##### Table of Contents



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, 2001

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

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|                                                               |  |                                 
|-------------------------------------------------------------- |  | --------------------------------
|New York                                                       |  | 13-2565216                      
|                                                              
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification)
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |  |                                 
|                                                              
|                                                              
|                                                              
|                                                              
|650 Fifth Avenue, New York, N.Y                                |  | 10019-6108                      
|                                                              
|(Address of principal executive offices)                       |  | (Zip Code)                      

212-757-3300

---

N/A

---

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

As of September 30, 2001 there were 9,313,518 shares of common stock,
$1.00 par value, outstanding.





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TABLE OF CONTENTS



|                                  |                                          |                                                                |  |  |  |  |  | 
|--------------------------------- | ---------------------------------------- | -------------------------------------------------------------- |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION     
|                                  | Item 1. Financial Statements (Unaudited)
|                                  |                                          | Consolidated Balance Sheets                                   
|                                  |                                          | Consolidated Statements of Income                             
|                                  |                                          | Consolidated Statements of Comprehensive Income               
|                                  |                                          | Consolidated Statements of Changes in Shareholders Equity    
|                                  |                                          | Consolidated Statements of Cash Flows                         
|                                  |                                          | Notes to Consolidated Financial Statements                    
|                                  |                                          | BUSINESS                                                      
|                                  |                                          | Results for the Three Months Ended September 30, 2001 and 2000
|                                  |                                          | Results for the Nine Months Ended September 30, 2001 and 2000 
|                                  |                                          | BALANCE SHEET ANALYSIS                                        
|                                  |                                          | CAPITAL                                                       
|                                  |                                          | Average Balance Sheets [1]                                    
|                                  |                                          | Rate/Volume Analysis [1]                                      
|                                  |                                          | Regulatory Capital and Ratios                                 
|                                  |                                          | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    
|                                  |                                          | ASSET/LIABILITY MANAGEMENT                                    
|                                  |                                          | Interest Rate Sensitivity                                     
|PART II OTHER INFORMATION        
|                                  | Item 6. Exhibits and Reports on Form 8-K
|SIGNATURES                       
|EXHIBIT INDEX                    
|COMPUTATION OF PER SHARE EARNINGS



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##### Table of Contents

TABLE OF CONTENTS



|                                  |                                          |                                                                |  |  |  |  |  | 
|--------------------------------- | ---------------------------------------- | -------------------------------------------------------------- |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION     
|                                  | Item 1. Financial Statements (Unaudited)
|                                  |                                          | Consolidated Balance Sheets                                   
|                                  |                                          | Consolidated Statements of Income                             
|                                  |                                          | Consolidated Statements of Comprehensive Income               
|                                  |                                          | Consolidated Statements of Changes in Shareholders Equity    
|                                  |                                          | Consolidated Statements of Cash Flows                         
|                                  |                                          | Notes to Consolidated Financial Statements                    
|                                  |                                          | BUSINESS                                                      
|                                  |                                          | Results for the Three Months Ended September 30, 2001 and 2000
|                                  |                                          | Results for the Nine Months Ended September 30, 2001 and 2000 
|                                  |                                          | BALANCE SHEET ANALYSIS                                        
|                                  |                                          | CAPITAL                                                       
|                                  |                                          | Average Balance Sheets [1]                                    
|                                  |                                          | Rate/Volume Analysis [1]                                      
|                                  |                                          | Regulatory Capital and Ratios                                 
|                                  |                                          | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    
|                                  |                                          | ASSET/LIABILITY MANAGEMENT                                    
|                                  |                                          | Interest Rate Sensitivity                                     
|PART II OTHER INFORMATION        
|                                  | Item 6. Exhibits and Reports on Form 8-K
|SIGNATURES                       
|EXHIBIT INDEX                    
|COMPUTATION OF PER SHARE EARNINGS

STERLING BANCORP

|                              |                                                                    |                                            |    |     
|----------------------------- | ------------------------------------------------------------------ | ------------------------------------------ | -- | ----
|                              |                                                                    |                                            |    | Page
|                              |                                                                    |                                            |    |     
|PART I

FINANCIAL INFORMATION
|                             
|                             
|                             
|                             
|                              |                                                                    |                                            |    |     
|                             
|                             
|                             
|                             
|                              | 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        |    |     
|                             
|                             
|                             
|                             
|                              |                                                                    |                                            |    |     
|                             
|                             
|                             
|                             
|                              |                                                                    | Business                                   |    | 13  
|                             
|                             
|                             
|                             
|                              |                                                                    | Results for Three Months                   |    | 13  
|                             
|                             
|                             
|                             
|                              |                                                                    | Results for Nine Months                    |    | 15  
|                             
|                             
|                             
|                             
|                              |                                                                    | Balance Sheet Analysis                     |    | 17  
|                             
|                             
|                             
|                             
|                              |                                                                    | Capital                                    |    | 21  
|                             
|                             
|                             
|                             
|                              |                                                                    | Average Balance Sheets                     |    | 22  
|                             
|                             
|                             
|                             
|                              |                                                                    | Rate/Volume Analysis                       |    | 24  
|                             
|                             
|                             
|                             
|                              |                                                                    | Regulatory Capital and Ratios              |    | 26  
|                             
|                             
|                             
|                             
|                              | Item 3. Quantitative and Qualitative Disclosures About
Market Risk |                                            |   
|                             
|                             
|                             
|                             
|                              |                                                                    |                                            |    |     
|                             
|                             
|                             
|                             
|                              |                                                                    | Asset/Liability Management                 |    | 27  
|                             
|                             
|                             
|                             
|                              |                                                                    | Interest Rate Sensitivity                  |    | 30  
|                             
|                             
|                             
|                             
|PART

II OTHER INFORMATION   
|                             
|                             
|                             
|                             
|                              |                                                                    |                                            |    |     
|                             
|                             
|                             
|                             
|                              | Item 6. Exhibits and Reports on Form 8-K                           |                                            | 31
|                             
|                             
|                             
|                             
|                              |                                                                    |                                            |    |     
|                             
|                             
|                             
|                             
|SIGNATURES                    |                                                                    | 31                                        
|                             
|                             
|                             
|                             
|                              |                                                                    |                                            |    |     
|                             
|                             
|                             
|                             
|EXHIBIT INDEX                
|                             
|                             
|                             
|                             
|                              |                                                                    |                                            |    |     
|                             
|                             
|                             
|                             
|                              | Exhibit 11 Computation of Per Share Earnings                       |                                            | 33

2



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##### Table of Contents












STERLING BANCORP AND SUBSIDIARIES
Consolidated Balance Sheets

|                                                                                                              |                                                                                                                                  |                                                           |                             |             |               |               |               |             |           |               | 
|------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------- | --------------------------- | ----------- | ------------- | ------------- | ------------- | ----------- | --------- | ------------- | 
|                                                                                                              |                                                                                                                                  |                                                           |                             |             | September 30, |               | December 31, 
|                                                                                                              |                                                                                                                                  |                                                           |                             |             | 2001          |               | 2000         
|                                                                                                              |                                                                                                                                  |                                                           |                             |             |               |               |              
|ASSETS                                                                                                        |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Cash and due from banks                                                                                       |                                                                                                                                  | $                                                         | 47,844,395                  |             |               | $             | 50,212,689    |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Interest-bearing deposits with other banks                                                                    |                                                                                                                                  |                                                           | 4,211,014                   |             |               |               | 2,656,678     |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Federal funds sold                                                                                            |                                                                                                                                  |                                                           | 5,000,000                   |             |               |               | --            |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Securities
available for sale                                                                                 |                                                                                                                                  |                                                           | 163,429,838                 |             |               |               | 62,060,656    |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Securities available for sale  pledged                                                                       |                                                                                                                                  |                                                           | 80,182,247                  |             |               |               | 90,138,534    |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Securities held to maturity                                                                                   |                                                                                                                                  |                                                           | 134,332,469                 |             |               |               | 104,585,942   |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Securities held to maturity  pledged                                                                         |                                                                                                                                  |                                                           | 108,092,589                 |             |               |               | 177,011,726   |            
|                                                                                                              |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|                                                                                                              |                                                                                                                                  |                                                           | Total investment securities |             |               | 486,037,143   |               |             |           | 433,796,858   | 
|                                                                                                              |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|Loans,
net of unearned discounts                                                                              |                                                                                                                                  |                                                           | 783,514,765                 |             |               |               | 750,887,822   |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Less allowance for credit losses                                                                              |                                                                                                                                  |                                                           | 13,468,638                  |             |               |               | 12,675,052    |            
|                                                                                                              |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|                                                                                                              |                                                                                                                                  |                                                           | Loans, net                  |             |               | 770,046,127   |               |             |           | 738,212,770   | 
|                                                                                                              |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|Customers liability under acceptances                                                                        |                                                                                                                                  |                                                           | 1,333,420                   |             |               |               | 987,048       |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Excess cost over equity in net assets of the
banking subsidiary                                               |                                                                                                                                  |                                                           | 21,158,440                  |             |               |               | 21,158,440    |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Premises and equipment, net                                                                                   |                                                                                                                                  |                                                           | 7,232,186                   |             |               |               | 5,469,462     |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Other real estate                                                                                             |                                                                                                                                  |                                                           | 673,056                     |             |               |               | 647,994       |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Accrued interest receivable                                                                                   |                                                                                                                                  |                                                           | 6,067,389                   |             |               |               | 5,195,956     |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Other assets                                                                                                  |                                                                                                                                  |                                                           | 14,126,093                  |             |               |               | 12,410,719    |            
|                                                                                                              |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|                                                                                                              |                                                                                                                                  | $                                                         | 1,363,729,263               |             |               | $             | 1,270,748,614 |            
|                                                                                                              |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|LIABILITIES
AND SHAREHOLDERS EQUITY                                                                          |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                              |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Deposits                                                                                                      |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                              | Noninterest-bearing deposits                                                                                                     |                                                           | $                           | 323,610,618 |               |               | $             | 341,039,328 |          
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                              | Interest-bearing deposits                                                                                                        |                                                           |                             | 677,202,411 |               |               |               | 525,242,856 |          
|                                                                                                              |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|                                                                                                              |                                                                                                                                  |                                                           | Total deposits              |             |               | 1,000,813,029 |               |             |           | 866,282,184   | 
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Federal funds purchased and securities
sold under agreements to repurchase                                    |                                                                                                                                  |                                                           | 61,426,791                  |             |               |               | 162,763,009   |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Commercial paper                                                                                              |                                                                                                                                  |                                                           | 35,284,700                  |             |               |               | 25,655,020    |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Other short-term borrowings                                                                                   |                                                                                                                                  |                                                           | 9,031,295                   |             |               |               | 17,733,482    |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Acceptances outstanding                                                                                       |                                                                                                                                  |                                                           | 1,333,420                   |             |               |               | 987,048       |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Accrued expenses and other liabilities                                                                        |                                                                                                                                  |                                                           | 84,017,007                  |             |               |               | 69,611,777    |            
|                                                                                                              |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|                                                                                                              |                                                                                                                                  |                                                           | 1,191,906,242               |             |               |               | 1,143,032,520 |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Long-term debt  FHLB                                                                                         |                                                                                                                                  |                                                           | 40,350,000                  |             |               |               | 10,700,000    |            
|                                                                                                              |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|                                                                                                              |                                                                                                                                  |                                                           | Total liabilities           |             |               | 1,232,256,242 |               |             |           | 1,153,732,520 | 
|                                                                                                              |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|Commitments
and contingent liabilities                                                                        |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                              | Shareholders
equityPreferred stock, $5 par value. Authorized 644,389 shares
Series B, issued -0- and 1,199 shares, respectively |                                                           |                             |            |               |               |               | 23,980      |          
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                              |                                                                                                                                  | Series D, issued 235,179 and 237,878 shares, respectively |                             |             | 2,351,790     |               |               |             | 2,378,780 |              
|                                                                                                              |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|                                                                                                              |                                                                                                                                  |                                                           | 2,351,790                   |             |               |               | 2,402,760     |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Common stock, $1 par value. Authorized 20,000,000 shares;
issued 9,876,874 and 9,563,329 shares, respectively |                                                                                                                                  |                                                           | 9,876,874                   |             |               |               | 9,563,329     |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Capital surplus                                                                                               |                                                                                                                                  |                                                           | 70,979,605                  |             |               |               | 67,450,110    |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Retained earnings                                                                                             |                                                                                                                                  |                                                           | 57,225,620                  |             |               |               | 47,466,602    |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Accumulated other comprehensive income(loss), net of tax                                                      |                                                                                                                                  |                                                           | 2,998,849                   |             |               |               | (22,652       | )          
|                                                                                                              |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|                                                                                                              |                                                                                                                                  |                                                           | 143,432,738                 |             |               |               | 126,860,149   |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|Less                                                                                                          |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                              | Common shares in treasury at cost, 563,356 and
473,125 shares, respectively                                                      |                                                           |                             | 10,401,603  |               |               |               | 7,986,763   |          
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                             
|                                                                                                              | Unearned compensation                                                                                                            |                                                           |                             | 1,558,114   |               |               |               | 1,857,292   |          
|                                                                                                              |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|                                                                                                              |                                                                                                                                  |                                                           | Total shareholders equity  |             |               | 131,473,021   |               |             |           | 117,016,094   | 
|                                                                                                              |                                                                                                                                  |                                                           |                             |             |               |               |               |            
|                                                                                                              |                                                                                                                                  | $                                                         | 1,363,729,263               |             |               | $             | 1,270,748,614 |            
|                                                                                                              |                                                                                                                                  |                                                           |                             |             |               |               |               |            

See Notes to Consolidated Financial Statements

3



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##### Table of Contents






STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Income

|                                                      |                                                                            |                  |                            |            |                    |            |                   |            |           |            |            |            |            |            |            |            |            |            | 
|----------------------------------------------------- | -------------------------------------------------------------------------- | ---------------- | -------------------------- | ---------- | ------------------ | ---------- | ----------------- | ---------- | --------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | 
|                                                      |                                                                            |                  |                            |            | Three Months Ended |            | Nine Months Ended
|                                                      |                                                                            |                  |                            |            | September 30,      |            | September 30,    
|                                                      |                                                                            |                  |                            |            |                    |            |                  
|                                                      |                                                                            |                  |                            |            | 2001               |            | 2000              |            | 2001      |            | 2000      
|                                                      |                                                                            |                  |                            |            |                    |            |                   |            |           |            |           
|INTEREST INCOME                                       |                                                                            |                  |                            |            |                    |            |                   |            |           |            |            |            |            |            |            |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Loans                                                                      |                  | $                          | 16,327,504 |                    |            | $                 | 17,362,186 |           |            | $          | 50,342,902 |            |            | $          | 48,869,738 |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Investment securities
Available for sale                                   |                  |                            | 3,232,726  |                    |            |                   | 2,409,409  |           |            |            | 8,843,426  |            |            |            | 7,246,480  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                            | Held to maturity |                            |            | 4,033,164          |            |                   |            | 5,124,572 |            |            |            | 13,107,623 |            |            |            | 15,487,800 |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Federal funds sold                                                         |                  |                            | 54,933     |                    |            |                   | 10,283     |           |            |            | 79,494     |            |            |            | 189,311    |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Deposits with other banks                                                  |                  |                            | 28,296     |                    |            |                   | 25,966     |           |            |            | 86,224     |            |            |            | 84,829     |           
|                                                      |                                                                            |                  |                            |            |                    |            |                   |            |           |            |            |            |            |            |            |           
|                                                      |                                                                            |                  | Total interest income      |            |                    | 23,676,623 |                   |            |           | 24,932,416 |            |            |            | 72,459,669 |            |            |            | 71,878,158 | 
|                                                      |                                                                            |                  |                            |            |                    |            |                   |            |           |            |            |            |            |            |            |           
|INTEREST
EXPENSE                                      |                                                                            |                  |                            |            |                    |            |                   |            |           |            |            |            |            |            |            |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Deposits                                                                   |                  |                            | 4,831,922  |                    |            |                   | 5,668,635  |           |            |            | 15,071,425 |            |            |            | 17,116,264 |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Federal funds purchased and
securities sold under agreements
to repurchase |                  |                            | 547,627    |                    |            |                   | 2,588,850  |           |            |            | 3,680,591  |            |            |            | 6,206,974  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Commercial paper                                                           |                  |                            | 357,027    |                    |            |                   | 371,943    |           |            |            | 1,225,377  |            |            |            | 1,108,575  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Other short-term borrowings                                                |                  |                            | 38,698     |                    |            |                   | 169,339    |           |            |            | 124,114    |            |            |            | 438,134    |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Long-term debt                                                             |                  |                            | 466,803    |                    |            |                   | 107,224    |           |            |            | 1,228,443  |            |            |            | 409,658    |           
|                                                      |                                                                            |                  |                            |            |                    |            |                   |            |           |            |            |            |            |            |            |           
|                                                      |                                                                            |                  | Total interest expense     |            |                    | 6,242,077  |                   |            |           | 8,905,991  |            |            |            | 21,329,950 |            |            |            | 25,279,605 | 
|                                                      |                                                                            |                  |                            |            |                    |            |                   |            |           |            |            |            |            |            |            |           
|Net interest income                                   |                                                                            |                  | 17,434,546                 |            |                    |            | 16,026,425        |            |           |            | 51,129,719 |            |            |            | 46,598,553 |           
|                                                     
|                                                     
|                                                     
|                                                     
|Provision for credit losses                           |                                                                            |                  | 2,017,800                  |            |                    |            | 1,478,600         |            |           |            | 5,231,400  |            |            |            | 4,518,200  |           
|                                                      |                                                                            |                  |                            |            |                    |            |                   |            |           |            |            |            |            |            |            |           
|Net interest income after provision
for credit losses |                                                                            |                  | 15,416,746                 |            |                    |            | 14,547,825        |            |           |            | 45,898,319 |            |            |            | 42,080,353 |           
|                                                      |                                                                            |                  |                            |            |                    |            |                   |            |           |            |            |            |            |            |            |           
|NONINTEREST
INCOME                                    |                                                                            |                  |                            |            |                    |            |                   |            |           |            |            |            |            |            |            |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Factoring income                                                           |                  |                            | 1,371,780  |                    |            |                   | 1,391,732  |           |            |            | 4,086,996  |            |            |            | 3,782,349  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Mortgage banking income                                                    |                  |                            | 2,216,606  |                    |            |                   | 1,529,230  |           |            |            | 5,639,722  |            |            |            | 4,419,367  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Service charges on deposit accounts                                        |                  |                            | 1,478,183  |                    |            |                   | 1,407,675  |           |            |            | 4,242,980  |            |            |            | 3,403,894  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Trade finance income                                                       |                  |                            | 646,189    |                    |            |                   | 631,627    |           |            |            | 1,943,501  |            |            |            | 2,083,158  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Trust fees                                                                 |                  |                            | 171,178    |                    |            |                   | 171,282    |           |            |            | 556,797    |            |            |            | 523,140    |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Other service charges and fees                                             |                  |                            | 475,376    |                    |            |                   | 423,500    |           |            |            | 1,208,797  |            |            |            | 1,388,773  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Other income                                                               |                  |                            | 158,297    |                    |            |                   | 73,773     |           |            |            | 307,653    |            |            |            | 142,722    |           
|                                                      |                                                                            |                  |                            |            |                    |            |                   |            |           |            |            |            |            |            |            |           
|                                                      |                                                                            |                  | Total noninterest income   |            |                    | 6,517,609  |                   |            |           | 5,628,819  |            |            |            | 17,986,446 |            |            |            | 15,743,403 | 
|                                                      |                                                                            |                  |                            |            |                    |            |                   |            |           |            |            |            |            |            |            |           
|NONINTEREST
EXPENSES                                  |                                                                            |                  |                            |            |                    |            |                   |            |           |            |            |            |            |            |            |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Salaries and employee benefits                                             |                  |                            | 7,072,561  |                    |            |                   | 7,086,680  |           |            |            | 20,944,900 |            |            |            | 20,797,782 |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Occupancy expenses, net                                                    |                  |                            | 1,346,724  |                    |            |                   | 1,197,744  |           |            |            | 3,545,329  |            |            |            | 3,146,422  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Equipment expenses                                                         |                  |                            | 698,595    |                    |            |                   | 604,153    |           |            |            | 1,851,252  |            |            |            | 1,780,225  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Advertising and marketing                                                  |                  |                            | 670,824    |                    |            |                   | 528,833    |           |            |            | 2,425,167  |            |            |            | 1,861,036  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Professional fees                                                          |                  |                            | 1,351,293  |                    |            |                   | 1,037,658  |           |            |            | 3,956,745  |            |            |            | 3,342,511  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Data processing services                                                   |                  |                            | 328,329    |                    |            |                   | 254,229    |           |            |            | 1,001,480  |            |            |            | 883,912    |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Other expenses                                                             |                  |                            | 2,053,432  |                    |            |                   | 1,937,099  |           |            |            | 6,332,760  |            |            |            | 5,148,785  |           
|                                                      |                                                                            |                  |                            |            |                    |            |                   |            |           |            |            |            |            |            |            |           
|                                                      |                                                                            |                  | Total noninterest expenses |            |                    | 13,521,758 |                   |            |           | 12,646,396 |            |            |            | 40,057,633 |            |            |            | 36,960,673 | 
|                                                      |                                                                            |                  |                            |            |                    |            |                   |            |           |            |            |            |            |            |            |           
|Income before income taxes                            |                                                                            |                  | 8,412,597                  |            |                    |            | 7,530,248         |            |           |            | 23,827,132 |            |            |            | 20,863,083 |           
|                                                     
|                                                     
|                                                     
|                                                     
|Provision for income taxes                            |                                                                            |                  | 3,419,876                  |            |                    |            | 3,344,153         |            |           |            | 9,592,899  |            |            |            | 8,799,771  |           
|                                                      |                                                                            |                  |                            |            |                    |            |                   |            |           |            |            |            |            |            |            |           
|Net income                                            |                                                                            | $                | 4,992,721                  |            |                    | $          | 4,186,095         |            |           | $          | 14,234,233 |            |            | $          | 12,063,312 |           
|                                                      |                                                                            |                  |                            |            |                    |            |                   |            |           |            |            |            |            |            |            |           
|Average
number of common
shares outstanding           |                                                                            |                  |                            |            |                    |            |                   |            |           |            |            |            |            |            |            |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Basic                                                                      |                  |                            | 9,314,674  |                    |            |                   | 9,091,680  |           |            |            | 9,193,978  |            |            |            | 9,133,057  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Diluted                                                                    |                  |                            | 9,957,938  |                    |            |                   | 9,401,626  |           |            |            | 9,732,346  |            |            |            | 9,373,581  |           
|                                                     
|                                                     
|                                                     
|                                                     
|Per average common share                              |                                                                            |                  |                            |            |                    |            |                   |            |           |            |            |            |            |            |            |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Basic                                                                      |                  | $                          | 0.53       |                    |            | $                 | 0.46       |           |            | $          | 1.54       |            |            | $          | 1.32       |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Diluted                                                                    |                  |                            | 0.50       |                    |            |                   | 0.45       |           |            |            | 1.46       |            |            |            | 1.28       |           
|                                                     
|                                                     
|                                                     
|                                                     
|Dividends per common share                            |                                                                            |                  | 0.16                       |            |                    |            | 0.14              |            |           |            | 0.48       |            |            |            | 0.42       |           

See Notes to Consolidated Financial Statements.

4



---



##### Table of Contents






STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income

|                                        |                                                    |   |                    |           |                   |   |           |         |      |   |            |           |  |   |            |           | 
|--------------------------------------- | -------------------------------------------------- | - | ------------------ | --------- | ----------------- | - | --------- | ------- | ---- | - | ---------- | --------- |  | - | ---------- | --------- | 
|                                        |                                                    |   | Three Months Ended |           | Nine Months Ended
|                                        |                                                    |   | September 30,      |           | September 30,    
|                                        |                                                    |   | 2001               |           | 2000              |   | 2001      |         | 2000
|                                        |                                                    |   |                    |           |                   |   |           |         |      |   |            |           |  |   |            |          
|Net Income                              |                                                    | $ | 4,992,721          |           |                   | $ | 4,186,095 |         |      | $ | 14,234,233 |           |  | $ | 12,063,312 |          
|                                       
|                                       
|                                       
|                                       
|Other
comprehensive income,
net of tax: |                                                    |   |                    |           |                   |   |           |         |      |   |            |           |  |   |            |          
|                                       
|                                       
|                                       
|                                       
|                                        | Unrealized holding gains
arising during the period |   |                    | 2,280,244 |                   |   |           | 915,857 |      |   |            | 3,021,501 |  |   |            | 1,205,081 | 
|                                        |                                                    |   |                    |           |                   |   |           |         |      |   |            |           |  |   |            |          
|                                        |                                                    |   |                    |           |                   |   |           |         |      |   |            |           |  |   |            |          
|                                       
|                                       
|                                       
|                                       
|Comprehensive income                    |                                                    | $ | 7,272,965          |           |                   | $ | 5,101,952 |         |      | $ | 17,255,734 |           |  | $ | 13,268,393 |          
|                                        |                                                    |   |                    |           |                   |   |           |         |      |   |            |           |  |   |            |          

See Notes to Consolidated Financial Statements.

5



---



##### Table of Contents






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

|                                                                              |                                                              |             |            |                     |            |                   |            |             |            |           |         |  
|----------------------------------------------------------------------------- | ------------------------------------------------------------ | ----------- | ---------- | ------------------- | ---------- | ----------------- | ---------- | ----------- | ---------- | --------- | ------- | -
|                                                                              |                                                              |             |            |                     |            | Nine Months Ended
|                                                                              |                                                              |             |            |                     |            | September 30,    
|                                                                              |                                                              |             |            |                     |            | 2001              |            | 2000       
|                                                                              |                                                              |             |            |                     |            |                   |            |            
|Preferred Stock                                                               |                                                              |             |            |                     |            |                   |            |            
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Balance at January 1                                         |             | $          | 2,402,760           |            |                   | $          | 2,443,430   |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Conversions of Series B shares                               |             |            | (2,460              | )          |                   |            | --          |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Redemption of Series B shares                                |             |            | (21,520             | )          |                   |            | --          |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Conversions of Series D shares                               |             |            | (26,990             | )          |                   |            | (29,220     | )         
|                                                                              |                                                              |             |            |                     |            |                   |            |            
|                                                                              | Balance at September 30                                      |             | $          | 2,351,790           |            |                   | $          | 2,414,210   |           
|                                                                              |                                                              |             |            |                     |            |                   |            |            
|Common
Stock                                                                  |                                                              |             |            |                     |            |                   |            |            
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Balance at January 1                                         |             | $          | 9,563,329           |            |                   | $          | 8,723,051   |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Conversions of preferred shares into common shares           |             |            | 3,390               |            |                   |            | 2,922       |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Options exercised                                            |             |            | 310,155             |            |                   |            | 9,000       |           
|                                                                              |                                                              |             |            |                     |            |                   |            |            
|                                                                              | Balance at September 30                                      |             | $          | 9,876,874           |            |                   | $          | 8,734,973   |           
|                                                                              |                                                              |             |            |                     |            |                   |            |            
|Capital
Surplus                                                               |                                                              |             |            |                     |            |                   |            |            
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Balance at January 1                                         |             | $          | 67,450,110          |            |                   | $          | 51,911,883  |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Conversions of preferred shares into common shares           |             |            | 26,064              |            |                   |            | 26,298      |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Redemption of Series B shares                                |             |            | (8,612              | )          |                   |            | --          |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Issuance of shares under incentive compensation plan         |             |            |                    |            |                   |            | (214,369    | )         
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Options exercised                                            |             |            | 3,512,043           |            |                   |            | 68,421      |           
|                                                                              |                                                              |             |            |                     |            |                   |            |            
|                                                                              | Balance at September 30                                      |             | $          | 70,979,605          |            |                   | $          | 51,792,233  |           
|                                                                              |                                                              |             |            |                     |            |                   |            |            
|Retained
Earnings                                                             |                                                              |             |            |                     |            |                   |            |            
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Balance at January 1                                         |             | $          | 47,466,602          |            |                   | $          | 52,360,024  |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Net Income                                                   |             |            | 14,234,233          |            |                   |            | 12,063,312  |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Cash dividends paid  common shares                          |             |            | (4,401,484          | )          |                   |            | (3,454,897  | )         
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              |                                                              |             |            |   preferred shares |            |                   | (73,731    | )           |            |           | (62,067 | )
|                                                                              |                                                              |             |            |                     |            |                   |            |            
|                                                                              | Balance at September 30                                      |             | $          | 57,225,620          |            |                   | $          | 60,906,372  |           
|                                                                              |                                                              |             |            |                     |            |                   |            |            
|Accumulated
Other Comprehensive Income(Loss), Net of Tax
Balance at January 1 |                                                              | $           | (22,652    | )                   |            | $                 | (2,634,509 | )          
|                                                                              |                                                              |             |            |                     |            |                   |            |            
|                                                                              | Unrealized holding gains
arising during the period           |             |            |                     |            |                   |            |             |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              |                                                              | Before tax  |            |                     | 5,585,026  |                   |            |             | 2,227,509  |          
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              |                                                              | Tax expense |            |                     | (2,563,525 | )                 |            |             | (1,022,428 | )        
|                                                                              |                                                              |             |            |                     |            |                   |            |            
|                                                                              |                                                              |             | Net of tax |                     |            | 3,021,501         |            |             |            | 1,205,081 |        
|                                                                              |                                                              |             |            |                     |            |                   |            |            
|                                                                              | Balance at September 30                                      |             | $          | 2,998,849           |            |                   | $          | (1,429,428  | )         
|                                                                              |                                                              |             |            |                     |            |                   |            |            
|Treasury
Stock                                                                |                                                              |             |            |                     |            |                   |            |            
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Balance at January 1                                         |             | $          | (7,986,763          | )          |                   | $          | (6,515,522  | )         
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Issuance of shares under incentive compensation plan         |             |            |                    |            |                   |            | 1,537,179   |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Surrender of shares issued under incentive
compensation plan |             |            | (1,459,673          | )          |                   |            | --          |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Purchase of common shares                                    |             |            | (955,167            | )          |                   |            | (3,008,420  | )         
|                                                                              |                                                              |             |            |                     |            |                   |            |            
|                                                                              | Balance at September 30                                      |             | $          | (10,401,603         | )          |                   | $          | (7,986,763  | )         
|                                                                              |                                                              |             |            |                     |            |                   |            |            
|Unearned
Compensation                                                         |                                                              |             |            |                     |            |                   |            |            
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Balance at January 1                                         |             | $          | (1,857,292          | )          |                   | $          | (1,048,230  | )         
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Issuance of shares under incentive compensation plan         |             |            |                    |            |                   |            | (1,462,656  | )         
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Amortization of unearned compensation                        |             |            | 299,178             |            |                   |            | 265,938     |           
|                                                                              |                                                              |             |            |                     |            |                   |            |            
|                                                                              | Balance at September 30                                      |             | $          | (1,558,114          | )          |                   | $          | (2,244,948  | )         
|                                                                              |                                                              |             |            |                     |            |                   |            |            
|Total
Shareholders Equity                                                    |                                                              |             |            |                     |            |                   |            |            
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Balance at January 1                                         |             | $          | 117,016,094         |            |                   | $          | 105,240,127 |           
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Net changes during period                                    |             |            | 14,456,927          |            |                   |            | 6,946,522   |           
|                                                                              |                                                              |             |            |                     |            |                   |            |            
|                                                                              | Balance at September 30                                      |             | $          | 131,473,021         |            |                   | $          | 112,186,649 |           
|                                                                              |                                                              |             |            |                     |            |                   |            |            

See Notes to Consolidated Financial Statements.

6



---



##### Table of Contents






STERLING BANCORP AND SUBSIDIARIES
Consolidated Statements of Cash Flows

|                                                        |                                                                                                  |                                                         |                                                    |              |                   |             |            |             |            |             |  
|------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | ------------------------------------------------------- | -------------------------------------------------- | ------------ | ----------------- | ----------- | ---------- | ----------- | ---------- | ----------- | -
|                                                        |                                                                                                  |                                                         |                                                    |              | Nine Months Ended
|                                                        |                                                                                                  |                                                         |                                                    |              | September 30,    
|                                                        |                                                                                                  |                                                         |                                                    |              | 2001              |             | 2000      
|                                                        |                                                                                                  |                                                         |                                                    |              |                   |             |            |            
|Operating Activities                                    |                                                                                                  |                                                         |                                                    |              |                   |             |            |            
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Net Income                                                                                       |                                                         | $                                                  | 14,234,233   |                   |             | $          | 12,063,312  |           
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Adjustments to reconcile net income to net cash
provided by operating activities:                |                                                         |                                                    |              |                   |             |            |             |           
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                                                                                  | Provision for credit losses                             |                                                    |              | 5,231,400         |             |            |             | 4,518,200  |            
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                                                                                  | Depreciation and amortization of premises and equipment |                                                    |              | 1,272,689         |             |            |             | 1,243,106  |            
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                                                                                  | Deferred income tax benefit                             |                                                    |              | (716,738          | )           |            |             | (350,698   | )          
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                                                                                  | Net change in loans held for sale                       |                                                    |              | (11,945,324       | )           |            |             | (1,642,130 | )          
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                                                                                  | Amortization of unearned compensation                   |                                                    |              | 299,178           |             |            |             | 265,938    |            
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                                                                                  | Amortization of premiums of securities                  |                                                    |              | 950,159           |             |            |             | 648,463    |            
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                                                                                  | Accretion of discounts on securities                    |                                                    |              | (518,548          | )           |            |             | (820,972   | )          
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                                                                                  | Decrease in accrued interest receivable                 |                                                    |              | (871,433          | )           |            |             | (526,311   | )          
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                                                                                  | Increase in accrued expenses and
other liabilities      |                                                    |              | 14,405,230        |             |            |             | 8,647,876  |            
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                                                                                  | Increase in other assets                                |                                                    |              | (3,562,160        | )           |            |             | (6,653,670 | )          
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                                                                                  | Other, net                                              |                                                    |              | (1,459,669        | )           |            |             | (139,846   | )          
|                                                        |                                                                                                  |                                                         |                                                    |              |                   |             |            |            
|                                                        |                                                                                                  |                                                         | Net cash provided by operating activities          |              |                   | 17,319,017  |            |             |            | 17,253,268  |  
|                                                        |                                                                                                  |                                                         |                                                    |              |                   |             |            |            
|Investing
Activities                                    |                                                                                                  |                                                         |                                                    |              |                   |             |            |            
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Purchase of premises and equipment                                                               |                                                         |                                                    | (3,035,413   | )                 |             |            | (712,091    | )         
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Increase in interest-bearing deposits                                                            |                                                         |                                                    | (1,554,336   | )                 |             |            | (547,463    | )         
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Increase in Federal funds sold                                                                   |                                                         |                                                    | (5,000,000   | )                 |             |            | --          |           
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Increase in other real estate                                                                    |                                                         |                                                    | (25,062      | )                 |             |            | (507,034    | )         
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Net increase in loans                                                                            |                                                         |                                                    | (25,119,433  | )                 |             |            | (31,299,390 | )         
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Proceeds from prepayments, redemptions or maturities
of securities  held to maturity            |                                                         |                                                    | 58,972,243   |                   |             |            | 28,172,875  |           
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Purchases of securities  held to maturity                                                       |                                                         |                                                    | (20,133,093  | )                 |             |            | (25,217,335 | )         
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Purchases of securities  available for sale                                                     |                                                         |                                                    | (122,725,448 | )                 |             |            | (61,354,495 | )         
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Proceeds from prepayments, redemptions or maturities
of securities  available for sale          |                                                         |                                                    | 36,799,427   |                   |             |            | 78,903,729  |           
|                                                        |                                                                                                  |                                                         |                                                    |              |                   |             |            |            
|                                                        |                                                                                                  |                                                         | Net cash used in investing activities              |              |                   | (81,821,115 | )          |             |            | (12,561,204 | )
|                                                        |                                                                                                  |                                                         |                                                    |              |                   |             |            |            
|Financing
Activities                                    |                                                                                                  |                                                         |                                                    |              |                   |             |            |            
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | (Decrease)Increase in noninterest-bearing deposits                                               |                                                         |                                                    | (17,428,710  | )                 |             |            | 4,888,401   |           
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Increase(Decrease) in interest-bearing deposits                                                  |                                                         |                                                    | 151,959,555  |                   |             |            | (57,942,794 | )         
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | (Decrease)Increase in Federal funds purchased
and securities sold under agreements to repurchase |                                                         |                                                    | (101,336,218 | )                 |             |            | 70,544,413  |           
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Increase(Decrease) in commercial paper and
other short-term borrowings                           |                                                         |                                                    | 927,493      |                   |             |            | (4,444,790  | )         
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Purchase of treasury stock                                                                       |                                                         |                                                    | (955,167     | )                 |             |            | (3,008,420  | )         
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Redemption of preferred stock                                                                    |                                                         |                                                    | (30,132      | )                 |             |            | --          |           
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Increase(Decrease) in other long-term debt                                                       |                                                         |                                                    | 29,650,000   |                   |             |            | (10,350,000 | )         
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Proceeds from exercise of stock options                                                          |                                                         |                                                    | 3,822,198    |                   |             |            | 77,421      |           
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Cash dividends paid on common and preferred stock                                                |                                                         |                                                    | (4,475,215   | )                 |             |            | (3,516,964  | )         
|                                                        |                                                                                                  |                                                         |                                                    |              |                   |             |            |            
|                                                        |                                                                                                  |                                                         | Net cash provided by(used in) financing activities |              |                   | 62,133,804  |            |             |            | (3,752,733  | )
|                                                        |                                                                                                  |                                                         |                                                    |              |                   |             |            |            
|Net (decrease) increase in cash and due from banks      |                                                                                                  |                                                         | (2,368,294                                         | )            |                   |             | 939,331    |            
|                                                       
|                                                       
|                                                       
|                                                       
|Cash and due from banks  beginning of period           |                                                                                                  |                                                         | 50,212,689                                         |              |                   |             | 35,505,342 |            
|                                                        |                                                                                                  |                                                         |                                                    |              |                   |             |            |            
|Cash and due from banks  end of period                 |                                                                                                  | $                                                       | 47,844,395                                         |              |                   | $           | 36,444,673 |            
|                                                        |                                                                                                  |                                                         |                                                    |              |                   |             |            |            
|Supplemental schedule of non-cash financing activities: |                                                                                                  |                                                         |                                                    |              |                   |             |            |            
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Issuance of treasury stock                                                                       |                                                         | $                                                  |             |                   |             | $          | 1,537,179   |           
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Preferred stock conversions                                                                      |                                                         |                                                    | 29,450       |                   |             |            | 29,220      |           
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Surrender of treasury shares issued under incentive
compensation plan                            |                                                         |                                                    | (1,459,673   | )                 |             |            | --          |           
|                                                       
|                                                       
|                                                       
|                                                       
|Supplemental disclosure of cash flow information:       |                                                                                                  |                                                         |                                                    |              |                   |             |            |            
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Interest paid                                                                                    |                                                         |                                                    | 21,400,448   |                   |             |            | 26,737,461  |           
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Income taxes paid                                                                                |                                                         |                                                    | 8,839,390    |                   |             |            | 8,103,063   |           

See Notes to Consolidated Financial Statements.

7



---



##### Table of Contents






STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements



|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, 2001 and 2000 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 2000 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, 2000. The Board announced a 10% stock dividend on November 16, 2000, payable on December 11, 2000 to
shareholders of record on December 1, 2000. Fractional shares were
cashed-out and payments were made to shareholders in lieu of
fractional shares. The basic and diluted average number of shares
outstanding and earnings per share information for all prior
reporting periods have been restated to reflect the effect of the
stock dividend.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | For purposes of reporting cash flows, cash and cash equivalents
include cash and due from banks.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|3. |  | The Companys outstanding Preferred Shares are comprised of
238,961 Series D shares (300,000 Series D shares authorized). As
of September 30, 2001, all outstanding Series B shares had been
redeemed by the Company. Each Series D share (all of such shares
are owned by the Companys Employee Stock Ownership Trust) is
entitled to dividends at the rate of $0.6125 per year, is
convertible into 1.1561 Common Shares, and is entitled to a
liquidation preference of $10 (together with accrued dividends).
All preferred shares are entitled to one vote per share (voting
with the Common Shares except as otherwise required by law).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|4. |  | The Financial Accounting Standards Board 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 issued to stockholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

8



---



##### Table of Contents



STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The Company provides a full range of financial products and
services, including commercial loans, asset-based financing,
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 2001 year-to-date average interest-earning assets were
60.6% loans (corporate lending was 74.2% and real estate lending was
20.4% of total loans, respectively) and 39.4% investment securities
and money market investments. There are no industry concentrations
exceeding 10% of loans, gross, in the corporate loan portfolio.
Approximately 72% of loans are to borrowers located in the
metropolitan New York area. The Company has determined that it has
three reportable operating segments: corporate lending, real estate
lending and company-wide treasury.

The following tables provide certain information regarding the
Companys operating segments for the three and nine month periods
ended September 30, 2001 and 2000:

|                                      |  |   |             |  |             |   |              |  |        |   |             |  |  |   |               |  | 
|------------------------------------- |  | - | ----------- |  | ----------- | - | ------------ |  | ------ | - | ----------- |  |  | - | ------------- |  | 
|                                      |  |   | Corporate   |  | Real Estate |   | Company-wide |  |        |   |            
|                                      |  |   | Lending     |  | Lending     |   | Treasury     |  | Totals
|                                      |  |   |             |  |             |   |              |  |       
|                                      |  |   |             |  |             |   |              |  |        |   |             |  |  |   |               | 
|                                     
|                                     
|                                     
|                                     
|Three Months Ended September 30, 2001 |  |   |             |  |             |   |              |  |        |   |             |  |  |   |               | 
|                                      |  |   |             |  |             |   |              |  |        |   |             |  |  |   |               | 
|Net interest income                   |  | $ | 7,386,074   |  |             | $ | 3,606,566    |  |        | $ | 5,978,522   |  |  | $ | 16,971,162    | 
|                                     
|                                     
|                                     
|                                     
|Noninterest income                    |  |   | 3,283,578   |  |             |   | 2,240,090    |  |        |   | 20,820      |  |  |   | 5,544,488     | 
|                                     
|                                     
|                                     
|                                     
|Depreciation and amortization         |  |   | 54,234      |  |             |   | 64,783       |  |        |   | 86          |  |  |   | 119,103       | 
|                                     
|                                     
|                                     
|                                     
|Segment profit                        |  |   | 4,206,830   |  |             |   | 3,166,087    |  |        |   | 6,653,391   |  |  |   | 14,026,308    | 
|                                     
|                                     
|                                     
|                                     
|Segment assets                        |  |   | 598,165,252 |  |             |   | 148,412,334  |  |        |   | 572,071,246 |  |  |   | 1,318,648,832 | 
|                                     
|                                     
|                                     
|                                     
|                                      |  |   |             |  |             |   |              |  |        |   |             |  |  |   |               |  | 
|                                     
|                                     
|                                     
|                                     
|Three Months Ended September 30, 2000 |  |   |             |  |             |   |              |  |        |   |             |  |  |   |               | 
|                                      |  |   |             |  |             |   |              |  |        |   |             |  |  |   |               | 
|Net interest income                   |  | $ | 8,086,055   |  |             | $ | 3,097,145    |  |        | $ | 4,273,097   |  |  | $ | 15,456,297    | 
|                                     
|                                     
|                                     
|                                     
|Noninterest income                    |  |   | 3,339,648   |  |             |   | 1,609,839    |  |        |   | 27,106      |  |  |   | 4,976,593     | 
|                                     
|                                     
|                                     
|                                     
|Depreciation and amortization         |  |   | 51,177      |  |             |   | 58,753       |  |        |   | 171         |  |  |   | 110,101       | 
|                                     
|                                     
|                                     
|                                     
|Segment profit                        |  |   | 5,221,904   |  |             |   | 2,389,240    |  |        |   | 5,571,695   |  |  |   | 13,182,839    | 
|                                     
|                                     
|                                     
|                                     
|Segment assets                        |  |   | 568,058,326 |  |             |   | 118,370,413  |  |        |   | 503,468,683 |  |  |   | 1,189,897,422 | 
|                                     
|                                     
|                                     
|                                     
|                                      |  |   |             |  |             |   |              |  |        |   |             |  |  |   |               | 
|                                     
|                                     
|                                     
|                                     
|Nine Months Ended September 30, 2001  |  |   |             |  |             |   |              |  |        |   |             |  |  |   |               | 
|                                      |  |   |             |  |             |   |              |  |        |   |             |  |  |   |               | 
|Net interest income                   |  | $ | 23,098,725  |  |             | $ | 10,553,734   |  |        | $ | 15,976,248  |  |  | $ | 49,628,707    | 
|                                     
|                                     
|                                     
|                                     
|Noninterest income                    |  |   | 9,665,583   |  |             |   | 5,807,984    |  |        |   | 93,108      |  |  |   | 15,566,675    | 
|                                     
|                                     
|                                     
|                                     
|Depreciation and amortization         |  |   | 140,721     |  |             |   | 163,366      |  |        |   | 256         |  |  |   | 304,343       | 
|                                     
|                                     
|                                     
|                                     
|Segment profit                        |  |   | 13,720,942  |  |             |   | 8,720,781    |  |        |   | 18,446,963  |  |  |   | 40,888,686    | 
|                                     
|                                     
|                                     
|                                     
|Segment assets                        |  |   | 598,165,252 |  |             |   | 148,412,334  |  |        |   | 572,071,246 |  |  |   | 1,318,648,832 | 
|                                     
|                                     
|                                     
|                                     
|                                      |  |   |             |  |             |   |              |  |        |   |             |  |  |   |               | 
|                                     
|                                     
|                                     
|                                     
|Nine Months Ended September 30, 2000  |  |   |             |  |             |   |              |  |        |   |             |  |  |   |               | 
|                                      |  |   |             |  |             |   |              |  |        |   |             |  |  |   |               | 
|Net interest income                   |  | $ | 22,962,417  |  |             | $ | 8,021,052    |  |        | $ | 13,464,205  |  |  | $ | 44,447,674    | 
|                                     
|                                     
|                                     
|                                     
|Noninterest income                    |  |   | 8,965,153   |  |             |   | 4,712,202    |  |        |   | 103,931     |  |  |   | 13,781,286    | 
|                                     
|                                     
|                                     
|                                     
|Depreciation and amortization         |  |   | 140,585     |  |             |   | 156,572      |  |        |   | 511         |  |  |   | 297,668       | 
|                                     
|                                     
|                                     
|                                     
|Segment profit                        |  |   | 13,403,039  |  |             |   | 6,705,486    |  |        |   | 17,231,994  |  |  |   | 37,340,519    | 
|                                     
|                                     
|                                     
|                                     
|Segment assets                        |  |   | 568,058,326 |  |             |   | 118,370,413  |  |        |   | 503,468,683 |  |  |   | 1,189,897,422 | 

9



---



##### Table of Contents



STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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,
|                                        |                                         |   |                                  |               |                                
|                                        |                                         |   | 2001                             |               | 2000                            |   | 2001          |               | 2000
|                                        |                                         |   |                                  |               |                                 |   |               |               |     
|Net
interest income:                    |                                         |   |                                  |               |                                 |   |               |               |      |   |               |               |   |   |               |              
|                                       
|                                       
|                                       
|                                       
|                                        | Total for reportable operating segments |   | $                                | 16,971,162    |                                 |   | $             | 15,456,297    |      |   | $             | 49,628,707    |   |   | $             | 44,447,674    |  
|                                       
|                                       
|                                       
|                                       
|                                        | Other [1]                               |   |                                  | 463,384       |                                 |   |               | 570,128       |      |   |               | 1,501,012     |   |   |               | 2,150,879     |  
|                                        |                                         |   |                                  |               |                                 |   |               |               |      |   |               |               |   |   |               |              
|Consolidated net interest income        |                                         | $ | 17,434,546                       |               |                                 | $ | 16,026,425    |               |      | $ | 51,129,719    |               |   | $ | 46,598,553    |              
|                                        |                                         |   |                                  |               |                                 |   |               |               |      |   |               |               |   |   |               |              
|Noninterest
income:                     |                                         |   |                                  |               |                                 |   |               |               |      |   |               |               |   |   |               |              
|                                       
|                                       
|                                       
|                                       
|                                        | Total for reportable operating segments |   | $                                | 5,544,488     |                                 |   | $             | 4,976,593     |      |   | $             | 15,566,675    |   |   | $             | 13,781,286    |  
|                                       
|                                       
|                                       
|                                       
|                                        | Other [1]                               |   |                                  | 973,121       |                                 |   |               | 652,226       |      |   |               | 2,419,771     |   |   |               | 1,962,117     |  
|                                        |                                         |   |                                  |               |                                 |   |               |               |      |   |               |               |   |   |               |              
|Consolidated noninterest income         |                                         | $ | 6,517,609                        |               |                                 | $ | 5,628,819     |               |      | $ | 17,986,446    |               |   | $ | 15,743,403    |              
|                                        |                                         |   |                                  |               |                                 |   |               |               |      |   |               |               |   |   |               |              
|Profit:                                 |                                         |   |                                  |               |                                 |   |               |               |      |   |               |               |   |   |               |              
|                                       
|                                       
|                                       
|                                       
|                                        | Total for reportable operating segments |   | $                                | 14,026,308    |                                 |   | $             | 13,182,839    |      |   | $             | 40,888,686    |   |   | $             | 37,340,519    |  
|                                       
|                                       
|                                       
|                                       
|                                        | Other [1]                               |   |                                  | (5,613,711    | )                               |   |               | (5,652,591    | )    |   |               | (17,061,554   | ) |   |               | (16,477,436   | )
|                                        |                                         |   |                                  |               |                                 |   |               |               |      |   |               |               |   |   |               |              
|Consolidated income before income taxes |                                         | $ | 8,412,597                        |               |                                 | $ | 7,530,248     |               |      | $ | 23,827,132    |               |   | $ | 20,863,083    |              
|                                        |                                         |   |                                  |               |                                 |   |               |               |      |   |               |               |   |   |               |              
|Assets:                                 |                                         |   |                                  |               |                                 |   |               |               |      |   |               |               |   |   |               |              
|                                       
|                                       
|                                       
|                                       
|                                        | Total for reportable operating segments |   | $                                | 1,318,648,832 |                                 |   | $             | 1,189,897,422 |      |   | $             | 1,318,648,832 |   |   | $             | 1,189,897,422 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Other [1]                               |   |                                  | 45,080,431    |                                 |   |               | 44,349,704    |      |   |               | 45,080,431    |   |   |               | 44,349,704    |  
|                                        |                                         |   |                                  |               |                                 |   |               |               |      |   |               |               |   |   |               |              
|Consolidated
assets                     |                                         | $ | 1,363,729,263                    |               |                                 | $ | 1,234,247,126 |               |      | $ | 1,363,729,263 |               |   | $ | 1,234,247,126 |              
|                                        |                                         |   |                                  |               |                                 |   |               |               |      |   |               |               |   |   |               |              



---

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



|5. |  | On September 29, 2000, the Financial Accounting Standards Board issued
SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities. SFAS No. 140 replaces SFAS No. 125
and addresses implementation issues that were identified in applying SFAS
No. 125. SFAS No. 140 is effective for transfers of financial assets
(including securitizations) occurring after June 30, 2001. However, the
provisions of SFAS No. 140 related to the recognition and reclassification
of collateral in financial statements and disclosures related to
securitization transactions and collateral are effective for fiscal years
ending after December 15, 2000.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In accordance with SFAS No. 140, the Company reports securities pledged
as collateral separately in the consolidated balance sheets if the secured
party has the right by contract or custom to sell or repledge the collateral.
Securities are pledged by the Company to secure trust and public deposits,
securities sold under agreements to repurchase, advances from the Federal Home
Loan Bank of New York and for other purposes required or permitted by law.                                                                                                                                                                                                                                

10



---



##### Table of Contents



STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements



|6. |  | SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended, is effective January 1, 2001 for the Company, and
requires the recognition of all derivatives as either assets or
liabilities measured at fair value. The accounting for derivative
instruments depends on the intended use of the derivative and its
classification as a fair value hedge, cash flow hedge, or a hedge of
foreign currency exposure.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Special hedge accounting treatment is permitted only if specific criteria
are met. One requirement is that the hedging relationship be highly effective
both at inception and on an ongoing basis. Hedge accounting is determined
based on the type of hedge-fair value, cash flow or foreign currency hedge of
a net investment in a foreign operation. Effective hedge results are
recognized in current earnings for fair value hedges, in other comprehensive
income for cash flow hedges and as part of the cumulative translation
adjustment in other comprehensive income for foreign currency net investment
hedges. Ineffective portions of hedges are recognized immediately in current
earnings.                                                                                                                                                                                                
|  
|   |  | The Company adopted the provisions of SFAS No. 133 effective January 1,
2001. At adoption, the Company recorded an insignificant loss and believes
that SFAS No. 133 will not have a material impact on the Companys 2001
consolidated financial statements since the only derivatives that the Company
has are interest rate floor contracts with a notional amount of $125 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|7. |  | In July 2001, the Financial Accounting Standards Board issued SFAS No.
141, Business Combinations, and SFAS No. 142, Goodwill and Other
Intangible Assets. These Statements will change the accounting for
business combinations and goodwill in two ways. First, SFAS No. 141
requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001. Second, SFAS No. 142 changes
the accounting for goodwill, including goodwill recorded in past business
combinations. The previous accounting principles governing goodwill
generated from a business combination will cease upon adoption of SFAS No.
142. The effect of adopting these standards is not expected to have a
material impact on the Companys statements of financial condition and
results of operations. These standards will become effective for the
Company on January 1, 2002.
|  
|8. |  | In August 2001, the Financial Accounting Standards Board
issued SFAS No 144, Accounting for the Impairment or Disposal of Long-Lived Assets.
This statement requires one accounting model be used for long-lived assets to be disposed of by sale,
whether previously held and used or newly acquired. This statement is effective for financial
statements issued for fiscal years beginning after December 15, 2001. The effect of adopting
this statement is not expected to have a material impact on the Companys statements of
financial condition and results of operations.                                                                                                                                                                                                                                                                                                                     

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STERLING BANCORP AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following commentary presents managements discussion and analysis of the
consolidated results of operations and financial condition of Sterling Bancorp
(the parent company), a bank holding company and a financial holding company
as defined by the Bank Holding Company Act of 1956, as amended, and its
wholly-owned subsidiaries Sterling Banking Corporation and Sterling National
Bank. Sterling National Bank, which is the principal subsidiary, owns all of
the outstanding shares of Sterling Factors Corporation (Factors), Sterling
National Mortgage Company, Inc.(SNMC), Sterling National Servicing, Inc.
(SNS-Virginia), Sterling Holding Company of Virginia, Inc. and Sterling Trade
Services, Inc. Sterling Holding Company of Virginia, Inc. owns all of the
outstanding shares of Sterling Real Estate Holding Company, Inc. (SREHC).
Sterling Trade Services, Inc., which was formed on April 23, 2001, owns all
outstanding common shares of Sterling National Asia Limited, Hong Kong, which
was also formed on that date. Throughout this discussion and analysis, the term
the Company refers to Sterling Bancorp and its subsidiaries and the term the
bank refers to Sterling National Bank and its subsidiaries. This discussion
and analysis should be read in conjunction with the Companys annual report on
Form 10-K for the year ended December 31, 2000.

FORWARD-LOOKING STATEMENTS

The Company may from time to time make written or oral statements that are
considered forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements may
include, but are not limited to, financial projections, statements of plans
and objectives for future operations, estimates of future economic performance
and assumptions relating thereto.

The Company may include forward-looking statements in its filings with the
Securities and Exchange Commission, including this 10-Q, in reports to
stockholders, in other written materials, and in statements made by officers
and representatives of the Company to analysts, rating agencies, institutional
investors, representatives of the media and others.

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 of our control. Any forward-looking statements we may
make speak only as of the date on which such statements are made. It is
possible that our actual results and financial position may differ, possibly
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, possibly
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 effect 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; 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

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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 forwarding-looking statement, whether
written or oral, that may be made from time to time.




BUSINESS

The Company provides a wide range of financial products and services, including
business and consumer loans, commercial and residential mortgage lending and
brokerage, asset-based financing, accounts receivable management services,
trade financing, equipment leasing, corporate and consumer deposits services,
trust and estate administration, and investment management services. The
Company has operations in metropolitan New York area, as well as Virginia and
other mid-Atlantic states and conducts business throughout the United States.

There is intense competition in all areas in which the Company conducts
its business. In addition to competing with other banks, the Company competes
in most areas of its business with other financial institutions. At September
30, 2001, the banks year-to-date average earning assets (of which loans were
59% and investment securities were 40%) represented approximately 97% of the
Companys year-to-date average earning assets.

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.




Results for the Three Months Ended September 30, 2001 and 2000

OVERVIEW

The Company reported net income for the three months ended September 30, 2001
of $5.0 million, representing $0.50 per share, calculated on a diluted basis,
compared to $4.2 million, or $0.45 per share, calculated on a diluted basis,
for the like period in 2000. This increase reflects higher net interest income
and continued growth in noninterest income.

Net interest income, on a tax equivalent basis, increased to $17.7 million
for the third quarter of 2001 compared with $16.3 million for the same period
in 2000, due to higher average earning assets outstanding coupled with lower
average cost of funding. The net interest margin, on a tax equivalent basis,
was 6.16% for the third quarter of 2001 compared to 6.05% for the like 2000
period. The net interest margin benefitted from a decrease of 149 basis points
in the average cost of funds partially offset by a decrease of 106 basis points
in the average yield on earning assets. Also contributing to the
improved net interest margin were increases in loans (discussed below)
and growth of noninterest-bearing deposits.  Average
noninterest-bearing deposits for the third quarter of 2001 were
$288,279,000, up $34,948,000 from the comparable prior year period.

Noninterest income rose to $6.5 million for the three months ended
September 30, 2001 compared to $5.6 million for the like 2000 period
principally due to continued growth in fees from mortgage banking and deposit
and other services.

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INCOME STATEMENT ANALYSIS

Net Interest Income

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. The increases
(decreases) in the components of interest income and interest expense,
expressed in terms of fluctuation in average volume and rate are 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 22.

Net interest income, on a tax equivalent basis, for the three months ended
September 30, 2001 increased to $17,699,000 from $16,276,000 for the comparable
period in 2000.

Total interest income, on a tax equivalent basis, aggregated $23,941,000
for the third quarter of 2001 down from $25,182,000 for the same period of
2000. The tax equivalent yield on interest earning assets was 8.38% for the
three months ended September 30, 2001 compared with 9.44% for the comparable
period in 2000. The decrease in interest income was due to a decrease in
income earned on the Companys loan portfolio principally due
to lower yields on loans primarily attributable to a lower interest
rate environment on average in the 2001 period.  The impact of lower
yields was partially offset by increases in loan balances as the
result of the continued implementation of business plans designed to increase
funds employed in this asset category.

Interest earned on the loan portfolio amounted to $16,328,000 which was
down $1,034,000 when compared to a year ago. Average loan balances amounted to
$710,986,000 which were up $70,765,000 from the prior year period. The
increase in the average loans was primarily in the commercial and industrial,
leasing and real estate loan segments. The decrease in the yield on the
domestic loan portfolio to 9.63% for the three months ended September 30, 2001
from 11.47% for the comparable 2000 period was primarily attributable to a
lower interest rate environment on average in the 2001 period.

Interest expense on deposits decreased $837,000 for the three months ended
September 30, 2001 to $4,831,000 from $5,668,000 for the comparable 2000 period
due to lower rates paid. Average rate paid on interest-bearing deposits was
3.09% which was 120 basis points lower than the prior year period. The
decrease in average cost of deposits reflects the lower interest rate
environment during the 2001 period.

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Interest expense associated with borrowed funds decreased to $1,411,000
for the third quarter of 2001 from $3,238,000 in the comparable 2000 period as
the result of lower average balances and lower funding costs. Average amounts
of borrowed funds outstanding decreased $81,735,000 to $137,766,000 for the
three months ended September 30, 2001. The average rate paid decreased to
4.07% from 5.91% in the prior year period reflecting the lower interest rate
environment during the 2001 period.

Provision for Credit Losses

Based on managements continuing evaluation of the loan portfolio (discussed
under Asset Quality below), and principally as the result of the growth in
the loan portfolios, the provision for credit losses increased to $2,018,000 up
$539,000 when compared to the same period last year.

Noninterest Income

Noninterest income increased $889,000 for the third quarter of 2001 from
$5,629,000 in the like 2000 period primarily as a result of increased fees from
mortgage banking and deposit and other services.

Noninterest Expenses

Noninterest expenses were $13,522,000 for the third quarter of 2001, an
increase of $875,000 when compared with the like 2000 period primarily due to
increased professional fees, advertising and marketing, occupancy and various
other expenses incurred to support growing levels of business activity and
continued investment in the business franchise.




Results for the Nine Months Ended September 30, 2001 and 2000

OVERVIEW

The Company reported net income for the nine months
ended September 30, 2001 of
$14.2 million, representing $1.46 per share, calculated on a diluted basis,
compared to $12.1 million, or $1.28 per share calculated on a diluted basis,
for the like period in 2000. This increase reflects continued growth in both
net interest income and noninterest income as explained below.

Net interest income, on a tax equivalent basis, increased to $51.9 million
for the first nine months of 2001 compared with $47.3 million for the same
period in 2000, due to higher average earning assets outstanding coupled with
lower average cost of funding. The net interest margin, on a tax equivalent
basis, was 6.27% for the first nine months of 2001 compared to 6.02% for the
like 2000 period. The net interest margin benefitted from a decrease of 78
basis points in the average costs of funds partially offset by a 40 basis point
decrease in the average yield on earning assets. Also contributing to
the improved net interest margin were increases in loans (discussed
below) and growth of noninterest-bearing deposits.  Average
noninterest-bearing deposits for the first nine months of 2001 were
$287,785,000, up $35,285,000 from the comparable prior year period.

Noninterest income rose to $18.0 million for the nine months ended
September 30, 2001 compared to $15.7 million for the like 2000 period
principally due to growth in fees from mortgage banking, deposit services and
factoring.

15



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INCOME STATEMENT ANALYSIS

Net Interest Income

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. The increases
(decreases) in the components of interest income and interest expense for the
first nine months, expressed in terms of fluctuation in average volume and rate
are shown on page 25. Information as to the components of interest income and
interest expense and average rates for the first nine months is provided in the
Average Balance Sheets shown on page 23.

Net interest income, on a tax equivalent basis, for the nine months ended
September 30, 2001 increased $4,590,000 to $51,901,000 from $47,311,000 for the
comparable period in 2000.

Total interest income, on a tax equivalent basis, aggregated $73,231,000
up $640,000 for the first nine months of 2001 as compared to $72,591,000 for the
same period of 2000. The tax equivalent yield on interest-earning assets was
8.89% for the first nine months of 2001 compared with 9.29% for the comparable
period in 2000. The increase in interest income was due to an increase in income
earned on the Companys loan portfolio as a result of the continuation of
managements strategy to increase funds employed in this asset category. The
decrease in yield on earning assets was due to lower yields on loans primarily
attributable to a lower interest rate environment on average in the 2001
period.

Interest earned on the loan portfolio amounted to $50,343,000 up
$1,473,000 when compared to a year ago. Average loan balances amounted to
$697,871,000 up $77,432,000 from an average of $620,439,000 in the prior year
period. The increase in the average loans, primarily in the leasing, real
estate and commercial and industrial loan segments, accounted for the increase
in interest earned on loans. The decrease in the yield on the domestic loan
portfolio to 10.41% for the nine months ended September 30, 2001 from 11.32% for
the comparable 2000 period was primarily attributable to the lower interest
rate environment in the 2001 period.

Total interest expense decreased $3,950,000 to $21,330,000 for the first
nine months of 2001 from $25,280,000 for the comparable period in 2000. The
decrease in interest expense was primarily due to lower average rates paid for
interest-bearing deposits.

Interest expense on deposits decreased $2,045,000 for the nine months
ended September 30, 2001 to $15,071,000 from $17,116,000 for the comparable 2000
period primarily due to the decrease in the cost of funds. The average rate
paid on interest-bearing deposits decreased to 3.53% in 2001 compared to 4.22%
in the comparable year ago period reflecting the lower rate environment during
the 2001 period.

Interest expense associated with borrowed funds decreased to $6,259,000
for the first nine months of 2001 from $8,164,000 in the comparable 2000 period
as the result of lower rates paid for borrowed funds rates and lower average
outstandings. The average rate paid decreased to 4.74% from 5.66% for the nine
months ended September 30, 2001 reflecting the lower rate environment during
the 2001 period. The average amount outstanding decreased $18,373,000 to
$176,232,000 for the prior year period.

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Provision for Credit Losses

Based on managements continuing evaluation of the loan portfolio (discussed
under Asset Quality below), and principally as the result of the growth in
the loan portfolios, the provision for credit losses increased to $5,231,000 up
$713,000 when compared to the same period last year.

Noninterest Income

Noninterest income increased $2,243,000 for the first nine months of 2001 from
$15,743,000 in the like 2000 period primarily as a result of increased fees
from mortgage banking, deposit services and factoring.

Noninterest Expense

Noninterest expenses were $40,058,000 for the first nine months of 2001, an
increase of $3,097,000 when compared with the like 2000 period primarily due to
increased advertising and marketing, professional fees, occupancy, salaries and
employee benefits and various other expenses incurred to support growing levels
of business activity and continued investments in the business franchise.




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, 2001, the Companys portfolio of securities totalled $486,037,000
of which U.S. Government and U.S. Government corporations and agencies
guaranteed mortgage-backed securities having an average life of approximately
3.7 years amounted to $439,831,000.

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. The following table presents information regarding
securities available for sale:

|                                                                                    |       |      |             |             |            |        |            |           |        |   |        |        |  |   |             |             | 
|----------------------------------------------------------------------------------- | ----- | ---- | ----------- | ----------- | ---------- | ------ | ---------- | --------- | ------ | - | ------ | ------ |  | - | ----------- | ----------- | 
|                                                                                    |       |      | Gross       |             | Gross      |        | Estimated  |           |        |   |       
|                                                                                    |       |      | Amortized   |             | Unrealized |        | Unrealized |           | Market
|September 30, 2001                                                                  |       | Cost |             | Gains       |            | Losses |            | Value    
|                                                                                    |       |      |             |             |            |        |            |          
|U.S. Treasury securities                                                            |       | $    | 2,474,001   |             |            | $      | 9,593      |           |        | $ |       |        |  | $ | 2,483,594   |            
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Obligations of U.S. government corporations and
agencies-mortgage-backed
securities |       |      | 192,371,247 |             |            |        | 4,110,713  |           |        |   | 59,386 |        |  |   | 196,422,574 |            
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Obligations
of state and
political institutions                                     |       |      | 34,536,245  |             |            |        | 1,459,261  |           |        |   | 386    |        |  |   | 35,995,120  |            
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Other debt securities                                                               |       |      | 2,995,760   |             |            |        | 8,927      |           |        |   |       |        |  |   | 3,004,687   |            
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Federal Reserve Bank and
other equity securities                                    |       |      | 5,691,642   |             |            |        | 14,468     |           |        |   |       |        |  |   | 5,706,110   |            
|                                                                                    |       |      |             |             |            |        |            |           |        |   |        |        |  |   |             |            
|                                                                                    | Total |      | $           | 238,068,895 |            |        | $          | 5,602,962 |        |   | $      | 59,772 |  |   | $           | 243,612,085 | 
|                                                                                    |       |      |             |             |            |        |            |           |        |   |        |        |  |   |             |            

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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
following table presents information regarding securities held to maturity:

|                                                                                      |  |          |             |            |  |            |           |        |  |           |         |  |  |   |             | 
|------------------------------------------------------------------------------------- |  | -------- | ----------- | ---------- |  | ---------- | --------- | ------ |  | --------- | ------- |  |  | - | ----------- | 
|                                                                                      |  |          |             |            |  | Gross      |           | Gross  |  | Estimated
|                                                                                      |  | Carrying |             | Unrealized |  | Unrealized |           | Market
|September 30, 2001                                                                    |  | Value    |             | Gains      |  | Losses     |           | Value 
|                                                                                      |  |          |             |            |  |            |           |       
|Obligations of U.S. government
corporations and agencies 
mortgage-backed securities |  | $        | 240,925,058 |            |  | $          | 8,192,428 |        |  | $         | 118,602 |  |  | $ | 248,998,884 | 
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Debt securities issued by
Foreign governments                                         |  |          | 1,500,000   |            |  |            |          |        |  |           |        |  |  |   | 1,500,000   | 
|                                                                                      |  |          |             |            |  |            |           |        |  |           |         |  |  |   |             | 
|Total                                                                                 |  | $        | 242,425,058 |            |  | $          | 8,192,428 |        |  | $         | 118,602 |  |  | $ | 250,498,884 | 
|                                                                                      |  |          |             |            |  |            |           |        |  |           |         |  |  |   |             | 

Loan Portfolio

A key 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
and the designation of lending limits for each borrower. The portfolio
strategies seek to avoid concentrations by industry or loan size in order to
minimize credit exposure and to originate loans in markets with which it is
familiar.

The Companys commercial and industrial loan portfolio represents
approximately 64% of gross loans. Loans in this category are typically made to
small and medium sized businesses and range between $250,000 and $10 million.
The primary source of repayment is from the borrowers operating profits and
cash flows. Based on underwriting standards, loans may be secured in whole or
in part by collateral such as liquid assets, accounts receivable, equipment,
inventory or real property. The Companys real estate loan portfolio, which represents
approximately 18% of gross loans, is secured by mortgages on real property
located principally in the State of New York and the Commonwealth of Virginia.

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The Companys leasing portfolio, which consists of finance leases for various
types of business equipment, represents approximately 14% of gross 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 loan portfolio:

|                                 |                                      |   |                  |         |       |  |          |      |       |   |         |         |      |  |       |      |  
|-------------------------------- | ------------------------------------ | - | ---------------- | ------- | ----- |  | -------- | ---- | ----- | - | ------- | ------- | ---- |  | ----- | ---- | -
|                                 |                                      |   | September 30,   
|                                 |                                      |   |                 
|                                 |                                      |   | 2001             |         | 2000 
|                                 |                                      |   |                  |         |      
|                                 |                                      |   | ($ in thousands)
|                                 |                                      |   |                  |         |       |  | % of     |      |       |   |         |         | % of
|                                 |                                      |   | Balances         |         | Gross |  | Balances |      | Gross
|                                 |                                      |   |                  |         |       |  |          |      |      
|Domestic                         |                                      |   |                  |         |       |  |          |      |       |   |         |         |      |  |       |     
|                                
|                                
|                                
|                                
|                                 | Commercial and industrial            |   | $                | 512,068 |       |  |          | 64.1 | %     |   | $       | 482,297 |      |  |       | 65.9 | %
|                                
|                                
|                                
|                                
|                                 | Equipment lease financing            |   |                  | 108,125 |       |  |          | 13.5 |       |   |         | 99,463  |      |  |       | 13.6 |  
|                                
|                                
|                                
|                                
|                                 | Real estate                          |   |                  | 144,219 |       |  |          | 18.1 |       |   |         | 120,353 |      |  |       | 16.5 |  
|                                
|                                
|                                
|                                
|                                 | Installment  individuals            |   |                  | 8,488   |       |  |          | 1.1  |       |   |         | 8,665   |      |  |       | 1.2  |  
|                                
|                                
|                                
|                                
|                                 | Loans to depository institutions     |   |                  | 25,000  |       |  |          | 3.1  |       |   |         | 20,000  |      |  |       | 2.7  |  
|                                
|                                
|                                
|                                
|Foreign                          |                                      |   |                  |         |       |  |          |      |       |   |         |         |      |  |       |     
|                                
|                                
|                                
|                                
|                                 | Government and official institutions |   |                  | 777     |       |  |          | 0.1  |       |   |         | 777     |      |  |       | 0.1  |  
|                                 |                                      |   |                  |         |       |  |          |      |       |   |         |         |      |  |       |     
|Gross loan                       |                                      |   | 798,677          |         |       |  | 100.0    | %    |       |   | 731,555 |         |      |  | 100.0 | %   
|                                 |                                      |   |                  |         |       |  |          |      |       |   |         |         |      |  |       |     
|                                 | Unearned discounts                   |   |                  | 15,162  |       |  |          |      |       |   |         | 12,903  |      |  |       |      |  
|                                 |                                      |   |                  |         |       |  |          |      |       |   |         |         |      |  |       |     
|Loans, net of unearned discounts |                                      | $ | 783,515          |         |       |  |          |      |       | $ | 718,652 |         |      |  |       |     
|                                 |                                      |   |                  |         |       |  |          |      |       |   |         |         |      |  |       |     

Asset Quality

Intrinsic to the lending process is the possibility of loss. In times of
economic slowdown, the risk 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
depends on current and expected economic conditions, the financial condition of
borrowers and the credit management process.

The allowance for credit losses is maintained through the provision for
credit losses, which is a charge to operating earnings. The adequacy of the
provision and the resulting allowance for credit losses is determined by managements continuing review 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,
review of regulatory examinations, an assessment of current and expected
economic conditions and changes in the size and character of the loan
portfolio. The allowance reflects managements evaluation of both loans
presenting identified loss potential and of the risk inherent in various
components of the 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, 2001, the allowance was $13,469,000 and the
ratio of the allowance to loans, net of unearned discounts, was 1.72%. At such date, the Companys non-accrual loans
amounted to $1,874,000; $315,000 of such loans were judged to be impaired
within the scope of SFAS No. 114 and required valuation allowances of $100,000.
Based on the foregoing, as well as managements judgment as to the current
risks inherent in the loan portfolio, the Companys allowance for credit
losses was deemed adequate to absorb all estimable losses on

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specifically known and other possible credit risks associated with the
portfolio as of September 30, 2001. 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 cause
management to have serious doubts as to the ability of the borrowers to
continue to comply with the present repayment terms, aggregated $658,000 at
September 30, 2001.

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,   
|                      |                         |   |                 
|                      |                         |   | 2001             |         | 2000 
|                      |                         |   |                  |         |      
|                      |                         |   | ($ in thousands)
|                      |                         |   |                  |         |       |  | % of     |      |       |   |         |         | % of
|                      |                         |   | Balances         |         | Total |  | Balances |      | Total
|                      |                         |   |                  |         |       |  |          |      |      
|Domestic
Demand       |                         | $ | 323,611          |         |       |  | 32.3     | %    |       | $ | 296,696 |         |      |  | 36.6  | %   
|                     
|                     
|                     
|                     
|                      | NOW                     |   |                  | 99,363  |       |  |          | 9.9  |       |   |         | 69,587  |      |  |       | 8.6  | 
|                     
|                     
|                     
|                     
|                      | Savings                 |   |                  | 31,397  |       |  |          | 3.1  |       |   |         | 23,151  |      |  |       | 2.9  | 
|                     
|                     
|                     
|                     
|                      | Money Market            |   |                  | 221,644 |       |  |          | 22.2 |       |   |         | 146,284 |      |  |       | 18.1 | 
|                     
|                     
|                     
|                     
|                      | Time deposits           |   |                  | 321,823 |       |  |          | 32.2 |       |   |         | 270,853 |      |  |       | 33.4 | 
|                      |                         |   |                  |         |       |  |          |      |       |   |         |         |      |  |       |     
|                      | Total
domestic deposits |   | 997,838          |         |       |  | 99.7     |      |       |   | 806,571 |         |      |  | 99.6  |     
|                     
|                     
|                     
|                     
|Foreign
Time
deposits |                         |   | 2,975            |         |       |  | 0.3      |      |       |   | 2,895   |         |      |  | 0.4   |     
|                      |                         |   |                  |         |       |  |          |      |       |   |         |         |      |  |       |     
|Total
deposits        |                         | $ | 1,000,813        |         |       |  | 100.0    | %    |       | $ | 809,466 |         |      |  | 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 customers
balance sheet strategies. Historically, however, average balances for deposits
have been relatively stable. Information regarding these average balances is
presented on pages 22 and 23.

20



---



##### Table of Contents






CAPITAL

The Company and the bank are subject to risk-based capital regulations. The
purpose of these regulations is to quantitatively measure capital against
risk-weighted assets, including off-balance sheet items. These regulations
define the elements of total capital into Tier 1 and Tier 2 components and
establish minimum ratios of 4% for Tier 1 capital and 8% for Total Capital for
capital adequacy purposes. Supplementing these regulations is a leverage
requirement. This requirement establishes a minimum leverage ratio (at least
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 26. In addition, the
Company and the bank are subject to the provisions of the Federal Deposit
Insurance Corporation Improvement Act of 1981 (FDICIA) which imposes a number
of mandatory supervisory measures. Among other matters, FDICIA established
five capital categories ranging from well capitalized to critically under capitalized.
Such classifications are used by regulatory agencies to determine a banks
deposit insurance premium, approval of applications authorizing institutions to
increase their asset size or otherwise expand business activities or acquire
other institutions and for other supervisory and regulatory purposes. Under the provisions of FDICIA a well capitalized
institution must maintain minimum leverage, Tier 1 and Total Capital ratios of
5%, 6% and 10%, respectively. At September 30, 2001, the Company and the bank
exceeded the requirements for well capitalized
institutions. Under the
provisions of the Gramm-Leach-Bliley Act of 1999, in order for the parent
company to maintain its status as a financial holding company, the bank must
remain well capitalized.

21



---



##### Table of Contents






STERLING BANCORP AND SUBSIDIARIES
Average Balance Sheets [1]
Three Months Ended September 30,

(dollars in thousands)

|                                                                                         |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |      |      |      |      | 
|---------------------------------------------------------------------------------------- | --------------------- | ------------ | ------------------------------- | ------------------------------------------ | ------- | ------- | --------- | -------- | ----- | ----- | ----- | ------- | ---- | -------- | --------- | ------- | ------- | ------- | --------- | ------- | ----- | ----- | ----- | ---- | ---- | ---- | ---- | 
|                                                                                         |                       |              |                                 |                                            |         | 2001    |           | 2000    
|                                                                                         |                       |              |                                 |                                            |         |         |           |         
|                                                                                         |                       |              |                                 |                                            |         | Average |           |          |       |       |       | Average |      | Average  |           |         |         |         |           | Average
|                                                                                         |                       |              |                                 |                                            |         | Balance |           | Interest |       | Rate  |       | Balance |      | Interest |           | Rate   
|                                                                                         |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |        
|ASSETS                                                                                   |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Interest-bearing deposits
with other banks                                               |                       | $            | 4,039                           |                                            |         | $       | 28        |          |       |       | 2.78  | %       |      | $        | 1,623     |         |         | $       | 26        |         |       |       | 5.54  | %   
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Investment securities:                                                                   |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Available for sale    |              |                                 | 176,281                                    |         |         |           | 2,855    |       |       |       | 6.48    |      |          |           | 121,864 |         |         |           | 2,051   |       |       |       | 6.60 |     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Held to maturity      |              |                                 | 239,305                                    |         |         |           | 4,034    |       |       |       | 6.74    |      |          |           | 298,217 |         |         |           | 5,125   |       |       |       | 6.87 |     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Tax-exempt [2]        |              |                                 | 34,660                                     |         |         |           | 641      |       |       |       | 7.34    |      |          |           | 32,962  |         |         |           | 608     |       |       |       | 7.34 |     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Federal funds sold                                                                       |                       |              | 6,130                           |                                            |         |         | 55        |          |       |       | 3.51  |         |      |          | 620       |         |         |         | 10        |         |       |       | 6.49  |     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Loans,
net of unearned discounts Domestic [3]                                            |                       |              | 710,209                         |                                            |         |         | 16,318    |          |       |       | 9.63  |         |      |          | 639,444   |         |         |         | 17,347    |         |       |       | 11.47 |     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Foreign                                                                                  |                       |              |                                 | 777                                        |         |         |           | 10       |       |       |       | 5.20    |      |          |           | 777     |         |         |           | 15      |       |       |       | 7.70 |     
|                                                                                         |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     
|TOTAL INTEREST-EARNING ASSETS                                                            |                       |              | 1,171,401                       |                                            |         |         | 23,941    |          |       |       | 8.38  | %       |      |          | 1,095,507 |         |         |         | 25,182    |         |       |       | 9.44  | %   
|                                                                                         |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     
|Cash and due from banks                                                                  |                       |              | 38,776                          |                                            |         |         |           |          |       |       |       |         |      |          | 38,755    |         |         |         |           |         |       |       |       |     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Allowance for credit losses                                                              |                       |              | (13,691                         | )                                          |         |         |           |          |       |       |       |         |      |          | (12,310   | )       |         |         |           |         |       |       |       |     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Goodwill                                                                                 |                       |              | 21,158                          |                                            |         |         |           |          |       |       |       |         |      |          | 21,158    |         |         |         |           |         |       |       |       |     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Other assets                                                                             |                       |              | 29,689                          |                                            |         |         |           |          |       |       |       |         |      |          | 23,319    |         |         |         |           |         |       |       |       |     
|                                                                                         |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     
|TOTAL ASSETS                                                                             |                       | $            | 1,247,333                       |                                            |         |         |           |          |       |       |       |         |      | $        | 1,166,429 |         |         |         |           |         |       |       |       |     
|                                                                                         |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     
|LIABILITIES
AND SHAREHOLDERS
EQUITY                                                     |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Interest-bearing deposits                                                                |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Domestic Savings      |              | $                               | 30,267                                     |         |         |           | 165      |       |       |       | 2.17    | %    |          | $         | 24,466  |         |         |           | 147     |       |       |       | 2.39 | %   
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                       | NOW          |                                 |                                            | 94,777  |         |           |          | 407   |       |       |         | 1.70 |          |           |         | 69,143  |         |           |         | 460   |       |       |      | 2.65 |     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                       | Money market |                                 |                                            | 201,781 |         |           |          | 1,080 |       |       |         | 2.12 |          |           |         | 151,735 |         |           |         | 1,195 |       |       |      | 3.13 |     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                       | Time         |                                 |                                            | 290,412 |         |           |          | 3,147 |       |       |         | 4.30 |          |           |         | 277,705 |         |           |         | 3,833 |       |       |      | 5.49 |     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Foreign Time          |              |                                 | 2,975                                      |         |         |           | 32       |       |       |       | 4.22    |      |          |           | 2,844   |         |         |           | 33      |       |       |       | 4.67 |     
|                                                                                         |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     
|                                                                                         |                       |              | Total interest-bearing deposits |                                            |         | 620,212 |           |          |       | 4,831 |       |         |      | 3.09     |           |         |         | 525,893 |           |         |       | 5,668 |       |      |      | 4.29 |     
|                                                                                         |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     
|BorrowingsFederal
funds purchased and
securities   sold under
agreements to   repurchase |                       |              | 56,529                          |                                            |         |         | 548       |          |       |       | 3.84  |         |      |          | 169,175   |         |         |         | 2,589     |         |       |       | 6.09  |     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Commercial paper      |              |                                 | 36,552                                     |         |         |           | 357      |       |       |       | 3.88    |      |          |           | 27,823  |         |         |           | 372     |       |       |       | 5.32 |     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Other short-term debt |              |                                 | 4,335                                      |         |         |           | 39       |       |       |       | 3.54    |      |          |           | 11,803  |         |         |           | 169     |       |       |       | 5.34 |     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Long-term debt        |              |                                 | 40,350                                     |         |         |           | 467      |       |       |       | 4.63    |      |          |           | 10,700  |         |         |           | 108     |       |       |       | 5.19 |     
|                                                                                         |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     
|                                                                                         |                       |              |                                 | Total borrowings                           |         |         | 137,766   |          |       |       | 1,411 |         |      |          | 4.07      |         |         |         | 219,501   |         |       |       | 3,238 |      |      |      | 5.91 | 
|                                                                                         |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     
|TOTAL
INTEREST-BEARING LIABILITIES                                                       |                       |              | 757,978                         |                                            |         |         | 6,242     |          |       |       | 3.27  | %       |      |          | 745,394   |         |         |         | 8,906     |         |       |       | 4.76  | %   
|                                                                                         |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     
|Noninterest-bearing deposits                                                             |                       |              | 288,279                         |                                            |         |         |           |          |       |       |       |         |      |          | 253,331   |         |         |         |           |         |       |       |       |     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Other liabilities                                                                        |                       |              | 73,743                          |                                            |         |         |           |          |       |       |       |         |      |          | 59,217    |         |         |         |           |         |       |       |       |     
|                                                                                         |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     
|                                                                                         |                       |              |                                 | Total liabilities                          |         |         | 1,120,000 |          |       |       |       |         |      |          |           |         |         |         | 1,057,942 |         |       |       |       |      |      |      |      | 
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Shareholders
equity                                                                     |                       |              | 127,333                         |                                            |         |         |           |          |       |       |       |         |      |          | 108,487   |         |         |         |           |         |       |       |       |     
|                                                                                         |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     
|                                                                                         |                       |              |                                 | TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY |         | $       | 1,247,333 |          |       |       |       |         |      |          |           |         |         | $       | 1,166,429 |         |       |       |       |      |      |      |      | 
|                                                                                         |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     
|Net
interest income/spread                                                               |                       |              |                                 |                                            |         |         | 17,699    |          |       |       | 5.11  | %       |      |          |           |         |         |         | 16,276    |         |       |       | 4.68  | %   
|                                                                                         |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     
|Net
yield on interest-earning
assets (margin)                                            |                       |              |                                 |                                            |         |         |           |          |       |       | 6.16  | %       |      |          |           |         |         |         |           |         |       |       | 6.05  | %   
|                                                                                         |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     
|Less:
Tax equivalent adjustment                                                          |                       |              |                                 |                                            |         |         | 264       |          |       |       |       |         |      |          |           |         |         |         | 250       |         |       |       |       |     
|                                                                                         |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     
|Net
interest income                                                                      |                       |              |                                 |                                            |         | $       | 17,435    |          |       |       |       |         |      |          |           |         |         | $       | 16,026    |         |       |       |       |     
|                                                                                         |                       |              |                                 |                                            |         |         |           |          |       |       |       |         |      |          |           |         |         |         |           |         |       |       |       |     



---

| |  | [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 2000 amounts to conform to the
current      presentation.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|
|
| |  | [2] Interest on tax-exempt securities is presented on a tax equivalent basis.                                                                                                                                                                                                          
|
|
|
|
| |  | [3] Nonaccrual loans are included in amounts outstanding and income has been included to the
extent earned.                                                                                                                                                                            

22



---



##### Table of Contents



STERLING BANCORP AND SUBSIDIARIES
Average Balance Sheets [1]
Nine Months Ended September 30,

(dollars in thousands)

|                                              |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |       |      |   |      | 
|--------------------------------------------- | -------------------------------------------------------------------------- | ------------ | ------------------------------------------ | ----------------- | ------- | --------- | --------- | -------- | ----- | ---- | ----- | ------- | ---- | -------- | --------- | ------- | ------- | --------- | --------- | ------- | ------ |  | ----- | ----- | ---- | - | ---- | 
|                                              |                                                                            |              |                                            |                   |         | 2001      |           | 2000    
|                                              |                                                                            |              |                                            |                   |         |           |           |         
|                                              |                                                                            |              |                                            |                   |         | Average   |           |          |       |      |       | Average |      | Average  |           |         |         |           |           | Average
|                                              |                                                                            |              |                                            |                   |         | Balance   |           | Interest |       | Rate |       | Balance |      | Interest |           | Rate   
|                                              |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |        
|ASSETS                                        |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|                                             
|                                             
|                                             
|                                             
|Interest-bearing deposits
with other banks    |                                                                            | $            | 3,371                                      |                   |         | $         | 86        |          |       |      | 3.42  | %       |      | $        | 2,191     |         |         | $         | 85        |         |        |  | 4.97  | %    
|                                             
|                                             
|                                             
|                                             
|Investment securities:                        |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|                                             
|                                             
|                                             
|                                             
|                                              | Available for sale                                                         |              |                                            | 155,740           |         |           |           | 7,740    |       |      |       | 6.63    |      |          |           | 125,247 |         |           |           | 6,226   |        |  |       | 6.59  |     
|                                             
|                                             
|                                             
|                                             
|                                              | Held to maturity                                                           |              |                                            | 257,193           |         |           |           | 13,108   |       |      |       | 6.80    |      |          |           | 300,951 |         |           |           | 15,488  |        |  |       | 6.86  |     
|                                             
|                                             
|                                             
|                                             
|                                              | Tax-exempt [2]                                                             |              |                                            | 33,810            |         |           |           | 1,874    |       |      |       | 7.41    |      |          |           | 31,504  |         |           |           | 1,733   |        |  |       | 7.35  |     
|                                             
|                                             
|                                             
|                                             
|Federal funds sold                            |                                                                            |              | 2,681                                      |                   |         |           | 80        |          |       |      | 3.91  |         |      |          | 4,471     |         |         |           | 189       |         |        |  | 5.56  |      
|                                             
|                                             
|                                             
|                                             
|Loans, net of unearned discounts              |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|                                             
|                                             
|                                             
|                                             
|                                              | Domestic [3]                                                               |              |                                            | 697,094           |         |           |           | 50,306   |       |      |       | 10.41   |      |          |           | 619,658 |         |           |           | 48,827  |        |  |       | 11.32 |     
|                                             
|                                             
|                                             
|                                             
|                                              | Foreign                                                                    |              |                                            | 777               |         |           |           | 37       |       |      |       | 6.32    |      |          |           | 781     |         |           |           | 43      |        |  |       | 7.38  |     
|                                              |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |       |      |   |     
|TOTAL
INTEREST-EARNING ASSETS                 |                                                                            |              | 1,150,666                                  |                   |         |           | 73,231    |          |       |      | 8.89  | %       |      |          | 1,084,803 |         |         |           | 72,591    |         |        |  | 9.29  | %    
|                                              |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|Cash and due from banks                       |                                                                            |              | 42,510                                     |                   |         |           |           |          |       |      |       |         |      |          | 37,713    |         |         |           |           |         |        |  |       |      
|                                             
|                                             
|                                             
|                                             
|Allowance for credit losses                   |                                                                            |              | (13,443                                    | )                 |         |           |           |          |       |      |       |         |      |          | (11,972   | )       |         |           |           |         |        |  |       |      
|                                             
|                                             
|                                             
|                                             
|Goodwill                                      |                                                                            |              | 21,158                                     |                   |         |           |           |          |       |      |       |         |      |          | 21,158    |         |         |           |           |         |        |  |       |      
|                                             
|                                             
|                                             
|                                             
|Other assets                                  |                                                                            |              | 27,536                                     |                   |         |           |           |          |       |      |       |         |      |          | 22,646    |         |         |           |           |         |        |  |       |      
|                                              |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|                                              |                                                                            |              |                                            | TOTAL
ASSETS      |         | $         | 1,228,427 |          |       |      |       |         |      |          |           |         |         | $         | 1,154,348 |         |        |  |       |       |      |   |      | 
|                                              |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|LIABILITIES
AND SHAREHOLDERS
EQUITY          |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|                                             
|                                             
|                                             
|                                             
|Interest-bearing deposits                     |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|                                             
|                                             
|                                             
|                                             
|                                              | Domestic                                                                   |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |       |     
|                                             
|                                             
|                                             
|                                             
|                                              |                                                                            | Savings      |                                            | $                 | 27,492  |           |           |          | 476   |      |       |         | 2.31 | %        |           | $       | 24,317  |           |           |         | 432    |  |       |       | 2.37 | %
|                                             
|                                             
|                                             
|                                             
|                                              |                                                                            | NOW          |                                            |                   | 80,928  |           |           |          | 1,242 |      |       |         | 2.05 |          |           |         | 70,245  |           |           |         | 1,335  |  |       |       | 2.54 |  
|                                             
|                                             
|                                             
|                                             
|                                              |                                                                            | Money market |                                            |                   | 190,900 |           |           |          | 3,499 |      |       |         | 2.45 |          |           |         | 157,899 |           |           |         | 3,732  |  |       |       | 3.16 |  
|                                             
|                                             
|                                             
|                                             
|                                              |                                                                            | Time         |                                            |                   | 268,634 |           |           |          | 9,750 |      |       |         | 4.85 |          |           |         | 286,981 |           |           |         | 11,521 |  |       |       | 5.36 |  
|                                             
|                                             
|                                             
|                                             
|                                              | Foreign                                                                    |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |       |     
|                                             
|                                             
|                                             
|                                             
|                                              |                                                                            | Time         |                                            | 2,975             |         |           |           | 104      |       |      |       | 4.68    |      |          |           | 2,835   |         |           |           | 96      |        |  |       | 4.51  |     
|                                              |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|Total interest-bearing deposits               |                                                                            |              | 570,929                                    |                   |         |           | 15,071    |          |       |      | 3.53  |         |      |          | 542,277   |         |         |           | 17,116    |         |        |  | 4.22  |      
|                                              |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|Borrowings                                    |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|                                             
|                                             
|                                             
|                                             
|                                              | Federal
funds purchased and
securities sold under
agreements to repurchase |              |                                            | 101,195           |         |           |           | 3,681    |       |      |       | 4.86    |      |          |           | 142,888 |         |           |           | 6,207   |        |  |       | 5.80  |     
|                                             
|                                             
|                                             
|                                             
|                                              | Commercial paper                                                           |              |                                            | 35,999            |         |           |           | 1,225    |       |      |       | 4.55    |      |          |           | 28,769  |         |           |           | 1,109   |        |  |       | 5.15  |     
|                                             
|                                             
|                                             
|                                             
|                                              | Other short-term debt                                                      |              |                                            | 3,588             |         |           |           | 124      |       |      |       | 4.62    |      |          |           | 10,450  |         |           |           | 438     |        |  |       | 5.38  |     
|                                             
|                                             
|                                             
|                                             
|                                              | Long-term debt                                                             |              |                                            | 35,450            |         |           |           | 1,229    |       |      |       | 4.62    |      |          |           | 12,498  |         |           |           | 410     |        |  |       | 5.39  |     
|                                              |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|                                              |                                                                            |              |                                            | Total borrowings  |         |           | 176,232   |          |       |      | 6,259 |         |      |          | 4.74      |         |         |           | 194,605   |         |        |  | 8,164 |       |      |   | 5.66 | 
|                                              |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|TOTAL
INTEREST-BEARING LIABILITIES            |                                                                            |              | 747,161                                    |                   |         |           | 21,330    |          |       |      | 3.82  | %       |      |          | 736,882   |         |         |           | 25,280    |         |        |  | 4.60  | %    
|                                              |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|Noninterest-bearing deposits                  |                                                                            |              | 287,785                                    |                   |         |           |           |          |       |      |       |         |      |          | 252,500   |         |         |           |           |         |        |  |       |      
|                                             
|                                             
|                                             
|                                             
|Other liabilities                             |                                                                            |              | 71,520                                     |                   |         |           |           |          |       |      |       |         |      |          | 59,085    |         |         |           |           |         |        |  |       |      
|                                              |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|                                              |                                                                            |              |                                            | Total liabilities |         |           | 1,106,466 |          |       |      |       |         |      |          |           |         |         |           | 1,048,467 |         |        |  |       |       |      |   |      | 
|                                             
|                                             
|                                             
|                                             
|Shareholders equity                          |                                                                            |              | 121,961                                    |                   |         |           |           |          |       |      |       |         |      |          | 105,881   |         |         |           |           |         |        |  |       |      
|                                              |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|                                              |                                                                            |              | TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY |                   | $       | 1,228,427 |           |          |       |      |       |         |      |          |           |         | $       | 1,154,348 |           |         |        |  |       |       |      |   |     
|                                              |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|Net
interest income/spread                    |                                                                            |              |                                            |                   |         |           | 51,901    |          |       |      | 5.07  | %       |      |          |           |         |         |           | 47,311    |         |        |  | 4.69  | %    
|                                              |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|Net
yield on interest-earning
assets (margin) |                                                                            |              |                                            |                   |         |           |           |          |       |      | 6.27  | %       |      |          |           |         |         |           |           |         |        |  | 6.02  | %    
|                                              |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|Less:
Tax equivalent adjustment               |                                                                            |              |                                            |                   |         |           | 771       |          |       |      |       |         |      |          |           |         |         |           | 713       |         |        |  |       |      
|                                              |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      
|Net
interest income                           |                                                                            |              |                                            |                   |         | $         | 51,130    |          |       |      |       |         |      |          |           |         |         | $         | 46,598    |         |        |  |       |      
|                                              |                                                                            |              |                                            |                   |         |           |           |          |       |      |       |         |      |          |           |         |         |           |           |         |        |  |       |      



---

|[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 2000 amounts to conform to current presentation.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|[2] |  | Interest on tax-exempt securities is presented on a tax equivalent basis.                                                                                                                                                                                            
|   
|   
|   
|   
|[3] |  | Nonaccrual loans are included in amounts outstanding and income has been included to the
extent earned.                                                                                                                                                              

23



---



##### Table of Contents






STERLING BANCORP AND SUBSIDIARIES
Rate/Volume Analysis [1]

(in thousands)

|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |        |      |        |  
|------------------------------------------ | -------------------------------------------------------------------------- | ------------ | ------------------------------------- | ------ | ---------------------------------------- | ----- | ------ | ------ | ------- | ------ | ------ | ------ | ---- | ------ | -
|                                           |                                                                            |              |                                       |        | Increase/(Decrease)                     
|                                           |                                                                            |              |                                       |        | Three Months
Ended                      
|                                           |                                                                            |              |                                       |        | September
30, 2001 to September 30, 2000
|                                           |                                                                            |              |                                       |        |                                         
|                                           |                                                                            |              |                                       |        | Volume                                   |       | Rate   |        | Net [2] |       
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |        
|INTEREST
INCOME                            |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|                                          
|                                          
|                                          
|                                          
|Interest-bearing deposits with other banks |                                                                            | $            | 18                                    |        |                                          | $     | (16    | )      |         | $      | 2      |       
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|Investment securities                      |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|                                          
|                                          
|                                          
|                                          
|                                           | Available for sale                                                         |              |                                       | 844    |                                          |       |        | (40    | )       |        |        | 804    |     
|                                          
|                                          
|                                          
|                                          
|                                           | Held to maturity                                                           |              |                                       | (995   | )                                        |       |        | (96    | )       |        |        | (1,091 | )   
|                                          
|                                          
|                                          
|                                          
|                                           | Tax-exempt                                                                 |              |                                       | 33     |                                          |       |        |       |         |        |        | 33     |     
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|                                           |                                                                            |              | Total investment securities           |        |                                          | (118  | )      |        |         | (136   | )      |        |      | (254   | )
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|Federal
funds sold                         |                                                                            |              | 52                                    |        |                                          |       | (7     | )      |         |        | 45     |       
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|Loans,
net of unearned discounts           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|                                          
|                                          
|                                          
|                                          
|                                           | Domestic [3]                                                               |              |                                       | 2,002  |                                          |       |        | (3,031 | )       |        |        | (1,029 | )   
|                                          
|                                          
|                                          
|                                          
|                                           | Foreign                                                                    |              |                                       |       |                                          |       |        | (5     | )       |        |        | (5     | )   
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|                                           |                                                                            |              | Total loans, net of unearned discount |        |                                          | 2,002 |        |        |         | (3,036 | )      |        |      | (1,034 | )
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|TOTAL
INTEREST INCOME                      |                                                                            | $            | 1,954                                 |        |                                          | $     | (3,195 | )      |         | $      | (1,241 | )     
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|INTEREST
EXPENSE                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|                                          
|                                          
|                                          
|                                          
|Interest-bearing deposits                  |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|                                          
|                                          
|                                          
|                                          
|                                           | Domestic                                                                   |              |                                       |        |                                          |       |        |        |         |        |        |        |     
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            | Savings      |                                       | $      | 33                                       |       |        | $      | (15     | )      |        | $      | 18   |       
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            | NOW          |                                       |        | 142                                      |       |        |        | (195    | )      |        |        | (53  | )     
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            | Money market |                                       |        | 332                                      |       |        |        | (447    | )      |        |        | (115 | )     
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            | Time         |                                       |        | 171                                      |       |        |        | (857    | )      |        |        | (686 | )     
|                                          
|                                          
|                                          
|                                          
|                                           | Foreign                                                                    |              |                                       |        |                                          |       |        |        |         |        |        |        |     
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            | Time         |                                       |        | 2                                        |       |        |        | (3      | )      |        |        | (1   | )     
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|                                           |                                                                            |              | Total interest-bearing deposits       |        |                                          | 680   |        |        |         | (1,517 | )      |        |      | (837   | )
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|Borrowings                                 |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|                                          
|                                          
|                                          
|                                          
|                                           | Federal funds purchased and securities sold
under agreements to repurchase |              |                                       | (1,313 | )                                        |       |        | (728   | )       |        |        | (2,041 | )   
|                                          
|                                          
|                                          
|                                          
|                                           | Commercial paper                                                           |              |                                       | 100    |                                          |       |        | (115   | )       |        |        | (15    | )   
|                                          
|                                          
|                                          
|                                          
|                                           | Other short-term debt                                                      |              |                                       | (85    | )                                        |       |        | (45    | )       |        |        | (130   | )   
|                                          
|                                          
|                                          
|                                          
|                                           | Long-term debt                                                             |              |                                       | 375    |                                          |       |        | (16    | )       |        |        | 359    |     
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|                                           |                                                                            |              | Total borrowings                      |        |                                          | (923  | )      |        |         | (904   | )      |        |      | (1,827 | )
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|TOTAL
INTEREST EXPENSE                     |                                                                            | $            | (243                                  | )      |                                          | $     | (2,421 | )      |         | $      | (2,664 | )     
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|NET
INTEREST INCOME                        |                                                                            | $            | 2,197                                 |        |                                          | $     | (774   | )      |         | $      | 1,423  |       
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       



---

| |  | [1] The above table is presented on a tax equivalent basis.                                                                                                                                                                                                                                                                                     
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|
|
| |  | [2] The change in interest income and interest expense due to both rate and volume has been
allocated to the change due to rate and
      the change due to volume in proportion to the
relationship of the absolute dollar amounts of the changes in each.
The effect of
      one extra day in 2000 has been included in the change in volume.
|
|
|
|
| |  | [3] Nonaccrual loans have been included in the amounts outstanding and income has been
included to the extent accrued.                                                                                                                                                                                                                          

24



---



##### Table of Contents



STERLING BANCORP AND SUBSIDIARIES
Rate/Volume Analysis [1]

(in thousands)

|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |        |        |        |  
|------------------------------------------ | -------------------------------------------------------------------------- | ------------ | ------------------------------------- | ------ | ---------------------------------------- | ----- | ------ | ------ | ------- | ------ | ------ | ------ | ------ | ------ | -
|                                           |                                                                            |              |                                       |        | Increase/(Decrease)                     
|                                           |                                                                            |              |                                       |        | Nine
Months Ended                       
|                                           |                                                                            |              |                                       |        | September 30, 2001 to September 30, 2000
|                                           |                                                                            |              |                                       |        |                                         
|                                           |                                                                            |              |                                       |        | Volume                                   |       | Rate   |        | Net [2] |       
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |        
|INTEREST
INCOME                            |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|                                          
|                                          
|                                          
|                                          
|Interest-bearing deposits with other banks |                                                                            | $            | 32                                    |        |                                          | $     | (31    | )      |         | $      | 1      |       
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|Investment securities
Available for sale   |                                                                            |              | 1,476                                 |        |                                          |       | 38     |        |         |        | 1,514  |       
|                                          
|                                          
|                                          
|                                          
|                                           | Held to maturity                                                           |              |                                       | (2,254 | )                                        |       |        | (126   | )       |        |        | (2,380 | )     
|                                          
|                                          
|                                          
|                                          
|                                           | Tax-exempt                                                                 |              |                                       | 126    |                                          |       |        | 15     |         |        |        | 141    |       
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|                                           |                                                                            |              | Total investment securities           |        |                                          | (652  | )      |        |         | (73    | )      |        |        | (725   | )
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|Federal
funds sold                         |                                                                            |              | (63                                   | )      |                                          |       | (46    | )      |         |        | (109   | )     
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|Loans,
net of unearned discounts           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|                                          
|                                          
|                                          
|                                          
|                                           | Domestic [3]                                                               |              |                                       | 5,819  |                                          |       |        | (4,340 | )       |        |        | 1,479  |       
|                                          
|                                          
|                                          
|                                          
|                                           | Foreign                                                                    |              |                                       |       |                                          |       |        | (6     | )       |        |        | (6     | )     
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|                                           |                                                                            |              | Total loans, net of unearned discount |        |                                          | 5,819 |        |        |         | (4,346 | )      |        |        | 1,473  |  
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|TOTAL
INTEREST INCOME                      |                                                                            | $            | 5,136                                 |        |                                          | $     | (4,496 | )      |         | $      | 640    |       
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|INTEREST
EXPENSE                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|                                          
|                                          
|                                          
|                                          
|Interest-bearing deposits                  |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|                                          
|                                          
|                                          
|                                          
|                                           | Domestic                                                                   |              |                                       |        |                                          |       |        |        |         |        |        |        |       
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            | Savings      |                                       | $      | 54                                       |       |        | $      | (10     | )      |        | $      | 44     |       
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            | NOW          |                                       |        | 177                                      |       |        |        | (270    | )      |        |        | (93    | )     
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            | Money market |                                       |        | 673                                      |       |        |        | (906    | )      |        |        | (233   | )     
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            | Time         |                                       |        | (780                                     | )     |        |        | (991    | )      |        |        | (1,771 | )     
|                                          
|                                          
|                                          
|                                          
|                                           | Foreign                                                                    |              |                                       |        |                                          |       |        |        |         |        |        |        |       
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            | Time         |                                       |        | 4                                        |       |        |        | 4       |        |        |        | 8      |       
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|                                           |                                                                            |              | Total interest-bearing deposits       |        |                                          | 128   |        |        |         | (2,173 | )      |        |        | (2,045 | )
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|Borrowings                                 |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|                                          
|                                          
|                                          
|                                          
|                                           | Federal funds purchased and securities sold
under agreements to repurchase |              |                                       | (1,645 | )                                        |       |        | (881   | )       |        |        | (2,526 | )     
|                                          
|                                          
|                                          
|                                          
|                                           | Commercial paper                                                           |              |                                       | 251    |                                          |       |        | (135   | )       |        |        | 116    |       
|                                          
|                                          
|                                          
|                                          
|                                           | Other short-term debt                                                      |              |                                       | (260   | )                                        |       |        | (54    | )       |        |        | (314   | )     
|                                          
|                                          
|                                          
|                                          
|                                           | Long-term debt                                                             |              |                                       | 893    |                                          |       |        | (74    | )       |        |        | 819    |       
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|                                           |                                                                            |              | Total borrowings                      |        |                                          | (761  | )      |        |         | (1,144 | )      |        |        | (1,905 | )
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|TOTAL
INTEREST EXPENSE                     |                                                                            | $            | (633                                  | )      |                                          | $     | (3,317 | )      |         | $      | (3,950 | )     
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       
|NET
INTEREST INCOME                        |                                                                            | $            | 5,769                                 |        |                                          | $     | (1,179 | )      |         | $      | 4,590  |       
|                                           |                                                                            |              |                                       |        |                                          |       |        |        |         |        |        |       



---

| | [1] | The above table is presented on a tax equivalent basis.                                                                                                                                                                                                                                                                         
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|
|
| | [2] | The change in interest income and interest expense due to both rate and volume has been
allocated to the change due to rate and the change due to volume in proportion to the
relationship of the absolute dollar amounts of the changes in each. The effect of one
extra day in 2000 has been included in the change in volume.
|
|
|
|
| | [3] | Nonaccrual loans have been included in the amounts outstanding and income has been
included to the extent accrued.                                                                                                                                                                                                              

25



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##### Table of Contents






STERLING BANCORP AND SUBSIDIARIES
Regulatory Capital and Ratios

|                                            |             |  |        |         |                  |  |             |       |       |  |             |        |            |  |  |      |   |  |   |        |  |  |  |       |  
|------------------------------------------- | ----------- |  | ------ | ------- | ---------------- |  | ----------- | ----- | ----- |  | ----------- | ------ | ---------- |  |  | ---- | - |  | - | ------ |  |  |  | ----- | -
|Ratios and Minimums                         |             |  |        |         |                  |  |             |       |       |  |             |        |            |  |  |      |   |  |   |        |  |  |  |      
|(dollars in thousands)                      |             |  |        |         |                  |  |             |       |       |  |             |        |            |  |  |      |   |  |   |        |  |  |  |      
|                                            |             |  |        |         |                  |  |             |       |       |  |             |        |            |  |  |      |   |  |   |        |  |  |  |      
|                                            |             |  |        |         |                  |  |             |       |       |  | For
Capital |        | To Be
Well
|                                            |             |  | Actual |         | Adequacy
Minimum |  | Capitalized
|                                            |             |  |        |         |                  |  |            
|                                            |             |  | Amount |         | Ratio            |  | Amount      |       | Ratio |  | Amount      |        | Ratio     
|                                            |             |  |        |         |                  |  |             |       |       |  |             |        |           
|As of September 30, 2001                    |             |  |        |         |                  |  |             |       |       |  |             |        |            |  |  |      |   |  |   |        |  |  |  |      
|Total
Capital(to Risk Weighted Assets):     |             |  |        |         |                  |  |             |       |       |  |             |        |            |  |  |      |   |  |   |        |  |  |  |      
|                                           
|                                           
|                                           
|                                           
|                                            | The Company |  | $      | 117,614 |                  |  |             | 14.33 | %     |  |             | 65,655 |            |  |  | 8.00 | % |  | $ | 82,069 |  |  |  | 10.00 | %
|                                           
|                                           
|                                           
|                                           
|                                            | The bank    |  |        | 100,831 |                  |  |             | 12.98 |       |  |             | 62,141 |            |  |  | 8.00 |   |  |   | 77,676 |  |  |  | 10.00 |  
|                                           
|                                           
|                                           
|                                           
|Tier
1 Capital(to Risk Weighted Assets):    |             |  |        |         |                  |  |             |       |       |  |             |        |            |  |  |      |   |  |   |        |  |  |  |      
|                                           
|                                           
|                                           
|                                           
|                                            | The Company |  |        | 107,316 |                  |  |             | 13.08 |       |  |             | 32,828 |            |  |  | 4.00 |   |  |   | 49,242 |  |  |  | 6.00  |  
|                                           
|                                           
|                                           
|                                           
|                                            | The bank    |  |        | 91,096  |                  |  |             | 11.73 |       |  |             | 31,070 |            |  |  | 4.00 |   |  |   | 46,606 |  |  |  | 6.00  |  
|                                           
|                                           
|                                           
|                                           
|Tier
1 Leverage Capital(to Average Assets): |             |  |        |         |                  |  |             |       |       |  |             |        |            |  |  |      |   |  |   |        |  |  |  |      
|                                           
|                                           
|                                           
|                                           
|                                            | The Company |  |        | 107,316 |                  |  |             | 8.75  |       |  |             | 49,047 |            |  |  | 4.00 |   |  |   | 61,309 |  |  |  | 5.00  |  
|                                           
|                                           
|                                           
|                                           
|                                            | The bank    |  |        | 91,096  |                  |  |             | 7.68  |       |  |             | 47,464 |            |  |  | 4.00 |   |  |   | 59,330 |  |  |  | 5.00  |  
|                                           
|                                           
|                                           
|                                           
|                                            |             |  |        |         |                  |  |             |       |       |  |             |        |            |  |  |      |   |  |   |        |  |  |  |      
|As of December 31, 2000                     |             |  |        |         |                  |  |             |       |       |  |             |        |            |  |  |      |   |  |   |        |  |  |  |      
|                                            |             |  |        |         |                  |  |             |       |       |  |             |        |            |  |  |      |   |  |   |        |  |  |  |      
|                                           
|                                           
|                                           
|                                           
|Total Capital(to Risk Weighted Assets):     |             |  |        |         |                  |  |             |       |       |  |             |        |            |  |  |      |   |  |   |        |  |  |  |      
|                                           
|                                           
|                                           
|                                           
|                                            | The Company |  | $      | 105,503 |                  |  |             | 13.35 | %     |  | $           | 63,205 |            |  |  | 8.00 | % |  | $ | 79,006 |  |  |  | 10.00 | %
|                                           
|                                           
|                                           
|                                           
|                                            | The bank    |  |        | 86,877  |                  |  |             | 11.44 |       |  |             | 60,746 |            |  |  | 8.00 |   |  |   | 75,933 |  |  |  | 10.00 |  
|                                           
|                                           
|                                           
|                                           
|Tier
1 Capital(to Risk Weighted Assets):    |             |  |        |         |                  |  |             |       |       |  |             |        |            |  |  |      |   |  |   |        |  |  |  |      
|                                           
|                                           
|                                           
|                                           
|                                            | The Company |  |        | 95,593  |                  |  |             | 12.10 |       |  |             | 31,602 |            |  |  | 4.00 |   |  |   | 47,404 |  |  |  | 6.00  |  
|                                           
|                                           
|                                           
|                                           
|                                            | The bank    |  |        | 77,367  |                  |  |             | 10.19 |       |  |             | 30,373 |            |  |  | 4.00 |   |  |   | 45,560 |  |  |  | 6.00  |  
|                                           
|                                           
|                                           
|                                           
|Tier
1 Leverage Capital(to Average Assets): |             |  |        |         |                  |  |             |       |       |  |             |        |            |  |  |      |   |  |   |        |  |  |  |      
|                                           
|                                           
|                                           
|                                           
|                                            | The Company |  |        | 95,593  |                  |  |             | 8.11  |       |  |             | 47,141 |            |  |  | 4.00 |   |  |   | 58,926 |  |  |  | 5.00  |  
|                                           
|                                           
|                                           
|                                           
|                                            | The bank    |  |        | 77,367  |                  |  |             | 6.73  |       |  |             | 46,015 |            |  |  | 4.00 |   |  |   | 57,519 |  |  |  | 5.00  |  

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QUANTITATIVE AND QUALITATIVEDISCLOSURES ABOUT MARKET RISK




ASSET/LIABILITY MANAGEMENT

The Companys primary earnings source is net interest income; therefore, the
Company devotes significant time and has invested in resources to assist in the
management of market risk, liquidity risk, capital 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 market risk,
liquidity and capital. This risk management process is governed by policies
and limits established by senior management which are reviewed and approved by
the Asset/Liability Committee (ALCO). ALCO, which is comprised of members of
senior management and the Board, 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 off-balance sheet 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 on- and
off-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 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 an institutions 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 an institutions net interest margin. However, the
traditional gap analysis does not assess the relative sensitivity of assets and
liabilities to changes in interest rates. The Company utilizes the gap
analysis to complement its income simulations modeling.

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, 2001, is
presented on page 30. The results of both the income simulation analysis and
the gap analysis, reveal that net interest income would tend to increase during periods
of rising interest rates and tend to decrease during periods of falling interest rates.

As part of its interest rate risk strategy, the Company uses certain
financial instruments (derivatives) to hedge the interest rate sensitivity of
assets with the corresponding amortization reflected in the yield of the
related on-balance sheet assets being hedged. The Company has written policy
guidelines, which have been approved by the Board of Directors based on
recommendations of the Asset/Liability Committee, governing the use of certain
financial instruments (derivatives), including approved counterparties, risk
limits and appropriate

27



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##### Table of Contents



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 purchased interest rate floor contracts to reduce the impact
of falling rates on its floating rate commercial loans. Interest rate floor
contracts require the counterparty to pay the Company at specified future dates
the amount, if any, by which the specified interest rate (3 month LIBOR) falls
below the fixed floor rates, applied to the notional amounts. The Company
utilizes these financial instruments to adjust its interest rate risk position
without exposing itself to principal risk and funding requirements.

At September 30, 2001, the Company utilized five interest rate floor
contracts having a notional amount totaling $75 million consisting of a
contract with a notional amount of $25 million and a final maturity of November
15, 2001 and two contracts with a notional amount of $25 million each and a
final maturity of November 15, 2002. These financial instruments are being
used as part of the Companys interest rate risk management and not for trading
purposes. At September 30, 2001, all counterparties have investment grade
credit ratings from the major rating agencies. Each counterparty is
specifically approved for applicable credit exposure.

The Company utilizes income simulation models to complement its
traditional gap analysis. While ALCO 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 sensitivity or volatility 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 is not 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 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 which 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
can project the impact of changes in interest rates on net interest margin.
The estimated effects of the Companys interest rate floors are included in the
results of the sensitivity analysis. The Company has established certain
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, 2001, the model indicated the impact of a 200 basis point
parallel and pro rata rise in rates over twelve months would approximate a
2.05% ($1,479,000) increase in net interest income, while the impact of a 200
basis point decline in rates over the same period would approximate a 3.25%
($2,343,000) decline from an unchanged rate environment.

28



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##### Table of Contents



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 make any
assurances as to the predictive nature of these assumptions including how
customer 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 internal/external
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 throughout the Company. 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 have significant
unused borrowing capacity. Contingency plans exist and could be implemented on
a timely basis to minimize the impact of any dramatic change in market
conditions.

The parent company generates income from its own operations. Its cash
requirements are supplemented from funds maintained or generated by its
subsidiaries, principally the bank. Such sources have been adequate to meet
the parent companys cash requirements.

The
banks ability to supply funds to the parent company and its nonbank
subsidiaries subject to various legal restrictions. 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 that
year to date combined with its retained net profits for the preceding two
calendar years. A national bank can make loans or otherwise provide
funds to its parent company subject to limitations on amount and
collateral requirements. There are no such loans outstanding.

At September 30, 2001, the parent companys short-term debt, consisting
principally of commercial paper used to finance ongoing current business
activities, was approximately $35,285,000. The parent company had cash,
interest-bearing deposits with banks and other current assets aggregating
$37,906,000 and back-up credit lines with banks of $19,000,000. Since
1979, the parent company has had no need to use available back-up lines of
credit.

While the past performance is no guarantee of the future, management
believes that the Companys funding sources (including dividends from all its
subsidiaries) and the banks funding sources will be adequate to meet their
liquidity and capital requirements in the future.

29



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##### Table of Contents






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 placed in a time of the earliest repricing period. Amounts are presented in thousands.

|                                     |                                                            |                                            |                                              |           |         |                |         |           |        |           |         |           |        |           |         |         |       |         |          |         |   |         |           |         |         |           |       | 
|------------------------------------ | ---------------------------------------------------------- | ------------------------------------------ | -------------------------------------------- | --------- | ------- | -------------- | ------- | --------- | ------ | --------- | ------- | --------- | ------ | --------- | ------- | ------- | ----- | ------- | -------- | ------- | - | ------- | --------- | ------- | ------- | --------- | ----- | 
|                                     |                                                            |                                            |                                              |           |         | Repricing Date
|                                     |                                                            |                                            |                                              |           |         |               
|                                     |                                                            |                                            |                                              |           |         |                |         |           |        | More than |         | More than |        |           |         |         |       | Non     |          |         |   |        
|                                     |                                                            |                                            |                                              |           |         | 3 months       |         | 3 months  |        | 1 Year to |         | Over      |        | Rate      |         |         |       |        
|                                     |                                                            |                                            |                                              |           |         | or less        |         | to 1 Year |        | 5 years   |         | 5 years   |        | Sensitive |         | Total  
|                                     |                                                            |                                            |                                              |           |         |                |         |           |        |           |         |           |        |           |         |        
|ASSETS                               |                                                            |                                            |                                              |           |         |                |         |           |        |           |         |           |        |           |         |         |       |         |          |         |   |         |           |        
|                                    
|                                    
|                                    
|                                    
|                                     | Interest-bearing deposits
with other banks                 |                                            | $                                            | 4,211     |         |                | $       |          |        |           | $       |          |        |           | $       |        |       |         | $        |        |   |         | $         | 4,211   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Federal funds sold                                         |                                            |                                              | 5,000     |         |                |         |          |        |           |         |          |        |           |         |        |       |         |          |        |   |         |           | 5,000   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Investment securities                                      |                                            |                                              | 3,393     |         |                |         | 4,341     |        |           |         | 40,698    |        |           |         | 431,899 |       |         |          | 5,706   |   |         |           | 486,037 |        
|                                    
|                                    
|                                    
|                                    
|                                     | Loans, net of unearned
discounts                           |                                            |                                              |           |         |                |         |           |        |           |         |           |        |           |         |         |       |         |          |         |   |         |           |         |        
|                                    
|                                    
|                                    
|                                    
|                                     |                                                            |                                            | Commercial and industrial                    |           |         | 508,934        |         |           |        | 742       |         |           |        | 2,261     |         |         |       | 131     |          |         |   | (788    | )         |         |         | 511,280   |      
|                                    
|                                    
|                                    
|                                    
|                                     |                                                            |                                            | Loans to depository
institutions             |           |         | 25,000         |         |           |        |          |         |           |        |          |         |         |       |        |          |         |   |        |           |         |         | 25,000    |      
|                                    
|                                    
|                                    
|                                    
|                                     |                                                            |                                            | Lease financing                              |           |         | 30,057         |         |           |        | 3,373     |         |           |        | 64,750    |         |         |       | 9,945   |          |         |   | (14,287 | )         |         |         | 93,838    |      
|                                    
|                                    
|                                    
|                                    
|                                     |                                                            |                                            | Real estate                                  |           |         | 58,934         |         |           |        | 535       |         |           |        | 29,799    |         |         |       | 54,951  |          |         |   | (43     | )         |         |         | 144,176   |      
|                                    
|                                    
|                                    
|                                    
|                                     |                                                            |                                            | Installment                                  |           |         | 4,487          |         |           |        | 85        |         |           |        | 2,218     |         |         |       | 1,698   |          |         |   | (44     | )         |         |         | 8,444     |      
|                                    
|                                    
|                                    
|                                    
|                                     |                                                            |                                            | Foreign government and
official institutions |           |         |               |         |           |        | 777       |         |           |        |          |         |         |       |        |          |         |   |        |           |         |         | 777       |      
|                                    
|                                    
|                                    
|                                    
|                                     | Noninterest-earning
assets and allowance
for credit losses |                                            |                                              |          |         |                |         |          |        |           |         |          |        |           |         |        |       |         |          | 84,966  |   |         |           | 84,966  |        
|                                     |                                                            |                                            |                                              |           |         |                |         |           |        |           |         |           |        |           |         |         |       |         |          |         |   |         |           |        
|                                     |                                                            |                                            | Total Assets                                 |           |         | 640,016        |         |           |        | 9,853     |         |           |        | 139,726   |         |         |       | 498,624 |          |         |   | 75,510  |           |         |         | 1,363,729 |      
|                                     |                                                            |                                            |                                              |           |         |                |         |           |        |           |         |           |        |           |         |         |       |         |          |         |   |         |           |        
|LIABILITIES
AND
SHAREHOLDERS EQUITY |                                                            |                                            |                                              |           |         |                |         |           |        |           |         |           |        |           |         |         |       |         |          |         |   |         |           |        
|                                    
|                                    
|                                    
|                                    
|                                     | Interest-bearing deposits                                  |                                            |                                              |           |         |                |         |           |        |           |         |           |        |           |         |         |       |         |          |         |   |         |           |         |        
|                                    
|                                    
|                                    
|                                    
|                                     |                                                            | Savings [1]                                |                                              |          |         |                |         |          |        |           |         | 31,397    |        |           |         |        |       |         |          |        |   |         |           | 31,397  |        
|                                    
|                                    
|                                    
|                                    
|                                     |                                                            | NOW [1]                                    |                                              |           |        |                |         |           |       |           |         |           | 99,363 |           |         |         |      |         |          |         |  |         |           |         | 99,363  |          
|                                    
|                                    
|                                    
|                                    
|                                     |                                                            | Money market [1]                           |                                              |           | 180,354 |                |         |           |       |           |         |           | 41,290 |           |         |         |      |         |          |         |  |         |           |         | 221,644 |          
|                                    
|                                    
|                                    
|                                    
|                                     |                                                            | Time  domestic                            |                                              |           | 198,180 |                |         |           | 74,785 |           |         |           | 47,858 |           |         |         | 1,000 |         |          |         |  |         |           |         | 321,823 |          
|                                    
|                                    
|                                    
|                                    
|                                     |                                                            |                                            |                                              |  foreign |         |                | 1,180   |           |        |           | 1,795   |           |        |           |        |         |       |         |         |         |   |         |          |         |         |           | 2,975 | 
|                                    
|                                    
|                                    
|                                    
|                                     | Federal funds purchased &
securities sold u/a/r            |                                            |                                              | 60,908    |         |                |         | 519       |        |           |         |          |        |           |         |        |       |         |          |        |   |         |           | 61,427  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Commercial paper                                           |                                            |                                              | 35,285    |         |                |         |          |        |           |         |          |        |           |         |        |       |         |          |        |   |         |           | 35,285  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Other short-term borrowings                                |                                            |                                              | 8,681     |         |                |         | 350       |        |           |         |          |        |           |         |        |       |         |          |        |   |         |           | 9,031   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Long-term borrowings  FHLB                                |                                            |                                              |          |         |                |         |          |        |           |         | 350       |        |           |         | 40,000  |       |         |          |        |   |         |           | 40,350  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Noninterest-bearing liabilities
and shareholders equity   |                                            |                                              |          |         |                |         |          |        |           |         |          |        |           |         |        |       |         |          | 540,434 |   |         |           | 540,434 |        
|                                     |                                                            |                                            |                                              |           |         |                |         |           |        |           |         |           |        |           |         |         |       |         |          |         |   |         |           |        
|                                     |                                                            | Total
Liabilities and
Shareholders Equity | 484,588                                      |           |         |                | 77,449  |           |        |           | 220,258 |           |        |           | 41,000  |         |       |         | 540,434  |         |   |         | 1,363,729 |        
|                                     |                                                            |                                            |                                              |           |         |                |         |           |        |           |         |           |        |           |         |         |       |         |          |         |   |         |           |        
|Net
Interest Rate
Sensitivity Gap    |                                                            | $                                          | 155,428                                      |           |         | $              | (67,596 | )         |        | $         | (80,532 | )         |        | $         | 457,624 |         |       | $       | (464,924 | )       |   | $       |          |        
|                                     |                                                            |                                            |                                              |           |         |                |         |           |        |           |         |           |        |           |         |         |       |         |          |         |   |         |           |        
|Cumulative
Gap
September 30, 2001    |                                                            | $                                          | 155,428                                      |           |         | $              | 87,832  |           |        | $         | 7,300   |           |        | $         | 464,924 |         |       | $       |         |         |   | $       |          |        
|                                     |                                                            |                                            |                                              |           |         |                |         |           |        |           |         |           |        |           |         |         |       |         |          |         |   |         |           |        
|Cumulative
Gap
September 30, 2000    |                                                            | $                                          | 76,651                                       |           |         | $              | (14,542 | )         |        | $         | (45,593 | )         |        | $         | 405,710 |         |       | $       |         |         |   | $       |          |        
|                                     |                                                            |                                            |                                              |           |         |                |         |           |        |           |         |           |        |           |         |         |       |         |          |         |   |         |           |        
|Cumulative
Gap
December 31, 2000     |                                                            | $                                          | 101,033                                      |           |         | $              | 24,199  |           |        | $         | (9,231  | )         |        | $         | 455,154 |         |       | $       |         |         |   | $       |          |        
|                                     |                                                            |                                            |                                              |           |         |                |         |           |        |           |         |           |        |           |         |         |       |         |          |         |   |         |           |        



---

| | [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 runoff experience.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents



STERLING BANCORP AND SUBSIDIARIES







Item 6. Exhibits and Reports on Form 8-K

(a)  The following exhibits are filed as part of this report:



| |                                                     
| | ----------------------------------------------------
| | (11) Statement Re: Computation of Per Share Earnings

(b)  No reports on Form 8-K have been filed during the quarter.




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





|     |  |          |  |     |  |                                                                                                 
|---- |  | -------- |  | --- |  | ------------------------------------------------------------------------------------------------
|Date |  | 11/14/01 |  | /s/ |  | Louis J. Cappelli

Louis J. Cappelli
Chairman and
Chief Executive Officer                       
|    
|    
|    
|    
|     |  |          |  |     |  |                                                                                                 
|    
|    
|    
|    
|Date |  | 11/14/01 |  | /s/ |  | John W. Tietjen

John W. Tietjen
Executive Vice President, Treasurer
and Chief Financial Officer

31



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##### Table of Contents






|                                 
|---------------------------------
|STERLING BANCORP AND SUBSIDIARIES
|                                 
|EXHIBIT INDEX                    
|                                 

|        |  |                    |  |              |  |              |  |       |   |      |  |            |  |  |  | 
|------- |  | ------------------ |  | ------------ |  | ------------ |  | ----- | - | ---- |  | ---------- |  |  |  | 
|        |  |                    |  |              |  | Incorporated |  |       |   |      |  | Sequential
|Exhibit |  |                    |  |              |  | Herein By    |  | Filed |   | Page
|Number  |  | Description        |  | Reference To |  | Herewith     |  | No.  
|        |  |                    |  |              |  |              |  |      
|11      |  | Computation of     |  |              |  |              |  |       | X |     
|       
|       
|       
|       
|        |  | Per Share Earnings |  |              |  |              |  |       |   |     

32