Attached files
file | filename |
---|---|
EX-11 - STERLING BANCORP | i00217_ex11.htm |
EX-31.2 - STERLING BANCORP | i00217_ex31-2.htm |
EX-32.2 - STERLING BANCORP | i00217_ex32-2.htm |
EX-32.1 - STERLING BANCORP | i00217_ex32-1.htm |
EX-31.1 - STERLING BANCORP | i00217_ex31-1.htm |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|
(Mark One) |
x QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
For the quarterly period ended March 31, 2011 |
or |
|
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
For the transition period from ___________________________________ to __________________________________ |
|
Commission File Number: 1-5273-1 |
|
Sterling Bancorp |
(Exact name of registrant as specified in its charter) |
|
|
New York |
12-2565216 |
|
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification) |
|
|
650 Fifth Avenue, New York, N.Y. |
10019-6108 |
|
|
(Address of principal executive offices) |
(Zip Code) |
|
|
212-757-3300 |
|
(Registrants telephone number, including area code) |
|
|
|
N/A |
|
(Former name, former address and former fiscal year, if changed since last report) |
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.
x Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(17 CFR § 232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
o Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company as defined in Rule 12b-2 of the Exchange Act. (Check one):
|
|
|
|
|
Large Accelerated Filer o |
Accelerated Filer x |
|
|
Non-Accelerated Filer o |
Smaller Reporting Company o |
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o Yes x No
As of April 30, 2011 there were
30,927,328 shares of common stock,
$1.00 par value, outstanding.
STERLING BANCORP
|
|
|
|
|
PART I FINANCIAL INFORMATION |
|
Page |
||
|
|
|
|
|
|
Item 1. |
Financial Statements |
|
|
|
|
|
|
|
|
|
|
3 |
|
|
|
|
8 |
|
|
|
|
|
|
|
Managements Discussion and Analysis of Financial Condition and Results of Operations |
|
|
|
|
|
|
|
|
|
|
|
39 |
|
|
|
|
40 |
|
|
|
|
42 |
|
|
|
|
49 |
|
|
|
|
50 |
|
|
|
|
50 |
|
|
|
|
51 |
|
|
|
|
52 |
|
|
|
|
53 |
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
54 |
|
|
|
|
56 |
|
|
|
|
57 |
|
|
|
|
|
|
|
|
58 |
||
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
59 |
||
|
|
|
|
|
|
|
59 |
||
|
|
|
|
|
|
60 |
|||
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
Exhibit 11 |
Statement Re: Computation of Per Share Earnings |
|
62 |
|
|
|
|
|
|
Exhibit 31.1 |
Certification of the CEO pursuant to Exchange Act Rule 13a-14(a) |
|
63 |
|
|
|
|
|
|
Exhibit 31.2 |
Certification of the CFO pursuant to Exchange Act Rule 13a-14(a) |
|
64 |
|
|
|
|
|
|
Exhibit 32.1 |
Certification of the CEO required by Section 1350 of Chapter 63 of Title 18 of the U.S. Code |
|
65 |
|
|
|
|
|
|
Exhibit 32.2 |
Certification of the CFO required by Section 1350 of Chapter 63 of Title 18 of the U.S. Code |
|
66 |
2
|
STERLING BANCORP AND SUBSIDIARIES |
(Unaudited) |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
March
31, |
|
December 31, |
|
||
|
|
|
|
|
|
||
ASSETS |
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
35,981 |
|
$ |
26,824 |
|
Interest-bearing deposits with other banks |
|
|
7,932 |
|
|
40,503 |
|
|
|
|
|
|
|
|
|
Securities available for sale (at estimated fair value; pledged: $75,188 in 2011 and $95,311 in 2010) |
|
|
414,164 |
|
|
390,080 |
|
Securities held to maturity (pledged: $295,549 in 2011 and $212,606 in 2010) (estimated fair value: $462,298 in 2011 and $400,453 in 2010) |
|
|
458,281 |
|
|
399,235 |
|
|
|
|
|
|
|
|
|
Total investment securities |
|
|
872,445 |
|
|
789,315 |
|
|
|
|
|
|
|
|
|
Loans held for sale |
|
|
24,102 |
|
|
32,049 |
|
|
|
|
|
|
|
|
|
Loans held in portfolio, net of unearned discounts |
|
|
1,288,649 |
|
|
1,314,234 |
|
Less allowance for loan losses |
|
|
18,040 |
|
|
18,238 |
|
|
|
|
|
|
|
|
|
Loans, net |
|
|
1,270,609 |
|
|
1,295,996 |
|
|
|
|
|
|
|
|
|
Federal Reserve and Federal Home Loan Bank stock, at cost |
|
|
8,674 |
|
|
9,365 |
|
Customers liability under acceptances |
|
|
228 |
|
|
|
|
Goodwill |
|
|
22,901 |
|
|
22,901 |
|
Premises and equipment, net |
|
|
18,000 |
|
|
15,909 |
|
Other real estate |
|
|
132 |
|
|
182 |
|
Accrued interest receivable |
|
|
9,296 |
|
|
8,280 |
|
Cash surrender value of life insurance policies |
|
|
51,998 |
|
|
51,512 |
|
Other assets |
|
|
70,247 |
|
|
67,621 |
|
|
|
|
|
|
|
|
|
|
|
$ |
2,392,545 |
|
$ |
2,360,457 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
Deposits |
|
|
|
|
|
|
|
Noninterest-bearing demand deposits |
|
$ |
561,524 |
|
$ |
570,290 |
|
Savings, NOW and money market deposits |
|
|
549,392 |
|
|
562,207 |
|
Time deposits |
|
|
617,169 |
|
|
615,267 |
|
|
|
|
|
|
|
|
|
Total deposits |
|
|
1,728,085 |
|
|
1,747,764 |
|
|
|
|
|
|
|
|
|
Securities sold under agreements to repurchase - customers |
|
|
21,107 |
|
|
23,016 |
|
Securities sold under agreements to repurchase - dealers |
|
|
5,000 |
|
|
5,000 |
|
Federal funds purchased |
|
|
60,000 |
|
|
15,000 |
|
Commercial paper |
|
|
15,391 |
|
|
14,388 |
|
Short-term borrowings - other |
|
|
4,525 |
|
|
3,490 |
|
Advances - FHLB |
|
|
128,815 |
|
|
144,173 |
|
Long-term borrowings - subordinated debentures |
|
|
25,774 |
|
|
25,774 |
|
|
|
|
|
|
|
|
|
Total borrowings |
|
|
260,612 |
|
|
230,841 |
|
|
|
|
|
|
|
|
|
Acceptances outstanding |
|
|
228 |
|
|
|
|
Accrued interest payable |
|
|
1,145 |
|
|
1,314 |
|
Due to factored clients |
|
|
70,117 |
|
|
91,543 |
|
Accrued expenses and other liabilities |
|
|
72,068 |
|
|
66,253 |
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
2,132,255 |
|
|
2,137,715 |
|
|
|
|
|
|
|
|
|
Shareholders equity |
|
|
|
|
|
|
|
Preferred stock, Series A, $5 par value; $1,000 liquidation value. Authorized 644,389 shares; issued 42,000 shares, respectively |
|
|
40,721 |
|
|
40,602 |
|
Common stock, $1 par value. Authorized 50,000,000 shares; issued 35,225,110 and 31,138,545 shares, respectively |
|
|
35,225 |
|
|
31,139 |
|
Warrants to purchase common stock |
|
|
2,615 |
|
|
2,615 |
|
Capital surplus |
|
|
268,878 |
|
|
236,437 |
|
Retained earnings |
|
|
11,915 |
|
|
11,392 |
|
Accumulated other comprehensive loss |
|
|
(12,508 |
) |
|
(12,887 |
) |
Common shares in treasury at cost, 4,297,782 and 4,297,782 shares, respectively |
|
|
(86,556 |
) |
|
(86,556 |
) |
|
|
|
|
|
|
|
|
Total shareholders equity |
|
|
260,290 |
|
|
222,742 |
|
|
|
|
|
|
|
|
|
|
|
$ |
2,392,545 |
|
$ |
2,360,457 |
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
3
|
STERLING BANCORP AND SUBSIDIARIES |
Consolidated Statements of Income |
(Unaudited) |
(dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
Three
Months Ended |
|
||||
|
|
|
|
||||
|
|
2011 |
|
2010 |
|
||
|
|
|
|
|
|
||
INTEREST INCOME |
|
|
|
|
|
|
|
Loans |
|
$ |
16,876 |
|
$ |
16,511 |
|
Investment securities |
|
|
|
|
|
|
|
Available for sale |
|
|
2,423 |
|
|
2,953 |
|
Held to maturity |
|
|
3,397 |
|
|
4,412 |
|
FRB and FHLB stock |
|
|
23 |
|
|
121 |
|
Deposits with other banks |
|
|
35 |
|
|
19 |
|
|
|
|
|
|
|
|
|
Total interest income |
|
|
22,754 |
|
|
24,016 |
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE |
|
|
|
|
|
|
|
Deposits |
|
|
|
|
|
|
|
Savings, NOW and money market |
|
|
700 |
|
|
965 |
|
Time |
|
|
1,360 |
|
|
1,675 |
|
Short-term borrowings |
|
|
78 |
|
|
87 |
|
Advances - FHLB |
|
|
664 |
|
|
871 |
|
Long-term borrowings - subordinated debentures |
|
|
523 |
|
|
523 |
|
|
|
|
|
|
|
|
|
Total interest expense |
|
|
3,325 |
|
|
4,121 |
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
19,429 |
|
|
19,895 |
|
|
|
|
|
|
|
|
|
Provision for loan losses |
|
|
3,000 |
|
|
6,000 |
|
|
|
|
|
|
|
|
|
Net interest income after provision for loan losses |
|
|
16,429 |
|
|
13,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST INCOME |
|
|
|
|
|
|
|
Accounts receivable management/factoring commissions and other fees |
|
|
5,368 |
|
|
5,127 |
|
Mortgage banking income |
|
|
2,175 |
|
|
1,677 |
|
Service charges on deposit accounts |
|
|
1,371 |
|
|
1,473 |
|
Securities gains |
|
|
729 |
|
|
1,502 |
|
Other income |
|
|
1,799 |
|
|
1,323 |
|
|
|
|
|
||||
Total noninterest income |
|
|
11,442 |
|
|
11,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST EXPENSE |
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
14,260 |
|
|
13,162 |
|
Occupancy and equipment expenses, net |
|
|
3,273 |
|
|
2,540 |
|
Deposit insurance |
|
|
933 |
|
|
754 |
|
Professional fees |
|
|
818 |
|
|
1,353 |
|
Other expenses |
|
|
3,169 |
|
|
3,527 |
|
|
|
|
|
||||
Total noninterest expenses |
|
|
22,453 |
|
|
21,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
5,418 |
|
|
3,661 |
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
1,475 |
|
|
1,098 |
|
|
|
|
|
|
|
|
|
Net income |
|
|
3,943 |
|
|
2,563 |
|
Dividends on preferred shares and accretion |
|
|
644 |
|
|
636 |
|
|
|
|
|
|
|
|
|
Net income available to common shareholders |
|
$ |
3,299 |
|
$ |
1,927 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of common shares outstanding |
|
|
|
|
|
|
|
Basic |
|
|
27,351,584 |
|
|
19,208,189 |
|
Diluted |
|
|
27,351,584 |
|
|
19,212,768 |
|
|
|
|
|
|
|
|
|
Net income available to common shareholders, per average common share |
|
|
|
|
|
|
|
Basic |
|
$ |
0.12 |
|
$ |
0.10 |
|
Diluted |
|
|
0.12 |
|
|
0.10 |
|
|
|
|
|
|
|
|
|
Dividends per common share |
|
|
0.09 |
|
|
0.09 |
|
See Notes to Consolidated Financial Statements.
4
|
STERLING BANCORP AND SUBSIDIARIES |
Consolidated Statements of Comprehensive Income |
(Unaudited) |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
||||
|
|
|
|
||||
|
|
2011 |
|
2010 |
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
Net income |
|
$ |
3,943 |
|
$ |
2,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income, net of tax: |
|
|
|
|
|
|
|
Unrealized gains on securities available for sale and other investments arising during the year |
|
|
379 |
|
|
1,214 |
|
|
|
|
|
|
|
|
|
Reclassification adjustment for gains included in net income |
|
|
(398 |
) |
|
(820 |
) |
|
|
|
|
|
|
|
|
Reclassification adjustment for amortization of: |
|
|
|
|
|
|
|
Prior service cost |
|
|
9 |
|
|
9 |
|
Net actuarial losses |
|
|
389 |
|
|
413 |
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
379 |
|
|
816 |
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
$ |
4,322 |
|
$ |
3,379 |
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
5
|
STERLING BANCORP AND SUBSIDIARIES |
Consolidated Statements of Changes in Shareholders Equity |
(Unaudited) |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
||||
|
|
|
|
||||
|
|
2011 |
|
2010 |
|
||
|
|
|
|
|
|
||
Preferred Stock |
|
|
|
|
|
|
|
Balance at January 1, |
|
$ |
40,602 |
|
$ |
40,113 |
|
Discount accretion |
|
|
119 |
|
|
111 |
|
|
|
|
|
|
|
|
|
Balance at March 31, |
|
$ |
40,721 |
|
$ |
40,224 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
|
|
|
|
|
Balance at January 1, |
|
$ |
31,139 |
|
$ |
22,227 |
|
Common shares issued |
|
|
4,025 |
|
|
8,625 |
|
Restricted shares issued |
|
|
61 |
|
|
84 |
|
Common shares issued under stock incentive plan |
|
|
|
|
|
203 |
|
|
|
|
|
|
|
|
|
Balance at March 31, |
|
$ |
35,225 |
|
$ |
31,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants to Purchase Common Stock |
|
|
|
|
|
|
|
Balance at January 1, and March 31, |
|
$ |
2,615 |
|
$ |
2,615 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Surplus |
|
|
|
|
|
|
|
Balance at January 1, |
|
$ |
236,437 |
|
$ |
178,734 |
|
Common shares issued |
|
|
32,429 |
|
|
56,240 |
|
Restricted shares issued |
|
|
(61 |
) |
|
(84 |
) |
Common shares issued under stock incentive plan and related tax benefits |
|
|
|
|
|
1,274 |
|
Stock option compensation and restricted stock expense |
|
|
73 |
|
|
36 |
|
|
|
|
|
|
|
|
|
Balance at March 31, |
|
$ |
268,878 |
|
$ |
236,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained Earnings |
|
|
|
|
|
|
|
Balance at January 1, |
|
$ |
11,392 |
|
$ |
15,828 |
|
Net income |
|
|
3,943 |
|
|
2,563 |
|
Cash dividends paid - preferred shares |
|
|
(525 |
) |
|
(525 |
) |
Cash dividends paid - common shares |
|
|
(2,776 |
) |
|
(1,630 |
) |
Discount accretion on series A preferred stock |
|
|
(119 |
) |
|
(111 |
) |
|
|
|
|
|
|
|
|
Balance at March 31, |
|
$ |
11,915 |
|
$ |
16,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive Loss |
|
|
|
|
|
|
|
Balance at January 1, |
|
$ |
(12,887 |
) |
$ |
(12,399 |
) |
Other comprehensive income, net of tax |
|
|
379 |
|
|
816 |
|
|
|
|
|
|
|
|
|
Balance at March 31, |
|
$ |
(12,508 |
) |
$ |
(11,583 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury Stock |
|
|
|
|
|
|
|
Balance at January 1, |
|
$ |
(86,556 |
) |
$ |
(85,168 |
) |
Surrender of shares issued under stock incentive plan |
|
|
|
|
|
(1,388 |
) |
|
|
|
|
|
|
|
|
Balance at March 31, |
|
$ |
(86,556 |
) |
$ |
(86,556 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shareholders Equity |
|
|
|
|
|
|
|
Balance at January 1, |
|
$ |
222,742 |
|
$ |
161,950 |
|
Net changes during the period |
|
|
37,548 |
|
|
66,214 |
|
|
|
|
|
|
|
|
|
Balance at March 31, |
|
$ |
260,290 |
|
$ |
228,164 |
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Financial Statements.
6
|
STERLING BANCORP AND SUBSIDIARIES |
Consolidated Statements of Cash Flows |
(Unaudited) |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
||||
|
|
|
|
||||
|
|
2011 |
|
2010 |
|
||
|
|
|
|
|
|
||
Operating Activities |
|
|
|
|
|
|
|
Net Income |
|
$ |
3,943 |
|
$ |
2,563 |
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
Provision for loan losses |
|
|
3,000 |
|
|
6,000 |
|
Depreciation and amortization of premises and equipment |
|
|
698 |
|
|
551 |
|
Securities gains |
|
|
(729 |
) |
|
(1,502 |
) |
Income (Loss) from life insurance policies, net |
|
|
22 |
|
|
(54 |
) |
Deferred income tax provision (benefit) |
|
|
446 |
|
|
(512 |
) |
Proceeds from sale of loans |
|
|
106,720 |
|
|
104,778 |
|
Gains on sales of loans, net |
|
|
(2,184 |
) |
|
(1,685 |
) |
Originations of loans held for sale |
|
|
(96,928 |
) |
|
(90,089 |
) |
Amortization of premiums on securities |
|
|
2,065 |
|
|
657 |
|
Accretion of discounts on securities |
|
|
(123 |
) |
|
(198 |
) |
(Increase) decrease in accrued interest receivable |
|
|
(1,016 |
) |
|
1,425 |
|
(Decrease) increase in accrued interest payable |
|
|
(169 |
) |
|
265 |
|
(Decrease) increase in due to factored clients |
|
|
(21,426 |
) |
|
6,070 |
|
(Decrease) increase in accrued expenses and other liabilities |
|
|
(3,950 |
) |
|
2,349 |
|
Increase in other assets |
|
|
(2,806 |
) |
|
(1,728 |
) |
Gain on other real estate owned |
|
|
|
|
|
(14 |
) |
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities |
|
|
(12,437 |
) |
|
28,876 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
|
Purchase of premises and equipment |
|
|
(2,789 |
) |
|
(2,449 |
) |
Net decrease (increase) in interest-bearing deposits with other banks |
|
|
32,571 |
|
|
(9,699 |
) |
Net decrease in loans held in portfolio |
|
|
15,707 |
|
|
5,513 |
|
Net decrease (increase) in short-term factored receivables |
|
|
7,018 |
|
|
(11,127 |
) |
Decrease in other real estate |
|
|
50 |
|
|
604 |
|
Proceeds from prepayments, redemptions or maturities of securities - held to maturity |
|
|
15,298 |
|
|
14,414 |
|
Purchases of securities - held to maturity |
|
|
(79,383 |
) |
|
(14,508 |
) |
Proceeds from calls of securities - held to maturity |
|
|
5,000 |
|
|
54,380 |
|
Proceeds from calls/sales of securities - available for sale |
|
|
88,587 |
|
|
123,285 |
|
Proceeds from prepayments, redemptions or maturities of securities - available for sale |
|
|
59,532 |
|
|
28,286 |
|
Purchases of securities - available for sale |
|
|
(163,934 |
) |
|
(208,128 |
) |
Proceeds from redemptions or maturities of securities - FHLB & FRB stock |
|
|
691 |
|
|
450 |
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(21,652 |
) |
|
(18,979 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities |
|
|
|
|
|
|
|
Net decrease in noninterest-bearing demand deposits |
|
|
(8,766 |
) |
|
(36,884 |
) |
Net decrease in savings, NOW and money market deposits |
|
|
(12,815 |
) |
|
(29,327 |
) |
Net increase in time deposits |
|
|
1,902 |
|
|
99,586 |
|
Net increase(decrease) in Federal funds purchased |
|
|
45,000 |
|
|
(41,000 |
) |
Net (decrease) increase in securities sold under agreements to repurchase |
|
|
(1,909 |
) |
|
12 |
|
Net increase(decrease) in commercial paper and other short-term borrowings |
|
|
2,038 |
|
|
(50,669 |
) |
Decrease in long-term borrowings |
|
|
(15,358 |
) |
|
(10,000 |
) |
Proceeds from exercise of stock options |
|
|
|
|
|
79 |
|
Proceeds from issuance of common stock |
|
|
36,455 |
|
|
64,865 |
|
Cash dividends paid on preferred stock |
|
|
(525 |
) |
|
(525 |
) |
Cash dividends paid on common stock |
|
|
(2,776 |
) |
|
(1,630 |
) |
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities |
|
|
43,246 |
|
|
(5,493 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and due from banks |
|
|
9,157 |
|
|
4,404 |
|
Cash and due from banks - beginning of period |
|
|
26,824 |
|
|
24,911 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks - end of period |
|
$ |
35,981 |
|
$ |
29,315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures: |
|
|
|
|
|
|
|
Interest paid |
|
$ |
3,494 |
|
$ |
3,856 |
|
Income taxes paid |
|
|
877 |
|
|
904 |
|
Loans held for sale transferred to portfolio |
|
|
338 |
|
|
|
|
Loans transferred to other real estate |
|
|
|
|
|
79 |
|
Due to brokers on purchases of securities - AFS |
|
|
10,493 |
|
|
20,830 |
|
Due to brokers on purchases of securities - HTM |
|
|
|
|
|
1,074 |
|
See Notes to Consolidated Financial Statements.
7
|
STERLING BANCORP AND SUBSIDIARIES |
(Unaudited) |
Note 1. Significant Accounting Policies
Nature of Operations. Sterling Bancorp (the parent company) is a financial holding company, pursuant to an election made under the Gramm-Leach-Bliley Act of 1999. Throughout the notes, the term the Company refers to Sterling Bancorp and its subsidiaries and the term the bank refers to Sterling National Bank and its subsidiaries. The Company provides a full range of financial products and services, including business and consumer loans, commercial and residential mortgage lending and brokerage, mortgage warehouse lending, asset-based financing, factoring/accounts receivable management services, trade financing, equipment financing and deposit services. The Company has operations principally in New York and conducts business throughout the United States.
The Companys financial statements are prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) which principally consist of the Financial Accounting Standards Board Accounting Standards Codification (FASB Codification). FASB Codification Topic 105: Generally Accepted Accounting Principles establishes the FASB codification as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative guidance for SEC registrants. All guidance contained in the FASB Codification carries an equal level of authority. All non-grandfathered, non-SEC accounting literature not included in the FASB Codification is superseded and deemed non-authoritative.
Basis of Presentation. The consolidated financial statements include the accounts of Sterling Bancorp and its subsidiaries, principally the bank, after elimination of intercompany transactions. The consolidated financial statements as of and for the interim periods ended March 31, 2011 and 2010 are unaudited; however, in the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of such periods have been made. Certain reclassifications have been made to the prior years consolidated financial statements to conform to the current presentation. Throughout the notes, dollar amounts presented in tables are in thousands, except per share data. The interim consolidated financial statements should be read in conjunction with the Companys annual report on Form 10-K for the year ended December 31, 2010 (the 2010 Form 10-K).
Use of Estimates. The preparation of financial statements in accordance with U.S. GAAP requires management to make assumptions and estimates which impact the amounts reported in those statements and are, by their nature, subject to change in the future as additional information becomes available or as circumstances vary. Actual results could differ from managements current estimates as a result of changing conditions and future events. The current economic environment has increased the degree of uncertainty inherent in these significant estimates. Several accounting estimates are particularly critical and are susceptible to significant near-term change, including the allowance for loan losses and asset impairment judgments, such as other-than-temporary declines in the value of securities and the accounting for income taxes. The judgments used by management in applying these critical accounting policies may be affected by a further and prolonged deterioration in the economic environment, which may result in changes to future financial results. For example, subsequent evaluations of the loan portfolio, in light of the factors then prevailing, may result in significant changes in the allowance for loan losses in future periods, and the inability to collect outstanding principal may result in increased loan losses. The Company evaluates subsequent events through the date that the financial statements are issued.
8
|
STERLING BANCORP AND SUBSIDIARIES |
Notes to Consolidated Financial Statements |
(Unaudited) |
Note 2. Investment Securities
The following tables present information regarding securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011 |
|
Amortized |
|
Gross |
|
Gross |
|
Fair |
|
||||
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||
Obligations of U.S. government corporations and government sponsored enterprises |
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
CMOs (Federal Home Loan Mortgage Corporation) |
|
$ |
55,910 |
|
$ |
103 |
|
$ |
559 |
|
$ |
55,454 |
|
CMOs (Government National Mortgage Association) |
|
|
6,837 |
|
|
5 |
|
|
12 |
|
|
6,830 |
|
Federal National Mortgage Association |
|
|
11,186 |
|
|
10 |
|
|
51 |
|
|
11,145 |
|
Federal Home Loan Mortgage Corporation |
|
|
42 |
|
|
2 |
|
|
1 |
|
|
43 |
|
Government National Mortgage Association |
|
|
107 |
|
|
|
|
|
|
|
|
107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total residential mortgage-backed securities |
|
|
74,082 |
|
|
120 |
|
|
623 |
|
|
73,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal National Mortgage Association |
|
|
20,088 |
|
|
12 |
|
|
34 |
|
|
20,066 |
|
Federal Home Loan Bank |
|
|
10,000 |
|
|
|
|
|
129 |
|
|
9,871 |
|
Federal Home Loan Mortgage Corporation |
|
|
19,981 |
|
|
|
|
|
267 |
|
|
19,714 |
|
Federal Farm Credit Bank |
|
|
10,000 |
|
|
11 |
|
|
|
|
|
10,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total obligations of U.S. government corporations and government sponsored enterprises |
|
|
134,151 |
|
|
143 |
|
|
1,053 |
|
|
133,241 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of state and political institutions-New York Bank Qualified |
|
|
28,461 |
|
|
348 |
|
|
137 |
|
|
28,672 |
|
Single-issuer, trust preferred securities |
|
|
8,633 |
|
|
98 |
|
|
65 |
|
|
8,666 |
|
Corporate debt securities |
|
|
239,026 |
|
|
184 |
|
|
551 |
|
|
238,659 |
|
Other securities |
|
|
5,039 |
|
|
1 |
|
|
114 |
|
|
4,926 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
415,310 |
|
$ |
774 |
|
$ |
1,920 |
|
$ |
414,164 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
STERLING BANCORP AND SUBSIDIARIES |
Notes to Consolidated Financial Statements |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
Amortized |
|
Gross |
|
Gross |
|
Fair |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Obligations of U.S. government corporations and government sponsored enterprises |
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
CMOs (Federal Home Loan Mortgage Corporation) |
|
$ |
36,026 |
|
$ |
64 |
|
$ |
372 |
|
$ |
35,718 |
|
CMOs (Government National Mortgage Association) |
|
|
7,218 |
|
|
72 |
|
|
|
|
|
7,290 |
|
Federal National Mortgage Association |
|
|
8,750 |
|
|
84 |
|
|
13 |
|
|
8,821 |
|
Federal Home Loan Mortgage Corporation |
|
|
44 |
|
|
2 |
|
|
1 |
|
|
45 |
|
Government National Mortgage Association |
|
|
110 |
|
|
|
|
|
1 |
|
|
109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total residential mortgage-backed securities |
|
|
52,148 |
|
|
222 |
|
|
387 |
|
|
51,983 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal National Mortgage Association |
|
|
30,087 |
|
|
77 |
|
|
|
|
|
30,164 |
|
Federal Home Loan Bank |
|
|
10,000 |
|
|
|
|
|
59 |
|
|
9,941 |
|
Federal Home Loan Mortgage Corporation |
|
|
49,964 |
|
|
132 |
|
|
110 |
|
|
49,986 |
|
Federal Farm Credit Bank |
|
|
10,000 |
|
|
31 |
|
|
|
|
|
10,031 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total obligations of U.S. government corporations and government sponsored enterprises |
|
|
152,199 |
|
|
462 |
|
|
556 |
|
|
152,105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of state and political institutions-New York Bank Qualified |
|
|
39,967 |
|
|
780 |
|
|
703 |
|
|
40,044 |
|
Single-issuer, trust preferred securities |
|
|
3,879 |
|
|
79 |
|
|
25 |
|
|
3,933 |
|
Corporate debt securities |
|
|
189,091 |
|
|
278 |
|
|
311 |
|
|
189,058 |
|
Other securities |
|
|
5,039 |
|
|
1 |
|
|
100 |
|
|
4,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
390,175 |
|
$ |
1,600 |
|
$ |
1,695 |
|
$ |
390,080 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
|
STERLING BANCORP AND SUBSIDIARIES |
Notes to Consolidated Financial Statements |
(Unaudited) |
The following tables present information regarding securities held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011 |
|
Carrying |
|
Gross |
|
Gross |
|
Fair |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
|
|||||||||||||
Obligations of U.S. government corporations and government sponsored enterprises |
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
CMOs (Federal National Mortgage Association) |
|
$ |
6,182 |
|
$ |
265 |
|
$ |
|
|
$ |
6,447 |
|
CMOs (Federal Home Loan Mortgage Corporation) |
|
|
9,838 |
|
|
423 |
|
|
|
|
|
10,261 |
|
Federal National Mortgage Association |
|
|
63,976 |
|
|
4,060 |
|
|
|
|
|
68,036 |
|
Federal Home Loan Mortgage Corporation |
|
|
34,756 |
|
|
1,851 |
|
|
|
|
|
36,607 |
|
Government National Mortgage Association |
|
|
4,726 |
|
|
569 |
|
|
|
|
|
5,295 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total residential mortgage-backed securities |
|
|
119,478 |
|
|
7,168 |
|
|
|
|
|
126,646 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal National Mortgage Association |
|
|
109,948 |
|
|
62 |
|
|
1,634 |
|
|
108,376 |
|
Federal Home Loan Bank |
|
|
49,979 |
|
|
4 |
|
|
229 |
|
|
49,754 |
|
Federal Home Loan Mortgage Corporation |
|
|
57,483 |
|
|
13 |
|
|
652 |
|
|
56,844 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total obligations of U.S. government corporations and government sponsored enterprises |
|
|
336,888 |
|
|
7,247 |
|
|
2,515 |
|
|
341,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of state and political institutions-New York Bank Qualified |
|
|
121,393 |
|
|
738 |
|
|
1,453 |
|
|
120,678 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
458,281 |
|
$ |
7,985 |
|
$ |
3,968 |
|
$ |
462,298 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
|
STERLING BANCORP AND SUBSIDIARIES |
Notes to Consolidated Financial Statements |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
Carrying |
|
Gross |
|
Gross |
|
Fair |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. government corporations and government sponsored enterprises |
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
CMOs (Federal National Mortgage Association) |
|
$ |
7,504 |
|
$ |
349 |
|
$ |
|
|
$ |
7,853 |
|
CMOs (Federal Home Loan Mortgage Corporation) |
|
|
11,704 |
|
|
572 |
|
|
|
|
|
12,276 |
|
Federal National Mortgage Association |
|
|
70,001 |
|
|
4,292 |
|
|
|
|
|
74,293 |
|
Federal Home Loan Mortgage Corporation |
|
|
40,583 |
|
|
1,931 |
|
|
|
|
|
42,514 |
|
Government National Mortgage Association |
|
|
4,943 |
|
|
605 |
|
|
|
|
|
5,548 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total residential mortgage-backed securities |
|
|
134,735 |
|
|
7,749 |
|
|
|
|
|
142,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal National Mortgage Association |
|
|
84,969 |
|
|
5 |
|
|
1,405 |
|
|
83,569 |
|
Federal Home Loan Bank |
|
|
14,991 |
|
|
|
|
|
222 |
|
|
14,769 |
|
Federal Home Loan Mortgage Corporation |
|
|
42,493 |
|
|
4 |
|
|
608 |
|
|
41,889 |
|
Federal Farm Credit Bank |
|
|
5,078 |
|
|
|
|
|
42 |
|
|
5,036 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total obligations of U.S. government corporations and government sponsored enterprises |
|
|
282,266 |
|
|
7,758 |
|
|
2,277 |
|
|
287,747 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of state and political institutions-New York Bank Qualified |
|
|
116,969 |
|
|
118 |
|
|
4,381 |
|
|
112,706 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
399,235 |
|
$ |
7,876 |
|
$ |
6,658 |
|
$ |
400,453 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
|
STERLING BANCORP AND SUBSIDIARIES |
Notes to Consolidated Financial Statements |
(Unaudited) |
The following tables present information regarding securities available for sale with temporary unrealized losses for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Than 12 Months |
|
12 Months or Longer |
|
Total |
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||
March 31, 2011 |
|
Fair |
|
Unrealized |
|
Fair |
|
Unrealized |
|
Fair |
|
Unrealized |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Obligations of U.S. government corporations and government sponsored enterprises |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CMOs (Federal Home Loan Mortgage Corporation) |
|
$ |
40,039 |
|
$ |
559 |
|
$ |
|
|
$ |
|
|
$ |
40,039 |
|
$ |
559 |
|
CMOs (Government National Mortgage Association) |
|
|
2,587 |
|
|
12 |
|
|
|
|
|
|
|
|
2,587 |
|
|
12 |
|
Federal National Mortgage Association |
|
|
11,045 |
|
|
51 |
|
|
|
|
|
|
|
|
11,045 |
|
|
51 |
|
Federal Home Loan Mortgage Corporation |
|
|
26 |
|
|
1 |
|
|
|
|
|
|
|
|
26 |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total residential mortgage-backed securities |
|
|
53,697 |
|
|
623 |
|
|
|
|
|
|
|
|
53,697 |
|
|
623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal National Mortgage Association |
|
|
15,056 |
|
|
34 |
|
|
|
|
|
|
|
|
15,056 |
|
|
34 |
|
Federal Home Loan Bank |
|
|
9,871 |
|
|
129 |
|
|
|
|
|
|
|
|
9,871 |
|
|
129 |
|
Federal Home Loan Mortgage Corporation |
|
|
19,714 |
|
|
267 |
|
|
|
|
|
|
|
|
19,714 |
|
|
267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total obligations of U.S. government corporations and government sponsored enterprises |
|
|
98,338 |
|
|
1,053 |
|
|
|
|
|
|
|
|
98,338 |
|
|
1,053 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of state and political institutions-New York Bank Qualified |
|
|
8,002 |
|
|
137 |
|
|
|
|
|
|
|
|
8,002 |
|
|
137 |
|
Single-issuer, trust preferred securities |
|
|
2,979 |
|
|
53 |
|
|
2,124 |
|
|
12 |
|
|
5,103 |
|
|
65 |
|
Corporate debt securities |
|
|
166,168 |
|
|
551 |
|
|
|
|
|
|
|
|
166,168 |
|
|
551 |
|
Other securities |
|
|
4,886 |
|
|
114 |
|
|
|
|
|
|
|
|
4,886 |
|
|
114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
280,373 |
|
$ |
1,908 |
|
$ |
2,124 |
|
$ |
12 |
|
$ |
282,497 |
|
$ |
1,920 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. government corporations and government sponsored enterprises |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CMOs (Federal Home Loan Mortgage Corporation) |
|
$ |
30,494 |
|
$ |
372 |
|
$ |
|
|
$ |
|
|
$ |
30,494 |
|
$ |
372 |
|
Federal National Mortgage Association |
|
|
7,269 |
|
|
13 |
|
|
|
|
|
|
|
|
7,269 |
|
|
13 |
|
Federal Home Loan Mortgage Corporation |
|
|
28 |
|
|
1 |
|
|
|
|
|
|
|
|
28 |
|
|
1 |
|
Government National Mortgage Association |
|
|
110 |
|
|
1 |
|
|
|
|
|
|
|
|
110 |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total residential mortgage-backed securities |
|
|
37,901 |
|
|
387 |
|
|
|
|
|
|
|
|
37,901 |
|
|
387 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Home Loan Bank |
|
|
9,941 |
|
|
59 |
|
|
|
|
|
|
|
|
9,941 |
|
|
59 |
|
Federal Home Loan Mortgage Corporation |
|
|
9,875 |
|
|
110 |
|
|
|
|
|
|
|
|
9,875 |
|
|
110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total obligations of U.S. government corporations and government sponsored enterprises |
|
|
57,717 |
|
|
556 |
|
|
|
|
|
|
|
|
57,717 |
|
|
556 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of state and political institutions-New York Bank Qualified |
|
|
18,716 |
|
|
703 |
|
|
|
|
|
|
|
|
18,716 |
|
|
703 |
|
Single-issuer, trust preferred securities |
|
|
|
|
|
|
|
|
2,111 |
|
|
25 |
|
|
2,111 |
|
|
25 |
|
Corporate debt securities |
|
|
92,392 |
|
|
311 |
|
|
|
|
|
|
|
|
92,392 |
|
|
311 |
|
Other securities |
|
|
4,900 |
|
|
100 |
|
|
|
|
|
|
|
|
4,900 |
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
173,725 |
|
$ |
1,670 |
|
$ |
2,111 |
|
$ |
25 |
|
$ |
175,836 |
|
$ |
1,695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
|
STERLING BANCORP AND SUBSIDIARIES |
Notes to Consolidated Financial Statements |
(Unaudited) |
The following tables present information regarding securities held to maturity with temporary unrealized losses for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Than 12 Months |
|
12 Months or Longer |
|
Total |
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||
March 31, 2011 |
|
Fair |
|
Unrealized |
|
Fair |
|
Unrealized |
|
Fair |
|
Unrealized |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. government corporations and government sponsored enterprises - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal National Mortgage Association |
|
$ |
78,337 |
|
$ |
1,634 |
|
$ |
|
|
$ |
|
|
$ |
78,337 |
|
$ |
1,634 |
|
Federal Home Loan Bank |
|
|
39,757 |
|
|
229 |
|
|
|
|
|
|
|
|
39,757 |
|
|
229 |
|
Federal Home Loan Mortgage Corporation |
|
|
51,836 |
|
|
652 |
|
|
|
|
|
|
|
|
51,836 |
|
|
652 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total obligations of U.S. government corporations and government sponsored enterprises |
|
|
169,930 |
|
|
2,515 |
|
|
|
|
|
|
|
|
169,930 |
|
|
2,515 |
|
Obligations of state and political institutions-New York Bank Qualified |
|
|
64,624 |
|
|
1,227 |
|
|
2,825 |
|
|
226 |
|
|
67,449 |
|
|
1,453 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
234,554 |
|
$ |
3,742 |
|
$ |
2,825 |
|
$ |
226 |
|
$ |
237,379 |
|
$ |
3,968 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. government corporations and government sponsored enterprises - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal National Mortgage Association |
|
$ |
78,564 |
|
$ |
1,405 |
|
$ |
|
|
$ |
|
|
$ |
78,564 |
|
$ |
1,405 |
|
Federal Home Loan Bank |
|
|
14,769 |
|
|
222 |
|
|
|
|
|
|
|
|
14,769 |
|
|
222 |
|
Federal Home Loan Mortgage Corporation |
|
|
36,890 |
|
|
608 |
|
|
|
|
|
|
|
|
36,890 |
|
|
608 |
|
Federal Farm Credit Bank |
|
|
5,036 |
|
|
42 |
|
|
|
|
|
|
|
|
5,036 |
|
|
42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total obligations of U.S. government corporations and government sponsored enterprises |
|
|
135,259 |
|
|
2,277 |
|
|
|
|
|
|
|
|
135,259 |
|
|
2,277 |
|
Obligations of state and political institutions-New York Bank Qualified |
|
|
94,309 |
|
|
4,103 |
|
|
2,277 |
|
|
278 |
|
|
96,586 |
|
|
4,381 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
229,568 |
|
$ |
6,380 |
|
$ |
2,277 |
|
$ |
278 |
|
$ |
231,845 |
|
$ |
6,658 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
The following table presents information regarding single-issuer, trust preferred securities at March 31, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuer |
|
TARP |
|
Credit |
|
Amortized |
|
Fair |
|
Unrealized |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Sterling Bancorp Trust I, 8.375%, due 3/31/2032 |
|
|
Yes |
|
|
NA |
|
$ |
981 |
|
$ |
1,031 |
|
$ |
50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NPB Capital Trust II, 7.85%, due 9/30/2032 |
|
|
Yes |
* |
|
NA |
|
|
126 |
|
|
125 |
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VNB Capital Trust I, 7.75%, due 12/15/2031 |
|
|
Yes |
* |
|
BBB- |
|
|
22 |
|
|
22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HSBC Finance, 6.875%, |
|
|
No |
|
|
A |
|
|
740 |
|
|
772 |
|
|
32 |
|
owned by HSBC Group, PLC |
|
|
No |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Citigroup Capital VII,
7.125%, |
|
|
Yes |
* |
|
BB+ |
|
|
1,508 |
|
|
1,499 |
|
|
(9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fleet Capital Trust
VIII, 7.20%, |
|
|
No |
|
|
BB+ |
|
|
502 |
|
|
500 |
|
|
(2 |
) |
owned by Bank of America Corporation |
|
|
Yes |
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BAC Capital Trust II, 7.00%, |
|
|
Yes |
* |
|
BB+ |
|
|
300 |
|
|
301 |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JP MorganChase Capital XI,
5.875%, |
|
|
Yes |
* |
|
BBB+ |
|
|
525 |
|
|
520 |
|
|
(5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Citigroup Capital
VIII, 6.95%, |
|
|
Yes |
* |
|
BB+ |
|
|
245 |
|
|
247 |
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goldman Sachs Capital
I, 6.345%, |
|
|
Yes |
* |
|
BBB- |
|
|
995 |
|
|
961 |
|
|
(34 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Morgan Stanley Capital
Trust III, 6.25%, |
|
|
Yes |
* |
|
BB+ |
|
|
939 |
|
|
950 |
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keycorp Capital V,
5.875%, |
|
|
Yes |
* |
|
BB |
|
|
238 |
|
|
240 |
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BB&T Capital Trust I,
5.85%, |
|
|
Yes |
* |
|
BBB |
|
|
960 |
|
|
952 |
|
|
(8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JP MorganChase
XVII, 5.85%, |
|
|
Yes |
* |
|
BBB+ |
|
|
460 |
|
|
458 |
|
|
(2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keycorp Capital II,
6.875%, |
|
|
Yes |
* |
|
BB |
|
|
92 |
|
|
88 |
|
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
8,633 |
|
$ |
8,666 |
|
$ |
33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* TARP obligation was repaid prior to March 31, 2011.
15
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
The Company invests principally in obligations of U.S. government corporations and government sponsored enterprises and other investment-grade securities. The fair value of these investments fluctuates based on several factors, including credit quality and general interest rate changes. The Company determined that it is not more likely than not that the Company would be required to sell before anticipated recovery.
At March 31, 2011, approximately $118.5 million, representing approximately 13.6%, of the Companys held to maturity and available for sale securities are comprised of securities issued by financial service companies/banks including single-issuer trust preferred securities (11 issuers), corporate debt (18 issuers) and equity securities (8 issuers). These investments may pose a higher risk of future impairment charges as result of a possible further deterioration of the U.S. economy. The Company would be required to recognize impairment charges on these securities if they suffer a decline in value that is considered other-than-temporary. Numerous factors, including lack of liquidity for re-sales of certain investment securities, absence of reliable pricing information for investment securities, adverse changes in business climate, adverse actions by regulators or unanticipated changes in the competitive environment could have a negative effect on the Companys investment portfolio and may result in other than temporary impairment on certain investment securities in future periods.
At March 31, 2011, the Company held 3 securities positions of single-issuer, trust preferred securities issued by financial institutions, in the available for sale portfolio, that were in an unrealized loss position for more than 12 months all of which are paying in accordance with their terms and have no deferrals of interest or other deferrals. In addition, management analyzes the performance of the issuers on a periodic basis, including a review of the issuers most recent bank regulatory report and other public regulatory disclosures, to assess credit risk and the probability of impairment of the contractual cash flows of the applicable securities. Based upon managements first quarter review, all of the issuers have maintained performance levels adequate to support the contractual cash flows of the securities.
At March 31, 2011, the Company held 11 issues of obligations of state and political institutions, in the held to maturity portfolio, that were in an unrealized loss position for more than 12 months. All of these securities were rated A at issuance and carry private insurance which guarantees principal and interest payments. Management has concluded that the unrealized losses are due to changes in market interest rates and/or changes in securities markets which resulted from temporary illiquidity and/or uncertainty in those markets. Further, management has made an evaluation that it has the intent to hold these securities until maturity and it is not more likely than not that the Company would be required to sell before anticipated recovery. As a result, the unrealized losses are deemed to be temporary.
16
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
The following tables present information regarding securities available for sale and securities held to maturity at March 31, 2011, based on contractual maturity. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
|
|
|
|
|
|
|
|
Available for sale |
|
Amortized |
|
Fair |
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
Obligations of U.S. government corporations and government sponsored enterprises |
|
|
|
|
|
|
|
Residential mortgage-backed securities |
|
|
|
|
|
|
|
CMOs (Federal Home Loan Mortgage Corporation) |
|
$ |
55,910 |
|
$ |
55,454 |
|
CMOs (Government National Mortgage Association) |
|
|
6,837 |
|
|
6,830 |
|
Federal National Mortgage Association |
|
|
11,186 |
|
|
11,145 |
|
Federal Home Loan Mortgage Corporation |
|
|
42 |
|
|
43 |
|
Government National Mortgage Association |
|
|
107 |
|
|
107 |
|
|
|
|
|
|
|
|
|
Total residential mortgage-backed securities |
|
|
74,082 |
|
|
73,579 |
|
|
|
|
|
|
|
|
|
Agency notes |
|
|
|
|
|
|
|
Federal National Mortgage Association |
|
|
|
|
|
|
|
Due after 1 year but within 5 years |
|
|
9,989 |
|
|
9,985 |
|
Due after 5 years but within 10 years |
|
|
10,099 |
|
|
10,081 |
|
Federal Home Loan Bank |
|
|
|
|
|
|
|
Due after 5 years but within 10 years |
|
|
10,000 |
|
|
9,871 |
|
Federal Home Loan Mortgage Corporation |
|
|
|
|
|
|
|
Due after 5 years but within 10 years |
|
|
19,981 |
|
|
19,714 |
|
Federal Farm Credit Bank |
|
|
|
|
|
|
|
Due after 1 year but within 5 years |
|
|
10,000 |
|
|
10,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total obligations of U.S. government corporations and government sponsored enterprises |
|
|
134,151 |
|
|
133,241 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of state and political institutions - New York Bank Qualified |
|
|
|
|
|
|
|
Due within 1 year |
|
|
1,417 |
|
|
1,428 |
|
Due after 1 year but within 5 years |
|
|
2,859 |
|
|
2,949 |
|
Due after 5 years but within 10 years |
|
|
2,977 |
|
|
3,039 |
|
Due after 10 years |
|
|
21,208 |
|
|
21,256 |
|
|
|
|
|
|
|
|
|
Total obligations of state and political institutions-New York Bank Qualified |
|
|
28,461 |
|
|
28,672 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-issuer, trust preferred securities |
|
|
|
|
|
|
|
Due after 10 years |
|
|
8,633 |
|
|
8,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities |
|
|
|
|
|
|
|
Due within 6 months |
|
|
103,161 |
|
|
103,207 |
|
Due after 6 months but within 1 year |
|
|
66,148 |
|
|
66,097 |
|
Due after 1 year but within 2 years |
|
|
48,399 |
|
|
48,160 |
|
Due after 2 years but within 5 years |
|
|
21,318 |
|
|
21,195 |
|
|
|
|
|
|
|
|
|
Total corporate debt securities |
|
|
239,026 |
|
|
238,659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other securities |
|
|
5,039 |
|
|
4,926 |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
415,310 |
|
$ |
414,164 |
|
|
|
|
|
|
|
|
|
17
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
|
|
|
|
|
|
|
|
Held to maturity |
|
Carrying |
|
Fair |
|
||
|
|
|
|
|
|
||
|
|||||||
Obligations of U.S. government corporations and government sponsored enterprises |
|
|
|
|
|
|
|
Residential mortgage-backed securities |
|
|
|
|
|
|
|
CMOs (Federal National Mortgage Association) |
|
$ |
6,182 |
|
$ |
6,447 |
|
CMOs (Federal Home Loan Mortgage Corporation) |
|
|
9,838 |
|
|
10,261 |
|
Federal National Mortgage Association |
|
|
63,976 |
|
|
68,036 |
|
Federal Home Loan Mortgage Corporation |
|
|
34,756 |
|
|
36,607 |
|
Government National Mortgage Association |
|
|
4,726 |
|
|
5,295 |
|
|
|
|
|
|
|
|
|
Total residential mortgage-backed securities |
|
|
119,478 |
|
|
126,646 |
|
|
|
|
|
|
|
|
|
Agency notes |
|
|
|
|
|
|
|
Federal National Mortgage Association |
|
|
|
|
|
|
|
Due after 1 year but within 5 years |
|
|
39,994 |
|
|
39,666 |
|
Due after 5 years but within 10 years |
|
|
39,960 |
|
|
38,997 |
|
Due after 10 years |
|
|
29,994 |
|
|
29,713 |
|
Federal Home Loan Bank |
|
|
|
|
|
|
|
Due after 1 year but within 5 years |
|
|
19,991 |
|
|
19,861 |
|
Due after 5 years but within 10 years |
|
|
29,988 |
|
|
29,893 |
|
Federal Home Loan Mortgage Corporation |
|
|
|
|
|
|
|
Due within 1 year |
|
|
5,000 |
|
|
4,993 |
|
Due after 1 year but within 5 years |
|
|
29,995 |
|
|
29,851 |
|
Due after 5 years but within 10 years |
|
|
22,488 |
|
|
22,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total obligations of U.S. government corporations and government sponsored enterprises |
|
|
336,888 |
|
|
341,620 |
|
|
|
|
|
|
|
|
|
Obligations of state and political institutions - New York Bank Qualified |
|
|
|
|
|
|
|
Due after 5 years but within 10 years |
|
|
1,077 |
|
|
1,112 |
|
Due after 10 years |
|
|
120,316 |
|
|
119,566 |
|
|
|
|
|
|
|
|
|
Total obligations of state and political institutions-New York Bank Qualified |
|
|
121,393 |
|
|
120,678 |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
458,281 |
|
$ |
462,298 |
|
|
|
|
|
|
|
|
|
Information regarding sales/calls of available for sale securities is as follows:
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
||||
|
|
|
|
||||
|
|
2011 |
|
2010 |
|
||
|
|
|
|
|
|
||
|
|||||||
Sales |
|
|
|
|
|
|
|
Proceeds |
|
$ |
55,898 |
|
$ |
58,260 |
|
Gross gains |
|
|
757 |
|
|
1,499 |
|
Gross losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calls |
|
|
|
|
|
|
|
Proceeds |
|
|
32,689 |
|
|
65,025 |
|
Gross gains |
|
|
48 |
|
|
1 |
|
Gross losses |
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
Information regarding calls of held to maturity securities is as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
||||
|
|
|
|
||||
|
|
2011 |
|
2010 |
|
||
|
|
|
|
|
|
||
Calls |
|
|
|
|
|
|
|
Proceeds |
|
$ |
5,000 |
|
$ |
54,380 |
|
Gross gains |
|
|
|
|
|
3 |
|
Gross losses |
|
|
76 |
|
|
|
|
There were no sales or transfers of held to maturity securities during the three-month periods ended March 31, 2011 or March 31, 2010.
18
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
Note 3. Loans and allowance for loan losses
The major components of domestic loans held for sale and loans held in portfolio are as follows:
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
||
|
|
|
|
|
|
||
Loans held for sale, net of valuation reserve ($-0- at March 31, 2011 and $113 at December 31, 2010) |
|
|
|
|
|
|
|
Real estateresidential mortgage |
|
$ |
24,102 |
|
$ |
32,049 |
|
|
|
|
|
|
|
|
|
Loans held in portfolio, net of unearned discounts |
|
|
|
|
|
|
|
Commercial and industrial |
|
|
592,566 |
|
|
620,136 |
|
Equipment financing receivables |
|
|
156,473 |
|
|
161,054 |
|
Factored receivables |
|
|
154,948 |
|
|
162,070 |
|
Real estateresidential mortgage |
|
|
132,659 |
|
|
127,695 |
|
Real estatecommercial mortgage |
|
|
98,216 |
|
|
96,991 |
|
Real estateconstruction and land development |
|
|
23,975 |
|
|
25,624 |
|
Loans to individuals |
|
|
11,699 |
|
|
11,370 |
|
Loans to depository institutions |
|
|
25,505 |
|
|
15,425 |
|
Loans to nondepository financial institutions |
|
|
110,590 |
|
|
112,882 |
|
|
|
|
|
|
|
|
|
Loans held in portfolio, gross |
|
|
1,306,631 |
|
|
1,333,247 |
|
Less unearned discounts |
|
|
17,982 |
|
|
19,013 |
|
|
|
|
|
|
|
|
|
Loans held in portfolio, net of unearned discounts |
|
|
1,288,649 |
|
|
1,314,234 |
|
|
|
|
|
|
|
|
|
|
|
$ |
1,312,751 |
|
$ |
1,346,283 |
|
|
|
|
|
|
|
|
|
At March 31, 2011, the bank had qualified loans, at carrying value of approximately $432.1 million, available to secure borrowings from the FHLB and the FRB. There were no loans pledged at March 31, 2011.
Loan Origination/Risk Management
The Company has lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.
The Company maintains an independent loan review process that reviews and validates the credit risk program on a periodic basis. Results of these reviews are presented to management. The loan review process complements and reinforces the risk identification and assessment decisions made by lenders.
Commercial and Loans to Nondepository Financial Institutions
Sterling provides a full range of loans to small and medium-sized businesses with the objective of establishing longer-term relationships. Loans generally range in size up to $20 million, tailored to meet customers long- and short-term needs, and include secured and unsecured lines of credit and business installment loans.
Loans generally are collateralized by accounts receivable, inventory and other assets. Sterling also provides back-office services, i.e., processing payroll, generating customer invoices, credit collection assistance and related payroll services. The repayment of commercial loans is generally dependent on the creditworthiness and cash flow of borrowers and guarantors, which may be negatively impacted by adverse economic conditions. While these loans are secured, collateral type, marketability, coverage, valuation and monitoring is not as uniform as in other portfolio classes and recovery from liquidation of such collateral may be subject to greater variability.
Factoring
Factoring provides a finance service that combines working capital financing, credit risk protection, and accounts receivable management for companies in a variety of industries. This business may be conducted on a recourse or non-recourse basis, depending upon the needs of the client.
19
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
In general, Sterling records a receivable for the amount of accounts receivable due from customers of its clients and records a liability for the funds due to the client. Under advance factoring arrangements, clients can draw an advance as accounts receivable are sold/assigned to Sterling. With advance factoring, Sterling normally has recourse against the client if the customer fails to pay. Under collection factoring arrangements, clients sell Sterling their accounts receivable and Sterling provides credit protection to the client guaranteeing the collection of the amount due and back-office support. Collection factoring is generally under a nonrecourse basis where the principal source of payment for Sterling is through the collection of the receivable from our clientss customers whose credit has been approved by Sterling following a rigorous review process. Also, with collection factoring, Sterling has credit default insurance with a nationally recognized insurance company to provide it with protection against customer default.
Commercial Real Estate
Sterling offers a range of commercial real estate lending including financing on commercial buildings, retail properties and mixed use properties. Loans are predicated on the cash flow of the property, the value of the property determined by an independent appraisal and the strength of personal guarantees, if any. Loans are made at fixed or floating rates. Floating rate loans are based on the prime rate. Fixed rate loans are tied to Treasury or FHLB benchmarks and other indices.
Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Companys real estate portfolio are diverse in terms of type and geographic location. This diversity helps reduce the Companys exposure to adverse economic events that affect any single market or industry. Management monitors and evaluates commercial real estate loans based on collateral, geographic and risk grade criteria.
With respect to loans to developers and builders that are secured by non-owner occupied properties that the Company may originate from time to time, the Company generally requires the borrower to have had an existing relationship with the Company and have a record of success. Construction loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of absorption and lease rates and financial analysis of the developers and property owners. Construction loans are generally based upon estimates of costs and value associated with funds, with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to the timely completion of the project, interest rate changes, government regulation of real property, general economic conditions and the availability of long-term financing.
Equipment Financing
Sterling engages in direct and indirect lease financing. Direct lease financing is when requests for financing originate with an end user seeking to finance equipment for up to 60 months. Indirect lease financing arises through relationships with equipment financing brokers. In both cases, credit approval is based upon a full underwriting process that involves the submission of financial and other information, including the applicants historical performance, cash flow projections and value of equipment, and for customers who are not public entities, Sterling generally obtains the personal guarantees of the principals of the entities.
20
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
Residential Mortgage
Residential mortgage loans, principally on single-family residences, are made primarily for re-sale into the secondary market. Offering both fixed and adjustable rate residential mortgage loan products, mortgages are focused on conforming credit, government insured FHA and other high-quality loan products. Jumbo loans are also originated for sale into the secondary market, or brokered to third party providers.
The ability of borrowers to service debt in the residential mortgage loan portfolios is generally subject to personal income which may be impacted by general economic conditions, such as increased unemployment levels. These loans are predominantly collateralized by first and second liens on single family properties. If a borrower cannot maintain the loan, the Companys ability to recover against the collateral in sufficient amount and in a timely manner may be significantly influenced by market, legal and regulatory conditions.
Concentrations of Credit
There are no industry concentrations (exceeding 10% of loans, gross) of loans held in portfolio. Approximately 68.5% of loans are to borrowers located in the New York metropolitan area. A further deterioration in economic conditions within the region including a decline in real estate values, higher unemployment and other factors which could adversely impact small and mid-sized businesses, could have a significant adverse impact on the quality of the Companys loan portfolio. In addition, a decline in real estate values and higher unemployment within the mid-Atlantic region and North Carolina could adversely impact the Companys residential real estate loan portfolio.
Approximately 22.6% or $6.9 million and 24.3% or $5.9 million of the Companys net interest income and noninterest income are related to real estate lending for the three months ended March 31, 2011 and 2010, respectively. Real estate prices in the U.S. market decreased during 2010 and have continued to decrease in 2011. Continuing declines in real estate values could necessitate charge-offs in our mortgage loan portfolio that may impact our operating results. In addition, a sustained period of declining real estate values combined with the continued turbulence in the financial and credit markets would continue to limit our mortgage-related revenues.
As of March 31, 2011, approximately 67.3% of the Companys loan portfolio consisted of commercial and industrial, factored receivables, construction and commercial real estate loans. Because the Companys loan portfolio contains a number of commercial and industrial, construction and commercial real estate loans with relatively large balances, the deterioration of one or a few of these loans could cause a significant increase in non-performing loans.
Related Party Loans
Loans are made to officers or directors (including their immediate families) of the Company or for the benefit of corporations in which they have a beneficial interest subject to applicable regulations. There were no outstanding balances on such loans in excess of $60 thousand to any individual or entity at March 31, 2011 or 2010.
Nonperforming Loans
Nonaccrual loans are those on which the accrual of interest has ceased. Loans, including loans that are individually identified as being impaired under FASB Codification Topic 310: Receivables, are generally placed on nonaccrual status immediately if, in the opinion of management, principal or interest is not likely to be paid in accordance with the terms of the loan agreement, or when principal or interest is past due 90 days or more and collateral, if any, is insufficient to cover principal and interest.
Interest accrued but not collected at the date a loan is placed on nonaccrual status is reversed against interest income. Interest income is recognized on nonaccrual loans only to the extent received in cash. Where there is doubt regarding the ultimate collectibility of the loan principal, cash receipts, whether designated as principal or interest, are thereafter applied to reduce the carrying value of the loan. Loans are restored to accrual status when interest and principal payments are brought current and future payments are reasonably assured.
21
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
The following table sets forth the amount of nonaccrual loans of the Company as of the dates indicated:
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
||
|
|
|
|
|
|
||
Commercial & industrial |
|
$ |
1,242 |
|
$ |
1,014 |
|
Equipment financing receivables |
|
|
972 |
|
|
892 |
|
Factored receivables |
|
|
|
|
|
|
|
Real estateresidential mortgage |
|
|
1,675 |
|
|
1,614 |
|
Real estate-commercial mortgage |
|
|
3,124 |
|
|
3,124 |
|
Real estateconstruction and land development |
|
|
|
|
|
|
|
Loans to individuals |
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
Total nonaccrual loans |
|
$ |
7,016 |
|
$ |
6,644 |
|
|
|
|
|
|
|
|
|
The following table provides information regarding the past due status of loans at March 31, 2011 and December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011 |
|
3059 |
|
6089 |
|
90 & |
|
Total Past |
|
Current |
|
Total Loans |
|
MEMO |
|
|||||||
|
|
|
|
|
|
|
|
|||||||||||||||
Commercial and industrial |
|
$ |
17,138 |
|
$ |
4,702 |
|
$ |
1,243 |
|
$ |
23,083 |
|
$ |
567,821 |
|
$ |
590,904 |
|
$ |
1 |
|
Equipment financing receivables |
|
|
1,417 |
|
|
820 |
|
|
972 |
|
|
3,209 |
|
|
137,121 |
|
|
140,330 |
|
|
|
|
Factored receivables |
|
|
1,180 |
|
|
307 |
|
|
295 |
|
|
1,782 |
|
|
152,989 |
|
|
154,771 |
|
|
295 |
|
Real estateresidential mortgageportfolio |
|
|
1,916 |
|
|
2,068 |
|
|
1,675 |
|
|
5,659 |
|
|
127,000 |
|
|
132,659 |
|
|
|
|
Real estatecommercial mortgage |
|
|
6,812 |
|
|
|
|
|
3,124 |
|
|
9,936 |
|
|
88,280 |
|
|
98,216 |
|
|
|
|
Real estateconstruction and land development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,975 |
|
|
23,975 |
|
|
|
|
Loans to individuals |
|
|
|
|
|
|
|
|
3 |
|
|
3 |
|
|
11,696 |
|
|
11,699 |
|
|
|
|
Loans to depository institutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,505 |
|
|
25,505 |
|
|
|
|
Loans to nondepository financial institutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110,590 |
|
|
110,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total loans, net of unearned discount |
|
$ |
28,463 |
|
$ |
7,897 |
|
$ |
7,312 |
|
$ |
43,672 |
|
$ |
1,244,977 |
|
$ |
1,288,649 |
|
$ |
296 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
December 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial and industrial |
|
$ |
16,899 |
|
$ |
4,693 |
|
$ |
1,015 |
|
$ |
22,607 |
|
$ |
595,616 |
|
$ |
618,223 |
|
$ |
1 |
|
Equipment financing receivables |
|
|
1,399 |
|
|
579 |
|
|
958 |
|
|
2,936 |
|
|
141,299 |
|
|
144,235 |
|
|
66 |
|
Factored receivables |
|
|
3,321 |
|
|
662 |
|
|
247 |
|
|
4,230 |
|
|
157,559 |
|
|
161,789 |
|
|
247 |
|
Real estateresidential mortgageportfolio |
|
|
3,297 |
|
|
2,515 |
|
|
1,614 |
|
|
7,426 |
|
|
152,318 |
|
|
159,744 |
|
|
|
|
Real estatecommercial mortgage |
|
|
9,626 |
|
|
|
|
|
3,124 |
|
|
12,750 |
|
|
84,241 |
|
|
96,991 |
|
|
|
|
Real estateconstruction and land development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,624 |
|
|
25,624 |
|
|
|
|
Loans to individuals |
|
|
52 |
|
|
|
|
|
|
|
|
52 |
|
|
11,318 |
|
|
11,370 |
|
|
|
|
Loans to depository institutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,425 |
|
|
15,425 |
|
|
|
|
Loans to nondepository financial institutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112,882 |
|
|
112,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total loans, net of unearned discount |
|
$ |
34,594 |
|
$ |
8,449 |
|
$ |
6,958 |
|
$ |
50,001 |
|
$ |
1,296,282 |
|
$ |
1,346,283 |
|
$ |
314 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Impaired Loans
Management considers a loan to be impaired when, based on current information and events, it is determined that the Company will not be able to collect all amounts due according to the loan contract, including scheduled interest payments. Determination of impairment is treated the same across all classes of loans on a loan-by-loan basis. When management identifies a loan as impaired, the impairment is measured based on the present value of expected future cash flows, discounted at the loans effective interest rate, except when the sole remaining source of repayment of the loan is the operation or liquidation of the collateral. In these cases management uses the current fair value of the collateral, less selling costs when foreclosure is probable, instead of discounted cash flows.
22
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
If management determines that the value of the impaired loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance.
When the ultimate collectibility of the total principal of an impaired loan is in doubt and the loan is on nonaccrual status, all payments are applied to principal, under the cost recovery method. When the ultimate collectibility of the total principal of an impaired loan is not in doubt and the loan is on nonaccrual status, contractual interest is credited to interest income when received, under the cash basis method. Impaired loans, or portions thereof, are charged off when deemed uncollectible.
The following tables include the recorded investment and unpaid principal balances for impaired financing receivables with the associated allowance amount, if applicable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011 |
|
Recorded |
|
Principal |
|
Unpaid |
|
Related |
|
Average |
|
Interest |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commercial and industrial |
|
$ |
2,192 |
|
$ |
|
|
$ |
4,242 |
|
$ |
518 |
|
$ |
2,214 |
|
$ |
27 |
|
Equipment financing receivables |
|
|
192 |
|
|
|
|
|
192 |
|
|
17 |
|
|
303 |
|
|
20 |
|
Factored receivables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estateresidential mortgage |
|
|
4,731 |
|
|
|
|
|
4,817 |
|
|
1,208 |
|
|
4,818 |
|
|
47 |
|
Real estatecommercial mortgage |
|
|
3,124 |
|
|
|
|
|
3,124 |
|
|
1,113 |
|
|
3,124 |
|
|
26 |
|
Real estateconstruction and land development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans to individuals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans to depository institutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans to nondepository financial institutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Total |
|
$ |
10,239 |
|
$ |
|
|
$ |
12,375 |
|
$ |
2,856 |
|
$ |
10,459 |
|
$ |
120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial |
|
$ |
2,236 |
|
$ |
584 |
|
$ |
4,243 |
|
$ |
605 |
|
$ |
1,598 |
|
|
|
|
Equipment financing receivables |
|
|
414 |
|
|
|
|
|
414 |
|
|
33 |
|
|
1,095 |
|
|
|
|
Factored receivables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estateresidential mortgage |
|
|
4,904 |
|
|
|
|
|
4,990 |
|
|
1,104 |
|
|
3,681 |
|
|
|
|
Real estatecommercial mortgage |
|
|
3,124 |
|
|
|
|
|
3,124 |
|
|
1,100 |
|
|
1,725 |
|
|
|
|
Real estateconstruction and land development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans to individuals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans to depository institutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans to nondepository financial institutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Total |
|
$ |
10,678 |
|
$ |
584 |
|
$ |
12,771 |
|
$ |
2,842 |
|
$ |
8,099 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Quality Indicators
As part of the ongoing monitoring of the credit quality of the Companys loan portfolio, management tracks certain credit quality indicators including trends related to (i) the risk grade of loans, (ii) the level of classified loans, (iii) charge-offs, (iv) nonperforming loans and (v) the general economic conditions in the New York metropolitan area.
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company has a process for analyzing non-homogeneous loans, such as commercial and industrial and commercial real estate loans, individually by grading the loans based on credit risk. This analysis occurs at varying times based on the type of loan as well as the loan balance and occurs at least once every 18 months for those loans greater than $500,000.
23
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
For homogeneous loan pools, such as residential mortgages, leases and consumer loans, the Company uses payment status to identify the credit risk in these loan portfolios. Payment status is reviewed on a daily basis by the Companys personnel and on a monthly basis with respect to determining the adequacy of the allowance for loan losses. The payment status of these homogeneous pools at March 31, 2011 is included in the aging of the recorded investment of past due loans table above. In addition, the total nonperforming portion of these homogeneous loan pools at March 31, 2011 is presented in the recorded investment in nonaccrual loans table above.
The Company utilizes a risk grading matrix to assign a risk grade to each of its commercial loans. Loans under $100,000 are not risk rated. Loans are graded on a scale of 1 to 9. A description of the general characteristics of the 9 risk grades is as follows:
|
|
Risk Rating 1 & 2/High Quality/Minimal RiskThese loans are well secured by liquid or high quality, diversified, and readily marketable securities within the banks defined margin requirements including cash surrender value of life insurance, or loans to strong privately held obligors secured by real estate with satisfactory loan to value, and support guarantors. They could include loans to publicly traded entities with strong credit ratings (A-1 or better) with Moodys or Standard & Poors. |
|
|
Risk Rating 3 & 4/Very Good/Good QualityThese loans can be either unsecured or secured (with monthly monitoring of Accounts Receivable and/or Inventory) to adequately or moderately capitalized privately held obligors with satisfactory sales, revenue, earnings trends, cash flow, and leverage. These secured loans may be monitored in the Asset Based Lending or the Factoring Department to include control of cash receipts and defined formula advances. These categories could include loans to publicly traded entities with credit ratings of A-3 or lower by Moodys or Standard & Poors. |
|
|
Risk Rating 5/Watch ListThese loans are to companies with uneven financial performance containing exceptions to loan policy without mitigating factors. These loans may exist when the obligors experience temporary credit and/or structural deficiencies. Such credits have not been criticized by Loan Review. Close supervision is warranted to avoid further deterioration. |
|
|
Risk Rating 6/Special Mention (OCC Definition)Other Assets Especially Mentioned (OAEM) are loans that are currently protected but are potentially weak. Special Mention ratings have potential weaknesses which may, if not checked or corrected, weaken the asset or inadequately protect the banks credit position at some future date. Such assets constitute an undue and unwarranted credit risk but not to the point of justifying a classification of substandard. The credit risk may be relatively minor yet constitute an unwarranted risk in light of the circumstances surrounding a specific asset. |
|
|
Risk Rating 7/Substandard (OCC Definition)These loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness that jeopardizes the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified as substandard. |
|
|
Risk Rating 8/Doubtful (OCC Definition)These loans have all the weakness inherent in one classified as substandard with the added characteristics that the weakness makes collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors which may work to the advantage and strengthening of the asset, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, or liquidating procedures, capital injection, perfecting liens or additional collateral and refinancing plans. |
|
|
Risk Rating 9/Loss (OCC Definition)These loans are classified as Loss and charged off because they are determined to be uncollectible and unbankable assets. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be effected in the future. The bank should not be allowed to attempt long-term recoveries while the asset remains booked. Losses should be taken in the period in which they are determined to be uncollectible. |
24
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
The following table presents weighted average risk grades and classified loans by class of commercial loan. Classified loans include loans in Risk Grades 6, 7 and 8.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011 |
|
December 31, 2010 |
|
||||||
|
|
|
|
||||||||
|
|
Weighted |
|
Classified |
|
Weighted |
|
Classified |
|
||
|
|
|
|
|
|
|
|
||||
Commercial and industrial |
|
3.31 |
|
$ |
5,848 |
|
3.32 |
|
$ |
3,450 |
|
Factored receivables |
|
2.76 |
|
|
|
|
2.76 |
|
|
|
|
Real estatecommercial mortgage |
|
3.38 |
|
|
3,124 |
|
3.36 |
|
|
3,124 |
|
Real estateconstruction and land development |
|
4.49 |
|
|
|
|
4.55 |
|
|
5,249 |
|
Loans to depository institutions |
|
1.82 |
|
|
|
|
3.00 |
|
|
|
|
Loans to nondepository financial institutions |
|
3.13 |
|
|
|
|
3.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Total |
|
3.23 |
|
$ |
8,972 |
|
3.24 |
|
$ |
11,823 |
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses
The allowance reflects managements best estimate of probable losses within the existing loan portfolio and of the risk inherent in various components of the loan portfolio. The allowance, in the judgment of management, is necessary to reserve for estimated loan losses and risk inherent in the loan portfolio. Additions to the allowance for loan losses are made by charges to the provision for loan losses. Credit exposures deemed to be uncollectible are charged against the allowance for loan losses. Recoveries of previously charged-off amounts are credited to the allowance for loan losses.
The Companys allowance for loan loss methodology is based on guidance provided by the Interagency Policy Statement on the Allowance for Loan and Lease Losses issued by the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve system, the Federal Deposit Insurance Corporation, the National Credit Union Administration and the Office of Thrift Supervision in December 2006 and includes an allowance allocation calculated in accordance with U.S. GAAP guidance in FASB Codification Topic 310: Receivables and allowance allocations calculated in accordance with FASB Codification Topic 450: Contingencies. Accordingly, the methodology is based on historical loss experience by type of credit and internal risk grade, specific homogeneous risk pools and specific loss allocations, with adjustments for current events and conditions.
The level of the allowance for loan losses relies on a consistent process that requires multiple layers of management review and judgment and of industry concentrations, specific credit risks, loan loss experience, current loan portfolio quality, present economic, political and regulatory conditions and unidentified losses inherent in the current loan portfolio. Portions of the allowance may be allocated to specific credits; however, the entire allowance is available for any credit that, in managements judgment, should be charged off. While management utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond the Companys control, including, among other things, the performance of the Companys loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications.
The Companys allowance for loan losses includes (1) specific valuation allowances for impaired loans evaluated in accordance with FASB Codification Topic 310: Receivables; (2) formulaic allowances based on historical loss experience by loan category, adjusted, as necessary, to reflect the impact of current conditions; and (3) unallocated general valuation allowances determined in accordance with FASB Codification Topic 450: Contingencies based on general economic conditions and other qualitative risk factors both internal and external to the Company.
The allowance established for losses on specific loans is based on a regular analysis and evaluation of problem loans. Loans are classified based on an internal credit risk grading process that evaluates, among other things: (i) the obligors ability to repay; (ii) the underlying collateral, if any; and (iii) the economic environment and industry in which the borrower operates. This analysis is performed at the relationship manager level for all loans. When a loan has a calculated grade of 6 or higher, an analysis is performed to determine whether the loan is impaired and, if impaired, the need to specifically allocate a portion of the allowance for loan losses to the loan. Specific valuation allowances are determined by analyzing the borrowers ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrowers industry, among other things.
25
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
Historical valuation allowances are calculated based on the historical loss experience of specific types of loans and the internal risk grade of such loans at the time they were charged-off. The Company calculates historical loss ratios for pools of similar loans with similar characteristics based on the portion of actual charge-offs experienced to the total population of loans in the pool. The historical loss ratios are periodically updated based on actual charge-off experience. A historical valuation allowance is established for each pool of similar loans based upon the product of the historical loss ratio and the total dollar amount of the loans in the pool. During 2010 the Company revised its historical loss ratio calculation to reflect a five year history from a ten year history to reflect the current loss experience.
The Companys pool of similar loans include similarly risk-graded groups of commercial and industrial loans, commercial real estate loans, residential real estate loans and consumer and other loans.
General valuation allowances are based on general economic conditions and other qualitative risk factors both internal and external to the Company. In general, such valuation allowances are determined by evaluating, among other things:
|
|
Estimated future losses in all significant loans |
|
|
Existence and effect of any concentrations of credit |
|
|
Existence and effect of any geographic concentration |
|
|
Other external factors such as competition, legal matters or regulation that may affect risk |
|
|
Effect of criticized and classified loans |
|
|
Effects from risk arising with international lending |
|
|
Effectiveness of internal problem loan identification and risk ratings |
|
|
Trends in portfolio volume, maturity and compositions of loans within segments |
|
|
Volumes and trends in delinquencies and nonaccrual loans |
|
|
Changes in the quality of lending policies and procedures |
|
|
Changes in local and national economic conditions |
|
|
Experience, ability and depth of lending staff |
|
|
Changes in value of underlying collateral |
Management evaluates the degree of risk that each one of these components has on the quality of the loan portfolio on a quarterly basis. Each component is determined based on degree of risk. The results are then input into a general allocation matrix to determine an appropriate general valuation allowance.
Included in the general valuation allowances are allocations for groups of similar loans with risk characteristics that exceed certain concentration limits established by management. Concentration risk limits have been established, among other things, for certain industry concentrations, large and highly leveraged credit relationships that exceed specified risk grades, and loans originated with policy exceptions that exceed specified risk grades.
Loans are generally charged-off at the earlier of when it is determined that collection efforts are no longer productive or when they have been identified as losses by management, internal loan review and/or bank examiners. Furthermore, equipment financing receivables and revolving credit lines to small businesses are charged-off at the earlier of when payments are 120 days past due or when it is determined that collection efforts are no longer productive.
Factors considered in determining whether collection efforts are no longer productive include any amounts currently being collected, the status of discussions or negotiations with the lessee/borrower, the principal and/or guarantors, the cost of continuing efforts to collect, the status of any foreclosure or other legal actions, the value of the collateral, and any other pertinent factors.
26
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, |
|
Charge- |
|
(Recoveries) |
|
Net |
|
Provision |
|
Balance, |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial and industrial |
|
$ |
7,454 |
|
$ |
169 |
|
$ |
(20 |
) |
$ |
149 |
|
$ |
174 |
|
$ |
7,479 |
|
Equipment financing receivables |
|
|
3,423 |
|
|
3,776 |
|
|
(923 |
) |
|
2,853 |
|
|
2,485 |
|
|
3,055 |
|
Factored receivables |
|
|
1,424 |
|
|
132 |
|
|
(21 |
) |
|
111 |
|
|
27 |
|
|
1,340 |
|
Real estate residential mortgage (portfolio) |
|
|
2,497 |
|
|
248 |
|
|
(163 |
) |
|
85 |
|
|
184 |
|
|
2,596 |
|
Real estate commercial mortgage |
|
|
2,275 |
|
|
|
|
|
|
|
|
|
|
|
10 |
|
|
2,285 |
|
Real estate construction and land development |
|
|
310 |
|
|
|
|
|
|
|
|
|
|
|
(24 |
) |
|
286 |
|
Loans to individuals |
|
|
119 |
|
|
|
|
|
|
|
|
|
|
|
(3 |
) |
|
116 |
|
Loans to depository institutions |
|
|
46 |
|
|
|
|
|
|
|
|
|
|
|
31 |
|
|
77 |
|
Loans to nondepository finanical institutions |
|
|
564 |
|
|
|
|
|
|
|
|
|
|
|
100 |
|
|
664 |
|
Unallocated |
|
|
126 |
|
|
|
|
|
|
|
|
|
|
|
16 |
|
|
142 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
18,238 |
|
$ |
4,325 |
|
$ |
(1,127 |
) |
$ |
3,198 |
|
$ |
3,000 |
|
$ |
18,040 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents the activity in the allowance for loan losses for the three months ended March 31, 2010:
|
|
|
|
|
Three Months Ended March 31, |
|
2010 |
|
|
|
|
|
|
|
Allowance for loan losses: |
|
|
|
|
Balance at beginning of year |
|
$ |
19,872 |
|
|
|
|
|
|
Charge-offs: |
|
|
|
|
Commercial and industrial |
|
|
850 |
|
Equipment financing receivables |
|
|
4,983 |
|
Factored receivables |
|
|
151 |
|
Real estateresidential mortgage |
|
|
65 |
|
Real estatecommercial mortgage |
|
|
129 |
|
Real estateconstruction and land development |
|
|
|
|
Loans to individuals |
|
|
21 |
|
|
|
|
|
|
Total charge-offs |
|
|
6,199 |
|
|
|
|
|
|
Recoveries: |
|
|
|
|
Commercial and industrial |
|
|
215 |
|
Equipment financing receivables |
|
|
105 |
|
Factored receivables |
|
|
9 |
|
Real estateresidential mortgage |
|
|
|
|
Real estatecommercial mortgage |
|
|
|
|
Real estateconstruction and land development |
|
|
|
|
Loans to individuals |
|
|
|
|
|
|
|
|
|
Total recoveries |
|
|
329 |
|
|
|
|
|
|
Subtract: |
|
|
|
|
Net charge-offs |
|
|
5,870 |
|
|
|
|
|
|
Provision for loan losses |
|
|
6,000 |
|
|
|
|
|
|
Less loss on transfers to other real estate owned |
|
|
39 |
|
|
|
|
|
|
Balance at end of year |
|
$ |
19,963 |
|
|
|
|
|
|
27
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Allowance Balance |
|
Loan Balances |
|
||||||||||||||
|
|
|
|
|
|
||||||||||||||
|
|
Individually |
|
Collectively |
|
Total |
|
Individually |
|
Collectively |
|
Total |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial and industrial |
|
$ |
518 |
|
$ |
6,961 |
|
$ |
7,479 |
|
$ |
2,192 |
|
$ |
588,712 |
|
$ |
590,904 |
|
Equipment financing receivables |
|
|
17 |
|
|
3,038 |
|
|
3,055 |
|
|
192 |
|
|
140,138 |
|
|
140,330 |
|
Factored receivables |
|
|
|
|
|
1,340 |
|
|
1,340 |
|
|
|
|
|
154,771 |
|
|
154,771 |
|
Real estateresidential mortgage (portfolio) |
|
|
1,208 |
|
|
1,388 |
|
|
2,596 |
|
|
4,731 |
|
|
127,928 |
|
|
132,659 |
|
Real estatecommercial mortgage |
|
|
1,113 |
|
|
1,172 |
|
|
2,285 |
|
|
3,124 |
|
|
95,092 |
|
|
98,216 |
|
Real estateconstruction and land development |
|
|
|
|
|
286 |
|
|
286 |
|
|
|
|
|
23,975 |
|
|
23,975 |
|
Loans to individuals |
|
|
|
|
|
116 |
|
|
116 |
|
|
|
|
|
11,699 |
|
|
11,699 |
|
Loans to depository institutions |
|
|
|
|
|
77 |
|
|
77 |
|
|
|
|
|
25,505 |
|
|
25,505 |
|
Loans to nondepository financial institutions |
|
|
|
|
|
664 |
|
|
664 |
|
|
|
|
|
110,590 |
|
|
110,590 |
|
Unallocated |
|
|
|
|
|
|
|
|
142 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2,856 |
|
$ |
15,042 |
|
$ |
18,040 |
|
$ |
10,239 |
|
$ |
1,278,410 |
|
$ |
1,288,649 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 4. Federal Home Loan Bank Advances
During the 2011 first quarter, the bank restructured a portion of its Federal Home Loan Bank fixed rate advances by repaying $100 million of existing borrowings and replacing them with $100 million of lower cost, floating rate advances. This transaction resulted in $4.2 million in prepayment penalties that were deferred and will be recognized in interest expense as an adjustment to the cost of these borrowings in future periods. The existing borrowings were a combination of fixed rate and amortizing advances with an average cost of 2.58% and an average duration of 3.2 years. The new borrowings are all floating-rate advances with an average cost of 1.58%, including the deferred adjustment, with an average duration of three months. The relevant accounting treatment for this transaction was an interpretation of the guidance provided in ASC 470-50. This transaction was executed as an earnings and interest rate risk strategy, resulting in lower FHLB advance costs and a reduction of average duration.
Note 5. Other noninterest income and expenses
The following tables set forth the significant components of other noninterest income and other noninterest expenses:
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
||||
|
|
|
|
||||
|
|
2011 |
|
2010 |
|
||
|
|
|
|
|
|
||
OTHER NONINTEREST INCOME |
|
|
|
|
|
|
|
Trade finance income |
|
$ |
588 |
|
$ |
492 |
|
Other customer related fees |
|
|
180 |
|
|
174 |
|
Trust fees |
|
|
53 |
|
|
84 |
|
Income from life insurance policies |
|
|
275 |
|
|
264 |
|
Gain on other real estate owned |
|
|
|
|
|
13 |
|
Other income |
|
|
703 |
|
|
296 |
|
|
|
|
|
|
|
|
|
Total other noninterest income |
|
$ |
1,799 |
|
$ |
1,323 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER NONINTEREST EXPENSES |
|
|
|
|
|
|
|
Advertising and marketing |
|
$ |
425 |
|
$ |
1,006 |
|
Communications |
|
|
410 |
|
|
348 |
|
Other expenses |
|
|
2,334 |
|
|
2,173 |
|
|
|
|
|
|
|
|
|
Total other noninterest expenses |
|
$ |
3,169 |
|
$ |
3,527 |
|
|
|
|
|
|
|
|
|
28
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
Note 6. Common Shares and Stock Incentive Plan
On March 9, 2011, the Company completed an underwritten public offering of 4.025 million common shares at an offering price of $9.60 per share, which resulted in net proceeds of $36.5 million after underwriting discounts and expenses.
On March 24, 2011, the Board of Directors, upon recommendation by the Compensation and Corporate Governance Committees, granted a total of 20,000 shares of restricted stock to the eight non-management directors (director restricted shares) and 41,565 restricted shares to the Chairman, President and five Executive Vice Presidents (officer restricted shares). The director restricted shares will vest 25% annually over four years beginning on the first anniversary of the grant date. The officer restricted shares vest 50% on the second anniversary of the grant date and 25% on each of the third and fourth anniversaries of the grant date and were also limited by the 2008 agreement between the Company and the U.S. Treasury. The director restricted shares and the officer restricted shares were issued at $9.71 per share, the closing price on the date of the grant. The agreements for both the director restricted shares and the officer restricted shares have additional provisions regarding transferability and accelerated vesting of the shares and the continuation of performing substantial services for the Company.
Note 7. Employee Benefit Plans
The following table sets forth the components of net periodic benefit cost for the Companys noncontributory defined benefit pension plan and unfunded supplemental retirement plan.
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
||||
|
|
|
|
||||
|
|
2011 |
|
2010 |
|
||
|
|
|
|
|
|
||
Service Cost |
|
$ |
544 |
|
$ |
565 |
|
Interest Cost |
|
|
895 |
|
|
938 |
|
Expected return on plan assets |
|
|
(771 |
) |
|
(789 |
) |
Amortization of prior service cost |
|
|
16 |
|
|
17 |
|
Recognized actuarial loss |
|
|
700 |
|
|
756 |
|
|
|
|
|
|
|
|
|
Net periodic benefit cost |
|
$ |
1,384 |
|
$ |
1,487 |
|
|
|
|
|
|
|
|
|
The Company expects to contribute approximately $2.0 million to the defined benefit pension plan in 2011.
Note 8. Income Taxes
The Internal Revenue Service (IRS) has completed its examination of the Companys federal tax returns for the years 2002 through 2004 and has issued a report disallowing certain bad debt deductions arising from the worthlessness of loans made to customers. The Company, assisted by outside counsel, has prepared a written protest which vigorously challenges all of the IRS findings and the Company will exercise its right to a conference with the Appeals Office of the IRS to discuss the issues and arguments raised in the Companys protest. The Company and its outside counsel believe that the bad debt deductions were proper and that the position of the IRS is unsupportable as a matter of fact and law.
Note 9. Segment Reporting
The Company provides a broad range of financial products and services, including commercial loans, asset-based financing, mortgage warehouse lending, factoring and accounts receivable management services, trade financing, equipment leasing, commercial and residential mortgage lending and brokerage, and corporate and consumer deposit services. The Companys primary source of earnings is net interest income, which represents the difference between interest earned on interest-earning assets and the interest incurred on interest-bearing liabilities. The Companys 2011 year-to-date average interest-earning assets were 58.6% loans (corporate lending was 74.0% and real estate lending was 22.6% of total loans, respectively) and 41.0% investment securities and money market investments. There are no industry concentrations exceeding 10% of loans, gross, in the corporate lending segment. Approximately 68.5% of loans are to borrowers located in the New York metropolitan area. In order to comply with the segment reporting guidance under U.S. GAAP, the Company has determined that it has three reportable operating segments: corporate lending, real estate lending and company-wide treasury.
29
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
The following tables provide certain information regarding the Companys operating segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
Real Estate |
|
Company-wide |
|
Totals |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Three Months Ended March 31, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
9,625 |
|
$ |
4,687 |
|
$ |
4,895 |
|
$ |
19,207 |
|
Noninterest income |
|
|
7,633 |
|
|
2,183 |
|
|
1,530 |
|
|
11,346 |
|
Depreciation and amortization |
|
|
199 |
|
|
24 |
|
|
1 |
|
|
224 |
|
Segment income before income taxes |
|
|
5,521 |
|
|
3,974 |
|
|
6,169 |
|
|
15,664 |
|
Segment assets |
|
|
877,720 |
|
|
402,877 |
|
|
1,053,759 |
|
|
2,334,356 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
8,195 |
|
$ |
4,218 |
|
$ |
7,264 |
|
$ |
19,677 |
|
Noninterest income |
|
|
6,939 |
|
|
1,702 |
|
|
2,338 |
|
|
10,979 |
|
Depreciation and amortization |
|
|
174 |
|
|
28 |
|
|
1 |
|
|
203 |
|
Segment income before income taxes |
|
|
6,327 |
|
|
3,421 |
|
|
8,033 |
|
|
17,781 |
|
Segment assets |
|
|
829,351 |
|
|
355,521 |
|
|
966,572 |
|
|
2,151,444 |
|
The following table sets forth reconciliations of net interest income, noninterest income, profits and assets of reportable operating segments to the Companys consolidated totals:
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
||||
|
|
2011 |
|
2010 |
|
||
|
|
|
|
|
|
||
Net interest income: |
|
|
|
|
|
|
|
Total for reportable operating segments |
|
$ |
19,207 |
|
$ |
19,677 |
|
Other [1] |
|
|
222 |
|
|
218 |
|
|
|
|
|
|
|
|
|
Consolidated net interest income |
|
$ |
19,429 |
|
$ |
19,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest income: |
|
|
|
|
|
|
|
Total for reportable operating segments |
|
$ |
11,346 |
|
$ |
10,979 |
|
Other [1] |
|
|
96 |
|
|
123 |
|
|
|
|
|
|
|
|
|
Consolidated noninterest income |
|
$ |
11,442 |
|
$ |
11,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes: |
|
|
|
|
|
|
|
Total for reportable operating segments |
|
$ |
15,664 |
|
$ |
17,781 |
|
Other [1] |
|
|
(10,246 |
) |
|
(14,120 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated income before income taxes |
|
$ |
5,418 |
|
$ |
3,661 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
Total for reportable operating segments |
|
$ |
2,334,356 |
|
$ |
2,151,444 |
|
Other [1] |
|
|
58,189 |
|
|
42,870 |
|
|
|
|
|
|
|
|
|
Consolidated assets |
|
$ |
2,392,545 |
|
$ |
2,194,314 |
|
|
|
|
|
|
|
|
|
[1] Represents operations not considered to be a reportable segment and/or general operating expenses of the Company.
30
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
Note 10. Other Comprehensive Income
Information related to the components of other comprehensive income included in accumulated other comprehensive loss is as follows with related tax effects:
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
||||
|
|
|
|
||||
|
|
2011 |
|
2010 |
|
||
|
|
|
|
|
|
||
Other Comprehensive Income |
|
|
|
|
|
|
|
Unrealized holding gains on securities, arising during the period: |
|
|
|
|
|
|
|
Before tax |
|
$ |
693 |
|
$ |
2,223 |
|
Tax effect |
|
|
(314 |
) |
|
(1,009 |
) |
|
|
|
|
|
|
|
|
Net of tax |
|
|
379 |
|
|
1,214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment for securities gains included in net income: |
|
|
|
|
|
|
|
Before tax |
|
|
(729 |
) |
|
(1,502 |
) |
Tax effect |
|
|
331 |
|
|
682 |
|
|
|
|
|
|
|
|
|
Net of tax |
|
|
(398 |
) |
|
(820 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment for amortization of prior service cost: |
|
|
|
|
|
|
|
Before tax |
|
|
16 |
|
|
17 |
|
Tax effect |
|
|
(7 |
) |
|
(8 |
) |
|
|
|
|
|
|
|
|
Net of tax |
|
|
9 |
|
|
9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment for amortization of net actuarial losses: |
|
|
|
|
|
|
|
Before tax |
|
|
712 |
|
|
756 |
|
Tax effect |
|
|
(323 |
) |
|
(343 |
) |
|
|
|
|
|
|
|
|
Net of tax |
|
|
389 |
|
|
413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
$ |
379 |
|
$ |
816 |
|
|
|
|
|
|
|
|
|
31
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
Note 11. Fair Value Measurements
The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are independent, knowledgeable, able to transact and willing to transact.
FASB Codification Topic 820: Fair Value Measurements and Disclosures establishes a hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair values hierarchy is as follows:
|
|
|
|
|
Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Examples of financial instruments generally included in this level are U.S. Treasury securities, equity and trust preferred securities that trade in active markets and listed derivative instruments. |
|
|
|
|
|
Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means. Examples of financial instruments generally included in this level are corporate debt, mortgage-backed certificates issued by U.S. government corporations and government sponsored enterprises, equity securities that trade in less active markets and certain derivative instruments. |
|
|
|
|
|
Level 3 Inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entitys own judgments about the assumptions that market participants would use in pricing the assets or liabilities. Examples of financial instruments generally included in this level are private equities, certain loans held for sale and other alternative investments. |
Fair value of securities is based upon quoted market prices, where available (level 1 inputs). If such quoted market prices are not available, fair value is based upon market prices determined by an outside, independent entity that primarily uses as inputs, observable market-based parameters (level 2 inputs). Fair value of loans held for sale is based upon internally developed models that primarily use as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality, the Companys creditworthiness, among other things, as well as unobservable parameters (level 3 inputs). Any such valuation adjustments are applied consistently over time. The Company valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Companys valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.
Securities available for sale and other investments. Securities classified as available for sale and other investments (included in Other assets on the Consolidated Balance Sheet) are generally reported at fair value utilizing Level 1 and Level 2 inputs. Investments in fixed income securities, exclusive of preferred stock and mortgage-backed securities, are valued based on evaluations provided by Interactive Data Corporation (IDC), a leading global provider of market data information. IDC evaluations represent an exit price or their opinion as to what a buyer would pay for a security, typically in an institutional round lot position in a current sale. IDC seeks to utilize market data and observations in its evaluation service, and gives priority to observable benchmark yields and reported trades. IDC utilizes evaluated pricing techniques that vary by asset class and incorporate available market information; because many fixed income securities do not trade on a daily basis, IDC applies available information through processes such as benchmark curves, benchmarking of similar securities, sector groupings and matrix pricing. Model processes such as option-adjusted spread models are used to value securities that have prepayment features. Substantially all securities available for sale evaluated in this manner are deemed to be Level 2 valuations.
32
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
For mortgage-backed securities issued by U.S. government corporations and government sponsored enterprises, management considers dealer indicative bids in the valuation process. Indicative bids are estimates of value and do not necessarily represent the price at which the dealer would be willing to transact. Such bids are compared to IDC evaluated prices for reasonableness as well as consistency with observable market conditions. All mortgage-backed securities are deemed to be valued based on Level 2 inputs.
Publicly traded common and preferred stocks are valued by reference to the market closing price (last trade) on the measurement date (Level 1 inputs). In the unlikely event that no trade occurred on the measurement date, reference would be made to an indicative bid or the last trade most proximate to the measurement date (Level 2 inputs).
The following table summarizes financial assets measured at fair value on a recurring basis, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value. There were no financial liabilities measured at fair value.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011 |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. government corporations and government sponsored enterprises |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities |
|
$ |
|
|
$ |
73,579 |
|
$ |
|
|
$ |
73,579 |
|
Agency notes |
|
|
|
|
|
59,662 |
|
|
|
|
|
59,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total obligations of U.S. government corporations and government sponsored enterprises |
|
|
|
|
|
133,241 |
|
|
|
|
|
133,241 |
|
Obligations of state and political institutions - New York Bank Qualified |
|
|
|
|
|
28,672 |
|
|
|
|
|
28,672 |
|
Single-issuer, trust preferred securities |
|
|
8,666 |
|
|
|
|
|
|
|
|
8,666 |
|
Corporate debt securities |
|
|
|
|
|
238,659 |
|
|
|
|
|
238,659 |
|
Equity and other securities |
|
|
4,926 |
|
|
|
|
|
|
|
|
4,926 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total marketable securities |
|
$ |
13,592 |
|
$ |
400,572 |
|
$ |
|
|
$ |
414,164 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other investments |
|
$ |
11,445 |
|
$ |
8,686 |
|
$ |
|
|
$ |
20,131 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. government corporations and government sponsored enterprises |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities |
|
$ |
|
|
$ |
51,983 |
|
$ |
|
|
$ |
51,983 |
|
Agency notes |
|
|
|
|
|
100,122 |
|
|
|
|
|
100,122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total obligations of U.S. government corporations and government sponsored enterprises |
|
|
|
|
|
152,105 |
|
|
|
|
|
152,105 |
|
Obligations of state and political institutions - New York Bank Qualified |
|
|
|
|
|
40,044 |
|
|
|
|
|
40,044 |
|
Single-issuer, trust preferred securities |
|
|
3,933 |
|
|
|
|
|
|
|
|
3,933 |
|
Corporate debt securities |
|
|
|
|
|
189,058 |
|
|
|
|
|
189,058 |
|
Equity and other securities |
|
|
4,940 |
|
|
|
|
|
|
|
|
4,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total marketable securities |
|
$ |
8,873 |
|
$ |
381,207 |
|
$ |
|
|
$ |
390,080 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other investments |
|
$ |
11,838 |
|
$ |
6,760 |
|
$ |
|
|
$ |
18,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
Certain financial assets, such as loans held for sale and collateral-dependent impaired loans are measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The following table summarizes the period end fair value of financial assets, based on significant unobservable (Level 3) inputs, measured on a non-recurring basis:
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
||
|
|
|
|