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 September 30, 2004
or
|_| 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 (I.R.S. Employer
incorporation or organization) 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 |_| No
Indicate by check mark whether the registrant is an accelerated filer as defined in Rule 12b-2 of the Exchange Act,
|X| Yes |_| No
As of October 31, 2004 there were 15,177,080 shares of common stock, $1.00 par value, outstanding.
STERLING BANCORP
PART I FINANCIAL INFORMATION Page
----
Item 1. Financial Statements (Unaudited)
Consolidated Financial Statements 3
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview 13
Income Statement Analysis 14
Balance Sheet Analysis 18
Capital 22
Cautionary Statement Regarding Forward-Looking Statements 23
Average Balance Sheets 24
Rate/Volume Analysis 26
Regulatory Capital and Ratios 28
Item 3. Quantitative and Qualitative Disclosures About
Market Risk
Asset/Liability Management 29
Interest Rate Sensitivity 33
Item 4. Controls and Procedures 34
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 35
SIGNATURES 37
EXHIBIT INDEX
Exhibit 3(i) Restated Certificate of Incorporation
filed with the State of New York
Department of State, October 28, 2004 39
Exhibit 3(ii) The By-Laws as in effect on August 5, 2004
(Filed as Exhibit 3(ii)(A) to the Registrant's
Form 10-Q for the quarter ended June 30, 2004
and incorporated herein by reference)
Exhibit 10 Sterling Bancorp Stock Incentive Plan
(Amended and Restated as of May 20, 2004) 49
Form of Award Letter for Non-Employee Directors 68
Form of Award Letter for Officers 69
Exhibit 11 Statement Re: Computation of Per Share
Earnings 71
Exhibit 31 Certifications of the CEO and CFO pursuant to
Exchange Act Rule 13a-14(a) 72
Exhibit 32 Certifications of the CEO and CFO
required by Section 1350 of Chapter 63
of Title 18 of the U.S. Code 74
|
STERLING BANCORP AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
ASSETS 2004 2003
--------------- ---------------
Cash and due from banks $ 53,264,489 $ 63,947,722
Interest-bearing deposits with other banks 2,669,514 1,656,338
Securities available for sale 160,946,796 195,477,473
Securities available for sale - pledged 121,490,565 117,250,082
Securities held to maturity 258,309,947 203,480,172
Securities held to maturity - pledged 129,372,694 166,910,347
--------------- ---------------
Total investment securities 670,120,002 683,118,074
--------------- ---------------
Loans held for sale 38,810,366 40,556,380
--------------- ---------------
Loans held in portfolio, net of unearned discounts 968,073,110 900,556,215
Less allowance for loan losses 15,602,478 14,458,951
--------------- ---------------
Loans, net 952,470,632 886,097,264
--------------- ---------------
Customers' liability under acceptances 902,538 953,571
Excess cost over equity in net assets of the
banking subsidiary 21,158,440 21,158,440
Premises and equipment, net 9,987,174 9,226,183
Other real estate 1,019,095 829,856
Accrued interest receivable 5,140,340 5,069,423
Bank owned life insurance 22,302,781 21,872,266
Other assets 32,033,865 24,260,063
--------------- ---------------
$ 1,809,879,236 $ 1,758,745,580
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing deposits $ 424,534,758 $ 474,091,890
Interest-bearing deposits 874,834,879 737,648,930
--------------- ---------------
Total deposits 1,299,369,637 1,211,740,820
Securities sold under agreements to repurchase - customers 103,595,822 42,490,862
Securities sold under agreements to repurchase - dealers -- 51,327,944
Federal funds purchased -- 10,000,000
Commercial paper 34,953,800 28,799,055
Other short-term borrowings 1,107,981 56,871,359
Acceptances outstanding 902,538 953,571
Accrued expenses and other liabilities 88,429,678 77,602,887
Long-term debt 135,774,000 135,774,000
--------------- ---------------
Total liabilities 1,664,133,456 1,615,560,498
--------------- ---------------
Shareholders' equity
Preferred stock, $5 par value. Authorized
644,389 shares; Series D issued 0
and 224,432 shares,respectively -- 2,244,320
Common stock, $1 par value. Authorized 50,000,000 and
20,000,000 shares, respectively; issued 16,795,983
and 16,244,549 shares, respectively 16,795,983 16,244,549
Capital surplus 145,428,914 142,393,959
Retained earnings 29,011,473 17,751,859
Accumulated other comprehensive loss, net of tax (2,820,786) (976,782)
--------------- ---------------
188,415,584 177,657,905
Less
Common shares in treasury at cost, 1,618,903
and 1,306,587 shares, respectively 42,297,109 33,577,847
Unearned compensation 372,695 894,976
--------------- ---------------
Total shareholders' equity 145,745,780 143,185,082
--------------- ---------------
$ 1,809,879,236 $ 1,758,745,580
=============== ===============
|
See Notes to Consolidated Financial Statements.
STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
----------- ----------- ----------- -----------
INTEREST INCOME
Loans $16,897,670 $15,877,296 $47,392,037 $46,018,048
Investment securities
Available for sale 3,211,403 2,260,320 10,357,118 7,166,906
Held to maturity 4,624,665 4,201,130 14,008,129 14,830,069
Federal funds sold 72,779 5,282 128,915 45,184
Deposits with other banks 5,902 8,516 13,078 21,010
----------- ----------- ----------- -----------
Total interest income 24,812,419 22,352,544 71,899,277 68,081,217
----------- ----------- ----------- -----------
INTEREST EXPENSE
Deposits 3,015,262 2,168,483 7,862,397 6,679,403
Securities sold under agreements
to repurchase 325,203 339,686 1,006,563 1,022,538
Federal funds purchased 9,041 20,687 72,484 56,451
Commercial paper 106,502 65,653 247,861 191,722
Other short-term borrowings 33,970 85,754 239,541 416,363
Long-term debt 1,559,688 1,605,309 4,679,063 4,814,441
----------- ----------- ----------- -----------
Total interest expense 5,049,666 4,285,572 14,107,909 13,180,918
----------- ----------- ----------- -----------
Net interest income 19,762,753 18,066,972 57,791,368 54,900,299
Provision for loan losses 2,338,500 2,172,500 7,235,500 6,136,300
----------- ----------- ----------- -----------
Net interest income after provision
for loan losses 17,424,253 15,894,472 50,555,868 48,763,999
----------- ----------- ----------- -----------
NONINTEREST INCOME
Factoring income 1,915,761 1,630,993 5,110,102 4,394,174
Mortgage banking income 3,846,269 3,974,329 11,392,079 10,907,866
Service charges on deposit accounts 1,258,129 1,192,668 3,480,649 3,694,448
Trade finance income 688,276 631,816 1,699,083 1,793,460
Trust fees 160,311 138,891 508,046 469,339
Other service charges and fees 394,754 512,484 1,349,983 1,479,198
Bank owned life insurance income 498,530 252,241 975,264 790,221
Securities gains 285,918 101,225 970,722 297,583
Other income 126,880 300,626 638,309 478,581
----------- ----------- ----------- -----------
Total noninterest income 9,174,828 8,735,273 26,124,237 24,304,870
----------- ----------- ----------- -----------
NONINTEREST EXPENSES
Salaries and employee benefits 10,053,582 8,870,906 28,140,886 25,917,144
Occupancy expenses, net 1,336,548 1,100,625 3,647,442 3,630,877
Equipment expenses 755,738 680,052 2,169,997 2,046,141
Advertising and marketing 974,755 864,385 2,992,678 2,514,768
Professional fees 952,253 837,434 2,939,885 2,463,423
Data processing fees 272,292 255,157 860,235 780,211
Stationery and printing 141,816 230,368 602,821 675,483
Communications 363,698 381,503 1,161,891 1,230,182
Mortgage tax expense 131,247 321,407 493,628 755,983
Other expenses 1,333,637 1,278,629 4,063,563 4,219,183
----------- ----------- ----------- -----------
Total noninterest expenses 16,315,566 14,820,466 47,073,026 44,233,395
----------- ----------- ----------- -----------
Income before income taxes 10,283,515 9,809,279 29,607,079 28,835,474
Provision for income taxes 3,545,581 3,694,566 9,689,037 11,014,336
----------- ----------- ----------- -----------
Net income $ 6,737,934 $ 6,114,713 $19,918,042 $17,821,138
=========== =========== =========== ===========
Average number of common
shares outstanding
Basic 15,175,955 14,908,734 15,217,170 14,867,562
Diluted 15,866,897 15,786,843 15,966,159 15,731,877
Earnings per average common share
Basic $ 0.44 $ 0.41 $ 1.31 $ 1.19
Diluted 0.43 0.39 1.25 1.13
Dividends per common share 0.19 0.19 0.57 0.49
|
See Notes to Consolidated Financial Statements.
STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
------------ ------------ ------------ ------------
Net Income $ 6,737,934 $ 6,114,713 $ 19,918,042 $ 17,821,138
Other comprehensive income,
net of tax:
Unrealized holding gains (losses)
arising during the period 2,347,046 (19,418) (1,206,796) (430,643)
Reclassification adjustment for
gains included in net income (154,681) (54,762) (525,160) (160,992)
Unrealized gains
on supplemental pension 252,350 -- 252,350 --
Minimum pension liability adjustment -- -- (364,398) --
------------ ------------ ------------ ------------
Comprehensive income $ 9,182,649 $ 6,040,533 $ 18,074,038 $ 17,229,503
============ ============ ============ ============
|
See Notes to Consolidated Financial Statements.
STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders' Equity
(Unaudited)
Nine Months Ended
September 30,
2004 2003
------------- -------------
Preferred Stock
Balance at January 1 $ 2,244,320 $ 2,322,060
Conversions of Series D shares (2,244,320) (61,800)
------------- -------------
Balance at September 30 $ -- $ 2,260,260
============= =============
Common Stock
Balance at January 1 $ 16,244,549 $ 16,107,005
Conversions of preferred shares into common shares 428,304 9,759
Options exercised 123,130 124,745
------------- -------------
Balance at September 30 $ 16,795,983 $ 16,241,509
============= =============
Capital Surplus
Balance at January 1 $ 142,393,959 $ 140,512,359
Conversions of preferred shares into common shares 1,816,016 52,041
Options exercised 1,218,939 1,849,017
Stock splt paid - cash in lieu -- (32,358)
------------- -------------
Balance at September 30 $ 145,428,914 $ 142,381,059
============= =============
Retained Earnings
Balance at January 1 $ 17,751,859 $ 3,783,539
Net Income 19,918,042 17,821,138
Cash dividends paid - common shares (8,658,428) (7,291,756)
- preferred shares -- (94,271)
------------- -------------
Balance at September 30 $ 29,011,473 $ 14,218,650
============= =============
Accumulated Other Comprehensive Income
Balance at January 1 $ (976,782) $ 1,330,239
------------- -------------
Unrealized holding gains/(losses) arising during the period:
Before tax (2,230,677) (796,012)
Tax effect 1,023,881 365,369
------------- -------------
Net of tax (1,206,796) (430,643)
------------- -------------
Reclassification adjustment for gains:
included in net income:
Before tax (970,722) (297,583)
Tax effect 445,562 136,591
------------- -------------
Net of tax (525,160) (160,992)
------------- -------------
Unrealized gains/(losses) in supplemental pension:
Before tax 466,451 --
Tax effect (214,101) --
------------- -------------
Net of tax 252,350 --
------------- -------------
Minimum pension liability adjustment:
Before tax (673,563) --
Tax effect 309,165 --
------------- -------------
Net of tax (364,398) --
------------- -------------
Balance at September 30 $ (2,820,786) $ 738,604
============= =============
Treasury Stock
Balance at January 1 $ (33,577,847) $ (32,400,952)
Purchase of common shares (8,310,004) (256,007)
Surrender of shares issued under
incentive compensation plan (409,258) (920,888)
------------- -------------
Balance at September 30 $ (42,297,109) $ (33,577,847)
============= =============
Unearned Compensation
Balance at January 1 $ (894,976) $ (1,873,926)
Amortization of unearned compensation 522,281 557,010
------------- -------------
Balance at September 30 $ (372,695) $ (1,316,916)
============= =============
Total Shareholders' Equity
Balance at January 1 $ 143,185,082 $ 129,780,324
Net changes during the period 2,560,698 11,164,995
------------- -------------
Balance at September 30 $ 145,745,780 $ 140,945,319
============= =============
|
See Notes to Consolidated Financial Statements.
STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
2004 2003
------------- -------------
Operating Activities
Net Income $ 19,918,042 $ 17,821,138
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Provision for loan losses 7,235,500 6,136,300
Depreciation and amortization of premises and equipment 1,318,157 1,272,483
Securities gains (970,722) (297,583)
Income from bank owned life insurance (975,264) (790,221)
Deferred income tax benefit (447,226) (262,891)
Net change in loans held for sale 1,746,014 (24,662,600)
Amortization of unearned compensation 522,281 557,010
Amortization of premiums on securities 1,198,486 1,905,331
Accretion of discounts on securities (394,808) (968,109)
Increase in accrued interest receivable (70,917) (701,001)
Increase (decrease) in accrued expenses and
other liabilities 10,826,791 1,887,842
Increase in other assets (5,857,132) (4,708,668)
Other, net 23,444 (884,852)
------------- -------------
Net cash provided by (used in) operating activities 34,072,646 (3,695,821)
------------- -------------
Investing Activities
Purchase of premises and equipment (2,079,148) (1,120,058)
(Increase) Decrease in interest-bearing deposits
with other banks (1,013,176) 425,800
Decrease in Federal funds sold -- 5,000,000
Net increase in loans held in portfolio (73,608,868) (90,713,494)
Increase in other real estate (189,239) (200,917)
Proceeds from prepayments, redemptions or maturities
of securities - held to maturity 105,510,986 214,664,362
Purchases of securities - held to maturity (123,394,828) (155,024,448)
Proceeds from sales of securities - available for sale 73,254,718 9,767,421
Proceeds from prepayments, redemptions or maturities
of securities - available for sale 84,957,982 308,043,037
Purchases of securities - available for sale (130,365,143) (373,835,784)
------------- -------------
Net cash used in investing activities (66,926,716) (82,994,081)
------------- -------------
Financing Activities
Decrease in noninterest-bearing deposits (49,557,132) (1,619,336)
Increase in interest-bearing deposits 137,185,949 49,791,047
Decrease in Federal funds purchased (10,000,000) --
Net increase in securities sold under agreements
to repurchase 9,777,016 42,700,897
Decrease in commercial paper and
other short-term borrowings (49,608,633) (10,448,290)
Purchase of treasury stock (8,310,004) (256,007)
Proceeds from exercise of stock options 1,342,069 1,973,762
Cash dividends paid on common and preferred stock (8,658,428) (7,386,027)
Cash paid in lieu of fractional shares in connection
with stock split (32,358)
------------- -------------
Net cash provided by financing activities 22,170,837 74,723,688
------------- -------------
Net increase (decrease) in cash and due from banks (10,683,233) (11,966,214)
Cash and due from banks - beginning of period 63,947,722 58,173,569
------------- -------------
Cash and due from banks - end of period $ 53,264,489 $ 46,207,355
============= =============
Supplemental disclosures:
Interest paid $ 13,800,992 $ 12,080,996
Income taxes paid 10,869,100 9,886,194
|
See Notes to Consolidated Financial Statements.
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
1. The consolidated financial statements include the accounts of Sterling Bancorp ("the parent company") and its subsidiaries, principally Sterling National Bank and its subsidiaries ("the bank"), after elimination of material intercompany transactions. The term "the Company" refers to Sterling Bancorp and its subsidiaries. The consolidated financial statements as of and for the interim periods ended September 30, 2004 and 2003 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 prior period amounts to conform to the current presentation. The interim consolidated financial statements should be read in conjunction with the Company's annual report on Form 10-K for the year ended December 31, 2003. The Company effected a five-for-four stock split on September 10,2003 and paid stock dividends as follows: 20% on December 9, 2002; 10% on December 10, 2001; 10% on December 11, 2000; and 5% on December 14, 1999. Fractional shares were cashed-out and payments were made to shareholders in lieu of fractional shares. All capital and share amounts as well as basic and diluted average number of shares outstanding and earnings per average common share information for all prior reporting periods have been restated to reflect the effect of the stock split and stock dividends.
2. At September 30, 2004, the Company has a stock-based employee compensation plan, which is described more fully in Note 15 to the consolidated financial statements in the Company's annual report on Form 10-K for the year ended December 31, 2003. The Company accounts for this plan under the recognition and measurement principles of APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. In accordance with Statement of Financial Accounting Standards ("SFAS") No. 148, the following table illustrates the effect on net income and earnings per average common share if the Company had applied the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," to the stock-based employee compensation plans.
Three Months Ended September 30, 2004 2003
-------------------------------- ---------- ----------
Net income available for
common shareholders $6,737,934 $6,083,586
Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related tax effects (136,389) (311,674)
---------- ----------
Pro forma, net income $6,601,545 $5,771,912
========== ==========
Earnings per average common share:
Basic- as reported $ 0.44 $ 0.41
Basic- pro forma 0.43 0.39
Diluted- as reported 0.43 0.39
Diluted- pro forma 0.42 0.37
|
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
Nine Months Ended September 30, 2004 2003
------------------------------- ----------- -----------
Net income available for
common shareholders $19,918,042 $17,726,867
Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related tax effects (396,588) (898,330)
----------- -----------
Pro forma, net income $19,521,454 $16,828,537
=========== ===========
Earnings per average common share:
Basic- as reported $ 1.31 $ 1.19
Basic- pro forma 1.28 1.13
Diluted- as reported 1.25 1.13
Diluted- pro forma 1.22 1.07
|
3. The major components of domestic loans held for sale and loans held in portfolio are as follows:
September 30,
------------------------------
2004 2003
------------ ------------
Loans held for sale
Real estate-mortgage $ 38,810,366 $ 79,347,587
============ ============
Loans held in portfolio
Commercial and industrial $585,288,435 $545,054,019
Lease financing 181,671,932 161,508,913
Real estate-mortgage 206,546,866 153,802,839
Real estate-construction 2,329,491 2,380,603
Installment 15,270,005 13,977,231
Loans to depository institutions -- 20,000,000
------------ ------------
Loans, gross 991,106,729 896,723,605
Less unearned discounts 23,033,619 19,944,510
------------ ------------
Loans, net of unearned discounts $968,073,110 $876,779,095
============ ============
|
4. SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," established standards for the way that public business enterprises report and disclose selected information about operating segments in interim financial statements provided to stockholders. In order to comply with SFAS No. 131, the Company has determined that it has three reportable operating segments: corporate lending, real estate lending and company-wide treasury.
The Company provides a broad range of financial products and services, including commercial loans, asset-based financing, factoring and accounts receivable management services, trade financing, equipment leasing, corporate and consumer deposit services, commercial and residential mortgage lending and brokerage, trust and estate administration and investment management services. The Company's 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 Company's 2004 year-to-date average interest-earning assets were 55.8% loans (corporate lending was 72.5% and real estate lending was 24.6% of total loans, respectively) and 43.1% investment securities and money market investments. There are no industry concentrations exceeding 10% of loans, gross, in the corporate loan portfolio. Approximately 66% of loans are to borrowers located in the metropolitan New York area.
The following tables provide certain information regarding the Company's operating segments for the three-and nine-month periods ended September 30, 2004 and 2003:
Corporate Real Estate Company-wide
Lending Lending Treasury Totals
-------------- -------------- -------------- --------------
Three Months Ended September 30, 2004
-------------------------------------
Net interest income $ 9,186,653 $ 4,125,387 $ 5,958,732 $ 19,270,772
Noninterest income 3,587,898 3,929,044 821,997 8,338,939
Depreciation and amortization 80,415 102,964 920 184,299
Segment income before taxes 4,523,469 4,109,381 7,550,219 16,183,069
Segment assets 703,541,000 286,075,699 779,290,347 1,768,907,046
Three Months Ended September 30, 2003
-------------------------------------
Net interest income $ 8,678,941 $ 4,574,622 $ 4,381,618 $ 17,635,181
Noninterest income 3,285,616 4,038,713 428,095 7,752,424
Depreciation and amortization 65,875 81,167 -- 147,042
Segment income before taxes 4,440,415 3,446,438 5,446,923 13,333,776
Segment assets 703,324,770 240,461,682 681,588,969 1,625,375,421
Nine Months Ended September 30, 2004
------------------------------------
Net interest income $ 26,222,249 $ 11,788,083 $ 18,408,890 $ 56,419,222
Noninterest income 9,762,453 11,606,416 2,031,718 23,400,587
Depreciation and amortization 221,579 302,679 920 525,178
Segment income before taxes 11,415,455 12,201,185 22,794,965 46,411,605
Segment assets 703,541,000 286,075,699 779,290,347 1,768,907,046
Nine Months Ended September 30, 2003
------------------------------------
Net interest income $ 25,443,875 $ 12,502,274 $ 15,702,297 $ 53,648,446
Noninterest income 9,313,652 11,105,877 1,207,765 21,627,294
Depreciation and amortization 154,512 235,559 -- 390,071
Segment income before taxes 13,086,427 10,762,855 18,396,491 42,245,773
Segment assets 703,324,770 240,461,682 681,588,969 1,625,375,421
|
The following table sets forth reconciliations of net interest income, noninterest income, profits and assets of reportable operating segments to the Company's consolidated totals:
Three Months Ended September 30, Nine Months Ended September 30,
------------------------------------- -------------------------------------
2004 2003 2004 2003
--------------- --------------- --------------- ---------------
Net interest income:
Total for reportable operating segments $ 19,270,772 $ 17,635,181 $ 56,419,222 $ 53,648,446
Other [1] 491,981 431,791 1,372,146 1,251,853
--------------- --------------- --------------- ---------------
Consolidated net interest income $ 19,762,753 $ 18,066,972 $ 57,791,368 $ 54,900,299
=============== =============== =============== ===============
Noninterest income:
Total for reportable operating segments $ 8,338,939 $ 7,752,424 $ 23,400,587 $ 21,627,294
Other [1] 835,889 982,849 2,723,650 2,677,576
--------------- --------------- --------------- ---------------
Consolidated noninterest income $ 9,174,828 $ 8,735,273 $ 26,124,237 $ 24,304,870
=============== =============== =============== ===============
Income before taxes:
Total for reportable operating segments $ 16,183,069 $ 13,333,776 $ 46,411,605 $ 42,245,773
Other [1] (5,899,554) (3,524,497) (16,804,526) (13,410,299)
--------------- --------------- --------------- ---------------
Consolidated income before income taxes $ 10,283,515 $ 9,809,279 $ 29,607,079 $ 28,835,474
=============== =============== =============== ===============
Assets:
Total for reportable operating segments $ 1,768,907,046 $ 1,625,375,421 $ 1,768,907,046 $ 1,625,375,421
Other [1] 40,972,190 31,492,344 40,972,190 31,492,344
--------------- --------------- --------------- ---------------
Consolidated assets $ 1,809,879,236 $ 1,656,867,765 $ 1,809,879,236 $ 1,656,867,765
=============== =============== =============== ===============
|
[1] Represents operations not considered to be a reportable segment and/or general operating expenses of the Company.
5. On December 31, 2003, the Company adopted Financial Accounting Standards Board ("FASB") Interpretation No. 46R ("FIN 46R") "Consolidation of Variable Interest Entities," which clarified certain provisions of a previously released interpretation. Under the provisions of FIN 46R, Sterling deconsolidated the issuer trust and accounts for its investment in the trust as an asset, its junior subordinated debentures as long-term debt and the interest paid on those debentures as interest expense. As a result of the adoption of FIN 46R, the Company's prior period presentations have been restated to conform to the current presentation. Based on proposed Federal Reserve guidance, the Company does not expect the change in accounting treatment to affect the Tier I regulatory classification of the Company's outstanding trust preferred securities.
STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
6. The following information is provided in connection with the sales of available for sale securities:
Three Months Ended September 30, 2004 2003
-------------------------------- ----------- -----------
Proceeds $26,149,573 $ 1,297,334
Gross Gains 285,918 101,225
Gross Losses -- --
Nine Months Ended September 30, 2004 2003
-------------------------------- ----------- -----------
Proceeds $73,254,718 $ 9,767,421
Gross Gains 970,722 297,583
Gross Losses -- --
|
7. In February 2004, 224,432 Series D preferred shares were converted into 428,304 common shares.
8. The following tables set forth the disclosures required for net periodic benefit cost and net benefit cost:
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
COMPONENTS OF NET PERIODIC COST
Service Cost $ 388,090 $ 356,971 $ 1,191,131 $ 955,536
Interest Cost 492,931 566,594 1,507,418 1,491,497
Expected return on plan assets (417,379) (419,825) (1,292,898) (1,157,473)
Amortization of prior service cost 19,331 19,331 57,993 57,993
Recognized actuarial loss 216,556 261,705 643,647 664,961
----------- ----------- ----------- -----------
Net periodic benefit cost 699,529 784,776 2,107,291 2,012,514
Settlement gain -- -- (1,331,190) --
----------- ----------- ----------- -----------
Net benefit cost $ 699,529 $ 784,776 $ 776,101 $ 2,012,514
=========== =========== =========== ===========
|
The Company contributed $1,322,088 as of September 30, 2004.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following commentary presents management's discussion and analysis of the financial condition and results of operations of Sterling Bancorp ("the parent company"), a financial holding company under the Gramm-Leach-Bliley Act of 1999, and its subsidiaries, principally Sterling National Bank ("the bank"). Throughout this discussion and analysis, the term "the Company" refers to Sterling Bancorp and its subsidiaries. This discussion and analysis should be read in conjunction with the consolidated financial statements and supplemental data contained elsewhere in this quarterly report and the Company's annual report on Form 10-K for the year ended December 31, 2003. Certain reclassifications have been made to prior years' financial data to conform to current financial statement presentations.
OVERVIEW
The Company provides a broad range of financial products and services, including business and consumer loans, commercial and residential mortgage lending and brokerage, asset-based financing, factoring/accounts receivable management services, deposit services, trade financing, equipment leasing, trust and estate administration, and investment management services. The Company has operations in New York, Virginia and North Carolina and conducts business throughout the United States. The economic conditions in these areas and throughout the United States have a significant impact on loan demand, the ability of borrowers to repay these loans and the value of any collateral securing these loans.
For the three months ended September 30, 2004, the bank's average earning assets represented approximately 96.7% of the Company's average earning assets. Loans represented 56.0% and investment securities represented 42.6% of the bank's average earning assets for the third quarter of 2004.
For the nine months ended September 30, 2004, the bank's average earning assets represented approximately 97.2% of the Company's average earning assets. Loans represented 54.6% and investment securities represented 44.3% of the bank's average earning assets for the first nine months of 2004.
The Company's primary source of earnings is net interest income, and its principal market risk exposure is interest rate risk. The Company is not able to predict market interest rate fluctuations, and its asset-liability management strategy may not prevent interest rate changes from having a material adverse effect on the Company's results of operations and financial condition.
Although management endeavors to minimize the credit risk inherent in the Company's loan portfolio, it must necessarily make various assumptions and judgments about the collectibility of the loan portfolio based on its
experience and evaluation of economic conditions. If such assumptions or judgments prove to be incorrect, the current allowance for loan losses may not be sufficient to cover loan losses and additions to the allowance may be necessary, which would have a negative impact on net income.
There is intense competition in all areas in which the Company conducts its business. The Company competes with banks and other financial institutions, including savings and loan associations, savings banks, finance companies and credit unions. Many of these competitors have substantially greater resources and lending limits and provide a wider array of banking services. To a limited extent, the Company also competes with other providers of financial services, such as money market mutual funds, brokerage firms, consumer finance companies and insurance companies. Competition is based on a number of factors, including prices, interest rates, service, availability of products, and geographic location.
The Company regularly evaluates acquisition opportunities and conducts due diligence activities in connection with possible acquisitions. As a result, acquisition discussions, and in some cases negotiations, regularly take place and future acquisitions could occur.
INCOME STATEMENT ANALYSIS
Net interest income, which represents the difference between interest earned on interest-earning assets and interest incurred on interest-bearing liabilities, is the Company's primary source of earnings. Net interest income can be affected by changes in market interest rates as well as the level and composition of assets, liabilities and shareholders' equity. Net interest spread is the difference between the average rate earned, on a tax-equivalent basis, on interest-earning assets and the average rate paid on interest-bearing liabilities. The net yield on interest-earning assets ("net interest margin") is calculated by dividing tax equivalent net interest income by average interest-earnings assets. Generally, the net interest margin will exceed the net interest spread because a portion of interest-earning assets are funded by various noninterest-bearing sources, principally noninterest-bearing deposits and shareholders' equity. The increases (decreases) in the components of interest income and interest expense, expressed in terms of fluctuation in average volume and rate, are provided in the Rate/Volume Analysis shown on pages 26 and 27. Information as to the components of interest income and interest expense and average rates is provided in the Average Balance Sheets shown on pages 24 and 25.
Comparisons of the Three Months Ended September 30, 2004 and 2003
The Company reported net income for the three months ended September 30, 2004 of $6.7 million, representing $0.43 per share, calculated on a diluted basis, compared to $6.1 million, or $0.39 per share calculated on a diluted basis, for the third quarter of 2003. This increase reflects continued growth in both net interest income and noninterest income and a lower provision for income taxes, which more than offset increases in the provision for loan losses and noninterest expenses.
Net Interest Income
Net interest income on a tax-equivalent basis, increased to $20.0 million for the third quarter of 2004 from $18.3 million for the corresponding 2003 period, due to higher average earning assets outstanding coupled with lower average cost of funding partially offset by a lower yield on earning assets and higher average interest-bearing deposit balances. The net interest margin, on a tax equivalent basis, was 4.84% for the third quarter of 2004 compared to 5.02% for 2003. The decrease in the net interest margin was primarily the result of the impact of changes in the mix of earning assets, partially offset by the impact of the higher interest rate environment in the third quarter of 2004.
Total interest income, on a tax-equivalent basis, aggregated $25.0 million for the third quarter of 2004, up from $22.6 million for the corresponding 2003 period. The tax-equivalent yield on interest-earning assets was 6.11% for the third quarter of 2004 compared to 6.22% for the 2003 period.
Interest earned on the loan portfolio increased to $16.9 million for the third quarter of 2004, from $15.9 million for the third quarter of 2003. Average loan balances, which represented 57.4% of average earning assets for the third quarter of 2004, amounted to $951.9 million, an increase of $56.9 million from an average of $895.0 million (61.3% of average earning assets) in the corresponding prior year period. The increase in the average loans (across virtually all segments of the Company's loan portfolio), primarily due to the Company's business development activities and the ongoing consolidation of banks in the Company's marketing area, accounted for the increase in interest earned on loans. The increase in the yield on the loan portfolio to 7.31% for the third quarter of 2004 from 7.18% for the third quarter of 2003 was primarily attributable to the mix of outstanding balances on average among the components of the loan portfolio and the higher interest rate environment in 2004.
Interest earned on the securities portfolio, on a tax-equivalent basis, increased to $8.0 million for the third quarter of 2004 from $6.7 million in the prior year period. Average outstandings increased to $682.7 million (41.2% of average earning assets for the third quarter of 2004) from $558.6 million (38.3% of average earning assets) in the prior year period. The average life of the securities portfolio was approximately 4.2 years at September 30, 2004 compared to 2.8 years at September 30, 2003, reflecting the impact of purchases made primarily in the fourth quarter of 2003 and the first and second quarters of 2004. The decrease in yields on the securities portfolio reflects the impact of purchases made during the lower rate environment on average in the first and second quarters of 2004 and of the principal prepayments primarily in the fourth quarter of 2003 and the second quarter of 2004.
Total interest expense increased to $5.1 million for the third quarter of 2004, from $4.3 million in the prior year period. The increase was primarily due to higher average balances for interest-bearing deposits coupled with higher rates paid for those balances.
Interest expense on deposits increased to $3.0 million for the third quarter of 2004 from $2.2 million for the 2003 period due to an increase in average balance coupled with an increase in the cost of those funds. Average interest- bearing deposit balances increased to $853.3 million for the third quarter of 2004 from $681.6 million in the corresponding 2003 period primarily as a result of branching initiatives and other business development activities. Average rate paid on interest-bearing deposits was 1.41%, 15 basis points higher than the prior year period. The increase in average cost of deposits reflects the higher interest rate environment in 2004.
Provision for Loan Losses
Based on management's continuing evaluation of the loan portfolio (discussed under "Asset Quality" below), the provision for loan losses for the third quarter of 2004 was $2.3 million compared to $2.2 million for the prior year period. Factors affecting the level of provision for loan losses included the growth in the loan portfolios, changes in general economic conditions and the amount of nonaccrural loans.
Noninterest Income
Noninterest income increased to $9.2 million for the third quarter of 2004 from $8.7 million in the third quarter of 2003, primarily due to increased income from factoring activities, from bank owned life insurance and from gains on sales of available for sale securities. Partially offsetting these increases were lower revenues from fees various other services.
Noninterest Expenses
Noninterest expenses increased $1.5 million for the third quarter of 2004 when compared to the third quarter of 2003. The increase was primarily due to investments in the Sterling franchise, including the new branches, with higher expenses related to salaries and employee benefits, occupancy and professional fees.
Provision for Income Taxes
The provision for income taxes was $3.5 million for the third quarter of 2004, virtually unchanged from $3.7 million in the corresponding 2003 period.
Comparisons of the Nine Months Ended September 30, 2004 and 2003
The Company reported net income for the nine months ended September 30, 2004 of $19.9 million, representing $1.25 per share, calculated on a diluted basis, compared to $17.8 million, or $1.13 per share calculated on a diluted basis, for the first nine months of 2003. This increase reflects continued growth in both net interest income and noninterest income and a lower provision for income taxes, which more than offset increases in the provision for loan losses and noninterest expenses.
Net Interest Income
Net interest income on a tax-equivalent basis increased to $58.4 million for the first nine months of 2004 from $55.6 million for the corresponding 2003 period, due to higher average earning assets outstanding coupled with lower average cost of funding partially offset by a lower yield on earning assets and higher average
interest-bearing deposit balances. The net interest margin, on a tax-equivalent basis, was 4.92% for the first nine months of 2004 compared to 5.36% for 2003. The decrease in the net interest margin was primarily the result of changes in the mix of earning assets.
Total interest income, on a tax-equivalent basis, aggregated $72.5 million for the first nine months of 2004, up from $68.8 million for the 2003 period. The tax-equivalent yield on interest-earning assets was 6.13% for the first nine months of 2004 compared to 6.64% for the corresponding 2003 period.
Interest earned on the loan portfolio amounted to $47.4 million for the first nine months of 2004, up $1.4 million from a year ago. Average loan balances amounted to $905.4 million, an increase of $61.1 million from an average of $844.3 million in the prior year period. The increase in the average loans (across virtually all segments of the Company's loan portfolio), primarily due to the Company's business development activities and the ongoing consolidation of banks in the Company's marketing area, accounted for the increase in interest earned on loans. The decrease in the yield on the loan portfolio to 7.38% for the first nine months of 2004 from 7.68% for the first nine months of 2003 was primarily attributable to changes in the mix of outstanding balances on average among the components of the loan portfolio.
Interest earned on the securities portfolio, on a tax-equivalent basis, increased to $25.0 million for the first nine months of 2004 from $22.7 million in the corresponding prior year period. Average outstandings increased to $698.3 million from $573.4 in the prior year period. The average life of the securities portfolio was approximately 4.2 years at September 30, 2004 compared to 2.8 years at September 30, 2003, reflecting the impact of purchases made primarily in the fourth quarter of 2003 and the first and second quarters of 2004. The decrease in yields on the securities portfolio reflects the impact of purchases made during the lower rate environment on average in the first and second quarters of the 2004 period and of the principal prepayments primarily in the fourth quarter of 2003 and the second quarter of 2004.
Total interest expense increased to $14.1 million for the first nine months of 2004 from $13.2 million for the corresponding 2003 period, primarily due to higher average balances for interest-bearing deposits.
Interest expense on deposits increased to $7.9 million for the first nine months of 2004 from $6.7 million for the 2003 period, primarily due to an increase in average balances. Average interest-bearing deposit balances increased to $815.3 million for the first nine months of 2004 from $671.2 in the first nine months of 2003 period, primarily as a result of branching initiatives and other business development activities. Average rate paid on interest-bearing deposits was 1.29%, which was 4 basis points lower than the prior year period.
Provision for Loan Losses
Based on management's continuing evaluation of the loan portfolio (discussed under "Asset Quality" below), the provision for loan losses for the first nine months of 2004 increased to $7.2 million from $6.1 million for the prior year period. Factors 1 affecting the level of provision for loan losses included the growth in the loan
portfolios, changes in general economic conditions and the amount of nonaccrural loans.
Noninterest Income
Noninterest income increased to $26.1 million for the first nine months of 2004 from $24.3 million in the corresponding 2003 period, primarily due to increased income from mortgage banking, principally the result of a change in the mix of loans sold due to a broader array of loan products and an increased focus on higher margin mortgage loans, and from factoring activities, from bank owned life insurance and from gains on sales of available for sale securities. Partially offsetting these increases were lower revenues from fees for deposit and various other services.
Noninterest Expenses
Noninterest expenses increased $2.8 million for the first nine months of 2004 when compared to the corresponding 2003 period. The increase was primarily due to investments in the Sterling franchise, including the new branches, with higher expenses related to salaries and employee benefits, advertising and marketing, and professional fees. These higher expenses were partially offset by a $1.3 million reduction in employee benefit costs in the first quarter of 2004 as a result of an executive relinquishing his right to receive pension payments in exchange for a life insurance policy.
Provision for Income Taxes
The provision for income taxes decreased to $9.7 million for the first nine months of 2004 from $ 11.0 million in the first nine months of 2003. The lower provision for taxes in the 2004 period was due to the resolution, during the second quarter of 2004, of certain state tax issues for tax years 1999-2001.
BALANCE SHEET ANALYSIS
Securities
The Company's securities portfolios are comprised of principally U.S. government and U.S. government corporation and agency guaranteed mortgage-backed securities along with other debt and equity securities. At September 30, 2004, the Company's portfolio of securities totaled $670.1 million, of which U.S. government corporation and agency guaranteed mortgage-backed securities and collateralized mortgage obligations having an average life of approximately 4.4 years amounted to $575.0 million. The Company has the intent and ability to hold to maturity securities classified as "held to maturity." These securities are carried at cost, adjusted for amortization of premiums and accretion of discounts. The gross unrealized gains and losses on "held to maturity" securities were $5.2 million and $2.4 million, respectively. Securities classified as "available for sale" may be sold in the future, prior to maturity. These securities are carried at market value. Net aggregate unrealized gains or losses on these securities are included in a valuation allowance account and are shown net of taxes, as a component of shareholders' equity. "Available for sale" securities included gross unrealized gains of $3.3 million and gross unrealized losses of $2.7 million. Given the generally high credit quality of the portfolio, management expects to realize all of its investment upon the maturity of such instruments and thus believes that any market value impairment is temporary.
The following table presents information regarding securities available for sale:
Gross Gross Gross
Amortized Unrealized Unrealized Market
September 30, 2004 Cost Gains Losses Value
------------------ ------------ ------------ ------------ ------------
U.S. Treasury securities $ 2,488,090 $ -- $ (1,059) $ 2,487,031
Obligations of U.S. govern-
ment corporations and
agencies--mortgage-backed
securities 149,099,649 1,499,379 (605,420) 149,993,608
Obligations of U.S. govern-
ment corporations and
agencies--collateralized
mortgage obligations 50,300,775 -- (1,906,729) 48,394,046
Obligations of state and
political institutions 29,074,083 1,331,349 -- 30,405,432
Trust preferred securities 3,220,732 442,315 -- 3,663,047
Other debt securities 39,994,461 -- (141,336) 39,853,125
Federal Reserve Bank and
other equity securities 7,623,241 17,831 -- 7,641,072
------------ ------------ ------------ ------------
Total $281,801,031 $ 3,290,874 $ (2,654,544) $282,437,361
============ ============ ============ ============
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The following table presents information regarding securities held to maturity:
Gross Gross Estimated
Carrying Unrealized Unrealized Market
September 30, 2004 Value Gains Losses Value
------------------ ------------ ------------ ------------ ------------
Obligations of U.S. govern-
ment corporations and
agencies -- mortgage-backed
securities $306,779,884 $ 5,066,482 $ (905,293) $310,941,073
Obligations of U.S. govern-
ment corporations and
agencies--collateralized
mortgage obligations 69,641,819 138,245 (1,507,360) 68,272,704
Debt securities issued by
Foreign governments 1,250,000 -- -- 1,250,000
Other debt securities 10,010,938 -- (12,500) 9,998,438
------------ ------------ ------------ ------------
Total $387,682,641 $ 5,204,727 $ (2,425,153) $390,462,215
============ ============ ============ ============
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Loan Portfolio
A management objective is to maintain the quality of the loan portfolio. The Company seeks to achieve this objective by maintaining rigorous underwriting standards coupled with regular evaluation of the creditworthiness of and the designation of lending limits for each borrower. The portfolio strategies include seeking industry and loan size diversification in order to minimize credit exposure and the origination of loans in markets with which the Company is familiar.
The Company's commercial and industrial loan portfolio represents approximately 58% of all loans. Loans in this category are typically made to small and medium-sized businesses and range between $100,000 and $15 million. Sources of repayment are from the borrower's operating profits, cash flows and liquidation of pledged collateral. Based on underwriting standards, loans may be secured in whole or in part by collateral such as liquid assets, accounts receivable, equipment, inventory, and real property. The Company's real estate loan portfolio, which represents approximately 24% of all loans, is secured by mortgages on real property located principally in the states of New York, North Carolina, Georgia and Virginia. The Company's leasing portfolio, which consists of finance leases for various types of business equipment, represents approximately 16% of all loans. The collateral securing any loan may vary in value based on market conditions.
The following table sets forth the composition of the Company's loans held for sale and loans held in portfolio:
September 30,
------------------------------------------------
2004 2003
-------------------- --------------------
($ in thousands)
% of % of
Balances Gross Balances Gross
-------- ----- -------- -----
Domestic
Commercial and industrial $ 584,754 58.1% $ 544,409 56.9%
Equipment lease financing 159,175 15.8 142,223 14.9
Real estate - mortgage 245,357 24.4 235,526 24.6
Real estate - construction 2,329 0.2 -- --
Installment - individuals 15,268 1.5 13,969 1.5
Loans to depository institutions -- -- 20,000 2.1
---------- ----- ---------- -----
Loans, net of unearned discounts $1,006,883 100.0% $ 956,127 100.0%
========== ===== ========== =====
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Asset Quality
Intrinsic to the lending process is the possibility of loss. In times of economic slowdown, the risk of loss inherent in the Company's portfolio of loans may be increased. While management endeavors to minimize this risk, it recognizes that loan losses will occur and that the amount of these losses will fluctuate depending on the risk characteristics of the loan portfolio which in turn depend on current and expected economic conditions, the financial condition of borrowers, the realization of collateral, and the credit management process.
Management views the allowance for loan losses as a critical accounting policy due to its subjectivity. The allowance for loan losses is maintained through the provision for loan losses, which is a charge to operating earnings. The adequacy
of the provision and the resulting allowance for loan losses is determined by a management evaluation process of the loan portfolio, including identification and review of individual problem situations that may affect the borrower's ability to repay, review of overall portfolio quality through an analysis of current charge-offs, delinquency and nonperforming loan data, estimates of the value of any underlying collateral, an assessment of current and expected economic conditions and changes in the size and character of the loan portfolio. Other data utilized by management in determining the adequacy of the allowance for loan losses includes, but is not limited to, the results of regulatory reviews, the amount of, trend of and/or borrower characteristics on loans that are identified as requiring special attention as part of the credit review process, and peer group comparisons. The impact of this other data might result in an allowance which will be greater than that indicated by the evaluation process previously described. The allowance reflects management's evaluation both of loans presenting identified loss potential and of the risk inherent in various components of the loan portfolio, including loans identified as impaired as required by SFAS No. 114. Thus, an increase in the size of the portfolio or in any of its components could necessitate an increase in the allowance even though there may not be a decline in credit quality or an increase in potential problem loans. A significant change in any of the evaluation factors described above could result in future additions to the allowance. At September 30, 2004, the ratio of the allowance to loans held in portfolio, net of unearned discounts, was 1.61% and the allowance was $15.6 million. At such date, the Company's nonaccrual loans amounted to $3.0 million; $921 thousand of such loans was judged to be impaired within the scope of SFAS No. 114. Based on the foregoing, as well as management's judgment as to the current risks inherent in loans held in portfolio, the Company's allowance for loan losses was deemed adequate to absorb all reasonably anticipated losses on specifically known and other possible credit risks associated with the portfolio as of September 30, 2004. Net losses within loans held in portfolio are not statistically predictable and changes in conditions in the next twelve months could result in future provisions for loan losses varying from the level taken in the first nine months of 2004. Potential problem loans, which are loans that are currently performing under present loan repayment terms but where known information about possible credit problems of borrowers causes management to have serious doubts as to the ability of the borrowers to continue to comply with the present repayment terms, aggregated $0.6 million at September 30, 2004.
Deposits
A significant source of funds for the Company continues to be deposits, consisting of demand (noninterest-bearing), NOW, savings, money market and time deposits (principally certificates of deposit).
The following table provides certain information with respect to the Company's deposits:
September 30,
----------------------------------------------------
2004 2003
-------------------- -----------------------
($ in thousands)
% of % of
Balances Total Balances Total
-------- ----- -------- -----
Domestic
Demand $ 424,534 32.6% $ 399,975 36.5%
NOW 111,868 8.6 116,601 10.6
Savings 29,488 2.3 27,264 2.5
Money market 226,655 17.4 175,345 16.0
Time deposits 503,824 38.8 373,121 34.1
---------- ----- ---------- -----
Total domestic deposits 1,296,369 99.7 1,092,306 99.7
Foreign
Time deposits 3,000 0.3 3,000 0.3
---------- ----- ---------- -----
Total deposits $1,299,369 100.0% $1,095,306 100.0%
========== ===== ========== =====
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Fluctuations of balances in total or among categories at any date may occur based on the Company's mix of assets and liabilities as well as on customers' balance sheet strategies. Historically, however, average balances for deposits have been relatively stable. Information regarding these average balances is presented on pages 24 and 25.
The Company does not have any off-balance sheet arrangements that are reasonably likely to have a material current or future effect on the Company's financial condition, revenues, expenses, results of operations, liquidity or regulatory capital.
CAPITAL
The Company and the bank are subject to risk-based capital regulations which quantitatively measure capital against risk-weighted assets, including certain off-balance sheet items. These regulations define the elements of the Tier 1 and Tier 2 components of Total Capital and establish minimum ratios of 4% for Tier 1 capital and 8% for Total Capital for capital adequacy purposes. Supplementing these regulations is a leverage requirement. This requirement establishes a minimum leverage ratio (at least 3% to 5%) which is calculated by dividing Tier 1 capital by adjusted quarterly average assets (after deducting goodwill). Information regarding the Company's and the bank's risk-based capital is presented on page 28. In addition, the bank is subject to the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") which imposes a number of mandatory supervisory measures. Among other matters, five capital categories, ranging from "well capitalized" to "critically under capitalized", are used by regulatory agencies
to determine a bank's deposit insurance premium, approval of applications authorizing institutions to increase their asset size or otherwise expand business activities or acquire other institutions. Under FDICIA, a "well capitalized" bank must maintain minimum leverage, Tier 1 and Total Capital ratios of 5%, 6% and 10%, respectively. The Federal Reserve Board applies comparable tests for holding companies such as the Company. At September 30, 2004, the Company and the bank exceeded the requirements for "well capitalized" institutions.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this quarterly report, including but not limited to, statements concerning future results of operations or financial position, borrowing capacity and future liquidity, future investment results, future credit exposure, future loan losses and plans and objectives for future operations, and other statements contained herein regarding matters that are not historical facts, are "forward-looking statements" as defined in the Securities Exchange Act of 1934. These statements are not historical facts but instead are subject to numerous assumptions, risks and uncertainties, and represent only our belief regarding future events, many of which, by their nature, are inherently uncertain and outside our control. Any forward-looking statements we may make speak only as of the date on which such statements are made. Our actual results and financial position may differ materially from the anticipated results and financial condition indicated in or implied by these forward-looking statements.
Factors that could cause our actual results to differ materially from those in
the forward-looking statements include, but are not limited to, the following:
inflation, interest rates, market and monetary fluctuations; geopolitical
development including acts of war and terrorism and their impact on economic
conditions; the effects of, and changes in, trade, monetary and fiscal policies
and laws, including interest rate policies of the Board of Governors of the
Federal Reserve System; changes particularly declines, in general economic
conditions and in the local economies in which the Company operates; the
financial condition of the Company's borrowers; competitive pressures on loan
and deposit pricing and demand; changes in technology and their impact on the
marketing of new products and services and the acceptance of these products and
services by new and existing customers; the willingness of customers to
substitute competitors' products and services for the Company's products and
services; the impact of changes in the financial services' laws and regulations
(including laws concerning taxes, banking, securities and insurance); changes in
accounting principles, policies and guidelines; the success of the Company at
managing the risks involved in the foregoing as well as other risks and
uncertainties detailed from time to time in press releases and other public
filings. The foregoing list of important factors is not exclusive, and we will
not update any forward-looking statement, whether written or oral, that may be
made from time to time.
STERLING BANCORP AND SUBSIDIARIES
Average Balance Sheets [1]
Three Months Ended September 30,
(dollars in thousands)
2004 2003
---------------------------------- ---------------------------------------
Average Average Average Average
ASSETS Balance Interest Rate Balance Interest Rate
------- -------- ------- ------- -------- -------
Interest-bearing deposits
with other banks $ 3,799 $ 6 0.62% $ 4,244 $ 9 0.98%
Securities available for sale 266,551 2,886 4.33 171,712 1,917 4.58
Securities held to maturity 386,851 4,625 4.78 355,463 4,201 4.73
Securities tax-exempt [2] 29,267 528 7.18 31,404 583 7.37
Federal funds sold 19,620 73 1.45 2,065 5 1.00
Loans, net of unearned discounts [3] 951,941 16,898 7.31 895,036 15,877 7.18
----------- --------- ----------- ----------
TOTAL INTEREST-EARNING ASSETS 1,658,029 25,016 6.11% 1,459,924 22,592 6.22%
--------- ==== ---------- ====
Cash and due from banks 53,476 60,229
Allowance for loan losses (16,158) (15,004)
Goodwill 21,158 21,158
Other assets 70,050 63,256
----------- -----------
TOTAL ASSETS $ 1,786,555 $ 1,589,563
=========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing deposits
Domestic
Savings $ 29,991 28 0.37% $ 27,561 24 0.34%
NOW 133,357 162 0.48 125,470 141 0.45
Money market 217,612 348 0.64 169,220 189 0.44
Time 469,319 2,469 2.09 356,358 1,803 2.01
Foreign
Time 3,000 8 1.10 3,000 11 1.30
----------- --------- ----------- ----------
Total interest-bearing deposits 853,279 3,015 1.41 681,609 2,168 1.26
----------- --------- ----------- ----------
Borrowings
Securities sold under agreements
to repurchase - customers 90,654 272 1.19 77,980 235 1.20
Securities sold under agreements
to repurchase - dealers 14,910 54 1.43 35,266 104 1.17
Federal funds purchased 2,500 9 1.44 7,228 21 1.14
Commercial paper 34,394 107 1.23 24,285 66 1.07
Other short-term debt 6,293 34 2.15 31,114 85 1.09
Long-term debt 135,774 1,559 4.59 140,774 1,605 4.56
----------- --------- ----------- ----------
Total borrowings 284,525 2,035 2.86 316,647 2,116 2.67
----------- --------- ----------- ----------
TOTAL INTEREST-BEARING LIABILITIES 1,137,804 5,050 1.77% 998,256 4,284 1.71%
--------- ==== ---------- ====
Noninterest-bearing deposits 424,974 377,624
Other liabilities 83,603 77,606
----------- -----------
Total liabilities 1,646,381 1,453,486
----------- -----------
Shareholders' equity 140,174 136,077
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 1,786,555 $ 1,589,563
=========== ===========
Net interest income/spread 19,966 4.34% 18,308 4.51%
==== ====
Net yield on interest-earning
assets (margin) 4.84% 5.02%
==== ====
Less: Tax equivalent adjustment 202 240
--------- ----------
Net interest income $ 19,764 $ 18,068
========= ==========
|
[1] The average balances of assets, liabilities and shareholders' equity are computed on the basis of daily averages. Average rates are presented on a tax-equivalent basis. Certain reclassifications have been made to amounts for prior periods to conform to the current presentation.
[2] Interest on tax-exempt securities is presented on a tax equivalent basis.
[3] Includes loans held for sale and loans held in portfolio; all loans are domestic. Nonaccrual loans are included in amounts outstanding and income has been included to the extent earned.
STERLING BANCORP AND SUBSIDIARIES
Average Balance Sheets [1]
Nine Months Ended September 30,
(dollars in thousands)
2004 2003
------------------------------------- --------------------------------------
Average Average Average Average
ASSETS Balance Interest Rate Balance Interest Rate
----------- --------- ------- ----------- --------- -------
Interest-bearing deposits
with other banks $ 3,151 $ 13 0.55% $ 3,679 $ 21 0.76%
Securities available for sale 282,504 9,364 4.37 162,294 6,110 5.02
Securities held to maturity 385,548 14,008 4.84 378,874 14,830 5.22
Securities tax-exempt [2] 30,217 1,619 7.16 32,222 1,794 7.44
Federal funds sold 14,361 129 1.18 5,044 45 1.18
Loans, net of unearned discounts [3] 905,402 47,392 7.38 844,335 46,018 7.68
----------- --------- ----------- ---------
TOTAL INTEREST-EARNING ASSETS 1,621,183 72,525 6.13% 1,426,448 68,818 6.64%
--------- ==== ----------- --------- ====
Cash and due from banks 59,477 57,391
Allowance for loan losses (15,694) (14,579)
Goodwill 21,158 21,158
Other assets 70,370 63,630
----------- -----------
TOTAL ASSETS $ 1,756,494 $ 1,554,048
=========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing deposits
Domestic
Savings $ 31,851 93 0.39% $ 27,065 72 0.36%
NOW 134,237 463 0.46 118,907 438 0.49
Money market 210,257 909 0.58 160,835 565 0.47
Time 435,991 6,373 1.95 361,343 5,571 2.06
Foreign
Time 3,000 24 1.09 3,000 33 1.48
----------- --------- ----------- ---------
Total interest-bearing deposits 815,336 7,862 1.29 671,150 6,679 1.33
----------- --------- ----------- ---------
Borrowings
Securities sold under agreements
to repurchase - customers 81,625 702 1.15 69,057 639 1.24
Securities sold under agreements
to repurchase - dealers 34,018 305 1.20 40,198 384 1.28
Federal funds purchased 8,580 72 1.11 6,154 56 1.21
Commercial paper 28,733 248 1.15 22,758 192 1.13
Other short-term debt 16,603 240 1.93 30,959 416 1.80
Long-term debt 135,774 4,679 4.59 140,774 4,815 4.56
----------- --------- ----------- ---------
Total borrowings 305,333 6,246 2.73 309,900 6,502 2.80
----------- --------- ----------- ---------
TOTAL INTEREST-BEARING LIABILITIES 1,120,669 14,108 1.68% 981,050 13,181 1.80%
--------- ==== ----------- --------- ====
Noninterest-bearing deposits 411,916 360,793
Other liabilities 81,928 78,893
----------- -----------
Total liabilities 1,614,513 1,420,736
----------- -----------
Shareholders' equity 141,981 133,312
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 1,756,494 $ 1,554,048
=========== ===========
Net interest income/spread 58,417 4.45% 55,637 4.84%
==== ====
Net yield on interest-earning
assets (margin) 4.92% 5.36%
==== ====
Less: Tax equivalent adjustment 626 737
--------- ---------
Net interest income $ 57,791 $ 54,900
========= =========
|
[1] The average balances of assets, liabilities and shareholders' equity are computed on the basis of daily averages. Average rates are presented on a tax-equivalent basis. Certain reclassifications have been made to amounts for prior periods to conform to the current presentation.
[2] Interest on tax-exempt securities is presented on a tax equivalent basis.
[3] Includes loans held for sale and loans held in portfolio; all loans are domestic. Nonaccrual loans are included in amounts outstanding and income has been included to the extent earned.
STERLING BANCORP AND SUBSIDIARIES
Rate/Volume Analysis [1]
(in thousands)
Increase/(Decrease)
Three Months Ended
September 30, 2004 to September 30, 2003
----------------------------------------
Volume Rate Net [2]
--------- --------- ---------
INTEREST INCOME
Interest-bearing deposits with other banks $ (1) $ (2) $ (3)
--------- --------- ---------
Securities available for sale 1,079 (110) 969
Securities held to maturity 378 46 424
Securities tax-exempt (40) (15) (55)
--------- --------- ---------
Total investment securities 1,417 (79) 1,338
--------- --------- ---------
Federal funds sold 65 3 68
Loans, net of unearned discounts [3] 795 226 1,021
--------- --------- ---------
TOTAL INTEREST INCOME $ 2,276 $ 148 $ 2,424
========= ========= =========
INTEREST EXPENSE
Interest-bearing deposits
Domestic
Savings $ 2 $ 2 $ 4
NOW 10 11 21
Money market 62 97 159
Time 592 74 666
Foreign
Time -- (3) (3)
--------- --------- ---------
Total interest-bearing deposits 666 181 847
--------- --------- ---------
Borrowings
Securities sold under agreements
to repurchase - customers 39 (2) 37
Securities sold under agreements
to repurchase - dealers (69) 19 (50)
Federal funds purchased (16) 4 (12)
Commercial paper 30 11 41
Other short-term debt (98) 47 (51)
Long-term debt (57) 11 (46)
--------- --------- ---------
Total borrowings (171) 90 (81)
--------- --------- ---------
TOTAL INTEREST EXPENSE $ 495 $ 271 $ 766
========= ========= =========
NET INTEREST INCOME $ 1,781 $ (123) $ 1,658
========= ========= =========
|
[1] This table is presented on a tax-equivalent basis.
[2] Changes in interest income and interest expense due to a combination of both volume and rate have been allocated to the change due to volume and the change due to rate in proportion to the relationship of the change due solely to each.
[3] Includes loans held for sale and loans held in portfolio; all loans are domestic. Nonaccrual loans are included in amounts outstanding and income has been included to the extent earned.
STERLING BANCORP AND SUBSIDIARIES
Rate/Volume Analysis [1]
(in thousands)
Increase/(Decrease)
Nine Months Ended
September 30, 2004 to September 30, 2003
----------------------------------------
Volume Rate Net [2]
--------- --------- ---------
INTEREST INCOME
Interest-bearing deposits with other banks $ (3) $ (5) $ (8)
--------- --------- ---------
Securities available for sale 4,121 (867) 3,254
Securities held to maturity 303 (1,125) (822)
Securities tax-exempt (111) (64) (175)
--------- --------- ---------
Total investment securities 4,313 (2,056) 2,257
--------- --------- ---------
Federal funds sold 84 -- 84
Loans, net of unearned discounts [3] 3,416 (2,042) 1,374
--------- --------- ---------
TOTAL INTEREST INCOME $ 7,810 $ (4,103) $ 3,707
========= ========= =========
INTEREST EXPENSE
Interest-bearing deposits
Domestic
Savings $ 14 $ 7 $ 21
NOW 54 (29) 25
Money market 196 148 344
Time 1,115 (313) 802
Foreign
Time -- (9) (9)
--------- --------- ---------
Total interest-bearing deposits 1,379 (196) 1,183
--------- --------- ---------
Borrowings
Securities sold under agreements
to repurchase - customers 113 (50) 63
Securities sold under agreements
to repurchase - dealers (56) (23) (79)
Federal funds purchased 21 (5) 16
Commercial paper 53 3 56
Other short-term debt (204) 28 (176)
Long-term debt (166) 30 (136)
--------- --------- ---------
Total borrowings (239) (17) (256)
--------- --------- ---------
TOTAL INTEREST EXPENSE $ 1,140 $ (213) $ 927
========= ========= =========
NET INTEREST INCOME $ 6,670 $ (3,890) $ 2,780
========= ========= =========
|
[1] This table is presented on a tax-equivalent basis.
[2] Changes in interest income and interest expense due to a combination of both volume and rate have been allocated to the change due to volume and the change due to rate in proportion to the relationship of the change due solely to each. The effect of the extra day in 2004 has been included in the change in volume.
[3] Includes loans held for sale and loans held in portfolio; all loans are domestic. Nonaccrual loans are included in amounts outstanding and income has been included to the extent earned.
STERLING BANCORP AND SUBSIDIARIES
Regulatory Capital and Ratios
Ratios and Minimums
(dollars in thousands)
For Capital To Be Well
Actual Adequacy Minimum Capitalized
--------------------- --------------------- ----------------------
As of September 30, 2004 Amount Ratio Amount Ratio Amount Ratio
------------------------ -------- ----- -------- ---- -------- -----
Total Capital(to Risk Weighted Assets):
The Company $166,929 14.38% $ 92,839 8.00% $116,049 10.00%
The bank 135,324 12.32 87,879 8.00 109,849 10.00
Tier 1 Capital(to Risk Weighted Assets):
The Company 152,409 13.13 46,420 4.00 69,629 6.00
The bank 121,572 11.07 43,939 4.00 65,909 6.00
Tier 1 Leverage Capital(to Average Assets):
The Company 152,409 8.63 70,616 4.00 88,270 5.00
The bank 121,572 7.13 68,172 4.00 85,215 5.00
As of December 31, 2003
-----------------------
Total Capital(to Risk Weighted Assets):
The Company $161,593 14.88% $ 86,898 8.00% $108,623 10.00%
The bank 123,092 11.85 83,130 8.00 103,912 10.00
Tier 1 Capital(to Risk Weighted Assets):
The Company 148,004 13.63 43,449 4.00 65,174 6.00
The bank 110,086 10.59 41,565 4.00 62,347 6.00
Tier 1 Leverage Capital(to Average Assets):
The Company 148,004 8.87 66,741 4.00 83,426 5.00
The bank 110,086 6.76 65,112 4.00 81,390 5.00
|
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ASSET/LIABILITY MANAGEMENT
The Company's primary earnings source is its net interest income; therefore the Company devotes significant time and has invested in resources to assist in the management of interest rate risk and asset quality. The Company's net interest income is affected by changes in market interest rates, and by the level and composition of interest-earning assets and interest-bearing liabilities. The Company's objectives in its asset/liability management are to utilize its capital effectively, to provide adequate liquidity and to enhance net interest income, without taking undue risks or subjecting the Company to excessive interest rate fluctuations.
The Company takes a coordinated approach to the management of its liquidity, capital and interest rate risk. This risk management process is governed by policies and limits established by senior management which are reviewed and approved by the Asset/Liability Committee. This committee, which is comprised of members of senior management, meets to review, among other things, economic conditions, interest rates, yield curve, cash flow projections, expected customer actions, liquidity levels, capital ratios and repricing characteristics of assets, liabilities and financial instruments.
Market Risk
Market risk is the risk of loss in a financial instrument arising from adverse changes in market indices such as interest rates, foreign exchange rates and equity prices. The Company's principal market risk exposure is interest rate risk, with no material impact on earnings from changes in foreign exchange rates or equity prices.
Interest rate risk is the exposure to changes in market interest rates. Interest rate sensitivity is the relationship between market interest rates and net interest income due to the repricing characteristics of assets and liabilities. The Company monitors the interest rate sensitivity of its balance sheet positions by examining its near-term sensitivity and its longer-term gap position. In its management of interest rate risk, the Company utilizes several financial and statistical tools, including traditional gap analysis and sophisticated income simulation models.
A traditional gap analysis is prepared based on the maturity and repricing characteristics of interest-earning assets and interest-bearing liabilities for selected time periods. The mismatch between repricings or maturities within a time period is commonly referred to as the "gap" for that period. A positive gap (asset sensitive) where interest rate sensitive assets exceed interest rate sensitive liabilities generally will result in the net interest margin increasing in a rising rate environment and decreasing in a falling rate environment. A negative gap (liability sensitive) will generally have the opposite result on the net interest margin. However, the traditional gap analysis does not assess the relative sensitivity of assets and liabilities to changes in interest rates and other factors that could have an impact on interest rate sensitivity or net interest income. The Company utilizes the gap analysis to complement its income simulations modeling, primarily focusing on the longer-term structure of the balance sheet.
The Company's balance sheet structure is primarily short-term in nature, with a substantial portion of assets and liabilities repricing or maturing within one year. The Company's gap analysis at September 30, 2004, presented on page 33, indicates that net interest income would increase during periods of rising interest rates and decrease during periods of falling interest rates, but, as mentioned above, gap analysis may not be an accurate predictor of net interest income.
As part of its interest rate risk strategy, the Company may use financial instrument derivatives to hedge the interest rate sensitivity of assets with the corresponding amortization reflected in the yield of the related balance sheet assets being hedged. The Company has written policy guidelines, approved by the Board of Directors, governing the use of financial instruments, including approved counterparties, risk limits and appropriate internal control procedures. The credit risk of derivatives arises principally from the potential for a counterparty to fail to meet its obligation to settle a contract on a timely basis.
The Company utilizes income simulation models to complement its traditional gap analysis. While the Asset/Liability Committee routinely monitors simulated net interest income sensitivity over a rolling two-year horizon, it also utilizes additional tools to monitor potential longer-term interest rate risk.
The income simulation models measure the Company's net interest income volatility or sensitivity to interest rate changes utilizing statistical techniques that allow the Company to consider various factors which impact net interest income. These factors include actual maturities, estimated cash flows, repricing characteristics, deposits growth/retention and, most importantly, the relative sensitivity of the Company's assets and liabilities to changes in market interest rates. This relative sensitivity is important to consider as the Company's core deposit base has not been subject to the same degree of interest rate sensitivity as its assets. The core deposit costs are internally managed and tend to exhibit less sensitivity to changes in interest rates than the Company's adjustable rate assets whose yields are based on external indices and generally change in concert with market interest rates.
The Company's interest rate sensitivity is determined by identifying the probable impact of changes in market interest rates on the yields on the Company's assets and the rates that would be paid on its liabilities. This modeling technique involves a degree of estimation based on certain assumptions that management believes to be reasonable. Utilizing this process, management projects the impact of changes in interest rates on net interest margin. The Company has established certain policy limits for the potential volatility of its net interest margin assuming certain levels of changes in market interest rates with the objective of maintaining a stable net interest margin under various probable rate scenarios. Management generally has maintained a risk position well within the policy limits. As of September 30, 2004, the model indicated the impact of a 200 basis point parallel and pro rata rise in rates over 12 months would approximate a 3.0% ($2.4 million) increase in net interest income, while the impact of a 200 basis point decline in rates over the same period would approximate a 5.2% ($4.2 million) decline from an unchanged rate environment.
The preceding sensitivity analysis does not represent a Company forecast and should not be relied upon as being indicative of expected operating results. These hypothetical estimates are based upon numerous assumptions including: the nature and timing of interest rate levels including yield curve shape, pre-payments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment/replacement of asset and liability cash flows, and others. While assumptions are developed based upon current economic and local market conditions, the Company cannot provide any assurances as to the predictive nature of these assumptions, including how customers preferences or competitor influences might change.
Also, as market conditions vary from those assumed in the sensitivity analysis, actual results will also differ due to: pre-payment/refinancing levels likely deviating from those assumed, the varying impact of interest rate change caps or floors on adjustable rate assets, the potential effect of changing debt service levels on customers with adjustable rate loans, depositor early withdrawals and product preference changes, and other variables. Furthermore, the sensitivity analysis does not reflect actions that the Asset/Liability Committee might take in responding to or anticipating changes in interest rates.
Liquidity Risk
Liquidity is the ability to meet cash needs arising from changes in various categories of assets and liabilities. Liquidity is constantly monitored and managed at both the parent company and the bank levels. Liquid Assets consist of cash and due from banks, interest-bearing deposits in banks and Federal funds sold and securities available for sale. Primary funding sources include core deposits, capital market funds and other money market sources. Core deposits included domestic noninterest-bearing and interest-bearing retail deposits, which historically have been relatively stable. The parent company and the bank believe that they have significant unused borrowing capacity. Contingency plans exist which we believe could be implemented on a timely basis to mitigate the impact of any dramatic change in market conditions.
While the parent company generates income from its own operations, it also depends for its cash requirements on funds maintained or generated by its subsidiaries, principally the bank. Such sources have been adequate to meet the parent company's cash requirements throughout its history.
Various legal restrictions limit the extent to which the bank can supply funds to the parent company and its nonbank subsidiaries. All national banks are limited in the payment of dividends without the approval of the Comptroller of the Currency to an amount not to exceed the net profits as defined, for the year to date combined with its retained net profits for the preceding two calendar years.
At September 30, 2004, the parent company's short-term debt, consisting principally of commercial paper used to finance ongoing current business activities, was approximately $35.0 million. The parent company had cash, interest-bearing deposits with banks and other current assets aggregating $34.8 million. The parent company also has back-up credit lines with banks of $24.0 million. Since 1979, the parent company has had no need to use the available back-up lines of credit.
The following table sets forth information regarding the Company's obligations and commitments to make future payments under contract as of September 30, 2004:
Payments Due by Period
--------------------------------------------------------------------------
Contractual Less than 1-3 4-5 After 5
Obligations Total 1 Year Years Years Years
------------------------------------------------------------------------------------------------------------------
(in thousands)
Long-Term Debt $ 110,000 $ -- $ -- $ 10,000 $ 100,000
Operating Leases 30,242 3,522 6,670 6,515 13,535
---------- ---------- ---------- ---------- ----------
Total Contractual Cash Obligations $ 140,242 $ 3,522 $ 6,670 $ 16,515 $ 113,535
========== ========== ========== ========== ==========
|
The following table sets forth information regarding the Company's obligations under other commercial commitments as of September 30, 2004:
Amount of Commitment Expiration Per Period Other
Other --------------------------------------------------------------------------
Commercial Total Amount Less than 1-3 4-5 After 5
Commitments Committed 1 Year Years Years Years
------------------------------------------------------------------------------------------------------------------
(in thousands)
Residential loans $ 69,175 $ 69,175 $ -- $ -- $ --
Standby Letters of Credit 31,483 29,520 1,963 -- --
Other Commercial Commitments 46,610 32,325 11,484 2,725 76
---------- ---------- ---------- ---------- ----------
Total Commercial Commitments $ 147,268 $ 131,020 $ 13,447 $ 2,725 $ 76
========== ========== ========== ========== ==========
|
INFORMATION AVAILABLE ON OUR WEB SITE
Our Internet address is www.sterlingbancorp.com and the investor relations section of our web site is located at www.sterlingbancorp.com/ir/investor.cfm. We make available free of charge, on or through the investor relations section of our web site, annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission.
Also posted on our web site, and available in print upon request of any shareholder to our Investor Relations Department, are the charters for our Board of Directors' Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee, our Corporate Governance Guidelines, our Method for Interested Persons to Communicate with Non-Management Directors and a Code of Business Conduct and Ethics governing our directors, officers and employees. Within the time period required by the Securities and Exchange Commission and the New York Stock Exchange, we will post on our web site any amendment to the Code of Business Conduct and Ethics and any waiver applicable to our senior financial officers, as defined in the Code, or our executive officers or directors. In addition, information concerning purchases and sales of our equity securities by our executive officers and directors is posted on our web site.
STERLING BANCORP AND SUBSIDIARIES
Interest Rate Sensitivity
To mitigate the vulnerability of earnings to changes in interest rates, the Company manages the repricing characteristics of assets and liabilities in an attempt to control net interest rate sensitivity. Management attempts to confine significant rate sensitivity gaps predominantly to repricing intervals of a year or less so that adjustments can be made quickly. Assets and liabilities with predetermined repricing dates are classified based on the earliest repricing period. Amounts are presented in thousands.
Repricing Date
--------------------------------------------------------------------------------------------
More than More than
3 Months 3 Months 1 Year to Over Nonrate
or Less to 1 Year 5 Years 5 Years Sensitive Total
---------- ---------- ---------- ---------- ---------- ----------
ASSETS
Interest-bearing deposits
with other banks $ 2,670 $ -- $ -- $ -- $ -- $ 2,670
Investment securities 16,500 7,582 82,098 556,299 7,641 670,120
Loans, net of unearned
discounts
Commercial and industrial 577,019 1,088 7,173 8 (535) 584,753
Loans to depository
institutions -- -- -- -- -- --
Lease financing 1,212 16,289 154,045 10,126 (22,496) 159,176
Real estate 98,694 9,966 105,857 33,170 (1) 247,686
Installment 13,108 82 2,052 28 (2) 15,268
Noninterest-earning
assets and allowance
for loan losses -- -- -- -- 130,206 130,206
---------- ---------- ---------- ---------- ---------- ----------
Total Assets 709,203 35,007 351,225 599,631 114,813 1,809,879
---------- ---------- ---------- ---------- ---------- ----------
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing deposits
Savings [1] -- -- 29,488 -- -- 29,488
NOW [1] -- -- 111,868 -- -- 111,868
Money market [1] 185,045 -- 41,610 -- -- 226,655
Time - domestic 194,096 170,298 139,320 110 -- 503,824
- foreign 1,355 1,645 -- -- -- 3,000
Securities sold u/a/r - cust 98,483 5,113 -- -- -- 103,596
Securities sold u/a/r - deal -- -- -- -- -- --
Federal funds purchased -- -- -- -- -- --
Commercial paper 34,954 -- -- -- -- 34,954
Other short-term borrowings 1,108 -- -- -- -- 1,108
Long-term borrowings - FHLB -- -- 10,000 100,000 25,774 135,774
Noninterest-bearing liabilities
and shareholders' equity -- -- -- -- 659,612 659,612
---------- ---------- ---------- ---------- ---------- ----------
Total Liabilities and
Shareholders' Equity 515,041 177,056 332,286 100,110 685,386 1,809,879
---------- ---------- ---------- ---------- ---------- ----------
Net Interest Rate
Sensitivity Gap $ 194,162 $ (142,049) $ 18,939 $ 499,521 $ (570,573) $ --
========== ========== ========== ========== ========== ==========
Cumulative Gap
September 30, 2004 $ 194,162 $ 52,113 $ 71,052 $ 570,573 $ -- $ --
========== ========== ========== ========== ========== ==========
Cumulative Gap
September 30, 2003 $ 259,449 $ 129,985 $ 107,689 $ 543,384 $ -- $ --
========== ========== ========== ========== ========== ==========
Cumulative Gap
December 31, 2003 $ 230,662 $ 77,756 $ 46,397 $ 595,450 $ -- $ --
========== ========== ========== ========== ========== ==========
|
[1] Historically, balances in non-maturity deposit accounts have remained relatively stable despite changes in levels of interest rates. Balances are shown in repricing periods based on management's historical repricing practices and run-off experience.
ITEM 4. CONTROLS AND PROCEDURES
An evaluation was carried out under the supervision and with the participation of the Company's management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective as of the end of the period covered by this report. No changes in our internal control over financial reporting ( as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
3.(i) Restated Certificate of Incorporation filed with
the State of New York Department of State, October
28, 2004
3.(ii) The By-Laws as in effect on August 5, 2004 (Filed
as Exhibit 3(ii)(A) to the Registrant's Form 10-Q
for the quarter ended June 30, 2004 and
incorporated herein by reference)
10. Sterling Bancorp Stock Incentive Plan (Amended and
Restated as of May 20, 2004.)
Form of Award Letter for Non-Employee Directors
Form of Award Letter for Officers
11. Statement Re: Computation of Per Share Earnings
31. Certifications of the CEO and CFO pursuant to
Exchange Act Rule 13a-14(a)
32. Certifications of the CEO and CFO required by
Section 1350 of Chapter 63 of Title 18 of the U.S.
Code
|
(b) Reports on Form 8-K:
In a report on Form 8-K dated July 16,2004 and filed on July 19, 2004, the Company reported under Items 9 and 12 "Results of Operations and Financial Condition and Regulation FD Disclosure", the press release announcing a conference call on July 20, 2004 to discuss the results of operations for the second quarter ended June 30, 2004.
In a report on Form 8-K dated July 20, 2004 and filed on July 21, 2004, the Company reported, under Items 9 and 12 "Results of Operations and Financial Condition and Regulation FD Disclosure", the press release announcing the results of operations for the quarter and six months ended June 30,2004.
In a report on Form 8-K dated July 21, 2004 and filed on July
22, 2004, the Company reported, under Item 7 "Financial
Statements, Pro Forma Information and Exhibits" and under Item
9 "Regulation FD Disclosure", the press release announcing a
presentation on July 27, 2004 by John C. Millman, President of
Sterling Bancorp, as part of the Keefe, Bruyette & Woods, Inc.
Fifth Annual Investor Conference.
In a report on Form 8-K dated August 19, 2004 and filed on August 20, 2004, the Company reported under Item 5. "Other Events" and under Item 7 "Financial Statements, Pro Forma Financial Information and Exhibits", the press release announcing the declaration of a quarterly cash dividend of $0.19 payable September 30, 2004 to shareholders of record on September 15, 2004.
In a report on Form 8-K dated September 20, 2004 and filed on September 21, 2004, the Company reported, under Item 7 "Financial Statements, Pro Forma Information and Exhibits" and under Item 9 "Regulation FD Disclosure", the press release announcing a presentation on September 23, 2004 by John C. Millman, President of Sterling Bancorp and Michael Bizenov, President of Sterling National Mortgage Company Inc., as part of the LI Invest First Annual Investor Conference.
In a report on Form 8-K/A dated September 20, 2004 and filed on September 21, 2004, the Company reported, under Item 7.01 "Regulation FD Disclosure" and Item 9.01 "Financial Statements, Pro Forma Information and Exhibits", the press release announcing a presentation on September 23, 2004 by John C. Millman, President of Sterling Bancorp and Michael Bizenov, President of Sterling National Mortgage Company Inc., as part of the LI Invest First Annual Investor Conference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date 11/9/04 /s/ Louis J. Cappelli
------------ -----------------------------------
Louis J. Cappelli
Chairman and
Chief Executive Officer
Date 11/9/04 /s/ John W. Tietjen
------------ -----------------------------------
John W. Tietjen
Executive Vice President, Treasurer
and Chief Financial Officer
|
STERLING BANCORP AND SUBSIDIARIES
EXHIBIT INDEX
Incorporated Sequential
Exhibit Herein By Filed Page
Number Description Reference To Herewith No.
------ ----------- ------------ -------- ---
3(i) Restated Certificate of Incorporation filed with the State
of New York Department of State, October 28, 2004 X 39
3(ii) The By-Laws as in effect on August 5, 2004 (Filed as Exhibit
3(ii)(A) to the Registrant's Form 10-Q for the quarter ended
June 30, 2004 and incorporated herein by reference)
10 Sterling Bancorp Stock Incentive Plan (Amended And
Restated as of May 20, 2004). X 49
Form of Award Letter for Non-Employee Directors 68
Form of Award Letter for Officers 69
11 Statement re: Computation of Per Share Earnings X 71
31 Certifications of the CEO and CFO pursuant to Exchange Act
Rule 13a-14(a) X 72
32 Certifications of the CEO and CFO required by Section 1350
of Chapter 63 of Title 18 of the U.S. Code X 74
|
Exhibit 3(i)
RESTATED
CERTIFICATE OF INCORPORATION
OF STERLING BANCORP
Under Section 807 of the
Business Corporation Law
Pursuant to the provisions of Section 807 of the Business Corporation Law, the undersigned hereby certify:
FIRST: The name of the Corporation is STERLING BANCORP and the name under which it was originally incorporated was STANDARD PRUDENTIAL UNITED CORPORATION.
SECOND: The Certificate of Incorporation of the Corporation was filed by the Department of State of the State of New York on the 6th day of May, 1966.
THIRD: The Restated Certificate of Incorporation was duly authorized by the vote of a majority of the members of the Board of Directors of the Corporation.
FOURTH: The text of the Certificate of Incorporation is restated by this Certificate without amendment or change to read as herein set forth in full as follows:
ARTICLE FIRST: The name of the corporation is STERLING BANCORP (the "Corporation").
ARTICLE SECOND: The purposes for which the Corporation is formed are as follows:
1. To purchase, manufacture, produce, assemble, receive, lease or in any manner acquire, hold, own, use, operate, install, maintain, service, repair, process, alter, improve, import, export, sell, exchange, barter, distribute, mortgage, lease, assign, transfer and generally to trade and deal in and with, at wholesale or retail, all goods, wares, merchandise, textiles, raw materials, natural or manufactured articles or products, machinery, equipment, devices, systems, parts, supplies, apparatus and personal property of every kind, nature or description, tangible or intangible, used or capable of being used for any purpose whatsoever and to engage, finance and participate in any mercantile, manufacturing, commercial, industrial or trading business of any kind or character in any part of the world.
2. To adopt, apply for, obtain, register, purchase, lease or otherwise acquire and to maintain, protect, hold, use, own, exercise, develop, manufacture under, operate and introduce, and to sell and grant licenses or other rights in respect of, assign, or otherwise dispose of, turn to account, or in any manner deal with and contract with reference to, any trademarks, trade names, patents, patent rights, concessions, franchises, designs, copyrights and distinctive marks and rights analogous thereto, and inventions, devices, improvements, processes, secret or otherwise, recipes, formulae and the like,
Exhibit 3(i)
including such thereof as may be covered by, used in connection with, or secured or received under, Letters Patent of the United States of America or elsewhere, and any licenses in respect thereof and any or all rights connected therewith or pertaining thereto; and with a view to the working and development thereof, to carry on any business which the Corporation may consider calculated, directly or indirectly, to effectuate the use, exercise or development thereof.
3. To subscribe for, purchase, acquire, hold, own or become interested in, whether by subscription, purchase, underwriting, loan, participation in syndicates or otherwise, to sell, assign, transfer, mortgage, pledge or otherwise dispose of, or in any manner to deal in or with, and in furtherance of its corporate business and subject to the limitations prescribed by statute to guarantee, stocks, bonds, debentures, warrants, rights, scrip, notes, evidences of indebtedness, or other shares, securities or obligations of any kind by whomsoever issued whatsoever in any part of the world or of any government, domestic or foreign, to exercise in respect thereof all powers and privileges of individual ownership or interest therein, including the right to vote thereon for any and all purposes; to consent or otherwise act with respect thereto, without limitations, including the doing of all acts necessary or advisable for the protection, improvement, preservation and enhancement thereof; and to issue in exchange therefor or in payment thereof the Corporation's own shares, bonds, debentures, warrants, rights, scrip, notes, evidences of indebtedness or other shares, securities or obligations of any kind by whomsoever issued.
4. In furtherance of its corporate business and subject to the limitations prescribed by statute, to acquire by purchase, exchange or otherwise, all or any part of, or any interest in, the properties, assets, franchises, business and good will of any one or more corporations, associations, partnerships, firms, syndicates or individuals and to pay for the same in cash, property or its own or other securities, shares or obligations of any kind by whomsoever issued; to hold, operate, reorganize, liquidate, mortgage, pledge, sell, exchange, or in any manner dispose of the whole or any part thereof; and in connection therewith, to assume or guarantee performance of any liabilities, obligations or contracts of corporations, associations, partnerships, firms, syndicates or individuals.
5. In furtherance of its corporate business, to act as financial or business agent, general or special, for domestic and foreign corporations, individuals, partnerships or associations; to promote, or participate as a partner, member, agent, principal, shareholder, associate, manager or otherwise, in any business, enterprise or venture and to organize, to the extent permitted by law, other corporations, firms, partnerships and associations of any type or kinds, and to wind up, liquidate, reorganize, merge or consolidate any such corporation, firm, partnership or association or cause the same to be dissolved, wound up, liquidated, reorganized, merged or consolidated.
6. To purchase, hire, lease or otherwise acquire, manage, improve, develop, operate, maintain, sell, exchange, assign, transfer, convey, mortgage, lease or otherwise dispose of, any interest, estate or right in real property, improved or unimproved, and to erect or cause to be erected thereon buildings or other structures with their appurtenances, and to rebuild and enlarge, alter and improve any buildings or other structures now or hereafter erected on any such real property and otherwise to deal in, establish, promote, reorganize, carry on, finance, conduct and manage any and all interests in real property.
Exhibit 3(i)
7. To transact a general real estate agency and brokerage business in buying, selling and dealing in real estate and real property, and any interest and estates therein, on commission and renting and managing real estate; and to carry on any other lawful trade or business incident to or proper or useful in connection with the promotion, development, purchase, sale, ownership, construction, maintenance and management of real property.
8. To act as factor or selling agent for manufacturers, merchants, and others; to buy, sell, make advances against, and otherwise deal in, accounts and other receivables; to make advances on the security of merchandise or other personal property, including but not limited to trust receipts, conditional bills of sale, chattel mortgages, and factor's liens; to make loans, secured and unsecured; to finance, factor, purchase or make advances on the security of accounts receivable; to purchase or otherwise acquire, with or without recourse, commercial paper of all kinds, including without limitation conditional sales contracts, chattel mortgages, chattel leases, installment paper and trust receipts.
9. To make loans and advances on personal property and to buy, sell and deal in, with or without guarantee of payment thereof, securities which are liens on personal property; to make unsecured loans to corporations, firms or other persons; to purchase or otherwise acquire, with or without recourse, the promissory notes or other securities of any person, firm or corporation; to buy, sell and deal in, with or without guarantee of payment thereof, bonds, mortgages and other like securities which are liens on real property.
10. To erect, construct, maintain, improve, rebuild, enlarge, alter, manage and control any and all kinds of buildings, houses, hotels, stores, offices, warehouses, mills, shops, factories, machinery and plants, and any and all other structures and erections which may at any time be necessary, useful or advantageous for the purposes of the Corporation.
11. To carry on business as depositories, warehousemen or custodians of goods, wares and merchandise, and to issue therefor receipts negotiable or otherwise.
12. To purchase and acquire bills, notes and accounts receivable.
13. To purchase and acquire bonds and mortgages which are liens on real or personal property.
14. To make, and enter into, contracts of every name and nature pertaining to the business herein set forth with any individual, firm, association or corporation, private, public or municipal, and with the Government or public authorities of the United States, or of any State or political subdivision thereof, and with any foreign government.
15. To borrow or raise money for any of the objects and purposes of the Corporation, to secure the same and the interest thereon, and for that or any other purpose to mortgage or charge all or any part of the present or after-acquired property, rights and franchises of the Corporation, and to issue, sell, pledge, or otherwise dispose of notes, bonds, debentures and other evidences of indebtedness of the Corporation.
Exhibit 3(i)
16. In furtherance of its corporate purposes, to guarantee the payment of dividends or sinking fund payments upon any capital shares of any corporation in which the Corporation may at any time have an interest; and to become surety in respect of and to endorse or guarantee the payment, of the principal of or interest on any notes, debentures, bonds, securities or other obligations issued by others, and to become surety for or to guarantee the performance of any and all contracts, leases and obligations of every kind of any other person.
17. To carry out all phases of the business of acquiring, manufacturing, treating, refining, liquefying or otherwise preparing for market, transporting, marketing, dealing in, buying and selling, exporting and importing, storing, or otherwise disposing of oil of any and all kinds and grades, natural or artificial gas of any and all forms, gasoline, other hydrocarbon products, chemicals, petrochemicals, rock salt, salts, fertilizers, and any and all other minerals and mineral substances, and the elements, constituents, products, by-products, mixtures, combinations, compounds, derivatives and blends thereof but not to sell gas to consumers.
18. To obtain by contract or concession, purchase, or otherwise acquire, own, use, develop, explore, operate, lease, mortgage, create liens upon, deal and trade in, sell, lease or otherwise dispose of any and all lands, real property, mining claims, mineral rights, gas and oil wells, leases, concessions, licenses, royalty interests, grants, rights of way, land patents, franchises, deposits, water rights, wells, mines, quarries, claims, easements, tenements, hereditaments, and interests of every description and nature whatsoever.
19. To build, purchase, lease or otherwise acquire, own, develop, operate, mortgage, create liens upon, deal in, sell, lease or otherwise dispose of transportation facilities, including cars, trucks, tank cars, distribution lines and plants, pumping and compressing stations, terminals, aircraft, tankers and other vessels or ships of any kind, and any and all related facilities and any and all kinds of refineries, tanks and other storage facilities.
20. To purchase or acquire from any of the officers, directors or shareholders of the Corporation any property, interests or capital shares, and other assets belonging to them or any of them which the Board of Directors of this Corporation may deem it advisable to acquire.
21. To purchase, receive, take or otherwise acquire, own, hold, sell, lend, exchange, transfer or otherwise dispose of, pledge, use and otherwise deal in and with its own shares.
22. To sell or exchange all or any part of the property, assets, goodwill and undertakings of the Corporation and to accept in payment or exchange therefor lawful moneys, or the capital shares, bonds or other securities of any other corporation, either domestic or foreign.
Exhibit 3(i)
23. To carry out all or any part of the foregoing objects, or any other business or object permitted by law, as principals or agents, or in conjunction with any other persons, firm, association or corporation, and in any part of the world, and to do all such acts and other things as are incidental or conducive to the attainment of the above objects and the welfare of the business to be conducted.
For the accomplishment of the aforesaid purposes and in furtherance thereof the Corporation shall have and may exercise all of the powers conferred by the Business Corporation Law upon corporations formed thereunder subject to any limitations contained in Article 2 of said law and in accordance with the provisions of the statutes of the State of New York.
ARTICLE THIRD: The office of the Corporation in the State of New York is to be located in the City and County of New York.
ARTICLE FOURTH: (1) The aggregate number of shares which the Corporation shall have authority to issue is 50,644,389 divided into 644,389 Preferred Shares of the par value of $5.00 per share, and 50,000,000 Common Shares of the par value of $1.00 per share.
(2) The Corporation may issue its shares having par value and its authorized shares without par value, from time to time, for such consideration as from time to time may be fixed by the Board of Directors. The shares having par value shall not be issued for a consideration less than the aggregate par value thereof.
(3) No holder of shares of any class of the Corporation, whether now or hereafter authorized, shall be entitled, as such, as a matter of right to any right, whether preferential, preemptive or otherwise, to subscribe for or purchase any shares of any class of the Corporation, whether now or hereafter authorized, or any bonds, notes, obligations, options, warrants or other securities which the Corporation may at any time issue and whether or not the same shall be convertible into or exercisable for the purchase of shares of any class of the Corporation.
ARTICLE FIFTH: The relative rights, preferences and limitations of the shares of each class and each series thereof, insofar as the same are to be fixed in the Certificate of Incorporation, shall be as follows:
Section One: Preferred Shares
A. Dividends. The holders of Preferred Shares (which may be issued from time to time in one or more series, having such number of shares and such designation, relative voting, dividend, conversion, liquidation and other rights, preferences and limitations as may be fixed by the Board of Directors before issuance thereof pursuant to ARTICLE SIXTH) of each series shall be entitled to receive, as and when declared by the Board of Directors out of funds or other assets legally available therefor, dividends or other distributions payable in cash, shares, bonds or property fixed by the Board of Directors with respect to each such series and no more. The first dividend or distribution with respect to shares of any particular series not issued on a dividend date may be fixed
Exhibit 3(i)
by the Board of Directors at less than the regular periodic dividend or distribution. If a dividend or other distribution declared on any Preferred Shares shall be in arrears, the holders thereof shall not be entitled to any interest or sum of money in lieu of interest thereon. So long as any Preferred Shares remain outstanding, no dividend whatever shall be paid or declared, nor shall any distribution be made, on any junior shares other than a dividend payable in junior shares, unless all dividends or other distributions declared on the Preferred Shares for all past dividend periods shall have been paid or distributed or assets sufficient for the payment or distribution thereof set apart. Subject to the foregoing provisions, and not otherwise, such dividends (payable in cash, shares, bonds or other property) as may be determined by the Board of Directors may be declared and paid or distributed on any junior shares from time to time out of the remaining surplus of the Corporation legally available for the payment of dividends, and the Preferred Shares shall not be entitled to participate in any such dividends, whether payable in cash, shares, bonds or other property.
B. Dissolution, Liquidation and Winding-Up. Upon any dissolution, liquidation or winding-up of the Corporation, whether voluntary or involuntary, and upon any distribution of the assets of the Corporation other than by way of dividends, the holders of each series of Preferred Shares shall be entitled, before any distribution or payment is made upon any junior shares, to be paid the amount of cash, shares, bonds or other property to which each such outstanding series of Preferred Shares shall be entitled in accordance with the provisions thereof; the holders of Preferred Shares shall not be entitled to any further payment or distribution. After such payment or distribution to holders of Preferred Shares of the full amount of cash, shares, bonds or other property to which they shall be entitled, or after an amount sufficient to pay the aggregate amount to which the holders of Preferred Shares shall be so entitled shall have been deposited by the Corporation with a bank or trust company doing business in the Borough of Manhattan, City and State of New York, having capital, surplus and undivided profits aggregating at least $25,000,000 according to its last published statement of condition, in trust for the account of the holders of the Preferred Shares, the holders of Preferred Shares as such shall have no right or claim to any of the remaining net assets of the Corporation which may be distributed to the holders of junior shares. Neither the consolidation or merger of the Corporation into or with any other corporation or corporations, nor the sale or transfer by the Corporation of all or any part of its assets, nor the reduction of the capital stock or stated capital of the Corporation shall be deemed to be a dissolution, liquidation, distribution of assets or winding-up for purposes hereof.
C. Redemption. In the event that any series of Preferred Shares shall be made redeemable, by action of the Board of Directors as contemplated in ARTICLE SIXTH hereof, the Corporation, at the option of the Board of Directors, may redeem at any time or times, and from time to time, all or any part of the Preferred Shares, or all or any part of any one or more series of Preferred Shares outstanding, upon notice duly given as hereinafter specified in this ARTICLE FIFTH, by paying or distributing to the holder of each share the then applicable redemption price fixed by the Board of Directors pursuant to ARTICLE SIXTH. In case of redemption of a part, but not all, of any series of Preferred Shares at the time outstanding, the Corporation shall designate by lot the shares so to be redeemed in such manner as shall be determined by the Board of Directors.
Exhibit 3(i)
D. Voting Rights. Except as otherwise expressly provided in the certificate filed pursuant to law with respect to any series of Preferred Shares, or as otherwise required by law, the Preferred Shares shall not have any right to vote for the election of directors or for any other purpose and the Preferred Shares shall not be entitled to notice of any meeting of shareholders unless required by law.
E. Definitions. The term "junior shares" shall mean the Common Shares and any other shares ranking junior to the Preferred Shares in respect of the payment of dividends or other distributions in cash, shares, bonds or other property, or of payment or distribution in liquidation.
Section Two: General Provisions Concerning Redemption
In case of redemption of any class of shares of the Corporation, or any part thereof, notice of such redemption shall be mailed, postage prepaid, at least thirty (30) days prior to the date fixed for such redemption to the holders of record of the shares so to be redeemed at their respective addresses as the same shall appear on the books of the Corporation. If such notice of redemption shall have been duly given or if the Corporation shall have given to the bank or trust company hereinafter referred to irrevocable authorization promptly to give such notice, and if on or before the redemption date specified therein the funds necessary for such redemption shall have been deposited by the Corporation with a bank or trust company, designated in such notice, doing business in the Borough of Manhattan, City and State of New York, having capital, surplus and undivided profits aggregating at least $25,000,000 according to its last published statement of condition, in trust for the pro-rata benefit of the holders of the shares so called for redemption, then, notwithstanding that any certificate for shares so called for redemption shall not have been surrendered for cancellation, from and after the time of such deposit all shares so called for redemption shall no longer be deemed to be outstanding and all rights with respect to such shares shall forthwith cease and terminate, except only the right of the holders thereof to receive from such bank or trust company at any time after the time of such deposit the funds so deposited without interest, and the right to exercise privileges of exchange or conversion, if any, on or before the date fixed for redemption or such earlier date as may be fixed for the expiration thereof. Any interest accrued on such funds shall belong to the Corporation and be paid to it from time to time. Any funds so deposited by the Corporation which shall not be required for such redemption because of the exercise of any such right of conversion or exchange subsequent to the time of such deposit, shall be released or repaid to the Corporation forthwith. Any funds so deposited and unclaimed at the end of six years from such redemption date shall be released or repaid to the Corporation, after which the holders of the shares to be called for redemption shall look only to the Corporation for payment thereof.
ARTICLE SIXTH: Preferred Shares may be issued from time to time in one or more series and the Board of Directors may fix from time to time before issuance thereof, by filing a certificate under Section 805 of the Business Corporation Law, the number of shares in any or all series of such class and any or all of the designations, relative voting, dividend, liquidation and other rights (including the right to convert into shares of any class or into shares of any series of any class, except into a class of shares having rights
or preferences as to dividends or distribution of assets upon liquidation which are prior or superior in rank to those of the shares being converted), preferences and limitations of the shares in any and all series, subject to the limitation that, if the stated dividends and amounts payable on liquidation are not paid in full, the shares of all series of Preferred Shares shall share ratably in the payment of dividends including accumulations, if any, in accordance with the sums which would be payable on said shares if all dividends were declared and paid in full; and in any distribution of assets other than by way of dividends in accordance with the sums which would be payable on such distribution if all sums payable were discharged in full.
ARTICLE SEVENTH: The Secretary of State of the State of New York is hereby designated as agent of the Corporation upon whom process against the Corporation may be served. The post office address to which the Secretary of State shall mail a copy of any process served upon him is C/O THE CORPORATION, 650 FIFTH AVENUE, NEW YORK, NEW YORK 10019.
ARTICLE EIGHTH: The duration of the Corporation shall be perpetual.
ARTICLE NINTH: The following provisions are inserted for the regulation and conduct of the affairs of the Corporation and it is expressly provided that they are intended to be in furtherance and not in limitation or exclusion of the powers conferred by statute.
(a) The Board of Directors by resolution adopted by a majority of the entire Board may designate from among its members one or more committees each consisting of three or more directors. Each such committee to the extent provided in such resolution or the By-Laws, and except as otherwise limited by statute, shall have all the authority of the Board of Directors. The Board may designate one or more directors as alternate members of any such committee who may replace any absent member or members at any meeting of such committee. Each such committee shall serve at the pleasure of the Board.
(b) The Corporation may have one or more offices within or without the State of New York and may keep the books of the Corporation, subject to the provisions of the laws of the State of New York, at such place or places within or without the State of New York as the Board of Directors shall from time to time determine.
(c) The Board of Directors shall from time to time decide whether and to what extent and at what times and under what conditions and requirements the accounts and books of the Corporation, or any of them, except the stock book, shall be open to the inspection of the shareholders, and no shareholder shall have any right to inspect any books or documents of the Corporation except as conferred by the laws of the State of New York or authorized by the Board of Directors.
(d) The Board of Directors shall have power from time to time to fix and determine and vary the amount of the working capital of the Corporation and to direct and determine the use and disposition of any surplus or net profits over and above stated capital, and in its discretion the Board of Directors may use and apply any such surplus or
Exhibit 3(i)
accumulated profits in purchasing or acquiring bonds or other obligations of the Corporation or of its own capital shares, to such extent and in such manner and upon such terms as the Board of Directors shall deem expedient, and any such capital shares so purchased or acquired may be resold (except as otherwise provided in the Certificate of Incorporation as from time to time amended) unless such shares shall have been retired in the manner provided by law.
(e) Subject to the provisions of the Business Corporation Law, any and all directors may be removed for cause or without cause by vote of the shareholders entitled to vote. Except as otherwise provided by said Law or by the Certificate of Incorporation, any director or directors may be removed for cause by the vote, at a meeting of the Board, of a majority of the directors present at the time of the vote, if a quorum be then present. In the event any vacancies occur in the Board by reason of the removal of directors by shareholders without cause, such vacancies may be filled by the vote, at any meeting of the Board, of a majority of the directors present at the time of the vote, provided a quorum be then present.
(f) The Board of Directors may issue from time to time bonds of the Corporation, both convertible and non-convertible, in one or more series and may fix from time to time before issuance thereof the designations, principal amounts, relative rights and limitations of any and all series thereof and the Board of Directors may confer upon the holders of any or all series of bonds the right to vote in the election of directors and on any other matters on which shareholders may vote and may otherwise limit or define the respective voting powers of any and all series thereof.
(g) (i) No contract or other transaction between the Corporation and one or more of its directors, or between the Corporation and any other corporation, firm, association or other entity in which one or more of its directors are directors or officers, or are financially interested, shall be either void or voidable for this reason alone or solely by reason of the fact that such director or directors are present at the meeting of the Board, or of a committee thereof, which authorizes such contract or transaction, or that his or their votes are counted for such purpose:
(1) If the fact of such common directorship, officership or financial interest is disclosed or known to the Board or committee, and the Board or committee authorizes such contract or transaction by a vote sufficient for such purpose without counting the vote or votes of such interested director or directors;
(2) If such common directorship, officership or financial interest is disclosed or known to the shareholders entitled to vote thereon, and such contract or transaction is approved by vote of the shareholders; or
(3) If the contract or transaction is fair and reasonable as to the Corporation at the time it is authorized by the Board, a committee or the shareholders.
Exhibit 3(i)
(ii) Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board or of a committee which authorizes such contract or transaction.
(iii) The Board shall have authority to fix the compensation of directors for services in any capacity.
(h) The By-Laws of the Corporation may be amended, repealed or adopted by vote of the holders of shares at the time entitled to vote in the election of any directors. The By-Laws may also be amended, repealed or adopted by the Board of Directors provided, however, that any By-Law adopted or amended by the Board may be amended or repealed by the shareholders entitled to vote thereon.
ARTICLE TENTH: No director of the Corporation shall be personally liable to the Corporation or its shareholders for damages for any breach of duty in such capacity, provided that nothing contained in this Article shall eliminate or limit:
(a) The liability of any director if a judgment or other final adjudication adverse to him establishes that his acts or omissions were in bad faith or involved intentional misconduct or a knowing violation of law or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled or that his acts violated Section 719 of the New York Business Corporation Law, or
(b) The liability of any director for any act or omission prior to the adoption of the amendment including this paragraph in the Certificate of Incorporation of the Corporation.
IN WITNESS WHEREOF, we have made, subscribed and acknowledged this Amended and Restated Certificate of Incorporation this 26th day of October, 2004 and we affirm the statements contained therein are true under the penalties of perjury.
/s/ Louis J. Cappelli --------------------------- Louis J. Cappelli, Chairman /s/ Monica Lercher --------------------------- Monica Lercher, Secretary |
Subscribed and sworn to before me this 26th day of October, 2004.
/s/ Vivian Rivera --------------------- NOTARY PUBLIC |
Exhibit 10
STERLING BANCORP STOCK INCENTIVE PLAN
(Amended and Restated as of May 20, 2004)
1. Purposes.
The purposes of this Sterling Bancorp Stock Incentive Plan (the "Plan") are (i) to strengthen the ability of Sterling Bancorp (the "Company") and its subsidiaries to attract and retain employees and directors of high competence and (ii) to increase the identity of interests of such employees and directors with those of the Company's shareholders.
2. Elements of the Plan.
The Plan provides the Company's Board of Directors (the "Board") with the discretion to grant or award participants incentives relating to the Company's Common Shares, $1 par value (the "Shares"), utilizing (1) incentive stock options, (2) nonqualified stock options and (3) restricted stock. In connection with the grant of options, the Board shall have the authority to grant stock appreciation rights. Options, restricted stock and stock appreciation rights (collectively, "Awards") may be granted to participants singly or in any combination which the Board deems appropriate, provided that no stock appreciation right may be granted unless in connection with an option.
3. Shares Subject to the Plan.
The maximum aggregate number of Shares as to which options may be granted or restricted stock awarded under this Plan shall be 2,650,000 Shares, with 565,811 remaining available for grant as of May 20, 2004, after adjustment in accordance with Section 12(a) for stock dividends and stock splits in respect of Shares occurring since the adoption of the Plan, and excluding Shares as to which option grants to directors will be made pursuant to the appendices hereto. Such Shares shall be subject to adjustment as provided in Section 12 hereof and may be either authorized but unissued Shares, or Shares previously issued and reacquired by the Company. If and to the extent options granted under the Plan terminate, expire or are canceled without having been exercised, or if any Shares of restricted stock are forfeited, the Shares subject to such option or award shall again be available for purposes of the Plan.
4. Plan Administration.
The Plan shall be administered by the Board. The Board may delegate this or any other authority granted it hereunder to a committee which shall consist of at least three members of the Board (the "Stock Plans Committee"). Other than as stated in the appendices hereto, no member of the Stock Plans Committee shall be eligible to participate in the Plan. Any references herein to the "Board" shall be deemed to refer to
Exhibit 10
either the Board or the Stock Plans Committee if authority to administer the Plan has been delegated to such Committee. The Board shall have the sole authority to determine (a) the officers and employees to whom Awards shall be granted under the Plan; (b) the type, size and terms of the Awards to be made to each officer, employee, or director selected; (c) the time when Awards will be granted and the duration of the exercise period; and (d) any other matters arising under the Plan. The Board shall have full power and authority to administer and interpret the Plan and to adopt or amend such rules, regulations, agreements and instruments for implementing the Plan and for conduct of its business as it deems necessary or advisable. The Board's interpretations of the Plan and all determinations made by the Board pursuant to the powers vested in hereunder shall be conclusive and binding on all persons having any interest in the Plan or in any Awards granted hereunder.
A majority of the Board shall constitute a quorum for purposes of meetings which may be held at such times and places and on such notice as the Board deems appropriate. All actions and determinations of the Board shall be made by not less than a majority of its members and may be made at a meeting or by written consent in lieu of a meeting.
5. Eligibility for Participation.
All officers and other key employees (the "Participants") of the Company or any of its subsidiaries (as defined in Section 424(f) of the Internal Revenue Code of 1986, as amended (the "Code")) (the "Subsidiaries"), and all members of the Board who are not also employees or officers of the Company or any of its Subsidiaries (the "Non-Employee Directors") will be eligible to participate in the Plan. The provisions pertaining to option grants to Non-Employee Directors and terms and conditions of such options are not limited to the option grants provided in the appendices hereto. Nothing contained in this Plan shall be construed to limit the right of the Company or any Subsidiary to grant options otherwise than under this Plan in connection with the acquisition, by purchase, lease, merger, consolidation, or otherwise, of the business or assets of any corporation, firm or association, including options granted to officers or employees thereof who become officers or employees of the Company or a Subsidiary, or for other proper corporate purposes.
6. Granting of Options.
(a) The Board shall have the right to grant Participants stock options on the terms and conditions set forth herein. Such options shall be "Incentive Stock Options" if the Board so designates such options and they comply with Section 422 of the Code; otherwise they shall be "Nonqualified Stock Options". The purchase price of each Share subject to an Incentive Stock Option shall be the fair market value of a share of such stock on the date such Incentive Stock Option is granted, provided, however, that any Incentive Stock Option granted to a Participant who owns more than l0% of the total combined voting power of all classes of stock of the Company or any subsidiary or any parent corporation (as defined in Section 424(e) of the Code) of the Company (a "10% Stockholder") shall not be less than 110% of such fair market value.
Exhibit 10
The purchase price of each Share subject to a Nonqualified Stock Option shall be such price (which may be less than its fair market value) as is determined by the Board on or before the date such Nonqualified Stock Option is granted. The fair market value shall be determined in any reasonable manner approved by the Board.
(b) The Board may prescribe such other terms as it deems desirable or as may be necessary to qualify the grant of Incentive Stock Options under the provisions of Section 422 of the Code. The Board may also authorize acceleration of the exercisability of an option or installment thereof.
(c) The Board may grant at any time new Incentive Stock Options to a Participant who has previously received Incentive Stock Options or other options whether such prior Incentive Stock Options or other options are still outstanding, have previously been exercised in whole or in part, or are canceled in connection with the issuance of new Incentive Stock Options. If the aggregate fair market value (determined as of the date of grant) of the Shares subject to Incentive Stock Options that first become exercisable by a Participant in any calendar year exceeds $100,000, the excess is to be treated as Nonqualified Stock Options to the extent required by Section 422(d) of the Code.
7. Terms of Options.
Unless the option agreement provides otherwise, options granted hereunder shall be exercisable for a term of ten years from the date of grant; provided, however, that any Incentive Stock Option granted to a 10% Stockholder may not be exercisable for a term of more than five years from the date of grant.
8. Exercise of Options.
(a) Unless the option agreement provides otherwise, options granted hereunder shall be exercisable for cash or any other property (including Shares or, to the extent permitted by applicable corporate law, promissory notes) deemed acceptable by the Board; provided that, in the case of payment by a promissory note the Participant shall pay in cash or other property an amount equal to at least the par value of the Shares being purchased, and, if the option is an Incentive Stock Option, the note shall bear a sufficient rate of interest so that the exercise price for the purpose of the Code shall be no less than the fair market value on the date such Incentive Stock Option was granted on the Common Shares being purchased. Unless the Board provides otherwise, or if the following sentence or Section 12(d) below applies, Incentive Stock Options will become exercisable in installments on a cumulative basis at a rate of twenty-five percent (25%) per year, beginning on the first anniversary of the date of grant, and Nonqualified Stock Options will become exercisable six months after the date of grant. Notwithstanding anything in this Section 8 to the contrary, all unexercised options granted to any Participant under this Plan shall become immediately exercisable upon termination of the Participant's employment by the Company or any of its Subsidiaries without "Cause." For purposes of this Plan, a Participant's employment shall be deemed to be terminated for "Cause" only if the Participant is discharged by the Company or any of its
Exhibit 10
Subsidiaries on account of (i) being convicted of, or pleading guilty or no contest to, a felony, (ii) the Stock Plans Committee's determination that the Participant has engaged or is about to engage in conduct materially injurious to the Company or any of its Subsidiaries or (iii) the Participant's continuous use of illegal drugs or alcohol which significantly impacts the Participant's performance of his duties to the Company or any of its Subsidiaries.
(b) No fractional Shares, or cash in lieu thereof, shall be issued under this Plan or under any option granted hereunder. Except as otherwise provided herein, no option may be exercised at any time, unless the holder is then an officer, employee, or director of the Company or a Subsidiary and has continuously remained an officer, employee, or director at all times (other than on an absence for an approved leave of absence or service in the Armed Forces) since the date of grant of such option.
(c) Options shall be exercised by a Participant giving written notice of such exercise to the Company, provided that an option may not be exercised at any one time as to less than 100 Shares (or such number of Shares as to which the option is then exercisable if less than 100).
(d) An Incentive Stock Option shall be exercisable during a Participant's lifetime only by the Participant, or, if the Participant has become disabled, by his legal representative.
9. Exercise on Termination of Employment.
(a) If a Participant ceases to be an officer, employee, or director for any reason other than death, disability or termination of employment by the Company with Cause, any unexercised portion of his option shall remain exercisable for a period of three months after the date of such termination to the extent that it was exercisable at the time of such cessation.
(b) If, prior to the expiration date of the option, a Participant shall cease to be an officer, employee, or director by reason of disability (with respect to a holder of an Incentive Stock Option, within the meaning of Section 22(e)(3) of the Code and, with respect to a holder of a Nonqualified Stock Option, permanent and total disability, as determined by the Board), he may exercise any option he holds for a period of one year after the date of cessation of his service as an officer, employee, or director to the extent that it was exercisable at the time of such cessation.
(c) If, prior to the expiration date of the option, a Participant shall die while an officer, employee, or director of the Company or a Subsidiary, any unexercised portion of such option shall expire one year after his death, and during such one year period, his legal representatives, heirs or legatees shall have the same rights to exercise the unexercised portion of the option as the Participant would have had if he were still an officer, employee, or director of the Company.
Exhibit 10
(d) If, prior to the expiration of any option, a Participant ceases to be an officer, employee, or director by reason of termination of his employment by the Company for Cause, the unexercised portion of such option shall automatically terminate.
(e) Notwithstanding anything in this Section 9 to the contrary, in no event shall any option be exercised after its expiration date.
10. Stock Appreciation Rights.
(a) Concurrently with the grant of any option under this Plan, the Board may award a Participant a "Stock Appreciation Right" which shall provide the Participant the right to receive cash in lieu of the purchase of Shares under such option. Such rights shall only be granted in conjunction with options and may not be granted alone.
(b) Unless the Board, in its sole discretion, provides otherwise, Stock Appreciation Rights shall be exercisable upon the same conditions as the related option is exercisable under Section 7, 8 and 9 hereof.
(c) The amount to which a Participant shall be entitled upon
the exercise of any Stock Appreciation Right shall be determined by multiplying
(i) the number of Shares with respect to which the Stock Appreciation Right is
exercisable by (ii) the amount, if any, by which the fair market value of a
Share on the exercise date exceeds the exercise price of the related option.
Such amount shall be payable in cash or Shares (valued at their fair market
value on the exercise date) or a combination of cash and shares, as determined
by the Board.
(d) The exercise of any Stock Appreciation Right shall reduce the number of Shares subject to the related option.
11. Restricted Stock Awards.
(a) The Board shall have the authority to award Participants Shares which shall be restricted as provided herein to avoid immediate taxation under the Code.
(b) Such restricted stock may not be sold, transferred or otherwise disposed of and shall not be pledged or otherwise hypothecated by a Participant, except as provided below. The Board may place such additional restrictions as it may deem appropriate on the restricted stock. As a condition to the receipt of any Shares awarded under this Plan, a Participant shall execute and deliver to the Company an instrument in writing, in form approved by the Board, wherein he agrees to the above restrictions and the legending of the certificates representing his Shares with respect thereto. Notwithstanding such restrictions, however, a Participant shall be entitled to receive all dividends declared on and to vote any Shares held by him and to all other rights of a shareholder with respect thereto.
Exhibit 10
(c) If a Participant terminates his service as an officer, employee, or director for any reason, his rights with respect to any Shares which remain restricted hereunder shall be as provided in a written agreement between the Participant and the Company relating to the award and forfeiture of Shares hereunder.
(d) Subject to subsection (c) hereof or to the extent otherwise provided in any written Agreement between the Participant and the Company relating to the award of Shares hereunder, the restrictions set forth in this Section on Shares awarded under this Plan shall lapse ratably over a period of five years from the date of award. The Board may, in its discretion, waive such restrictions at any time. Notwithstanding anything in this Section 11 to the contrary, the restrictions on Shares awarded under this Section 11 shall immediately lapse upon termination of the Participant's employment by the Company without Cause.
12. Adjustments for Certain Events.
(a) If there is any change in the number of Shares through the declaration of stock dividends or through recapitalization resulting in stock splits, or combinations or exchanges of such Shares, the number of Shares available for options or awards and the number of Shares covered by outstanding options or awards, and the price per Share of such options or the applicable market value of awards, shall be proportionately adjusted by the Board to reflect any increase or decrease in the number of issued Shares; provided, however, that any fractional Shares resulting from such adjustment shall be eliminated.
(b) In the event of any sale of all or substantially all of the assets of the Company, merger or consolidation, corporate separation or division (including split-up or split-off), or reorganization or dissolution or liquidation of the Company (each such event, an "Event"), the Board shall make such provision for the holders of Awards as it deems equitable. The actions which the Board shall have authority to take shall include (i) adjustment of outstanding options so that after the Event each holder of any option becomes entitled to receive upon exercise of the option at the option price the kind and amount of shares of stock or other securities, property, cash or combination thereof to which a holder of the number of Shares for which the option might have been exercised immediately prior to such Event is entitled thereafter; (ii) if the Event involves the acquisition by another corporation of all or substantially all of the Company's assets, or a merger or consolidation of the Company in which another corporation is the surviving or resulting corporation and if such other corporation is prepared to assume the options then outstanding or to substitute its options therefor, provision for such assumption or substitution; or (iii) provision that each Award granted under the Plan shall terminate as of the date fixed by the Board, with not less than twenty (20) days written notice of the date fixed to be given to each Participant and each Participant to have the right during the twenty (20) days preceding such termination to exercise the Awards as to all or any part of the Shares covered thereby, including installments as to which such Awards would not otherwise be exercisable.
Exhibit 10
(c) The foregoing adjustments and the manner of application of the foregoing provisions shall be determined by the Board in its sole discretion. Any such adjustment may provide for the elimination of fractional Shares, and, provided that any such adjustment with respect to an Incentive Stock Option in connection with a transaction to which Section 424(a) of the Code applies shall be done in accordance with the provisions of such Section 424(a) unless the Board specifically determines otherwise.
(d) In the event of a Change of Control, all Awards granted under the Plan shall become immediately exercisable. For purposes of this Plan, "Change of Control" shall mean the earliest to occur of:
i. The acquisition by any individual, entity or group (within the
meaning of section 13(d)(3) or 14(d)(1) of the Securities Exchange Act of 1934
(the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning
of Rule 13d 3 promulgated under the Exchange Act) of voting securities which
together with the beneficial ownership of voting securities theretofore held
comprises 20% or more of either (1) the then outstanding common shares of the
Company (the "Outstanding Company Common Shares") or (2) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that the following acquisitions will not
constitute a Change in Control: (1) any acquisition directly from the Company
(other than acquisition by virtue of the exercise of a conversion privilege),
(2) any acquisition by the Company, (3) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (4) any acquisition by any corporation
pursuant to a reorganization, merger or consolidation, if, following such
reorganization, merger or consolidation, the conditions described in clauses
(1), (2) and (3) of subsection (iii) of this definition are satisfied;
ii. Individuals who, as of May 20, 2004, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least two-thirds of the Board; provided, however, that any individual becoming a director subsequent to May 20, 2004 whose election, or nomination for election by the shareholders of the Company, was approved by a vote of at least two-thirds of the Directors then comprising the Incumbent Board will be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulations 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;
iii. A reorganization, merger or consolidation of the Company, in each case, unless, following such reorganization, merger or consolidation, (1) more than 60% of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of Directors is then beneficially owned, directly or indirectly, by all or
Exhibit 10
substantially all of the individuals and entities who were the beneficial owners, respectively, of the outstanding Company Common Shares and Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation, in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation, in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation, of the Outstanding Company Common Shares and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding the Company, any employee benefit plan (or related trust) of the Company or such corporation resulting from such reorganization, merger or consolidation) beneficially owns, directly or indirectly, 10% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation or the combined voting power of the then outstanding voting securities of such corporation, entitled to vote generally in the election of directors and (3) at least two-thirds of the members of the board of directors of the corporation resulting from such reorganization, merger or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement providing for such reorganization, merger or consolidation;
iv. Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company; or
v. The sale or other disposition of all or substantially all of the assets or deposits of the Company, other than to a corporation with respect to which following such sale or other disposition, (A) more than 60% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Shares and Outstanding Company Voting Securities immediately prior to such sale or other disposition of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding the Company and any employee benefit plan (or related trust) of the company or such corporation) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (C) at least two-thirds of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition of assets of the Company; or
vi. Reorganization, merger or consolidation of Sterling National Bank or sale or other disposition of all or substantially all of the assets or deposits of Sterling National Bank unless, in the case of a reorganization, merger or consolidation, the resulting entity is wholly owned by a corporation meeting the following requirements or, in the case of a sale or disposition, the sale or disposition is to a corporation meeting the following requirements (in each case after giving effect to the reorganization, merger, consolidation, sale or disposition and any related transactions): (A) more than two-thirds
Exhibit 10
of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Shares and Outstanding Company Voting Securities immediately prior to such reorganization, merger, consolidation, sale or disposition, as the case may be, (B) no Person (excluding the Company and any employee benefit plan (or related trust) of the Company or such corporation) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (C) at least two-thirds of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such reorganization, merger, consolidation, sale or disposition.
13. Forfeiture of Benefits.
Notwithstanding any other provision of this Plan, no payment of any
unpaid award shall be made and any and all unexercised options and all rights
under the Plan of a Participant who received such award or option grant (or his
designated beneficiary or legal representatives) to the payment or exercise
thereof shall be forfeited if, prior to the time of such payment or exercise,
the Participant shall (i) be employed by a competitor of, or shall be engaged in
any activity in competition with, the Company without the Company's consent,
(ii) divulge without the consent of the Company any secret or confidential
information belonging to the Company, or (iii) engage in any other activities
which would constitute grounds for his discharge by the Company for cause.
14. Transferability of Option and Awards.
A Participant's rights and interests under the Plan may not be assigned or transferred except, in the case of a Participant' death, by will or the laws of descent and distribution.
15. Amendment and Termination.
The Board may at any time and from time to time to terminate, modify or amend the Plan in any respect; provided, however, that unless also approved or ratified by a vote of the majority of the holders of the outstanding Shares of the Company entitled to vote thereon, any such modification or amendment shall not (subject, however, to the provisions of Section 12) increase the maximum number of Shares for which Awards may be granted under the Plan. No such termination, modification or amendment may adversely affect the rights of a Participant under an outstanding Award. Nevertheless, with the consent of the Participant affected, the Committee may amend outstanding Awards in a manner not inconsistent with the terms of the Plan.
Exhibit 10
16. Funding of the Plans.
This Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Award under this Plan and payment of Awards shall be subordinate to the claims of the Company's general creditors. In no event shall interest be paid or accrued on any Award, including unpaid installments of Awards.
17. Rights of Participants.
No Participant or other person shall have any claim or right to be granted an Award under this Plan. Neither this Plan nor any action taken hereunder shall be construed as giving any Participant any rights to be retained as an officer, employee, or director of the Company.
18. Withholding of Taxes.
The Company shall have the right to deduct from all Awards paid in cash any federal, state or local taxes required by law to be withheld with respect to such cash Awards and, in the case of Awards paid in Shares, the Participant or other person receiving such Shares shall be required to pay to the Company the amount of any such taxes which the Company is required to withhold with respect to such Awards paid in Shares. Without limiting the generality of the foregoing paragraph, unless otherwise provided in the written agreement between the Participant and the Company evidencing an Award, a Participant may satisfy, in whole or in part, the foregoing withholding tax liability (but not more than the minimum required withholding tax liability) by delivery of Shares owned by the Participant with a fair market value (determined as of the date of such delivery) equal to such withholding tax liability (provided that such Shares are not subject to any pledge or other security interest and have either been held by the Participant for six months, previously acquired by the Participant on the open market or meet such other requirements as the Stock Plans Committee may determine necessary in order to avoid an accounting earnings charge), or by having the Company withhold from the number of Shares otherwise issuable pursuant to the exercise or settlement of the Award a number of Shares with a fair market value (determined as of the date of such withholding) equal to such withholding tax liability.
19. Agreements with Participants.
Each Award granted under this Plan shall be evidenced by a written instrument containing such terms and conditions as the Board shall approve.
20. Requirements for Issuance of Shares.
No Shares shall be issued or transferred upon payment of any Award payable hereunder unless and until all legal requirements applicable to the issuance or transfer of such Shares have been complied with to the satisfaction of the Board. The Board shall have the right to condition any award of issuance of Shares made to any
Exhibit 10
Participant hereunder on such Participant's undertaking in writing to comply with such restrictions on his subsequent disposition of such Shares as the Board shall deem necessary or advisable as a result of any applicable law, regulation or official interpretation thereof, and certificates representing such Shares may be legended to reflect any such restrictions.
21. Headings.
Section headings are for reference only. In the event of a conflict between a title and the content of a Section, the content of the Section shall control.
22. Effective Date; Expiration Date.
This Plan was originally effective as of February 20, 1992, has been reapproved by shareholders from time to time, is amended and restated as of May 20, 2004, and shall expire on April 18, 2012 (the tenth anniversary of the most recent approval of the Plan by shareholders prior to its amendment and restatement as of May 20, 2004), on and after which no Awards may be granted hereunder; provided, however, that the administration of the Plan shall continue in effect until all matters relating to Awards previously granted have been settled.
Dated: May 20, 2004
Exhibit 10
APPENDIX I
OPTION GRANTS TO NON-EMPLOYEE DIRECTORS
(a) Option Grant Dates. Non-qualified stock options to purchase 2,000 shares (such number to be subject to adjustment in the same manner as provided for outstanding options in Section 12 of the Plan) shall be granted automatically to each Non-Employee Director on the last day that the Company's Shares are traded on the New York Stock Exchange or other national securities exchange upon which the Shares are traded, or if the Shares are not then listed on a national securities exchange and are traded over-the-counter, on the date of the last trade as reported by NASDAQ, or if not reported by NASDAQ, on the day the last trade was reported, in each April from 1995 through 1999.
(b) Purchase Price. The purchase price of Shares upon exercise of an
option granted to a Non-Employee Director shall be 100% of the fair market value
of the Shares on the date of grant of an option; which shall be: (i) if the
Shares are then listed on a national securities exchange, the closing price of
the shares on such date; provided, however, if on such date the Shares were
traded on more than one national securities exchange, then the closing price on
the exchange on which the greatest volume of Shares were traded on such day;
(ii) if the Shares are not then listed on a national securities exchange and are
traded over the counter, the last sale price of the Shares on such date as
reported by NASDAQ or, if not reported by NASDAQ, the average of the closing bid
and asked prices for the Shares on such date; and (iii) if the Shares are
neither then listed on a national securities exchange nor traded in the
over-the-counter market, such value as the Committee shall in good faith
determine. If the Shares are then listed on a national securities exchange or
are traded over the counter but are not traded on the date of grant, then the
purchase price of such shares shall be the closing price on the last day prior
thereto on which such Shares were traded.
(c) Exercisability and Term of Options. Each option granted a Non-Employee Director under the Plan shall become exercisable in four equal annual installments, commencing on the first anniversary of the date of grant. Each such option granted under the Plan shall expire five years from the date of the grant, and shall be subject to earlier termination as hereinafter provided. Notwithstanding anything herein to the contrary, all outstanding options granted to a Non-Employee Director shall become immediately exercisable upon the occurrence of a Change of Control.
(d) Termination of Service. In the event of the termination of service on the Board by a Non-Employee Director, who is a holder of any option, other than by reason of death as set forth in paragraph (e) of this Appendix I or by reason of such Non-Employee Director's commencement of employment with the Company, the then outstanding options of such Non-Employee Director may be exercised only to the extent that they were exercisable on the date of such termination and shall expire three months after such termination, or on their stated expiration date, whichever occurs first.
Exhibit 10
(e) Death. In the event of the death of the Non-Employee Director who is a holder of any option, each of the then outstanding options of such Non-Employee Director will immediately mature in full and become exercisable by the Non-Employee Director's legal representative at any time within a period of six months after death, but in no event after the expiration date of the term of the option.
(f) Payment. Options may be exercised only upon payment to the Company in full of the purchase price of the Shares to be delivered. Such payment shall be made in cash or check at the time of purchase, or by such other method as the Stock Plans Committee may allow.
(g) Options Non-Assignable and Non-Transferable. Each option and all rights thereunder shall be non-assignable and non-transferable other than by will or the laws of descent and distribution and shall be exercisable during the Non-Employee Director's lifetime only by the Non-Employee Director or the Non-Employee Director's guardian or legal representative.
(h) No Right to Continue as a Director. Neither the Plan nor the granting of an option nor any other action taken pursuant to the Plan, shall constitute or be evidence of any agreement or understanding, express or implied, that a Non-Employee Director has a right to continue as a Director for any period of time, or at any particular rate of compensation.
(i) No Stockholders' Rights for Holders of Options. A holder of options shall have no rights as a shareholder with respect to the Shares covered by options granted hereunder until the date of the issuance of a stock certificate therefore, and no adjustment will be made for regular cash dividend distributions for which the record date is prior to the date such certificate is issued.
(j) Limitation on Amendment. In order to comply with the executive provisions of Rule 16b-3 under the Exchange Act, no amendment of the provisions of this Appendix I which might otherwise be permitted, shall be made within six months of any other amendment hereto, unless such amendment shall be made to comport with changes in the Internal Revenue Code, the Employee Retirement Income Security Act or the rules thereunder.
(k) Defined Terms. Capitalized terms not otherwise defined in this Appendix I shall have the meaning given them in the Plan.
Exhibit 10
APPENDIX II
AUTOMATIC GRANT OF OPTIONS TO NON-EMPLOYEE DIRECTORS
i. Option Grant Dates. Non-qualified stock options to purchase
2,000, 2,000, 4,000, 4,000 and 4,000 shares, respectively, such number to be
subject to adjustment in the same manner as provided for outstanding options in
Section 12 of the Plan (as originally adopted) shall be granted automatically to
each Non-Employee Director on the last day that the Company's shares are traded
on The New York Stock Exchange or other national securities exchange upon which
the Shares are traded or if the Shares are not then listed on a national
securities exchange and are traded over-the-counter on the date of the last
trade as reported by NASDAQ or, if not reported by NASDAQ, the last trade which
was reported in each June, from June 1998 through 2002.
ii. Purchase Price. The purchase price of Shares upon exercise of an option shall be 100% of the fair market value of the Shares on the date of grant of an option, which shall be (i) if the Shares are then listed on a national securities exchange, the closing price of the Shares on such date, provided, however, if on such date the Shares were traded on more than one national securities exchange, then the closing price on the exchange on which the greatest volume of Shares were traded on such day; (ii) if the Shares are not then listed on a national securities exchange and are traded over-the-counter, the last sale price of the Shares on such date as reported by NASDAQ or, if not reported by NASDAQ, the average of the closing bid and asked prices for the Shares on such date; and (iii) if the Shares are neither then listed on a national securities exchange nor traded in the over-the-counter market, such value as the Committee shall in good faith determine. If the Shares are then listed on a national securities exchange or are traded over-the-counter but are not traded on the date of grant, then the purchase price of such shares shall be the closing price on the last day prior thereto on which such Shares were traded.
iii. Exercisability and Term of Options. Each option granted a Non-Employee Director under the Plan will become exercisable in four equal annual installments, commencing on the first anniversary of the date of grant. Each such option granted under the Plan shall expire five years from the date of the grant, and shall be subject to earlier termination as hereinafter provided.
iv. Termination of Service. In the event of the termination of service on the Board by the holder of any option, other than by reason of death as set forth in paragraph (v) hereof or by reason of such holders' commencement of employment with the Company, the then outstanding options of such holder may be exercised only to the extent that they were exercisable on the date of such termination and shall expire three months after such termination, or on their stated expiration date, whichever occurs first.
v. Death. In the event of the death of the holder of any option, each of the then outstanding options of such holder will immediately mature in full and
become exercisable by the holder's legal representative at any time within a period of six months after death, but in no event after the expiration date of the term of the option.
vi. Payment. Options may be exercised only upon payment to the Company in full of the purchase price of the Shares to be delivered. Such payment shall be made in cash or check at the time of purchase, or by such other method as the Stock Plans Committee may allow.
vii. Options Non-Assignable and Non-Transferable. Each option and all rights thereunder shall be non-assignable and non-transferable other than by will or the laws of descent and distribution and shall be exercisable during the holder's lifetime only by the holder or the holder's guardian or legal representative.
viii. No Right to Continue as a Director. Neither the Plan nor the granting of an option nor any other action taken pursuant to the Plan shall constitute or be evidence of any agreement or understanding, express or implied, that a Non-Employee Director has a right to continue as a Director for any period of time, or at any particular rate of compensation.
ix. No Stockholders' Rights for Holders of Options. A holder of options shall have no rights as a shareholder with respect to the Shares covered by options granted hereunder until the date of the issuance of a stock certificate therefor, and no adjustment will be made for regular cash dividend distributions for which the record date is prior to the date such certificate is issued.
Exhibit 10
APPENDIX III
AUTOMATIC GRANT OF OPTIONS TO NON-EMPLOYEE DIRECTORS
i. Option Grant Dates. Non-qualified stock options to purchase
2,000, 2,000, 2,000, 2,000 and 2,000 shares, respectively, such number to be
subject to adjustment in the same manner as provided for outstanding options in
Section 12 of the Plan (as originally adopted) shall be granted automatically to
each Non-Employee Director on the last day that the Company's shares are traded
on The New York Stock Exchange or other national securities exchange upon which
the Shares are traded or if the Shares are not then listed on a national
securities exchange and are traded over-the-counter on the date of the last
trade as reported by NASDAQ or, if not reported by NASDAQ, the last trade which
was reported in June, 2000, and the last trade which was reported in each July,
from July 2001 through 2004.
ii. Purchase Price. The purchase price of Shares upon exercise of an option shall be 100% of the fair market value of the Shares on the date of grant of an option, which shall be (i) if the Shares are then listed on a national securities exchange, the closing price of the Shares on such date, provided, however, if on such date the Shares were traded on more than one national securities exchange, then the closing price on the exchange on which the greatest volume of Shares were traded on such day; (ii) if the Shares are not then listed on a national securities exchange and are traded over-the-counter, the last sale price of the Shares on such date as reported by NASDAQ or, if not reported by NASDAQ, the average of the closing bid and asked prices for the Shares on such date; and (iii) if the Shares are neither then listed on a national securities exchange nor traded in the over-the-counter market, such value as the Committee shall in good faith determine. If the Shares are then listed on a national securities exchange or are traded over-the-counter but are not traded on the date of grant, then the purchase price of such shares shall be the closing price on the last day prior thereto on which such Shares were traded.
iii. Exercisability and Term of Options. Each option granted a Non-Employee Director under the Plan will become exercisable in four equal annual installments, commencing on the first anniversary of the date of grant. Each such option granted under the Plan shall expire five years from the date of the grant, and shall be subject to earlier termination as hereinafter provided.
iv. Termination of Service. In the event of the termination of service on the Board by the holder of any option, other than by reason of death as set forth in paragraph (v) hereof or by reason of such holders' commencement of employment with the Company, the then outstanding options of such holder may be exercised only to the extent that they were exercisable on the date of such termination and shall expire three months after such termination, or on their stated expiration date, whichever occurs first.
v. Death. In the event of the death of the holder of any option, each of the then outstanding options of such holder will immediately mature in full and
Exhibit 10
become exercisable by the holder's legal representative at any time within a period of six months after death, but in no event after the expiration date of the term of the option.
vi. Payment. Options may be exercised only upon payment to the Company in full of the purchase price of the Shares to be delivered. Such payment shall be made in cash or check at the time of purchase, or by such other method as the Stock Plans Committee may allow.
vii. Options Non-Assignable and Non-Transferable. Each option and all rights thereunder shall be non-assignable and non-transferable other than by will or the laws of descent and distribution and shall be exercisable during the holder's lifetime only by the holder or the holder's guardian or legal representative.
viii. No Right to Continue as a Director. Neither the Plan nor the granting of an option nor any other action taken pursuant to the Plan shall constitute or be evidence of any agreement or understanding, express or implied, that a Non-Employee Director has a right to continue as a Director for any period of time, or at any particular rate of compensation.
ix. No Stockholders' Rights for Holders of Options. A holder of options shall have no rights as a shareholder with respect to the Shares covered by options granted hereunder until the date of the issuance of a stock certificate therefor, and no adjustment will be made for regular cash dividend distributions for which the record date is prior to the date such certificate is issued.
Exhibit 10
APPENDIX IV
AUTOMATIC GRANT OF OPTIONS TO NON-EMPLOYEE DIRECTORS
i. Option Grant Dates. Non-qualified stock options to purchase 2,500, 2,500, 2,500, and 2,500 shares, respectively, such number to be subject to adjustment in the same manner as provided for outstanding options in Section 12 of the Plan (as originally adopted) shall be granted automatically to each Non-Employee Director on the last day that the Company's shares are traded on The New York Stock Exchange or other national securities exchange upon which the Shares are traded or if the Shares are not then listed on a national securities exchange and are traded over-the-counter on the date of the last trade as reported by NASDAQ or, if not reported by NASDAQ, the last trade which was reported in each June, from June 2003 through 2006.
ii. Purchase Price. The purchase price of Shares upon exercise of an option shall be 100% of the fair market value of the Shares on the date of grant of an option, which shall be (i) if the Shares are then listed, on a national securities exchange, the closing price of the Shares on such date, provided, however, if on such date the Shares were traded on more than one national securities exchange, then the closing price on the exchange on which the greatest volume of Shares were traded on such day; (ii) if the Shares are not then listed on a national securities exchange and are traded over-the-counter, the last sale price of the Shares on such date as reported by NASDAQ or, if not reported by NASDAQ, the average of the closing bid and asked prices for the Shares on such date; and (iii) if the Shares are neither listed on a national securities exchange nor traded in the over-the-counter market, such value as the Committee shall in good faith determine. If the Shares are then listed on a national securities exchange or are traded over-the-counter, but are not traded on the date of grant, then the purchase price of such shares shall be the closing price on the last day prior thereto on which such Shares were traded.
iii. Exercisability and Term of Options. Each option granted a Non-Employee Director under the Plan will become exercisable in four equal annual installments, commencing on the first anniversary of the date of grant. Each such option granted under the Plan shall expire five years from the date of the grant, and shall be subject to earlier termination as hereinafter provided.
iv. Termination of Service. In the event of the termination of service on the Board by the holder of any option, other than by reason of death as set forth in paragraph (v) hereof or by reason of such holders' commencement of employment with the Company, the then outstanding options of such holder may be exercised only to the extent that they were exercisable on the date of such termination and shall expire three months after such termination, or on their stated expiration date, whichever occurs first.
v. Death. In the event of the death of the holder of any option, each of the then outstanding options of such holder will immediately mature in full and become exercisable by the holder's legal representative at any time within a period of six months after death, but in no event after the expiration date of the term of the option.
Exhibit 10
vi. Payment. Options may be exercised only upon payment to the Company in full of the purchase price of the Shares to be delivered. Such payment shall be made in cash or check at the time of purchase, or by such other method as the Stock Plans Committee may allow.
vii. Options Non-Assignable and Non-Transferable. Each option and all rights thereunder shall be non-assignable and non-transferable other than by will or the laws of descent and distribution and shall be exercisable during the holder's lifetime only by the holder or the holder's guardian or legal representative.
viii. No Right to Continue as a Director. Neither the Plan nor the granting of an option nor any other action taken pursuant to the Plan shall constitute or be evidence of any agreement or understanding, express or implied, that a Non-Employee Director has a right to continue as a Director for any period of time, or at any particular rate of compensation.
ix. No Stockholders' Rights for Holders of Options. A holder of options shall have no rights as a shareholder with respect to the Shares covered by options granted hereunder until the date of the issuance of a stock certificate therefor, and no adjustment will be made for regular cash dividend distributions for which the record date is prior to the date such certificate is issued.
Exhibit 10
FORM OF AWARD LETTER FOR NON-EMPLOYEE DIRECTORS
Dear
The Company's Stock Incentive Plan provides for the automatic award of non-qualified stock options to purchase _____ Common Shares of Sterling Bancorp to non-employee Directors on the last day of _______. Under the terms of the Plan, an award of _____ non-qualified stock options was granted to non-employee directors effective _______. Accordingly, you were granted an option to purchase up to _____ shares pursuant to this automatic option, exercisable in four equal annual installments of ___ shares each, the first such installment of ___ shares exercisable on and after _______. As in the past, the purchase price of the shares upon exercise of the option is equal to 100% of the closing price of the shares on The New York Stock Exchange on the day of grant. The closing price of Sterling Bancorp Common shares on _______ was $__.__.
If you have any questions, please do not hesitate to call me.
Sincerely,
Exhibit 10
FORM OF AWARD LETTER FOR OFFICERS
Dear Mr. :
This will confirm the terms of the Option granted to you on _________, under the Plan, by the Stock Plans Committee of the Board of Directors of Sterling Bancorp (this and other capitalized terms in this agreement have the meaning given them under the Plan, except where otherwise indicated):
(1) The option is to be an "Incentive Stock Option" complying with Section 422 of the Code, is for a total of ________ Shares at a price of $______ per share, the fair market value on the date of the Grant, shall become exercisable on the first anniversary of the date of grant and shall remain exercisable for a term of 10 years from the date of grant (subject, however, to earlier termination as provided in Section 9(b) of the Plan).
(2) The Option may be exercised by written notice to Sterling Bancorp as to all Shares as to which it is then exercisable or as to any portion thereof (but not less than 100 Shares) and the purchase price shall be payable in cash or any other property authorized pursuant to Section 8(a) of the Plan. The Option may be exercised only by you, subject to the right of your estate or legal representative to exercise to the extent permitted under the Plan.
(3) The number of shares subject to the Option and the Option price shall be adjusted in accordance with the terms of Section 12 of the Plan.
Exhibit 10
(4) You agree that you will not dispose of any Shares acquired pursuant to the Option except in accordance with the registration requirements of the Securities Act of 1933 (including the exemptions thereunder) and that the Board may condition the issuance of Shares on your execution of an appropriate undertaking to such effect and may require the legending of the certificates representing the Shares, as authorized by Section 20 of the Plan.
(5) The terms of this Option Agreement are subject to those of the Plan and the requirements of Section 422 of the Code for incentive stock option treatment, which shall control in the event of any conflict.
Your signature will confirm your acceptance of the Option and the terms set forth above.
Very truly yours,
STERLING BANCORP
Louis J. Cappelli
Chairman and Chief Executive Officer
Accepted and Agreed:
Exhibit 11
STERLING BANCORP AND SUBSIDIARIES
Statement Re: Computation of Per Share Earnings
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
Net income $ 6,737,934 $ 6,114,713 $19,918,042 $17,821,138
Less: preferred dividends -- 31,127 -- 94,271
----------- ----------- ----------- -----------
Net income available for common
shareholders and adjusted for
diluted computation $ 6,737,934 $ 6,083,586 $19,918,042 $17,726,867
=========== =========== =========== ===========
Weighted average common
shares outstanding 15,175,955 14,908,734 15,217,170 14,867,562
Add dilutive effect of:
Stock options 690,942 650,972 704,123 635,014
Convertible preferred stock -- 227,137 44,866 229,301
----------- ----------- ----------- -----------
Adjusted for assumed diluted
computation 15,866,897 15,786,843 15,966,159 15,731,877
=========== =========== =========== ===========
Basic earnings per share $ 0.44 $ 0.41 $ 1.31 $ 1.19
=========== =========== =========== ===========
Diluted earnings per share $ 0.43 $ 0.39 $ 1.25 $ 1.13
=========== =========== =========== ===========
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Exhibit 31.1
CERTIFICATIONS
I, Louis J. Cappelli, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2004 of Sterling Bancorp (the "Company");
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and we have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the Company's internal control over financial reporting;
5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent function):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.
Date: 11/9/04 /s/ Louis J. Cappelli --------------------- Name: Louis J. Cappelli Title: Chairman and Chief Executive Officer |
Exhibit 31.2
CERTIFICATIONS
I, John W. Tietjen, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2004 of Sterling Bancorp (the "Company");
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and we have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the Company's internal control over financial reporting;
5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent function):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.
Date: 11/9/04 /s/ John W. Tietjen ------------------- Name: John W. Tietjen Title: Executive Vice President, Treasurer and Chief Financial Officer |
Exhibit 32
CERTIFICATIONS
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Sterling Bancorp, a New York corporation (the "Company"), hereby certifies that:
The Quarterly Report on Form 10-Q for the three months ended September 30, 2004 (the "Report") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: 11/9/04 /s/ Louis J. Cappelli
------------ -------------------------------------------
Name: Louis J. Cappelli
Title: Chairman and Chief Executive Officer
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Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Sterling Bancorp, a New York corporation (the "Company"), hereby certifies that:
The Quarterly Report on Form 10-Q for the three months ended September 30, 2004 (the "Report") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: 11/9/04 /s/ John W. Tietjen
------------ -------------------------------------------
Name: John W. Tietjen
Title: Executive Vice President,
Treasurer and Chief Financial Officer
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The foregoing certifications are being furnished solely pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of
Section 1350, Chapter 63 of Title 18, United States Code) and are not being
filed as part of the Report or as a separate disclosure document.