% $5,192 1.31% $4,136 1.32% $3,414 1.14% $3,177 1.10%
====== ==== ====== ==== ====== ==== ====== ==== ====== ====
V. Deposits
Average deposits and average rates paid for each of the most recent three years
is presented in the Company's 1996 Annual Report on page 47 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 1996 Annual Report beginning on page 23 in footnote 8
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,
--------------------------------
1996 1995 1994
-------- -------- --------
(in thousands)
Domestic
Demand $229,977 $224,081 $174,897
NOW 32,761 30,150 34,055
Savings 25,548 26,967 29,201
Money Market 133,510 120,655 118,571
Time deposits, by remaining maturity
Within 3 months 63,092 68,689 58,527
After 3 months but within 1 year 68,725 49,715 23,172
After 1 but within 5 years 18,099 27,531 76,210
-------- -------- --------
Total domestic deposits 571,712 547,788 514,633
-------- -------- --------
Foreign
Time deposits, by remaining maturity
Within 3 months 1,710 2,240 1,670
After 3 months but within 1 year 1,000 1,000 1,000
-------- -------- --------
Total foreign deposits 2,710 3,240 2,670
-------- -------- --------
Total deposits $574,422 $551,028 $517,303
======== ======== ========
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Interest expense for the most recent three fiscal years is as follows:
Years Ended December 31,
---------------------------------
1996 1995 1994
------- ------- -------
(in thousands)
NOW $ 313 $ 286 $ 273
Savings 535 565 685
Money market 3,381 3,206 2,353
Time--domestic 7,740 7,328 5,058
--foreign 139 155 104
------- ------- -------
Total interest expense $12,108 $11,540 $ 8,473
======= ======= =======
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,
----------------------------
1996 1995 1994
-------- -------- -------
Return on average total assets (Net income
divided by average total assets) 1.06% .81% .61%
Return on average shareholders' equity (Net
income divided by average equity) 12.55% 10.00% 7.52%
Dividend payout ratio (Dividends declared per
share divided by net income per share) 27.20% 28.41% 33.33%
Average shareholders' equity to average total
assets (Average equity divided by average
total assets) 8.46% 8.11% 8.08%
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 1996 Annual Report on page 24 in footnote 9 and is incorporated by
reference herein.
I-11
14
Item 2. PROPERTIES
The principal offices of the Company occupy one floor at 430 Park Avenue,
New York, N.Y. consisting of approximately 15,000 square feet. The lease for
these premises expires June 29, 2001. Annual rental commitments approximate
$441,000. Certain finance subsidiaries maintain offices in Great Neck, New York
and Richmond, Virginia
In addition to the principal offices, the bank maintains operating leases for
four branch offices, the International Banking Facility, additional office space
and an Operations Center with an aggregate of approximately 89,200 square feet.
The annual office rental commitments for these premises approximates $1,050,000.
The leases have expiration dates ranging from 1998 through 2015 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 9 of the Sterling Bancorp Proxy Statement
dated March 14, 1997 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 46 of the Sterling Bancorp 1996 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 39 of the 1996 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 40 - 46 of the 1996 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 37 footnote 23 of the 1996 Annual Report is incorporated by reference
herein.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements as of December 31, 1996 and 1995
and for each of the years in the three-year period ended December 31, 1996 and
the statements of condition of Sterling National Bank as of December 31, 1996
and 1995, notes thereto and Independent Auditors' Report thereon appearing on
pages 12 - 38 of the 1996 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, 1997 under the caption "ELECTION OF DIRECTORS" and beginning on
page 8 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 66 1967
John C. Millman President, Director 54 1986
Jerrold Gilbert Executive Vice President, General
Counsel & Secretary 60 1974
John W. Tietjen Senior Vice President, Treasurer
and Chief Financial Officer 52 1989
John A. Aloisio Vice President 54 1992
Leonard Rudolph Vice President 49 1992
Frank J. Voso Vice President 53 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, 1997 under the caption " Executive Compensation and Related
Matters" and on page 7 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 8 of the Sterling Bancorp Proxy Statement
dated March 14, 1997 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 7 of the Sterling Bancorp Proxy Statement
dated March 14, 1997 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 1996 Annual
Report (This document is filed only to the extent of pages 11
through 49 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, 1995 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 (Filed as Exhibits 3.10(iii)(a) and 3.10(iii)(b),
respectively to the Registrant's Form 10-K for the
fiscal year ended December 31, 1995 and incorporated by
reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(iv) Amendments to Employment Agreements dated February 28,
1997
(a) For Louis J. Cappelli
(b) For John C. Millman
IV-1
18
11 Statement re Computation of Per Share Earnings.
13 Annual Report to security holders, Sterling Bancorp
1996 Annual Report (This document is filed only to the
extent of pages 11 through 49 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 27, 1997
-------------------------------------------
Date
/s/ John W. Tietjen
-------------------------------------------
John W. Tietjen, Treasurer
(Principal Financial and Accounting Officer)
March 27, 1997
-------------------------------------------
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 27, 1997 /s/ Louis J. Cappelli Director
- -------------- ------------------------- ------------
(Date) (Signature) (Title)
March 27, 1997 /s/ John C. Millman Director
- -------------- ------------------------- ------------
(Date) (Signature) (Title)
March 27, 1997 /s/ William C. Warren Director
- -------------- ------------------------- ------------
(Date) (Signature) (Title)
March 27, 1997 /s/ Allan F. Hershfield Director
- -------------- ------------------------- ------------
(Date) (Signature) (Title)
March 27, 1997 /s/ Lillian Berkman Director
- -------------- ------------------------- ------------
(Date) (Signature) (Title)
March 27, 1997 /s/ Henry J. Humphreys Director
- -------------- ------------------------- ------------
(Date) (Signature) (Title)
20
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, 1995 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 (Filed as
Exhibits 3.10(iii)(a) and 3.10(iii)(b), respectively to the
Registrant's Form 10-K for the fiscal year ended December 31, 1995
and incorporated by reference herein).
(a) For Louis J. Cappelli
(b) For John C. Millman
(iv) Amendments to Employment Agreements dated February 28, 1997
(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 1996 Annual
Report (This document is filed only to the extent of pages 11 through
49 which are filed herewith).
21 Subsidiaries of the Registrant.
27 Financial Data Schedule.