UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 FORM 10-Q (Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the quarterly period
ended March 31, 2007 or oTRANSITION 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.
Employerincorporation 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 o
No Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of accelerated
filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one): Large Accelerated Filer o
Accelerated Filer x
Non-Accelerated
Filer o Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).oYesxNo As of April 30, 2007 there were 18,664,868 shares of common stock, 
$1.00 par value, outstanding.    STERLING BANCORP

PagePART I FINANCIAL
  INFORMATIONItem 1.
Financial StatementsConsolidated Financial
  Statements (Unaudited)
3Notes to
  Consolidated Financial Statements
9Item 2.
Managements
  Discussion and Analysis of Financial Condition and Results of OperationsOverview
13Income
  Statement Analysis
14Balance
  Sheet Analysis
17Capital
21Recently Issued Accounting Pronouncements
22Cautionary
  Statement Regarding Forward-Looking Statements
22Average Balance
  Sheets
23Rate/Volume
  Analysis
24Regulatory
  Capital and Ratios
25Item 3.
Quantitative
  and Qualitative Disclosures About Market RiskAsset/Liability
  Management
26Interest
  Rate Sensitivity
31Item 4.
Controls
  and Procedures
32PART II
  OTHER INFORMATIONItem 2.
Unregistered
  Sales of Equity Securities and Use of Proceeds
33Item 6.
Exhibits
34SIGNATURES
35EXHIBIT INDEXExhibit 11
Statement Re: Computation
  of Per Share Earnings
37Exhibit 31.1
Certification of the CEO
  pursuant to Exchange Act Rule 13a-14(a)
38Exhibit 31.2
Certification of the CFO
  pursuant to Exchange Act Rule 13a-14(a)
39Exhibit 32.1
Certification of the CEO
  required by Section 1350 of Chapter 63 of Title 18 of the U.S. Code
40Exhibit 32.2
Certification of the CFO
  required by Section 1350 of Chapter 63 of Title 18 of the U.S. Code
412

STERLING BANCORP AND SUBSIDIARIESConsolidated Balance Sheets
(Unaudited)

March 31,

December
  31,2007

2006ASSETSCash and due from banks

$
81,698,635

$
50,058,593Interest-bearing deposits with other banks


1,850,882


1,261,187Federal funds sold





20,000,000Securities available for sale (at estimated fair value; pledged:
  $46,176,029 in 2007 and $90,583,854 in 2006)


144,969,123


148,420,887Securities held to maturity (pledged: $217,411,362 in 2007 and
  $199,997,912 in 2006) (estimated fair value: $419,063,772 in 2007 and
  $411,650,690 in 2006)


426,380,228


420,903,430Total investment securities


571,349,351


569,324,317Loans held for sale


39,576,275


33,319,789Loans held in portfolio, net of unearned discounts


1,080,587,313


1,112,601,620Less allowance for loan losses


15,806,296


16,287,974Loans, net


1,064,781,017


1,096,313,646Customers liability under acceptances


487,409


98,399Goodwill


22,862,051


22,862,051Premises and equipment, net


11,640,018


11,323,649Other real estate


2,415,218


2,242,419Accrued interest receivable


5,195,659


5,844,868Bank owned life insurance


28,201,711


27,949,160Other assets


42,817,706


43,696,511Total assets from continuing operations


1,872,875,932


1,884,294,589Assets - discontinued operations


1,302,240


1,662,697$
1,874,178,172

$
1,885,957,286LIABILITIES AND SHAREHOLDERS EQUITYDepositsDemand deposits

$
461,733,507

$
546,442,704Savings, NOW and money market deposits


481,074,038


447,600,898Time deposits


566,350,351


527,986,821Total deposits


1,509,157,896


1,522,030,423Securities sold under agreements to repurchase - customers


61,607,136


52,802,796Commercial paper


27,652,304


27,561,567Short-term borrowings - other


2,575,825


3,411,630Long-term borrowings - FHLB


20,000,000


20,000,000Long-term borrowings - subordinated debentures


25,774,000


25,774,000Total borrowings


137,609,265


129,549,993Acceptances outstanding


487,409


98,399Accrued expenses and other liabilities


93,677,161


101,679,342Liabilities - discontinued operations


228,983


336,358Total liabilities


1,741,160,714


1,753,694,515Shareholders equityCommon stock, $1 par value. Authorized 50,000,000 shares; issued
  21,262,170 and 21,177,084 shares, respectively


21,262,170


21,177,084Capital surplus


168,615,797


167,960,063Retained earnings


16,631,370


16,693,987Accumulated other comprehensive loss, net of tax


(11,310,469
)

(11,842,908
)195,198,868


193,988,226LessCommon shares in treasury at cost, 2,597,302 and 2,572,368 shares,
  respectively


62,181,410


61,725,455Total shareholders equity


133,017,458


132,262,771$
1,874,178,172

$
1,885,957,286See Notes to Consolidated Financial Statements.

3

STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)

  Three
          Months Ended
          March 31,2007
      
      2006INTEREST
          INCOMELoans
      
      $
      21,726,617
      
      $
      19,380,054Investment
          securitiesAvailable
          for sale
      
      
      1,844,714
      
      
      2,201,786Held
          to maturity
      
      
      4,869,125
      
      
      5,743,474Federal
          funds sold
      
      
      635,308
      
      
      39,985Deposits
          with other banks
      
      
      30,684
      
      
      30,081Total
          interest income
      
      
      29,106,448
      
      
      27,395,380INTEREST
          EXPENSEDepositsSavings,
          NOW and money market
      
      
      2,859,406
      
      
      1,782,920Time
      
      
      6,547,498
      
      
      4,460,851Securities
          sold under agreements to repurchase-
          customers
      
      
      1,074,994
      
      
      694,848-
          dealers
      
      
      
      
      
      983,988Federal
          funds purchased
      
      
      12,379
      
      
      135,140Commercial
          paper
      
      
      349,739
      
      
      404,601Short-term
          borrowings - FHLB
      
      
      
      
      
      193,168Short-term
          borrowings - other
      
      
      11,868
      
      
      10,412Long-term
          borrowings - FHLB
      
      
      224,501
      
      
      586,351Long-term
          borrowings - subordinated debt
      
      
      523,438
      
      
      523,438Total
          interest expense
      
      
      11,603,823
      
      
      9,775,717Interest
          expense allocated to discontinued operations
      
      
      
      
      
      (773,994
      )Net
          interest income
      
      
      17,502,625
      
      
      18,393,657Provision
          for loan losses
      
      
      1,250,000
      
      
      1,365,000Net
          interest income after provision for loan losses
      
      
      16,252,625
      
      
      17,028,657NONINTEREST
          INCOMECustomer
          related service charges and fees
      
      
      5,839,339
      
      
      3,556,834Mortgage
          banking income
      
      
      2,832,420
      
      
      2,216,552Trust
          fees
      
      
      141,203
      
      
      151,722Bank
          owned life insurance income
      
      
      252,551
      
      
      220,060Securities
          losses
      
      
      
      
      
      (459,497
      )Other
          income
      
      
      163,783
      
      
      99,182Total
          noninterest income
      
      
      9,229,296
      
      
      5,784,853NONINTEREST
          EXPENSESSalaries
      
      
      8,997,512
      
      
      7,762,818Employee
          benefits
      
      
      2,489,561
      
      
      2,901,323Total
          personnel expense
      
      
      11,487,073
      
      
      10,664,141Occupancy
          and equipment expenses, net
      
      
      2,707,703
      
      
      2,302,949Advertising
          and marketing
      
      
      963,901
      
      
      999,026Professional
          fees
      
      
      1,339,775
      
      
      1,823,163Communications
      
      
      516,270
      
      
      394,572Other
          expenses
      
      
      2,669,028
      
      
      2,338,501Total
          noninterest expenses
      
      
      19,683,750
      
      
      18,522,352Income
          from continuing operations before income taxes
      
      
      5,798,171
      
      
      4,291,158Provision/(Benefit)
          for income taxes
      
      
      2,226,498
      
      
      (2,193,734
      )Income
          from continuing operations
      
      
      3,571,673
      
      
      6,484,892Loss
          from discontinued operations, net of tax
      
      
      (91,971
      )
      
      (44,759
      )Net
          income
      
      $
      3,479,702
      
      $
      6,440,133See Notes to
Consolidated Financial Statements.

4

STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)

continued

Three Months Ended
  March 31,2007

2006Average number of common shares
outstandingBasic


18,645,423


18,783,299Diluted


19,128,056


19,345,614Income from continuing
operations, per
  average common shareBasic

$
0.19

$
0.34Diluted


0.19


0.33Net income, per average common
shareBasic


0.19


0.34Diluted


0.18


0.33Dividends per common
share


0.19


0.19See Notes to Consolidated Financial
Statements.

5

STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(Unaudited)

Three Months Ended 
  March 31,2007

2006Net Income

$
3,479,702

$
6,440,133Other comprehensive
income/(loss), net of
  tax:Unrealized
holding gains/(losses) arising
  during the period


336,448


(1,234,347
)Reclassification adjustment for losses
  included in net income





251,850Amortization of:Prior service cost


13,545


Net actuarial losses


182,446


Comprehensive income

$
4,012,141

$
5,457,636See Notes to Consolidated Financial
Statements.

6

STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders Equity
(Unaudited)

Three Months Ended 
  March 31,2007

2006Common StockBalance at
January 1

$
21,177,084

$
21,066,916Common shares
issued under stock incentive
  plan


85,086


18,749Balance at
March 31

$
21,262,170

$
21,085,665Capital SurplusBalance at
January 1

$
167,960,063

$
166,313,566Common shares
issued under stock incentive
  plan and related tax benefits


655,734


534,996Balance at
March 31

$
168,615,797

$
166,848,562Retained EarningsBalance at
January 1

$
16,693,987

$
20,739,352Net
Income


3,479,702


6,440,133Cash dividends
paid - common shares


(3,542,319
)

(3,562,381
)Balance at
March 31

$
16,631,370

$
23,617,104Accumulated Other Comprehensive
LossBalance at
January 1

$
(11,842,908
)
$
(5,229,620
)Unrealized
holding losses arising during
  the period:Before
tax


613,284


(2,040,054
)Tax
effect


(276,836
)

805,707Net of
tax


336,448


(1,234,347
)Reclassification adjustment for
  losses/(gains) included in net income:Before
tax





459,497Tax
effect





(207,647
)Net of
tax





251,850Amortization of prior service cost and net actuarial losses:Before
tax


357,256


Tax
effect


(161,265
)

195,991


Balance at
March 31

$
(11,310,469
)
$
(6,212,117
)Treasury StockBalance at
January 1

$
(61,725,455
)
$
(55,280,647
)Purchase of
common shares





(1,525,999
)Surrender of
shares issued under stock
  incentive plan


(455,955
)

(205,322
)Balance at
March 31

$
(62,181,410
)
$
(57,011,968
)Unearned CompensationBalance at
January 1

$


$
(22,007
)Amortization
of unearned compensation





22,007Balance at
March 31

$


$
Total Shareholders
EquityBalance at
January 1

$
132,262,771

$
147,587,560Net changes
during the period


754,687


739,686Balance at
March 31

$
133,017,458

$
148,327,246See Notes to Consolidated Financial Statements.

7

STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)

Three
  Months Ended
  March 31,2007

2006Operating ActivitiesNet
Income

$
3,479,702

$
6,440,133Loss from discontinued operations
  included below in operating cash flows from discontinued operations


91,971


44,759Income from
continuing operations


3,571,673


6,484,892Adjustments to
reconcile income from
  continuing operations to net cash provided by operating activities:Provision for
loan losses


1,250,000


1,365,000Depreciation
and amortization of premises
  and equipment


639,479


519,975Securities
losses





459,497Income from
bank owned life insurance


(252,551
)

(220,060
)Deferred
income tax provision


1,431,346


2,066,068Proceeds from
sale of loans


138,527,585


149,510,690Gains on sales
of loans, net


(2,832,421
)

(2,216,552
)Originations
of loans held for sale


(141,951,650
)

(143,237,502
)Amortization
of unearned compensation





22,007Amortization
of premiums on securities


94,298


166,781Accretion of
discounts on securities


(84,699
)

(108,547
)Decrease in
accrued interest receivable


649,209


475,096Decrease in
accrued expenses and other
  liabilities


(8,002,181
)

(14,161,491
)(Increase)
Decrease in other assets


(552,541
)

1,220,768Other,
net


(456,170
)

111,857Net cash
(used in) provided by operating
  activities


(7,968,623
)

2,458,479Investing ActivitiesPurchase of
premises and equipment


(955,848
)

(309,550
)Net increase
in interest-bearing deposits with other
banks


(589,695
)

(434,729
)Net decrease
in federal funds sold


20,000,000


Net decrease
in loans held in portfolio


30,282,629


35,196,800Increase in
other real estate


(172,799
)

(438,805
)Proceeds from
prepayments, redemptions or
  maturities of securities - held to maturity


19,516,795


16,953,372Purchases of
securities - held to maturity


(25,003,500
)

(115,870
)Proceeds from
sales of securities -
  available for sale





24,538,500Proceeds from
prepayments, redemptions or
  maturities of securities - available for sale


34,093,334


7,130,721Purchases of
securities - available for
  sale


(29,996,170
)

(3,506,991
)Net cash
provided by investing activities


47,174,746


79,013,448Financing ActivitiesNet decrease
in deposits


(12,872,527
)

(35,318,593
)Net increase
(decrease) in borrowings


8,059,272


(60,970,974
)Purchase of
treasury stock





(1,525,999
)Net proceeds
from issuance of common stock
  including the exercise of stock options


628,382


266,940Cash dividends
paid on common stock


(3,542,319
)

(3,562,381
)Net cash
used in financing activities


(7,727,192
)

(101,111,007
)Cash flows from discontinued
operationsOperating cash
flows


(10,814
)

1,230,084Investing cash
flows


171,925


2,038,883Total


161,111


3,268,967Net (decrease) increase in cash
and due
  from banks


31,640,042


(16,370,113
)Cash and due from banks -
beginning of
  period


50,058,593


68,562,037Cash and due from banks - end
of period

$
81,698,635

$
52,191,924Supplemental
disclosures:Interest
paid

$
11,445,120

$
10,079,286Income taxes
paid


163,976


1,767,655See Notes to Consolidated Financial
Statements.

8

STERLING BANCORP AND SUBSIDIARIESNotes 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 March 31, 2007 and 2006 are unaudited; however, in the
  opinion of management, all adjustments, consisting of normal recurring
  accruals, necessary for a fair presentation of such periods have been made.
  Certain reclassifications have been made to the 2006 consolidated financial
  statements 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, 2006.2.
The major
  components of domestic loans held for sale and loans held in portfolio are as
  follows:March 31,2007

December 31,2006Loans held for saleReal
estate-residential mortgage

$
39,576,275

$
33,319,789Loans held in
portfolioCommercial and
industrial

$
596,855,008

$
622,476,925Lease
financing


243,948,999


239,225,533Real
estate-residential mortgage


113,927,870


120,056,900Real
estate-commercial mortgage


88,451,471


93,214,668Real
estate-construction


30,279,509


30,030,684Installment


12,672,282


12,380,848Loans to
depository institutions


27,000,000


27,000,000Loans held in
portfolio, gross


1,113,135,139


1,144,385,558Less unearned
discounts


32,547,826


31,783,938Loans held in
portfolio, net of unearned
  discounts

$
1,080,587,313

$
1,112,601,6203.
The
  following table sets forth components of net periodic benefit cost for the
  Companys noncontributory defined benefit pension plan and unfunded
  supplemental retirement plan.Three Months Ended March 31,2007

2006COMPONENTS OF NET PERIODIC
BENEFIT COSTService cost

$
409,271

$
467,499Interest cost


567,201


616,900Expected return on plan
assets


(475,457
)

(542,976
)Amortization of prior service
cost


24,689


19,691Recognized actuarial
loss


332,567


336,918Net periodic benefit
cost

$
858,271

$
898,032The Company
  previously disclosed in its financial statements for the year ended December
  31, 2006, that it expected to contribute approximately $2,000,000 to the
  defined benefit pension plan in 2007. No contribution has been made as of
  March 31, 2007.9

STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)

4.
The
  following information is provided in connection with the sales and/or calls
  of available for sale securities:Three Months Ended March 31,

2007

2006Proceeds

$



$
24,538,500Gross Gains






Gross Losses






459,497During the first quarter of 2006 the Company sold lower yielding available for
sale securities at a loss to partially fund the acquisition of Sterling Resource
Funding Corp.5.
Statement of Financial Accounting Standards (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.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 2007 year-to-date average interest-earning assets were 62.6% loans
  (corporate lending was 68.2% and real estate lending was 26.9% of total
  loans, respectively) and 37.4% investment securities and money market
  investments. There are no industry concentrations exceeding 10% of loans,
  gross, in the corporate lending segment. Approximately 75% of loans are to
  borrowers located in the metropolitan New York area. In order to comply with
  the provisions of SFAS No. 131, the Company has determined that it has three
  reportable operating segments: corporate lending, real estate lending and
  company-wide treasury.10

STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)

The following
tables provide certain information regarding the Companys operating segments
for the three month periods ended March 31,2007 and 2006 (all amounts are from
continuing operations except where designated as discontinued):

Corporate
  Lending

Real Estate
  Lending

Company-wide
  Treasury

TotalsThree
Months
  Ended March 31, 2007Net interest
  income

$
6,225,650

$
4,974,172

$
6,054,048

$
17,253,870Noninterest
  income


5,582,025


2,920,999


335,723


8,838,747Depreciation
  and amortization


180,404


92,308


614


273,326Segment
income
  from continuing operations before income taxes


4,121,969


4,247,900


5,746,217


14,116,086Segment loss
  from discontinued operations before income taxes


(167,454
)







(167,454
)Segment
assets
  from continuing operations


727,283,459


367,001,856


752,824,906


1,847,110,221Segment
assets
  from discontinued operations


1,302,240








1,302,240Three
Months
  Ended March 31, 2006Net interest
  income

$
8,110,761

$
5,424,633

$
4,586,401

$
18,121,795Noninterest
  income


3,151,469


2,315,471


(161,649
)

5,305,291Depreciation
  and amortization


103,402


100,731


614


204,747Segment
income
  from continuing operations before income taxes


4,827,938


2,923,638


4,294,289


12,045,865Segment
loss from discontinued operations before income taxes


(76,618
)







(76,618
)Segment
assets
  from continuing operations


689,589,766


342,949,424


770,803,911


1,803,343,101Segment
assets
  from discontinued operations


113,289,309








113,289,309The 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 March 31,2007

2006Net interest income:Total for
reportable operating segments

$
17,253,870

$
18,121,795Other
[1]


248,755


271,862Consolidated net interest
income

$
17,502,625

$
18,393,657Noninterest income:Total for
reportable operating segments

$
8,838,747

$
5,305,291Other
[1]


390,549


479,562Consolidated noninterest
income

$
9,229,296

$
5,784,853Income from continuing
operations before
  income taxes:Total for
reportable operating segments

$
14,116,086

$
12,045,865Other
[1]


(8,317,915
)

(7,754,707
)Consolidated income from
continuing
  operations before income taxes

$
5,798,171

$
4,291,158Assets:Total for
reportable operating segments:- continuing
operations

$
1,847,110,221

$
1,803,343,101- discontinued
operations


1,302,240


113,289,309Other
[1]


25,765,711


29,338,298Consolidated assets

$
1,874,178,172

$
1,945,970,708

[1]
Represents
  operations not considered to be a reportable segment and/or general operating
  expenses of the Company.11

STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)

6.
The Company
adopted Emerging Issues Task Force (EITF) Issue No. 06-5, Accounting for Purchases of Life Insurance-Determining
the Amount that Could be Realized in Accordance with FASB Technical BulletinNo. 85-4, Accounting for Purchases of Life
Insurance(EITF Issue No. 06-5) and SFAS No. 156, Accounting for Servicing of Financial
Assets-an amendment of FASB Statement No. 140(SFAS No. 156) as of January 1, 2007. There was no material impact on the
Companys results of operations or financial condition upon adoption.The Company also adopted Financial Accounting Standards Board Interpretation No. 48 (FIN
48) as of January 1, 2007. The implementation of FIN 48 did not have an
impact on our financial position or results of operations. At the adoption date
of January 1, 2007 and at March 31, 2007, we had approximately $644,000 of
unrecognized tax benefits, all of which would affect our effective tax rate if
recognized. Approximately 50% of the unrecognized tax benefits are expected to
be recognized during the second half of 2007 due to the expiration of the
statute of limitations related to the taxation of certain income items. The
Company recognizes interest accrued related to unrecognized tax benefits and
penalties in noninterest operating expenses. Such accrued interest payable was
approximately $235,000 at January 1, 2007. The Company and its subsidiaries are
subject to U.S. federal income tax as well as income tax of multiple state
jurisdictions. The Companys federal income tax returns for 2002 through
2005 are currently either under examination or subject to examination. The
Companys New York State and New York City tax returns for years prior to
2003 are no longer subject to examination.SFAS No.
  155, Accounting for Certain Hybrid
  Financial Instruments  an amendment of FASB Statements No. 133 and 140,
  which became effective for certain hybrid financial instruments acquired or
  issued by the Company on or after January 1, 2007, has had no impact on the
  Companys consolidated financial statements because the Company has not
  acquired or issued the type of instruments covered by SFAS No. 155.In February 2007, the Financial Accounting Standard Board (FASB)
issued SFAS No. 159,
The Fair Value Option for Financial Assets and Financial Liabilities - Including
an amendment of FASB Statement No. 115 (SFAS No. 159). SFAS No. 159
provides companies with an option to report selected financial assets and
liabilities at estimated fair value. Most of the provisions of SFAS No. 159 are
elective; however, the amendment to SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities, applies to all entities that own
trading and available for sale securities. The fair value option created by SFAS
No. 159 permits an entity to measure eligible items at fair value as of
specified election dates. The fair value option (a) may generally be applied
instrument by instrument, (b) is irrevocable unless a new election date occurs,
and (c) must be applied to the entire instrument and not to only a portion of
the instrument.
SFAS No. 159 is effective for the Company as of January 1, 2008.
The Company is currently analyzing the potential effects of SFAS
No. 159 on its financial statements.
In September 2006, FASB issued SFAS No. 157, Fair Value Measurements, which defines fair value, establishes a framework for
measuring fair value under generally accepted accounting principles, and
requires expanded disclosures regarding fair value measurements. SFAS No. 157 is
effective for the Company on January 1, 2008 and is not expected to have a
significant impact on the Companys financial statements.12

ITEM 2.
MANAGEMENTS DISCUSSION AND
  ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe 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, 2006.  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
the metropolitan New York area, New Jersey, Virginia and North Carolina  and conducts business throughout the United
States. The general state of the U.S. economy and, in particular, economic and
market conditions in the metropolitan New York area have a significant impact
on loan demand, the ability of borrowers to repay these loans and the value of
any collateral securing these loans and may also affect deposit levels.
Accordingly, future general economic conditions are a key uncertainty that
management expects will materially affect the Companys results of operations.

For the three months ended March 31, 2007, the banks
average earning assets represented approximately 100.0% of the Companys
average earning assets.  Loans
represented 62.6% and investment securities represented 34.4% of the banks
average earning assets for the first quarter of 2007.

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.

13

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-earning 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 page 24.
Information as to the components of interest income and interest expense
and average rates is provided in the Average Balance Sheets shown on page 23.

Comparison
of the Three Months Ended March 31, 2007 and 2006

The Company reported income from continuing
operations, after income taxes, for the three months ended March 31, 2007 of
$3.6 million, representing $0.19 per share, calculated on a diluted basis,
compared to $6.5 million, or $0.33 per share calculated on a diluted basis, for
the first quarter of 2006.  This
decrease reflects higher interest and noninterest expenses and an increase in
provision for income taxes which were only partially offset by increases in
both interest and noninterest income.

14

Net Interest Income

Net interest income, on a
tax-equivalent basis, was $17.6 million for the first quarter of 2007 compared
to $18.6 million for the 2006 period, as the higher rates paid on
interest-bearing deposits and borrowings in the first quarter of 2007 more than
offset the effects of higher average yield on loans, lower balances for borrowings
and investment securities for that quarter.
The net interest margin, on a tax-equivalent basis, was 4.24%  for the first quarter of 2007 compared to
4.45% for the 2006 period.  The net
interest margin was impacted by the flat yield curve, the higher interest rate
environment in 2007, the lower level of noninterest-bearing demand deposits and
the effect of higher average loans outstanding.  The flat yield curve and more competitive pricing practices in
the Companys markets have caused the costs of deposits and borrowings to
increase faster than the yield on earning assets.

Total interest income, on a
tax-equivalent basis, aggregated $29.2 million for the first quarter of 2007,
up $1.6 million, from the 2006 period.
The tax-equivalent yield on interest-earning assets was 7.15% for the
first quarter of 2007 compared to 6.69% for the 2006 period.

Interest earned on the loan
portfolio amounted to $21.7 million for the first quarter of 2007, up from
$19.4 million the prior year period.
Average loan balances amounted to $1,053.3 million, an increase of $77.3
million from an average of $976.0 million in the prior year period.  The increase in average loans (across many
segments of the Companys loan portfolio), primarily due to the acquisition of
Sterling Resource Funding Corp. (completed April 1, 2006) coupled with the
Companys other business development activities, accounted for $1.5 million of the
$2.3 million increase in interest earned on loans.  The increase in the yield on the loan portfolio to 8.66% for the
first quarter of 2007 from 8.32% for the 2006 period was primarily attributable
to the mix (including the acquisition of Sterling Resource Funding Corp.) of
average outstanding balances  among the
components of the loan portfolio and the higher interest rate environment in
2007.

Interest earned on the securities
portfolio, on a tax-equivalent basis, decreased to $6.8 million for the first
quarter of 2007 from $8.2 million in the prior year period. Average
outstandings decreased to $579.1 million (34.4% of average earning assets) for
the first quarter of 2007 from $708.7 million (41.9% of average earning assets)
in the prior year period.  The average
life of the securities portfolio was approximately 4.4 years at March 31, 2007
compared to 4.6 years at March 31, 2006.

Total interest expense increased
by $2.6 million for the first quarter of 2007 from $9.0 million for the 2006
period, primarily due to the impact of higher rates paid for interest-bearing
deposits partially offset by the impact of lower borrowed funds balances.

Interest expense on deposits
increased to $9.4 million for the first quarter of 2007 from $6.2 million for
the 2006 period, primarily due to an increase in the cost of those funds.  The average rate paid on interest-bearing
deposits was 3.75% which was 115 basis points higher than the prior year
period.  The increase in average cost of
deposits reflects the higher interest rate environment during 2007.

15

Interest expense on borrowings decreased to $2.2
million for the first quarter of 2007 from $3.5 million for the 2006 period,
primarily due to a decrease in average balances.  Average borrowings decreased to $170.6 million for the first
quarter of 2007 from $316.8 million in the prior year period, reflecting less
reliance  by the Company on wholesale
funding.

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 quarter of 2007 was $1.3 million, compared to $1.4 million for
the prior year period.  Factors
affecting the level of provision included the growth in the loan portfolios,
changes in general economic conditions and the amount of nonaccrual loans.

Noninterest
Income

Noninterest income increased to $9.2 million for the
first quarter of 2007 from $5.8 million in the 2006 period.  Higher customer related service charges and
fees were primarily due to revenues attributable to the acquisition of Sterling
Resource Funding Corp.  Mortgage banking
income increased due to a change in product mix towards more profitable market
segments and away from the less profitable, higher risk wholesale
business.  Also contributing to the
increase was the absence of losses on sales of securities.

Noninterest
Expenses

Noninterest expenses for the
first quarter of 2007 increased $1.2 million when compared to the 2006 period.  The increase was primarily due to higher
salaries, equipment and occupancy costs related
to investments in the Sterling franchise, including two new branches and the
acquisition of Sterling Resource Funding Corp.
These increases were partially offset by expense reductions achieved
from the reengineering of the mortgage banking activities, lower expenses for
employee benefits and professional fees.

Provision for Income Taxes

The provision for income taxes
increased by $4.4 million to $2.2 million for the first quarter of 2007.  The increase was primarily due to a $3.7 million reversal of
state and local taxes, net of federal tax effect, in the 2006 period as a
result of the closure of certain years for local tax purposes, and to the higher level of pre-tax income in the 2007 period.

Discontinued Operations

In September 2006, the Company
sold the business conducted by Sterling Financial Services.  In accordance with U.S. generally accepted accounting principles,
the after-tax loss from discontinued
operations is reported in the Consolidated Statements of Income after net income
from continuing operations.

Loss from discontinued operations
was $92 thousand for the first quarter of 2007, compared to $45 thousand for the first quarter of 2006.

Income taxes applicable to discontinued operations were calculated at
the Companys overall marginal tax rate of 45.14%.

16

BALANCE
SHEET ANALYSIS

Securities

The Companys securities portfolios are comprised
principally of mortgage-backed securities of U.S. government corporations and
government sponsored enterprises, and obligations of state and political
institutions, along with other debt and equity securities.   At March 31, 2007, the Companys portfolio
of securities totaled $571.3 million, of which mortgage-backed securities and
collateralized mortgage obligations of U.S. government corporations and
government sponsored enterprises having an average life of approximately 4.7
years amounted to $499.7 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 $0.7 million and $8.0 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.
Given the generally high credit quality of the portfolio, management
expects to realize all of its investment upon market recovery or the maturity
of such instruments and thus believes that any market value impairment is
interest rate related and therefore temporary.
Available for sale securities included gross unrealized gains of $0.4
million and gross unrealized losses of $3.5 million.

17

The following table presents information regarding
securities available for sale:

March 31,
  2007

Gross
  Amortized
  Cost

Gross
  Unrealized
  Gains

Gross
  Unrealized
  Losses

Market
  ValueMortgage-backed
  securitiesCMOs (Federal
  National Mortgage Association)

$
8,872,421

$


$
421,074

$
8,451,347CMOs (Federal
  Home Loan Mortgage Corporation)


22,662,465





963,052


21,699,413Federal National
  Mortgage Association


44,848,775


72,162


1,023,084


43,897,853Federal Home
  Loan Mortgage Corporation


41,772,562


9,283


1,025,589


40,756,256Government
  National Mortgage Association


3,923,559


123,175


3,721


4,043,013Total
  mortgage-backed securities


122,079,782


204,620


3,436,520


118,847,882Obligations of
  state and political institutions


20,684,073


99,698


72,320


20,711,451Trust Preferred
  Securities


1,179,912


58,246


1,701


1,236,457Federal Reserve
  Bank stock


1,130,700








1,130,700Federal Home
  Loan Bank stock


2,719,100








2,719,100Other securities


304,442


19,091





323,533Total

$
148,098,009

$
381,655

$
3,510,541

$
144,969,123The following table presents information regarding
securities held to maturity:

March 31,
  2007

Carrying
  Value

Gross
  Unrealized
  Gains

Gross
  Unrealized
  Losses

Estimated
  Market
  ValueMortgage-backed
  securitiesCMOs (Federal
  National Mortgage Association)

$
12,674,889

$


$
437,793

$
12,237,096CMOs (Federal
  Home Loan Mortgage Corporation)


22,487,416





855,848


21,631,568Federal National
  Mortgage Association


198,133,584


349,793


3,243,256


195,240,121Federal Home
  Loan Mortgage Corporation


137,540,735


78,486


3,330,829


134,288,392Government
  National Mortgage Association


10,045,952


267,396


45


10,313,303Total
  mortgage-backed securities


380,882,576


695,675


7,867,771


373,710,480Federal Home
  Loan Bank


29,997,652





27,340


29,970,312Federal Farm
  Credit Bank


15,000,000





112,500


14,887,500Total
  obligations of U.S. government corporations and agencies


425,880,228


695,675


8,007,611


418,568,292Debt securities
  issued by foreign governments


500,000





4,520


495,480Total

$
426,380,228

$
695,675

$
8,012,131

$
419,063,77218

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 originating  loans in markets with which the Company is
familiar.

The Companys commercial and industrial loan portfolio
represents approximately 53% of all loans.
Loans in this category are typically made to small and medium-sized
businesses and range between $25,000 and $10 million.  The Companys real estate mortgage portfolio, which represents
approximately 24% of all loans, is secured by mortgages on real property
located principally in the states of New York, New Jersey, Virginia and North
Carolina.  The Companys leasing
portfolio, which consists of finance leases for various types of business
equipment, represents approximately 19% of all loans.  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
collateral securing any loan or lease may depend on the type of loan or lease
and 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:

March 31,2007

2006($ in thousands)Balances

% of
  Total

Balances

% of
  TotalDomesticCommercial and
  industrial

$
596,582


53.3
%
$
483,765


47.8
%Equipment lease
  financing


211,675


18.9


205,610


20.3Real estate -
  residential mortgage


153,504


13.7


181,711


18.0Real estate-
  commercial mortgage


88,451


7.9


109,720


10.8Real estate -
  construction


30,280


2.7


2,309


0.2Installment -
  individuals


12,672


1.1


14,189


1.4Loans to
  depository institutions


27,000


2.4


15,000


1.5Loans, net of
  unearned discounts

$
1,120,164


100.0
%
$
1,012,304


100.0
%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  increase.
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.

19

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 include, but are 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   March 31, 2007, the ratio of
the allowance to loans held in portfolio, net of unearned discounts, was 1.46%
and the allowance was $15.8 million.  At
such date, the Companys nonaccrual loans amounted to $5.6 million; $0.4
million of such loans was judged to be impaired within the scope of SFAS No.
114.  Loans 90 days past due and still
accruing amounted to $1.4 million.
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 potential credit risks associated with the
portfolio  as of March 31, 2007.  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 quarter of 2007.  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
$1.1 million at March 31, 2007.

20

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:

March 31,2007

2006($ in thousands)Balances

% of
  Total

Balances

% of
  TotalDomesticDemand

$
461,734


30.6
%
$
483,001


34.2
%NOW


224,761


14.9


172,621


12.2Savings


21,792


1.4


23,803


1.7Money market


234,521


15.5


208,490


14.8Time deposits


565,776


37.5


522,068


36.9Total domestic
  deposits


1,508,584


99.9


1,409,983


99.8ForeignTime deposits


574


0.1


3,025


0.2Total deposits

$
1,509,158


100.0
%
$
1,413,008


100.0
%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 page 23.

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% or 4%, depending upon an
institutions regulatory status) 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 25.  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, FDICIA established
five  capital categories, ranging from well
capitalized to critically under capitalized, which 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

21

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 March
31, 2007, the Company and the bank exceeded the requirements for well
capitalized institutions.

RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS

For information regarding recently issued accounting
pronouncements and their impact or expected impact on the Companys
consolidated financial statements, see Note 6 of the Companys unaudited
consolidated financial statements in this quarterly report.

CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained or incorporated by
reference in this quarterly report on Form 10-Q, 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 developments 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
Federal Reserve Board; 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 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 the risks and uncertainties described in Risk Factors in the
Companys annual report on Form 10-K for the year ended December 31, 2006,
and 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.

22

STERLING BANCORP AND SUBSIDIARIESAverage Balance Sheets  [1]
Three Months Ended March 31,
(Unaudited)

(dollars in thousands)

2007

2006Average
  Balance

Interest

Average
  Rate

Average
  Balance

Interest

Average
  RateASSETSInterest-bearing deposits with other banks

$
2,830

$
31


4.40
%
$
3,045

$
30


2.47
%Securities available for sale


134,632


1,640


4.87


170,540


1,886


4.44Securities held to maturity


423,120


4,869


4.60


506,443


5,744


4.54Securities tax-exempt [2]


21,353


338


6.43


31,716


520


6.64Total investment securities


579,105


6,847


4.73


708,699


8,150


4.61Federal funds sold


47,722


635


5.33


3,611


40


4.43Loans, net of unearned discounts [3]


1,053,306


21,727


8.66


975,991


19,380


8.32TOTAL INTEREST-EARNING ASSETS


1,682,963


29,240


7.15
%

1,691,346


27,600


6.69
%Cash and due from banks


67,499








63,458Allowance for loan losses


(16,876
)







(16,035
)Goodwill


22,862








21,158Other assets


87,077








91,177Total assets-continuing operations


1,843,525








1,851,104Assets-discontinued operations


1,158








114,201TOTAL
  ASSETS

$
1,844,683







$
1,965,305LIABILITIES AND SHAREHOLDERS EQUITYInterest-bearing depositsDomesticSavings

$
20,902


25


0.48
%
$
25,697


26


0.41
%NOW


222,019


1,398


2.55


182,512


735


1.63Money market


207,063


1,436


2.81


241,796


1,022


1.71Time


566,176


6,546


4.69


522,755


4,453


3.45ForeignTime


574


2


1.09


3,024


8


1.09Total interest-bearing deposits


1,016,734


9,407


3.75


975,784


6,244


2.60BorrowingsSecurities sold under agreements to repurchase - customers


95,047


1,075


4.59


80,065


695


3.52Securities sold under agreements to repurchase - dealers











86,818


984


4.60Federal funds purchased


945


12


5.24


12,281


135


4.46Commercial paper


27,902


350


5.08


42,141


405


3.89Short-term borrowings - FHLB











16,946


193


4.62Short-term borrowings - other


900


12


5.35


913


11


4.63Long-term borrowings - FHLB


20,000


225


4.49


51,889


586


4.52Long-term borrowings - sub debt


25,774


523


8.38


25,774


523


8.38Total
  borrowings


170,568


2,197


5.22


316,827


3,532


4.51Interest-bearing liabilities allocated to discontinued operations











(102,516
)

(774
)

3.02TOTAL INTEREST-BEARING LIABILITIES


1,187,302


11,604


3.96
%

1,190,095


9,002


3.07
%Noninterest-bearing deposits


434,798








441,765Other liabilities


91,701








86,804Liabilities-discontinued operations


436








102,675Total
  liabilities


1,714,237








1,821,339Shareholders equity


130,446








143,966TOTAL
  LIABILITIES AND SHAREHOLDERS EQUITY

$
1,844,683







$
1,965,305Net interest income/spread





17,636


3.19
%




18,598


3.62
%Net yield on interest-earning assets (margin)








4.24
%







4.45
%Less: Tax equivalent adjustment





133








204Net interest income




$
17,503







$
18,394[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.23

STERLING BANCORP AND SUBSIDIARIESRate/Volume Analysis [1]
(Unaudited)

(in thousands)

Increase/ (Decrease)
  Three Months Ended
  March 31, 2007 to March 31, 2006Volume

Rate

Net [2]INTEREST INCOMEInterest-bearing deposits with other banks

$
(2
)
$
3

$
1Securities available for sale


(416
)

170


(246
)Securities held to maturity


(949
)

74


(875
)Securities tax-exempt


(166
)

(16
)

(182
)Total investment securities


(1,531
)

228


(1,303
)Federal funds sold


585


10


595Loans, net of unearned discounts [3]


1,548


799


2,347TOTAL INTEREST INCOME

$
600

$
1,040

$
1,640INTEREST EXPENSEInterest-bearing depositsDomesticSavings

$
(5
)
$
4

$
(1
)NOW


184


479


663Money market


(163
)

577


414Time


393


1,700


2,093ForeignTime


(6
)




(6
)Total interest-bearing deposits


403


2,760


3,163BorrowingsSecurities sold under agreements to repurchase - customers


145


235


380Securities sold under agreements to repurchase - dealers


(984
)




(984
)Federal funds purchased


(143
)

20


(123
)Commercial paper


(159
)

104


(55
)Short-term borrowings - FHLB


(193
)




(193
)Short-term borrowings - other





1


1Long-term borrowings - FHLB


(357
)

(4
)

(361
)Long-term borrowings - sub debt








Total borrowings


(1,691
)

356


(1,335
)Less: interest-bearing liabilities allocated to discontinued      operations


774





774TOTAL INTEREST EXPENSE

$
(514
)
$
3,116

$
2,602NET INTEREST INCOME

$
1,114

$
(2,076
)
$
(962
)[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.24

STERLING BANCORP AND SUBSIDIARIESRegulatory Capital and Ratios

Ratios and Minimums
(dollars in thousands)

Actual

For Capital
  Adequacy Minimum

To Be Well
  CapitalizedAs of March
  31, 2007

Amount

Ratio

Amount

Ratio

Amount

RatioTotal Capital (to Risk Weighted Assets):The Company

$
162,012


13.03
%
$
99,477


8.00
%
$
124,346


10.00
%The bank


142,581


11.58


98,514


8.00


123,142


10.00Tier 1 Capital (to Risk Weighted Assets):The Company


146,465


11.78


49,738


4.00


74,608


6.00The bank


127,183


10.33


49,257


4.00


73,885


6.00Tier 1 Leverage Capital (to Average Assets):The Company


146,465


8.04


72,873


4.00


91,091


5.00The bank


127,183


7.03


72,361


4.00


90,451


5.00As of December 31, 2006Total Capital (to Risk Weighted Assets):The Company

$
162,232


12.74
%
$
102,299


8.00
%
$
127,874


10.00
%The bank


138,651


11.00


101,288


8.00


126,610


10.00Tier 1 Capital (to Risk Weighted Assets):The Company


146,244


11.49


51,150


4.00


76,725


6.00The bank


122,819


9.75


50,644


4.00


75,966


6.00Tier 1 Leverage Capital (to Average Assets):The Company


146,244


7.82


75,131


4.00


93,913


5.00The bank


122,819


6.60


74,788


4.00


93,485


5.0025

ITEM 3.
QUANTITATIVE AND QUALITATIVE
  DISCLOSURES ABOUT MARKET RISKASSET/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 unduly to 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 bands. The mismatch between
repricings or maturities within a time band 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.

26

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 March 31,
2007, presented on page 31, 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. 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.

As of March 31, 2007, the Company was a party to two
interest rate floor agreements with notional amounts of $50,000,000 each and
maturities of September 14, 2007 and September 14, 2008, respectively. Interest
rate floor contracts require the counterparty to pay the Company at specified
future dates the amount, if any, by which the specified interest (prime rate)
falls below the fixed floor rates, applied to the notional amounts. The Company
utilizes the financial instruments to adjust its interest rate risk position
without exposing itself to principal risk and funding requirements. These
financial instruments are being used as part of the Companys interest rate
risk management and not for trading purposes. At March 31, 2007, all
counterparties have investment grade credit ratings from the major rating
agencies. Each counterparty is specifically approved for applicable credit
exposure.

The interest rate floor contracts require the Company
to pay a fee for the right to receive a fixed interest payment. The Company
paid up-front premiums of $141,250. At March 31, 2007, there were no amounts
receivable under these contracts.

The interest rate floor agreements were not designated
as hedges for accounting purposes and therefore changes in the fair values of
the instruments are required to be recognized as income or expenses in the
Companys financial statements. At March 31, 2007 and 2006, the aggregate fair value of
the interest rate floors was $2,288 and $6,144, respectively. For the three months ended March 31, 2007 and 2006, $381 and $21,886, respectively, were charged to Other
Expenses.

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.

27

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 March 31, 2007,
the model indicated the impact of a 200 basis point parallel and pro rata rise
in rates over 12 months would approximate a 2.5% ($2.0 million) increase in net
interest income, while the impact of a 200 basis point decline in rates over
the same period would approximate a 6.9% ($5.3 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, prepayments 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 customers 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:
prepayment/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.

The shape of the yield curve can cause downward
pressure on net interest income. In general, if and to the extent that the
yield curve is flatter (i.e., the differences between interest rates for
different maturities are relatively smaller) than previously anticipated, then
the yield on the Companys interest-earning assets and its cash flows will tend
to be lower. Management believes that a relatively flat yield curve would
continue to adversely affect the Companys results in 2007.

28

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 markets funds and other
money market sources. Core deposits include 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 March 31, 2007, the parent companys short-term
debt, consisting principally of commercial paper used to finance ongoing
current business activities, was approximately $27.7 million. The parent
company had cash, interest-bearing deposits with banks and other current assets
aggregating $41.8 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.

29

The following table sets forth information regarding
the Companys obligations and commitments to make future payments under
contract as of March 31, 2007:

Payments Due by PeriodContractual
  Obligations(1)

Total

Less than
  1 Year

1-3
  Years

4-5
  Years

After 5
  Years(in thousands)Long-Term Debt

$
45,774

$


$


$
20,000
(2)
$
25,774Operating Leases


25,078


4,114


7,601


4,641


8,722Total Contractual
  Cash Obligations

$
70,852

$
4,114

$
7,601

$
24,641

$
34,496(1)
Based on contractual
  maturity dates(2)
$10,000 was called on April
  16, 2007.The following table sets forth information regarding
the Companys obligations under other commercial commitments as of March 31,
2007:

Amount of Commitment
  Expiration Per PeriodOther Commercial
  Commitments

Total Amount 
  Committed

Less than
  1 Year

1-3
  Years

4-5
  Years

After 5
  Years(in thousands)Residential Loans

$
9,611

$
9,611

$


$


$
Commercial Loans


58,636


19,039


39,150


447


Total Loans


68,247


28,650


39,150


447


Standby Letters
  of Credit


37,080


31,108


5,972





Other Commercial
  Commitments


12,551


12,283








268Total Commercial
  Commitments

$
117,878

$
72,041

$
45,122

$
447

$
268INFORMATION
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.

30

STERLING BANCORP AND SUBSIDIARIESInterest 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.  Based on the interest rate sensitivity analysis shown below, the Companys net
interest income would decrease during periods of rising interest rates
and increase during periods of falling interest rates.

Repricing Date3 Monthsor Less

More than3 Monthsto 1 Year

More than1 Year to5 Years

Over5 Years

NonrateSensitive

TotalASSETSInterest-bearing deposits with other banks

$
1,851

$


$


$


$


$
1,851Investment
securities


7,802


12,824


124,429


422,122


4,172


571,349Commercial and
industrial loans


405,490


45,630


126,256


19,480


(274
)

596,582Equipment
lease financing


1,083


8,515


226,707


7,644


(32,274
)

211,675Real
estate-residential mortgage


42,629


4,882


83,803


22,190





153,504Real
estate-commercial mortgage


26,553


5,037


43,938


12,923





88,451Real
estate-construction loans








30,280








30,280Installment-individuals


12,672














12,672Loans to
depository institutions


27,000














27,000Noninterest-earning assets & allowance for loan losses














180,814


180,814Total
Assets


525,080


76,888


635,413


484,359


152,438


1,874,178LIABILITIES AND
SHAREHOLDERS EQUITYInterest-bearing depositsSavings
[1]








21,792








21,792NOW
[1]








224,761








224,761Money market
[1]


186,797





47,724








234,521Time -
domestic


216,122


303,854


45,600


200





565,776-
  foreign


179


395











574Securities sold under agreement
to repurchase - customer


57,607


4,000











61,607Commercial paper


27,652














27,652Short-term borrowings -
other


2,576














2,576Long-term borrowings -
FHLB








20,000








20,000Long-term borrowings -
subordinated debentures














25,774


25,774Noninterest-bearing liabilities
& shareholders equity














689,145


689,145Total
Liabilities and Shareholders Equity


490,933


308,249


359,877


200


714,919


1,874,178Net Interest RateSensitivity
Gap

$
34,147

$
(231,361
)
$
275,536

$
484,159

$
(562,481
)
$
Cumulative GapMarch 31,
2007

$
34,147

$
(197,214
)
$
78,322

$
562,481

$


$
Cumulative GapMarch 31,
2006

$
116,808

$
(62,064
)
$
48,070

$
607,868

$


$
Cumulative GapDecember 31,
2006

$
130,609

$
(31,621
)
$
170,278

$
684,751

$


$
[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.31

ITEM 4.
CONTROLS AND
PROCEDURESThe Companys
management, with the participation of the Companys principal executive and
principal financial officers, evaluated the Companys disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of
1934) as of the end of the period covered by this quarterly report on Form
10-Q.  Based on this evaluation, the
Companys management, including the Chief Executive Officer and the Chief
Financial Officer, concluded that, as of the end of the period covered by this
quarterly report, the Companys disclosure controls and procedures were
effective to ensure that information required to be disclosed by the Company in
reports that it files or submits under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in SEC rules and forms.

No change in
the Companys internal control over financial reporting (as defined in Rule
13a-15(f) under the Securities Exchange Act of 1934) occurred during the fiscal
quarter ended March 31, 2007 that has materially affected, or is reasonably
likely to materially affect, the Companys internal control over financial
reporting.

32

PART II - OTHER INFORMATION

Item 2.
Unregistered
  Sales of Equity Securities and Use of ProceedsUnder its
share repurchase program, the Company buys back common shares from time to
time.  The Company did not repurchase any of its common shares during the first quarter of 2007.
At March 31, 2007, the maximum number of shares that may yet be purchased under
the share repurchase program was 932,963.


The Board of
Directors initially authorized the repurchase of common shares in 1997 and
since then has approved increases in the number of common shares that the
Company is authorized to repurchase.
The latest increase was announced on February 15, 2007, when the Board
of Directors increased the Companys authority to repurchase common shares by
an additional 800,000 shares.

33

Item 6.
ExhibitsThe 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 (Filed as Exhibit 3(i) to the Registrants Form 10-Q
  for the quarter ended September 30, 2004 and incorporated herein by
  reference).(ii)
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).11.
Statement
  Re: Computation of Per Share Earnings.31.1
Certification
  of the CEO pursuant to Exchange Act Rule 13a-14(a).31.2
Certification
  of the CFO pursuant to Exchange Act Rule 13a-14(a).32.1
Certification
  of the CEO required by Section 1350 of Chapter 63 of Title 18 of the U.S.
  Code.32.2
Certification
  of the CFO required by Section 1350 of Chapter 63 of Title 18 of the U.S.
  Code.34

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.

STERLING BANCORP(Registrant)Date: May 10, 2007

/s/
Louis J.
  CappelliLouis J.
  CappelliChairman and
  Chief Executive OfficerDate: May 10, 2007

/s/
John W.
  TietjenJohn W.
  TietjenExecutive Vice President
  and Chief Financial Officer35

STERLING BANCORP AND SUBSIDIARIES

EXHIBIT INDEX

Exhibit
  Number

Description

Sequential
  Page No.11

Statement
  re: Computation of Per Share Earnings.

3731.1

Certification
  of the CEO pursuant to Exchange Act Rule 13a-14(a).

3831.2

Certification
  of the CFO pursuant to Exchange Act Rule 13a-14(a).

3932.1

Certification
  of the CEO required by Section 1350 of Chapter 63 of Title 18 of the U.S.
  Code.

4032.2

Certification
  of the CFO required by Section 1350 of Chapter 63 of Title 18 of the U.S.
  Code.

4136