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UNITED STATES
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, 2005
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   13-2565216
(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
(Registrant’s 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 is an accelerated filer as defined in Rule 12b-2 of the Exchange Act,

x Yes  o No

As of April 30, 2005 there were 18,346,597 shares of common stock,
$1.00 par value, outstanding.



STERLING BANCORP
 
  Page
PART I FINANCIAL INFORMATION    
           
  Item 1. Financial Statements    
         
    Consolidated Financial Statements (Unaudited) 3  
    Notes to Consolidated Financial Statements 8  
         
  Item 2. Management’s Discussion and Analysis of Financial    
      Condition and Results of Operations    
         
    Overview 12  
    Income Statement Analysis 13  
    Balance Sheet Analysis 15  
    Capital 19  
    Cautionary Statement Regarding Forward-Looking Statements 20  
    Average Balance Sheets 21  
    Rate/Volume Analysis 22  
    Regulatory Capital and Ratios 23  
         
  Item 3. Quantitative and Qualitative Disclosures About    
      Market Risk    
         
    Asset/Liability Management 24  
    Interest Rate Sensitivity 28  
         
  Item 4. Controls and Procedures 29  
         
PART II OTHER INFORMATION    
         
  Item 6. Exhibits 30  
         
SIGNATURES 31  
         
EXHIBIT INDEX    
         
  Exhibit 11 Statement Re: Computation of Per Share Earnings 33  
         
  Exhibit 31 Certifications of the CEO and CFO pursuant to
Exchange Act Rule 13a-14(a)		 34  
         
  Exhibit 32 Certifications of the CEO and CFO required by
Section 1350 of Chapter 63 of Title 18 of the
U.S. Code		 36  

2


STERLING BANCORP AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
 
ASSETS March 31,
2005		    December 31,
2004		   
 
  
  
Cash and due from banks $ 66,568,719    $ 48,842,418   
Interest-bearing deposits with other banks    4,088,863       1,329,103   
Federal funds sold    35,000,000       —   
                    
Securities available for sale    136,046,825       169,824,385   
Securities available for sale - pledged    83,057,892       63,937,786   
Securities held to maturity    329,712,425       323,152,347   
Securities held to maturity - pledged    157,738,965       123,305,216   
 
  
  
        Total investment securities    706,556,107       680,219,734   
 
  
  
                    
Loans held for sale    26,614,855       37,058,673   
 
  
  
Loans held in portfolio, net of unearned discounts    976,607,955       1,022,286,479   
Less allowance for loan losses    16,782,405       16,328,528   
 
  
  
        Loans, net    959,825,550       1,005,957,951   
 
  
  
Customers’ liability under acceptances    807,341       628,965   
Excess cost over equity in net assets of the
  banking subsidiary		    21,158,440       21,158,440   
Premises and equipment, net    10,726,956       10,674,708   
Other real estate    534,382       766,620   
Accrued interest receivable    5,987,105       5,604,781   
Bank owned life insurance    26,803,160       26,553,145   
Other assets    36,580,778       32,317,224   
 
  
  
   $ 1,901,252,256    $ 1,871,111,762   
 
  
  
           
LIABILITIES AND SHAREHOLDERS’ EQUITY               
Deposits                  
  Noninterest-bearing deposits $ 468,713,500    $ 511,307,018   
  Interest-bearing deposits    919,868,989       832,544,097   
 
  
  
        Total deposits    1,388,582,489       1,343,851,115   
Securities sold under agreements to repurchase - customers    82,980,843       55,934,170   
Securities sold under agreements to repurchase - dealers    43,697,000       33,882,000   
Federal funds purchased    —       32,500,000   
Commercial paper    38,810,149       25,991,038   
Other short-term borrowings    387,130       2,517,375   
Acceptances outstanding    807,341       628,965   
Accrued expenses and other liabilities    80,705,168       91,329,506   
Long-term debt    115,774,000       135,774,000   
 
  
  
        Total liabilities    1,751,744,120       1,722,408,169   
 
  
  
           
Shareholders’ equity                  
Common stock, $1 par value. Authorized 50,000,000 shares;
    issued 19,945,008 and 19,880,521 shares, respectively		    19,945,008       19,880,521   
Capital surplus    146,263,037       145,310,745   
Retained earnings    30,972,751       28,664,568   
Accumulated other comprehensive loss, net of tax    (4,263,610 )    (1,921,060 )
 
  
  
      192,917,186       191,934,774   
 
  
  
           
Less               
  Common shares in treasury at cost, 1,652,567
    and 1,642,996 shares, respectively		    43,189,007       42,939,969   
  Unearned compensation    220,043       291,212   
 
  
  
        Total shareholders’ equity    149,508,136       148,703,593   
 
  
  
   $ 1,901,252,256    $ 1,871,111,762   
  
  
  
 
See Notes to Consolidated Financial Statements.

3



STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
 
   Three Months Ended
March 31,		   
   2005    2004   
  
  
  
INTEREST INCOME               
  Loans $ 18,376,415    $ 15,081,995   
  Investment securities                  
    Available for sale    2,501,644       3,691,820   
    Held to maturity    5,210,223       4,706,408   
  Federal funds sold    109,861       50,342   
  Deposits with other banks    6,183       4,109   
  
  
  
        Total interest income    26,204,326       23,534,674   
  
  
  
                 
INTEREST EXPENSE               
  Deposits    3,451,595       2,473,145   
  Securities sold under agreements
    to repurchase		    585,647       315,632   
  Federal funds purchased    20,782       15,890   
  Commercial paper    160,066       62,762   
  Other short-term borrowings    5,003       112,194   
  Long-term debt    1,478,953       1,559,692   
  
  
  
        Total interest expense    5,702,046       4,539,315   
  
  
  
Net interest income    20,502,280       18,995,359   
Provision for loan losses    2,648,500       2,426,500   
  
  
  
Net interest income after provision
  for loan losses		    17,853,780       16,568,859   
  
  
  
                    
NONINTEREST INCOME                  
  Factoring income    1,417,314       1,426,869   
  Mortgage banking income    3,875,847       3,631,391   
  Service charges on deposit accounts    1,197,024       1,063,343   
  Trade finance income    420,454       492,807   
  Trust fees    172,278       181,697   
  Other service charges and fees    302,260       474,404   
  Bank owned life insurance income    250,014       233,695   
  Securities gains    196,680       536,304   
  Other income    164,329       183,599   
  
  
  
        Total noninterest income    7,996,200       8,224,109   
  
  
  
         
NONINTEREST EXPENSES                  
  Salaries    8,156,603       7,677,109   
  Employee benefits    1,750,205       1,926,138   
  
  
  
    Total personnel expense    9,906,808       9,603,247   
  Occupancy expenses, net    1,314,682       1,229,638   
  Equipment expenses    764,158       756,154   
  Advertising and marketing    1,116,323       1,093,460   
  Professional fees    1,531,179       913,671   
  Data processing fees    257,510       287,460   
  Stationery and printing    194,099       266,571   
  Communications    383,281       406,727   
  Other expenses    1,508,388       1,392,302   
  
  
  
        Total noninterest expenses    16,976,428       15,949,230   
  
  
  
Income before income taxes    8,873,552       8,843,738   
Provision for income taxes    3,106,829       3,636,804   
  
  
  
Net income $ 5,766,723    $ 5,206,934   
  
  
  
Average number of common
 shares outstanding		                  
  Basic    18,258,783       18,220,065   
  Diluted    18,926,688       19,210,918   
Earnings per average common share                  
  Basic $ 0.32    $ 0.29   
  Diluted    0.30       0.27   
Dividends per common share    0.19       0.16   
 
See Notes to Consolidated Financial Statements.

4


STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(Unaudited)
 
Three Months Ended
March 31,
2005 2004
 
 
 
             
Net Income $ 5,766,723   $ 5,206,934  
             
Other comprehensive income, net of tax:            
 Unrealized holding (losses)/gains
   arising during the period		   (1,848,451 )   1,427,580  
             
 Reclassification adjustment for
   gains included in net income		   (106,404 )   (290,141 )
             
 Unrealized (losses)/gains supplemental pension   (387,695 )   344,110  
 
 
 
             
Comprehensive income $ 3,424,173   $ 6,688,483  
 
 
 
 
See Notes to Consolidated Financial Statements.

5


STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders’ Equity
(Unaudited)
 
  Three Months Ended
March 31, 		 
2005 2004
 
 
 
Preferred Stock        
  Balance at January 1 $ —   $ 2,244,320  
  Conversions of Series D shares   —     (2,244,320 )
 
 
 
  Balance at March 31 $ —   $ —  
 
 
 
Common Stock            
  Balance at January 1 $ 19,880,521   $ 19,275,964  
  Conversions of preferred shares into common shares   —     428,304  
  Common shares issued under stock incentive plan   64,487     83,701  
 
 
 
  Balance at March 31 $ 19,945,008   $ 19,787,969  
 
 
 
Capital Surplus            
  Balance at January 1 $ 145,310,745   $ 141,179,832  
  Conversions of preferred shares into common shares   —     1,816,016  
  Common shares issued under stock incentive plan
    and related tax benefits		   952,292     1,217,712  
 
 
 
  Balance at March 31 $ 146,263,037   $ 144,213,560  
 
 
 
Retained Earnings            
  Balance at January 1 $ 28,664,568   $ 16,166,517  
  Net Income   5,766,723     5,206,934  
  Cash dividends paid - common shares   (3,458,540 )   (2,918,800 )
 
 
 
  Balance at March 31 $ 30,972,751   $ 18,454,651  
 
 
 
Accumulated Other Comprehensive Income
  Balance at January 1 $ (1,921,060 ) $ (1,131,803 )
 
 
 
  Unrealized holding (losses)/gains
    arising during the period:
     Before tax