|                                                                                        
|----------------------------------------------------------------------------------------
|UNITED STATES
      SECURITIES AND EXCHANGE COMMISSION
      Washington, D.C. 20549     
|                                                                                        
|FORM 10-Q                                                                               
|                                                                                        
|(Mark One)                                                                              
|xQUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|                                                                                        

|For the quarterly period ended                                                            | June 30, 2005 | 
|----------------------------------------------------------------------------------------- | ------------- | 
|                                                                                          | or            | 
|                                                                                         
|oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|                                                                                         

|For the transition period from |  | to |  | 
|------------------------------ |  | -- |  | 
|                               | 

|Commission File Number: | 1-5273-1 | 
|----------------------- | -------- | 

|                                                                                                                                                                                                                                                                                                                                                        
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Sterling Bancorp                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                        
|(Exact name of registrant as specified in its charter)                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                        
|New York                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                        
|(State or other jurisdiction of
      incorporation or organization)                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                        
|650 Fifth Avenue, New York, N.Y.                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                        
|(Address of principal executive offices)                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                        
|212-757-3300                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                        
|(Registrants telephone number, including area code)                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                        
|N/A                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                        
|(Former name, former address and former fiscal year, if changed since last report)                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                        
|Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
|x Yes  o No                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                        
|Indicate by check mark whether the registrant is an accelerated filer as defined in Rule 12b-2 of the Exchange Act,                                                                                                                                                                                                                                     
|x Yes  o No                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                        
|As of July 31, 2005 there were 18,343,644 shares of common stock,$1.00 par value, outstanding.                                                                                                                                                                                                                                                          

|
|



|STERLING BANCORP
|----------------
|                

|                               | Page      
|------------------------------ | ----------
|                               |           
|PART I   FINANCIAL INFORMATION |           
|                               |           
|                               | Item 1.   
|                               |           
|                               |           
|                               |           
|                               |           
|                               | Item 2.   
|                               |           
|                               |           
|                               |           
|                               |           
|                               |           
|                               |           
|                               |           
|                               |           
|                               |           
|                               |           
|                               | Item 3.   
|                               |           
|                               |           
|                               |           
|                               |           
|                               | Item 4.   
|                               |           
|PART II  OTHER INFORMATION     |           
|                               |           
|                               | Item 2.   
|                               |           
|                               | Item 6.   
|                               |           
|SIGNATURES                     | 38        
|                               |           
|EXHIBIT INDEX                  |           
|                               |           
|                               | Exhibit 11
|                               |           
|                               | Exhibit 31
|                               |           
|                               | Exhibit 32

|2
|-



|STERLING BANCORP AND SUBSIDIARIESConsolidated Balance Sheets 
(Unaudited)
|-------------------------------------------------------------------------
|                                                                         

|ASSETS                                                           | June
      30,
      2005 |               | December
      31,
      2004 |  
|---------------------------------------------------------------- | ------------------------- | ------------- | ----------------------------- | -
|                                                                 |                           |               |                               |  
|Cash
      and due from banks                                    | $                         | 51,543,500    |                               | $
|Interest-bearing
      deposits with other banks                 |                           | 1,039,494     |                               |  
|Securities
      available for sale (at estimated fair value;    |                           |               |                               |  
|pledged:
      $98,669,059 in 2005 and $64,933,098 in 2004)      |                           | 213,946,601   |                               |  
|Securities
      held to maturity (pledged: $195,810,300 in 2005 |                           |               |                               |  
|and
      $122,309,904 in 2004) (estimated fair value:           |                           |               |                               |  
|$511,541,046
      in 2005 and $448,173,450 in 2004)             |                           | 511,299,854   |                               |  
|                                                                 |                           |               |                               |  
|Total
      investment securities                                |                           | 725,246,455   |                               |  
|                                                                 |                           |               |                               |  
|Loans
      held for sale                                        |                           | 36,767,212    |                               |  
|                                                                 |                           |               |                               |  
|Loans
      held in portfolio, net of unearned discounts         |                           | 1,008,194,415 |                               |  
|Less
      allowance for loan losses                             |                           | 16,155,924    |                               |  
|                                                                 |                           |               |                               |  
|Loans,
      net                                                 |                           | 992,038,491   |                               |  
|                                                                 |                           |               |                               |  
|Customers
      liability under acceptances                     |                           | 466,576       |                               |  
|Excess
      cost over equity in net assets of the               |                           |               |                               |  
|banking
      subsidiary                                         |                           | 21,158,440    |                               |  
|Premises
      and equipment, net                                |                           | 10,914,468    |                               |  
|Other
      real estate                                          |                           | 295,052       |                               |  
|Accrued
      interest receivable                                |                           | 5,649,933     |                               |  
|Bank
      owned life insurance                                  |                           | 26,766,434    |                               |  
|Other
      assets                                               |                           | 36,925,413    |                               |  
|                                                                 |                           |               |                               |  
|                                                                 | $                         | 1,908,811,468 |                               | $
|                                                                 |                           |               |                               |  
|                                                                 |                           |               |                               |  
|LIABILITIES
      AND SHAREHOLDERS EQUITY                       |                           |               |                               |  
|Deposits                                                         |                           |               |                               |  
|Noninterest-bearing
      deposits                               | $                         | 457,565,468   |                               | $
|Interest-bearing
      deposits                                  |                           | 917,072,606   |                               |  
|                                                                 |                           |               |                               |  
|Total
      deposits                                             |                           | 1,374,638,074 |                               |  
|Securities
      sold under agreements to repurchase - customers |                           | 63,502,457    |                               |  
|Securities
      sold under agreements to repurchase - dealers   |                           | 74,728,000    |                               |  
|Federal
      funds purchased                                    |                           | 20,000,000    |                               |  
|Commercial
      paper                                           |                           | 36,533,429    |                               |  
|Other
      short-term borrowings                                |                           | 1,447,862     |                               |  
|Acceptances
      outstanding                                    |                           | 466,576       |                               |  
|Accrued
      expenses and other liabilities                     |                           | 76,915,522    |                               |  
|Long-term
      debt                                             |                           | 105,774,000   |                               |  
|                                                                 |                           |               |                               |  
|Total
      liabilities                                          |                           | 1,754,005,920 |                               |  
|                                                                 |                           |               |                               |  
|                                                                 |                           |               |                               |  
|Shareholders
      equity                                       |                           |               |                               |  
|Common
      stock, $1 par value. Authorized 50,000,000 shares;  |                           |               |                               |  
|issued
      20,055,849 and 19,880,521 shares, respectively      |                           | 20,055,849    |                               |  
|Capital
      surplus                                            |                           | 148,247,129   |                               |  
|Retained
      earnings                                          |                           | 33,523,972    |                               |  
|Accumulated
      other comprehensive loss, net of tax           |                           | (2,935,155    | )                             |  
|                                                                 |                           |               |                               |  
|                                                                 |                           | 198,891,795   |                               |  
|                                                                 |                           |               |                               |  
|Less                                                             |                           |               |                               |  
|and
      1,642,996 shares, respectively                         |                           | 43,932,216    |                               |  
|Unearned
      compensation                                      |                           | 154,031       |                               |  
|                                                                 |                           |               |                               |  
|Total
      shareholders equity                                 |                           | 154,805,548   |                               |  
|                                                                 |                           |               |                               |  
|                                                                 | $                         | 1,908,811,468 |                               | $
|                                                                 |                           |               |                               |  

|                                                   
|---------------------------------------------------
|**See Notes to Consolidated Financial Statements.**

|3
|-



|STERLING BANCORP AND SUBSIDIARIES
        Consolidated  Statements of Income 
    (Unaudited)
|---------------------------------------------------------------------------------------------
|                                                                                             

|                                                          |      
|--------------------------------------------------------- | -----
|**2005**                                                  |      
|                                                          |      
|**INTEREST INCOME**                                       |      
|**Loans**                                                 | **$**
|**Investment securities**                                 |      
|**Available for sale**                                    |      
|**Held to maturity**                                      |      
|**Federal funds sold**                                    |      
|**Deposits with other banks**                             |      
|                                                          |      
|**Total interest income**                                 |      
|                                                          |      
|                                                          |      
|                                                          |      
|**INTEREST EXPENSE**                                      |      
|**Deposits**                                              |      
|**Securities sold under agreements
    to repurchase**    |      
|**Federal funds purchased**                               |      
|**Commercial paper**                                      |      
|**Other short-term borrowings**                           |      
|**Long-term debt**                                        |      
|                                                          |      
|**Total interest expense**                                |      
|                                                          |      
|                                                          |      
|                                                          |      
|**Net interest income**                                   |      
|**Provision for loan losses**                             |      
|                                                          |      
|**Net interest income after provision
  for loan losses** |      
|                                                          |      
|                                                          |      
|                                                          |      
|**NONINTEREST INCOME**                                    |      
|**Factoring income**                                      |      
|**Mortgage banking income**                               |      
|**Service charges on deposit accounts**                   |      
|**Trade finance income**                                  |      
|**Trust fees**                                            |      
|**Other service charges and fees**                        |      
|**Bank owned life insurance income**                      |      
|**Securities gains**                                      |      
|**Other income**                                          |      
|                                                          |      
|**Total noninterest income**                              |      
|                                                          |      
|                                                          |      
|                                                          |      
|**NONINTEREST EXPENSES**                                  |      
|**Salaries**                                              |      
|**Employee benefits**                                     |      
|                                                          |      
|**Total personnel expense**                               |      
|**Occupancy expenses, net**                               |      
|**Equipment expenses**                                    |      
|**Advertising and marketing**                             |      
|**Professional fees**                                     |      
|**Data processing fees**                                  |      
|**Stationery and printing**                               |      
|**Communications**                                        |      
|**Other expenses**                                        |      
|                                                          |      
|**Total noninterest expenses**                            |      
|                                                          |      
|                                                          |      
|                                                          |      
|**Income before income taxes**                            |      
|**Provision for income taxes**                            |      
|                                                          |      
|                                                          |      
|**Net income**                                            | **$**
|                                                          |      
|                                                          |      
|                                                          |      
|**Average number of common
 shares outstanding**          |      
|**Basic**                                                 |      
|**Diluted**                                               |      
|**Earnings per average common share**                     |      
|**Basic**                                                 | **$**
|**Diluted**                                               |      
|**Dividends per common share**                            |      
|                                                          |      

|                                                   
|---------------------------------------------------
|**See Notes to Consolidated Financial Statements.**

|4
|-



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

|                                                                   |                                   |           |                                 |  
|------------------------------------------------------------------ | --------------------------------- | --------- | ------------------------------- | -
|                                                                   | Three Months Ended
      June 30, |           | Six Months Ended
      June 30, |  
|                                                                   | 2005                              |           | 2004                            |  
|                                                                   |                                   |           |                                 |  
|                                                                  
|Net Income                                                         | $                                 | 6,056,153 |                                 | $
|                                                                   |                                   |           |                                 |  
|Other comprehensive income,
   net of tax:                         |                                   |           |                                 |  
|Unrealized holding (losses)/gains
      arising during the period  |                                   | 1,495,155 |                                 |  
|                                                                  
|Reclassification adjustment for
      gains included in net income |                                   |          |                                 |  
|                                                                   |                                   |           |                                 |  
|Unrealized (losses)/gains
      supplemental pension               |                                   | (166,700  | )                               |  
|                                                                   |                                   |           |                                 |  
|                                                                   |                                   |           |                                 |  
|Comprehensive income                                               | $                                 | 7,384,608 |                                 | $
|                                                                   |                                   |           |                                 |  

|                                                   
|---------------------------------------------------
|**See Notes to Consolidated Financial Statements.**

|5
|-



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

|                                                                             | Six Months Ended
      June 30, |            
|---------------------------------------------------------------------------- | ------------------------------- | -----------
|
|
|Preferred Stock                                                              |                                 |            
|Balance at January 1                                                         | $                               |           
|Conversions of Series D shares                                               |                                 |           
|
|Balance at June 30                                                           | $                               |           
|
|                                                                             |                                 |            
|Common Stock                                                                 |                                 |            
|Balance at January 1                                                         | $                               | 19,880,521 
|Conversions of preferred shares into common shares                           |                                 |           
|Common shares issued under stock incentive plan                              |                                 | 175,328    
|
|Balance at June 30                                                           | $                               | 20,055,849 
|
|Capital Surplus                                                              |                                 |            
|Balance at January 1                                                         | $                               | 145,310,745
|Conversions of preferred shares into common shares                           |                                 |           
|Common shares issued under stock incentive plan
    and related tax benefits |                                 | 2,936,384  
|
|Balance at June 30                                                           | $                               | 148,247,129
|
|Retained Earnings                                                            |                                 |            
|Balance at January 1                                                         | $                               | 28,664,568 
|Net Income                                                                   |                                 | 11,822,876 
|Cash dividends paid - common shares                                          |                                 | (6,963,472 
|- preferred shares                                                           |                                 |           
|
|Balance at June 30                                                           | $                               | 33,523,972 
|
|                                                                             |                                 |            
|                                                                             |                                 |            
|Accumulated Other Comprehensive Income                                       |                                 |            
|Balance at January 1                                                         | $                               | (1,921,060 
|
|Unrealized holding (losses)/gains
    arising during the period:             |                                 |            
|Before tax                                                                   |                                 | (657,636   
|Tax effect                                                                   |                                 | 304,340    
|
|Net of tax                                                                   |                                 | (353,296   
|
|                                                                             |                                 |            
|Reclassification adjustment for gains
    included in net income:            |                                 |            
|Before tax                                                                   |                                 | (196,680   
|Tax effect                                                                   |                                 | 90,276     
|
|Net of tax                                                                   |                                 | (106,404   
|
|                                                                             |                                 |            
|Unrealized (losses) /gains supplemental pension:                             |                                 |            
|Before tax                                                                   |                                 | (1,026,840 
|Tax effect                                                                   |                                 | 472,445    
|
|Net of tax                                                                   |                                 | (554,395   
|
|Balance at June 30                                                           | $                               | (2,935,155 
|
|                                                                             |                                 |            
|Treasury Stock                                                               |                                 |            
|Balance at January 1                                                         | $                               | (42,939,969
|Purchase of common shares                                                    |                                 | (547,460   
|Surrender of shares issued under
    incentive compensation plan             |                                 | (444,787   
|
|Balance at June 30                                                           | $                               | (43,932,216
|
|Unearned Compensation                                                        |                                 |            
|Balance at January 1                                                         | $                               | (291,212   
|Amortization of unearned compensation                                        |                                 | 137,181    
|
|Balance at June 30                                                           | $                               | (154,031   
|
|Total Shareholders**** Equity                                               |                                 |            
|Balance at January 1                                                         | $                               | 148,703,593
|Net changes during the period                                                |                                 | 6,101,955  
|
|Balance at June 30                                                           | $                               | 154,805,548
|

|                                                   
|---------------------------------------------------
|**See Notes to Consolidated Financial Statements.**

|6
|-



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

|                                                                                                           | Six Months
      Ended
      June 30, |             
|---------------------------------------------------------------------------------------------------------- | ------------------------------------- | ------------
|
|
|Operating
      Activities                                                                                 |                                       |             
|Net
      Income                                                                                           | $                                     | 11,822,876  
|Adjustments
      to reconcile net income to net cash provided
         by (used in) operating activities: |                                       |             
|Provision
      for loan losses                                                                            |                                       | 4,654,000   
|Depreciation
      and amortization of premises and equipment                                              |                                       | 1,006,556   
|Securities
      gains                                                                                     |                                       | (196,680    
|Income
      from bank owned life insurance                                                                |                                       | (687,364    
|Deferred
      income tax benefit                                                                          |                                       | (1,463,038  
|Net
      change in loans held for sale                                                                    |                                       | 291,461     
|Amortization
      of unearned compensation                                                                |                                       | 137,181     
|Amortization
      of premiums on securities                                                               |                                       | 480,003     
|Accretion
      of discounts on securities                                                                 |                                       | (296,378    
|Increase
      in accrued interest receivable                                                              |                                       | (45,152     
|Decrease
      in accrued expenses and
           other liabilities                                        |                                       | (14,413,984 
|Increase
      in other assets                                                                             |                                       | (2,750,536  
|Other,
      net                                                                                           |                                       | 465,604     
|
|Net
      cash (used in) provided by operating activities                                                  |                                       | (995,451    
|
|                                                                                                           |                                       |             
|Investing
      Activities                                                                                 |                                       |             
|Purchase
      of premises and equipment                                                                   |                                       | (1,246,316  
|Net
      decrease (increase) in interest-bearing deposits
         with other banks                       |                                       | 289,609     
|Net
      decrease (increase) in loans held in portfolio                                                   |                                       | 9,265,460   
|Decrease
      (Increase) in other real estate                                                             |                                       | 471,568     
|Proceeds
      from prepayments, redemptions or maturities
         of securities - held to maturity       |                                       | 47,443,324  
|Purchases
      of securities - held to maturity                                                           |                                       | (112,476,006
|Proceeds
      from sales of securities - available for sale                                               |                                       | 2,932,250   
|Proceeds
      from prepayments, redemptions or maturities
         of securities - available for sale     |                                       | 41,938,821  
|Purchases
      of securities - available for sale                                                         |                                       | (25,706,370 
|
|Net
      cash (used in) investing activities                                                              |                                       | (37,087,660 
|
|                                                                                                           |                                       |             
|Financing
      Activities                                                                                 |                                       |             
|Net
      decrease in noninterest-bearing deposits                                                         |                                       | (53,741,550 
|Net
      increase in interest-bearing deposits                                                            |                                       | 84,528,509  
|Decrease
      in Federal funds purchased                                                                  |                                       | (12,500,000 
|Net
      increase in securities sold under agreements
         to repurchase                              |                                       | 48,414,287  
|Net
      increase in commercial paper and
         other short-term borrowings                            |                                       | 9,472,878   
|Net
      decrease in long-term borrowings                                                                 |                                       | (30,000,000 
|Purchase
      of treasury stock                                                                           |                                       | (547,460    
|Proceeds
      from exercise of stock options                                                              |                                       | 2,121,001   
|Cash
      dividends paid on common stock                                                                  |                                       | (6,963,472  
|
|Net
      cash provided by financing activities                                                            |                                       | 40,784,193  
|
|Net increase
      in cash and due from banks                                                              |                                       | 2,701,082   
|Cash and
      due from banks - beginning of period                                                        |                                       | 48,842,418  
|
|Cash and
      due from banks - end of period                                                              | $                                     | 51,543,500  
|
|                                                                                                           |                                       |             
|Supplemental
      disclosures:                                                                            |                                       |             
|Interest
      paid                                                                                        | $                                     | 11,720,360  
|Income
      taxes paid                                                                                    |                                       | 10,501,100  
|                                                                                                           |                                       |             

|                                                   
|---------------------------------------------------
|**See Notes to Consolidated Financial Statements.**

|7
|-



|STERLING BANCORP AND SUBSIDIARIESNotes to Consolidated Financial Statements
    (Unaudited)
|-------------------------------------------------------------------------------------------
|                                                                                           

|1. | The consolidated financial statements include the accounts of Sterling Bancorp (the parent company)
  and its subsidiaries, principally Sterling National Bank and its subsidiaries (the bank),
  after elimination of material intercompany transactions. The term the Company refers
  to Sterling Bancorp and its subsidiaries. The consolidated financial statements as of and for the
  interim periods ended June 30, 2005 and 2004 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 2004 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, 2004. The Company effected a six-for-five stock split on December 8, 2004, a five-for-four
  stock split on September 10,2003 and paid stock dividends as follows: 20% on December 9, 2002; 10%
  on December 10, 2001; 10% on December 11, 2000; and 5% on December 14, 1999. Fractional shares
  were cashed-out and payments were made to shareholders in lieu of fractional shares. All capital
  and share amounts as well as basic and diluted average number of shares outstanding and earnings
  per average common share information for all prior reporting periods presented, reflect
  the effect of the stock splits and stock dividends.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2. | At June 30, 2005, the Company has a stock-based employee compensation plan, which is described more
  fully in Note 1 and Note 15 of the Companys annual report on Form 10-K for the year ended December
  31, 2004. The Company accounts for this plan under the recognition and measurement principles of
  Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based employee compensation cost is reflected in net income,
  as all options granted under those plans had an exercise price equal to the market value of the underlying
  common stock on the date of grant. In accordance with Statement of Financial Accounting Standards
  (SFAS) No. 148, the following table illustrates the effect on net income and earnings
  per average common share if the Company had applied the fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, to the stock-based employee compensation plans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

| | Three Months Ended June 30,                                                                                                                             | 2005 |           | 2004 |  
| | ------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | --------- | ---- | -
|
| | Net income available for
    common shareholders                                                                                                        | $    | 6,056,153 |      | $
| | Deduct: Total stock-based employee
    compensation expense determined under
    fair value based method for all awards,
    net of related tax effects |      | (61,395   | )    |  
| |                                                                                                                                                         |      |          
|
| |                                                                                                                                                         |      |           |      |  
| | Pro forma, net income                                                                                                                                   | $    | 5,994,758 |      | $
|
| |                                                                                                                                                         |      |           |      |  
| | Earnings per average common share:                                                                                                                      |      |           |      |  
| | Basic- as reported                                                                                                                                      | $    | 0.33      |      | $
| | Basic- pro forma                                                                                                                                        |      | 0.33      |      |  
| | Diluted- as reported                                                                                                                                    |      | 0.33      |      |  
| | Diluted- pro forma                                                                                                                                      |      | 0.32      |      |  

|8
|-



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

| | Six Months Ended June 30,                                                                                                                               | 2005 |            | 2004 |  
| | ------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ---------- | ---- | -
|
| | Net income available for
    common shareholders                                                                                                        | $    | 11,822,876 |      | $
| | Deduct: Total stock-based employee
    compensation expense determined under
    fair value based method for all awards,
    net of related tax effects |      | (122,790   | )    |  
|
| |                                                                                                                                                         |      |            |      |  
| | Pro forma, net income                                                                                                                                   | $    | 11,700,086 |      | $
|
|
| | Earnings per average common share:                                                                                                                      |      |            |      |  
| | Basic- as reported                                                                                                                                      | $    | 0.65       |      | $
| | Basic- pro forma                                                                                                                                        |      | 0.64       |      |  
| | Diluted- as reported                                                                                                                                    |      | 0.63       |      |  
| | Diluted- pro forma                                                                                                                                      |      | 0.62       |      |  

|   |                                                                                                 
|-- | ------------------------------------------------------------------------------------------------
|3. | The major components of domestic loans held for sale and loans held in portfolio are as follows:
|   |                                                                                                 

| |                                                         | June 30, |              
| | ------------------------------------------------------- | -------- | -------------
|
|
|
| | Loans held for sale                                     |          |              
| | Real estate-mortgage                                    | $        | 36,767,212   
|
| | Loans held in portfolio                                 |          |              
| | Commercial and industrial                               | $        | 547,377,444  
| | Lease financing                                         |          | 190,449,866  
| | Real estate-mortgage                                    |          | 254,044,939  
| | Real estate-construction                                |          | 2,310,464    
| | Installment                                             |          | 11,463,248   
| | Loans to depository institutions                        |          | 27,000,000   
|
| |                                                         |          |              
| | Loans held in portfolio, gross                          |          | 1,032,645,961
| |                                                         |          |              
| | Less unearned discounts                                 |          | 24,451,546   
|
| |                                                         |          |              
| | Loans held in portfolio, net of
     unearned discounts | $        | 1,008,194,415
|
| |                                                         |          |              

|   |                                                                                               
|-- | ----------------------------------------------------------------------------------------------
|4. | In February 2004, 224,432 Series D preferred shares were converted into 428,304 common shares.
|   |                                                                                               

|5. | SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, established standards for the way that public business enterprises report and disclose selected information
  about operating segments in interim financial statements provided to stockholders.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|
|

|9
|-



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

|The Company provides a broad range of financial products and services, including commercial loans, asset-based financing, factoring and accounts receivable management services, trade financing, equipment leasing, corporate and consumer deposit services, commercial and residential mortgage lending and brokerage, trust and estate administration and investment management services. The Companys primary source of earnings is net interest income, which represents the difference between interest earned on interest-earning assets and the interest incurred on interest-bearing liabilities. The Companys 2005 year-to-date average interest-earning assets were 57.8% loans (corporate lending was 67.5% and real estate lending was 28.9% of total loans, respectively) and 41.0% investment securities and money market investments. There are no industry concentrations exceeding 10% of loans, gross, in the corporate loan portfolio. Approximately











 67% of loans are to borrowers located in the metropolitan New York area. In order to comply with SFAS No. 131, the Company has determined that it has three reportable operating segments: corporate lending, real estate lending and company-wide treasury.
        The following tables provide certain information regarding the Companys operating segments for the three - and six - month periods ended June 30, 2005 and 2004:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                       | Corporate
      Lending |             | Real Estate
      Lending |   | Company-wide
      Treasury |  | Totals |            
|-------------------------------------- | ----------------------- | ----------- | ------------------------- | - | --------------------------- |  | ------ | -----------
|
|Three
      Months Ended June 30, 2005 |                         |             |                           |   |                             |  |        |            
|Net interest
      income              | $                       | 9,752,277   |                           | $ | 5,358,477                   |  | $      | 5,727,296  
|Noninterest
      income               |                         | 3,159,755   |                           |   | 4,675,451                   |  |        | 680,231    
|Depreciation
      and amortization    |                         | 97,688      |                           |   | 90,610                      |  |        | 612        
|Segment income
      before taxes      |                         | 4,705,504   |                           |   | 5,282,423                   |  |        | 6,101,047  
|Segment assets                         |                         | 694,763,164 |                           |   | 341,785,149                 |  |        | 849,383,287
|                                       |                         |             |                           |  
|                                       |                         |             |                           |  
|                                      
|Three
      Months Ended June 30, 2004 |                         |             |                           |   |                             |  |        |            
|Net interest
      income              | $                       | 8,953,093   |                           | $ | 3,856,463                   |  | $      | 6,049,927  
|Noninterest
      income               |                         | 3,249,504   |                           |   | 3,973,944                   |  |        | 433,222    
|Depreciation
      and amortization    |                         | 80,383      |                           |   | 99,944                      |  |        |           
|Segment income
      before taxes      |                         | 4,964,638   |                           |   | 4,138,794                   |  |        | 6,374,206  
|Segment assets                         |                         | 712,537,790 |                           |   | 255,535,670                 |  |        | 810,066,256
|                                       |                         |             |                           |  
|                                       |                         |             |                           |  
|                                      
|Six Months
      Ended June 30, 2005   |                         |             |                           |   |                             |  |        |            
|Net interest
      income              | $                       | 19,467,643  |                           | $ | 10,212,489                  |  | $      | 11,446,867 
|Noninterest
      income               |                         | 6,123,240   |                           |   | 8,613,096                   |  |        | 1,204,524  
|Depreciation
      and amortization    |                         | 190,497     |                           |   | 179,570                     |  |        | 1,218      
|Segment income
      before taxes      |                         | 9,597,139   |                           |   | 10,381,926                  |  |        | 12,174,464 
|Segment assets                         |                         | 694,763,164 |                           |   | 341,785,149                 |  |        | 849,383,287
|                                       |                         |             |                           |  
|                                       |                         |             |                           |  
|                                      
|Six Months
      Ended June 30, 2004   |                         |             |                           |   |                             |  |        |            
|Net interest
      income              | $                       | 17,563,043  |                           | $ | 7,662,696                   |  | $      | 12,450,158 
|Noninterest
      income               |                         | 6,174,555   |                           |   | 7,677,372                   |  |        | 1,282,595  
|Depreciation
      and amortization    |                         | 141,164     |                           |   | 199,715                     |  |        |           
|Segment income
      before taxes      |                         | 8,426,200   |                           |   | 8,207,402                   |  |        | 13,442,118 
|Segment assets                         |                         | 712,537,790 |                           |   | 255,535,670                 |  |        | 810,066,256
|                                       |                         |             |                           |  
|                                       |                         |             |                           |  

|10
|--



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

|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 June 30, |               | Six Months Ended June 30, |  
|--------------------------------------------------- | --------------------------- | ------------- | ------------------------- | -
|                                                    |                             |               |                           |  
|                                                    | 2005                        |               | 2004                      |  
|                                                    |                             |               |                           |  
|                                                    |                             |               |                           |  
|Net interest
      income:                          |                             |               |                           |  
|Total
      for reportable operating segments       | $                           | 20,838,050    |                           | $
|Other
      [1]                                     |                             | 227,268       |                           |  
|                                                    |                             |               |                           |  
|                                                    |                             |               |                           |  
|Consolidated
      net interest income              | $                           | 21,065,318    |                           | $
|                                                    |                             |               |                           |  
|                                                    |                             |               |                           |  
|Noninterest
      income:                           |                             |               |                           |  
|Total
      for reportable operating segments       | $                           | 8,515,437     |                           | $
|Other [1]                                           |                             | 798,117       |                           |  
|                                                    |                             |               |                           |  
|                                                    |                             |               |                           |  
|Consolidated
      noninterest income               | $                           | 9,313,554     |                           | $
|                                                    |                             |               |                           |  
|                                                    |                             |               |                           |  
|Income before
      taxes:                          |                             |               |                           |  
|Total
      for reportable operating segments       | $                           | 16,088,974    |                           | $
|Other [1]                                           |                             | (5,906,268    | )                         |  
|                                                    |                             |               |                           |  
|                                                    |                             |               |                           |  
|Consolidated
      income before income       taxes | $                           | 10,182,706    |                           | $
|                                                    |                             |               |                           |  
|                                                    |                             |               |                           |  
|Assets:                                             |                             |               |                           |  
|Total
      for reportable operating segments       | $                           | 1,885,931,600 |                           | $
|Other [1]                                           |                             | 22,879,868    |                           |  
|                                                    |                             |               |                           |  
|                                                    |                             |               |                           |  
|Consolidated
      assets                           | $                           | 1,908,811,468 |                           | $
|                                                    |                             |               |                           |  

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

|6. | The following information is provided in connection with the sales of available for sale securities:
|-- | ----------------------------------------------------------------------------------------------------

| |                             |   |          
| | --------------------------- | - | ---------
| | Three Months Ended June 30, |   | 2005     
| |                             |   |          
| | Proceeds                    | $ |         
| |                             |   |          
| | Gross Gains                 |   |         
| |                             |   |          
| | Gross Losses                |   |         
| |                             |   |          
| | Six Months Ended June 30,   |   | 2005     
| |                             |   |          
| | Proceeds                    | $ | 2,932,250
| |                             |   |          
| | Gross Gains                 |   | 196,680  
| |                             |   |          
| | Gross Losses                |   |         

|11
|--



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

|7. | The following tables set forth the disclosures required for net periodic benefit cost and net benefit cost:
|-- | -----------------------------------------------------------------------------------------------------------
|   |                                                                                                            

| |                                          | Three Months Ended June 30, |          | Six Months Ended June 30, |  
| | ---------------------------------------- | --------------------------- | -------- | ------------------------- | -
| |                                          |                             |          |                           |  
| |                                          | 2005                        |          | 2004                      |  
| |                                          |                             |          |                           |  
| |                                          |                             |          |                           |  
| | COMPONENTS
      OF NET PERIODIC COST    |                             |          |                           |  
| | Service Cost                             | $                           | 403,843  |                           | $
| | Interest
      Cost                      |                             | 509,493  |                           |  
| | Expected
      return on plan assets     |                             | (442,549 | )                         |  
| | Amortization
      of prior service cost |                             | 19,116   |                           |  
| | Recognized
      actuarial loss          |                             | 207,354  |                           |  
| |                                          |                             |          |                           |  
|
| | Net periodic
      benefit cost          |                             | 697,257  |                           |  
| | Settlement
      gain                    |                             |         |                           |  
| |                                          |                             |          |                           |  
| | Net benefit
      cost                   | $                           | 697,257  |                           | $
| |                                          |                             |          |                           |  

|   | The Company previously disclosed in its financial statements for the year ended December 31,2004, that it expected to contribute approximately $3,000,000 to the defined benefit pension plan in 2005. No contribution has been made as of June 30, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|8. | In April, 2005, the Securities and Exchange Commission (the SEC) delayed the compliance date of SFAS No. 123R, Share-Based Payment. SFAS No. 123R was originally scheduled to be effective as of the first interim or annual reporting period beginning after June 15, 2005. As a result of the SECs action, SFAS No. 123R will be effective for the Company beginning January 1, 2006. SFAS No. 123R provides alternative transition methods and the Company has not yet determined which transition method it will apply upon adoption of SFAS No. 123R. The impact on the Companys consolidated financial statements will depend on the transition method selected.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|9. | In May 2005,
the Financial Accounting Standards Board (FASB) issued SFAS No. 154,
Accounting Changes and Error Corrections. This statement replaces APB
Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting
Accounting Changes in Interim Financial Statements, and changes the
requirements for the accounting for and reporting of a change in accounting
principle. This statement applies to all voluntary changes in accounting
principle. It also applies to changes required by an accounting pronouncement in
the unusual instance that the pronouncement does not include specific transition
provisions. When a pronouncement includes specific transition provisions, those
provisions should be followed. SFAS No. 154 establishes retrospective
application as the required method for reporting a voluntary change in
accounting principle and for adopting a new accounting pronouncement in the
unusual instance that the pronouncement does not include specific transition
guidance. SFAS No. 154 provides guidance for determining whether retrospective
application of a change in accounting principle is impracticable and for
reporting a change when retrospective application is impracticable. The
reporting of a correction of an error by restating previously issued financial
statements is also addressed by SFAS No. 154. SFAS No. 154 is effective for
accounting changes and correction of errors made in fiscal years beginning after
December 15, 2005. The Company expects to adopt SFAS No. 154 on January 1, 2006.

|12
|--



|ITEM 2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | AND RESULTS OF OPERATIONS                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|The following commentary presents managements discussion and analysis of the financial condition
and results of operations of Sterling Bancorp (the parent company), a financial holding
company under the Gramm-Leach-Bliley Act of 1999, and its subsidiaries, principally Sterling National
Bank (the bank). Throughout this discussion and analysis, the term the Company
refers to Sterling Bancorp and its subsidiaries. This discussion and analysis should be read in conjunction
with the consolidated financial statements and supplemental data contained elsewhere in this quarterly
report and the Companys annual report on Form 10-K for the year ended December 31, 2004. Certain
reclassifications have been made to prior years financial data to conform to current financial
statement presentations as well as to reflect the effect of the six-for-five stock split effected
on December 8, 2004.
OVERVIEW
The Company provides a broad range of financial products and services, including business and consumer
loans, commercial and residential mortgage lending and brokerage, asset-based financing, factoring/accounts
receivable management services, deposit services, trade financing, equipment leasing, trust
and estate administration, and investment management services. The Company has operations in New
York, Virginia and North Carolina and conducts business throughout the United States. The general
state of the U.S. economy and, in particular, economic and market conditions in the metropolitan
New York area have a significant impact on loan demand, the ability of borrowers to repay these loans
and the value of any collateral securing these loans and may also affect deposit levels. Accordingly,
future general economic conditions are a key uncertainty that management expects will materially
affect the Companys results of operations.
For the three months ended June 30, 2005, the banks average earning assets represented approximately
96.4% of the Companys average earning assets. Loans represented 56.0% and investment securities
represented 42.9% of the banks average earning assets for the three months ended June 30, 2005.
For the six months ended June 30, 2005, the banks average earning assets represented approximately
96.5% of the Companys average earning assets. Loans represented 56.3% and investment securities
represented 42.5% of the banks average earning assets for the six months ended June 30, 2005.
The Companys primary source of earnings is net interest income, and its principal market risk
exposure is interest rate risk. The Company is not able to predict market interest rate fluctuations,
and its asset-liability management strategy may not prevent interest rate changes from having a material
adverse effect on the Companys results of operations and financial condition.
Although management endeavors to minimize the credit risk inherent in the Companys loan portfolio,
it must necessarily make various assumptions and judgments about the collectibility of the loan portfolio
based on its experience and evaluation of economic conditions. If such assumptions or judgments prove
to

|13
|--



|be incorrect, the current allowance for loan losses may not be sufficient to cover loan losses and
additions to the allowance may be necessary, which would have a negative impact on net income.
There is intense competition in all areas in which the Company conducts its business. The Company competes
with banks and other financial institutions,including savings and loan associations, savings banks, finance companies and credit unions. Many of
these competitors have substantially greater resources and lending limits and provide a wider array
of banking services. To a limited extent, the Company also competes with other providers of financial
services, such as money market mutual funds, brokerage firms, consumer finance companies and insurance
companies. Competition is based on a number of factors, including prices, interest rates, service,
availability of products, and geographic location.
The Company regularly evaluates acquisition opportunities and conducts due diligence activities in
connection with possible acquisitions. As a result, acquisition discussions, and in some cases negotiations,
regularly take place and future acquisitions could occur.
INCOME STATEMENT ANALYSIS
Net interest income, which represents the difference between interest earned on interest-earning assets
and interest incurred on interest-bearing liabilities, is the Companys primary source of earnings.
Net interest income can be affected by changes in market interest rates as well as the level and
composition of assets, liabilities and shareholders equity. Net interest spread is the difference
between the average rate earned, on a tax-equivalent basis, on interest-earning assets and the average
rate paid on interest-bearing liabilities. The net yield on interest-earning assets (net interest
margin) is calculated by dividing tax-equivalent net interest income by average interest-earnings
assets. Generally, the net interest margin will exceed the net interest spread because a portion
of interest-earning assets are funded by various noninterest-bearing sources, principally noninterest-bearing
deposits and shareholders equity. The increases (decreases) in the components of interest income
and interest expense, expressed in terms of fluctuation in average volume and rate, are provided
in the Rate/Volume Analysis shown on pages 27 and 28. Information as to the components of interest
income and interest expense and average rates is provided in the Average Balance Sheets shown on pages 25 and 26.
Comparisons of the Three Months Ended June 30, 2005 and 2004
The Company reported net income for the three months ended June 30, 2005 of $6.1 million, representing
$0.33 per share, calculated on a diluted basis, compared to $6.6 million, or $0.34 per share calculated
on a diluted basis, for the second quarter of 2004. Net income benefitted from continued growth in
net interest income, a lower provision for loan losses and higher noninterest income, but these benefits
were more than offset by increases in the provision for income taxes and in noninterest expenses.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|14
|--



|Net Interest Income
Net interest income, on a tax-equivalent basis, increased to $21.2 million for the second quarter of
2005 from $19.2 million for the 2004 period, due to higher average earning assets outstanding coupled
with higher average yield on loans partially offset by higher balances for interest-bearing
deposits coupled with higher rates paid on interest-bearing deposit balances and borrowed funds.
The net interest margin, on a tax-equivalent basis, was 4.84% for the second quarter of 2005
compared to 4.75% for the 2004 period. The increase in the net interest margin was primarily the
result of the impact of the higher interest rate environment in 2005, and of an increase in average
loan outstandings and noninterest-bearing deposits partially offset by the impact of higher average
interest-bearing deposits.
Total interest income, on a tax-equivalent basis, aggregated $28.0 million for the second quarter of
2005, up from $23.7 million for the 2004 period. The tax-equivalent yield on interest-earning assets
was 6.42% for the second quarter of 2005 compared to 5.91% for the 2004 period.
Interest earned on the loan portfolio amounted to $19.5 million for the second quarter of 2005, up
$4.1 million from a year ago. Average loan balances amounted to $1,019.2 million, an increase of
$118.0 million from an average of $901.2 million in the prior year period. The increase in average
loans (across virtually all segments of the Companys loan portfolio), primarily due to the
Companys business development activities and the ongoing consolidation of banks in the Companys
marketing area, accounted for $2.1 million of the $4.1 million increase in interest earned on loans.
The increase in the yield on the domestic loan portfolio to 7.92% for the second quarter of 2005
from 7.02% for the 2004 period was primarily attributable to the mix of outstanding balances on average
among the components of the loan portfolio and the higher interest rate environment in 2005.
Interest earned on the securities portfolio, on a tax-equivalent basis, increased to $8.4 million for
the second quarter of 2005 from $8.3 million in the prior year period. Average outstandings increased
to $733.8 million (41.4% of average earning assets for the second quarter of 2005) from $717.2 million
(44.2% of average earning assets) in the prior year period. The average life of the securities portfolio
was approximately 4.2 years at June 30, 2005 compared to 3.9 years at June 30, 2004, reflecting
the impact of purchases made during 2004.The decrease in yields on most of the securities portfolio reflects the impact of purchases made during
the lower rate environment on average in 2004.
Total interest expense increased to $6.7 million for the second quarter of 2005 from $4.5 million for
the 2004 period, primarily due to higher rates paid for interest-bearing deposits and for borrowed
funds and higher average balances for interest-bearing deposits.
Interest expense on deposits increased to $4.1 million for the second quarter of 2005 from $2.4 million
for the 2004 period due to an increase in average balances, primarily for time deposits, coupled
with an increase in the cost of those funds. Average interest-bearing deposit balances increased
to $925.2 million for the second quarter of 2005 from $798.7 million in the 2004 period
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|15
|--



|primarily the result of the Companys branching initiatives and other business development activities.
Average rate paid on interest-bearing deposits was 1.77%which was 57 basis points higher than the prior year period. The increase in average cost of deposits
reflects the higher interest rate environment during 2005.
Interest expense on borrowings increased to $2.7 million for the second quarter of 2005 from $2.1 million
for the 2004 period primarily due to the higher interest rate environment during 2005. The average
rate paid on borrowed funds was 3.38% which was 78 basis points higher than the prior year period.
Provision for Loan Losses
Based on managements continuing evaluation of the loan portfolio (discussed under Asset
Quality below), the provision for loan losses for the second quarter of 2005 decreased to $2.0
million from $2.5 million for the prior year period. Factors affecting the level of provision
included the growth in the loan portfolios, changes in general economic conditions and the amount
of nonaccrual loans.
Noninterest Income
Noninterest income increased to $9.3 million for the second quarter of 2005 from $8.5 million in the
2004 period, primarily due to higher revenues from mortgage banking activities, bank owned life insurance
and fees for deposit services. Partially offsetting those increases were lower gains on sales of
available for sale securities and fees for factoring services.
Noninterest Expenses
Noninterest expenses increased $2.0 million for the second quarter of 2005 when compared to the 2004
period. The increase was primarily due to higher salaries and professional fees related to compliance
efforts and investments in the Sterling franchise, including the new branches, with higher expenses
related to salaries, equipment and occupancy costs.
Provision for Income Taxes
The provision for income taxes for the second quarter of 2005 increased by $1.7 million from the 2004
period. The lower provision for taxes for the second quarter of 2004 was due primarily to the resolution
in that quarter of certain state tax issues for the years 1999-2001.
Comparisons of the Six Months Ended June 30, 2005 and 2004
The Company reported net income for the six months ended June 30, 2005 of $11.8 million, representing
$0.63 per share, calculated on a diluted basis, compared to $11.8 million, or $0.61 per share calculated
on a diluted basis, for the first half of 2004. This increase reflected continued growth in net interest
income, a lower provision for loan losses and higher noninterest income, which were largely offset
by increases in the provision for income taxes and in noninterest expenses.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|16
|--



|Net Interest Income
Net interest income, on a tax-equivalent basis, increased to $41.9 million for the first six months
of 2005 from $38.5 million for the 2004 period, due to higher average earning assets outstanding
coupled with higher average yield on loans partially offset by higher balances for interest-bearing
deposits coupled with higher rates paid on interest-bearing deposit balances and borrowed funds.
The net interest margin, on a tax-equivalent basis, was 4.94% for the first six months of 2005
compared to 4.87% for the 2004 period. The increase in the net interest margin was primarily the
result of the impact of the higher interest rate environment in 2005, and of an increase in average
loan outstandings and noninterest-bearing deposits partially offset by the impact of higher average
interest-bearing deposits.
Total interest income, on a tax-equivalent basis, aggregated $54.4 million for the first six months
of 2005, up from $47.5 million for the 2004 period. The tax-equivalent yield on interest-earning
assets was 6.43% for the first six months of 2005 compared to 6.04% for the 2004 period.
Interest earned on the loan portfolio amounted to $37.9 million for the first six months of 2005, up
$7.4 million from a year ago. Average loan balances amounted to $1,006.1 million an increase
of $124.2 million from an average of $881.9 million in the prior year period. The increase in average
loans (across virtually all segments of the Companys loan portfolio), primarily due to the
Companys business development activities and the ongoing consolidation of banks in the Companys
marketing area, accounted for $4.2 million of the $7.4 million increase in interest earned on loans.
The increase in the yield on the domesticloan portfolio to 7.94% for the first six months of 2005 from 7.22% for the 2004 period was primarily
attributable to the mix of outstanding balances on average among the components of the loan portfolio
and the higher interest rate environment in 2005.
Interest earned on the securities portfolio, on a tax-equivalent basis, decreased to $16.3 million
for the first six months of 2005 from $17.0 million in the prior year period. The decrease in yields
on most of the securities portfolio reflects the impact of purchases made during the lower rate environment
on average in 2004. Average outstandings increased to $713.3 million (41.0% of average earning assets
for the first six months of 2005) from $706.2 million (44.1% of average earning assets) in the prior
year period. The average life of the securities portfolio was approximately 4.2 years at June 30,
2005 compared to 3.9 years at June 30, 2004, reflecting the impact of purchases made during 2004.
Total interest expense increased to $12.4 million for the first six months of 2005 from $9.1 million
for the 2004 period, primarily due to higher rates paid for interest-bearing deposits and for borrowed
funds and higher average balances for interest-bearing deposits.
Interest expense on deposits increased to $7.5 million for the first six months of 2005 from $4.8
million for the 2004 period due to an increase in average balances, primarily for time deposits,
coupled with an increase in the cost of those funds. Average interest-bearing deposit balances increased
to $909.8 million for the first six months of 2005 from $796.2 million in the 2004 period
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|17
|--



|primarily the result of the Companys branching initiatives and other business development activities.
Average rate paid on interest-bearing deposits was 1.67%which was 45 basis points higher than the prior year period. The increase in average cost of deposits
reflects the higher interest rate environment during 2005.
Interest expense on borrowings increased to $4.9 million for the first six months of 2005 from $4.2
for the 2004 period primarily due to the higher interest rate environment during 2005. The average
rate paid on borrowed funds was 3.27% which was 60 basis points higher than the prior year period.
Provision for Loan Losses
Based on managements continuing evaluation of the loan portfolio (discussed under Asset
Quality below), the provision for loan losses for the first half of 2005 decreased to $4.7
million from $4.9 million for the prior year period. Factors affecting the level of provision
included the growth in the loan portfolios, changes in general economic conditions and the amount
of nonaccrual loans.
Noninterest Income
Noninterest income increased to $17.3 million for the first six months of 2005 from $16.8 million in
the 2004 period, primarily due to higher revenues from mortgage banking activities, bank owned life
insurance and fees for deposit services. Partially offsetting those increases were lower gains on
sales of available for sale securities and fees for factoring services.
Noninterest Expenses
Noninterest expenses increased $3.1 million for the first six months of 2005 when compared to the 2004
period. The increase was primarily due to higher salaries and professional fees related to compliance
efforts and investments in the Sterling franchise, including the new branches, with higher expenses
related to salaries, equipment and occupancy costs.
Provision for Income Taxes
The provision for income taxes for the first six months of 2005 increased by $1.2 million from the
2004 period. The lower provision for taxes in the 2004 period was due primarily to the resolution,
during the second quarter of 2004, of certain state tax issues for the years 1999-2001.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|18
|--



|BALANCE SHEET ANALYSIS
  Securities
The Companys securities portfolios are comprised principally of U.S. government and U.S. government
corporation and agency guaranteed mortgage-backed securities. At June 30, 2005, the Companys
portfolio of securities totaled $725.2 million, of which U.S. government corporation and agency guaranteed
mortgage-backed securities and collateralized mortgage obligations having an average life of approximately
4.6 years amounted to $624.3 million. The Company has the intent and ability to hold to maturity
securities classified as held to maturity. These securities are carried at cost,
adjusted for amortization of premiums and accretion of discounts. The gross unrealized gains and
losses on held to maturity securities were $3.4 million and $3.2 million, respectively.
Securities classified as available for sale may be sold in the future, prior to maturity.
These securities are carried at market value. Net aggregate unrealized gains or losses on these securities
are included in a valuation allowance account and are shown net of taxes, as a component of shareholders
equity. Available for sale securities included gross unrealized gains of $1.6 million
and gross unrealized losses of $2.2 million. Given the generally high credit quality of the portfolio,
management expects to realize all of its investment upon the maturity of such instruments and thus
believes that any market value impairment is temporary.
The following table presents information regarding securities available for sale:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|June 30,2005                                                                                      | Gross
      Amortized
      Cost |             | Gross 
      Unrealized
      Gains |   | Gross
      Unrealized
      Losses |  | Market
      Value |          
|------------------------------------------------------------------------------------------------- | -------------------------------- | ----------- | ----------------------------------- | - | ----------------------------------- |  | ------------------ | ---------
|                                                                                                  |                                  |             |                                     |   |                                     |  |                    |          
|Obligations of U.S. government   corporations and agencies
  mortgage-backed securities          | $                                | 121,616,438 |                                     | $ | 1,044,166                           |  | $                  | 852,171  
|Obligations of U.S. government   corporations and agencies
  collateralized mortgage obligations |                                  | 38,432,884  |                                     |   |                                    |  |                    | 961,463  
|Obligations of state and
  political institutions                                                 |                                  | 21,912,816  |                                     |   | 519,777                             |  |                    | 570      
|Other debt securities                                                                             |                                  | 24,996,229  |                                     |   |                                    |  |                    | 399,354  
|Federal Reserve Bank and
  other equity securities                                                |                                  | 7,619,242   |                                     |   | 18,607                              |  |                    |         
|                                                                                                  |                                  |             |                                     |   |                                     |  |                    |          
|                                                                                                 
|Total                                                                                             | $                                | 214,577,609 |                                     | $ | 1,582,550                           |  | $                  | 2,213,558
|                                                                                                  |                                  |             |                                     |   |                                     |  |                    |          

|19
|--



|The following table presents information regarding securities held to maturity:
|-------------------------------------------------------------------------------

|June 30, 2005                                                                                                  | Carrying
      Value |             | Gross
      Unrealized
      Gains |   | Gross
      Unrealized
      Losses |  | Estimated
      Market
      Value |          
|-------------------------------------------------------------------------------------------------------------- | -------------------- | ----------- | ---------------------------------- | - | ----------------------------------- |  | ---------------------------------- | ---------
|                                                                                                               |                      |             |                                    |   |                                     |  |                                    |          
|Obligations of U.S. government   corporations and agencies  
        mortgage-backed securities               | $                    | 416,402,980 |                                    | $ | 3,342,322                           |  | $                                  | 1,985,526
|Obligations of U.S. government 
        corporations and agencies
        collateralized mortgage obligations |                      | 48,654,217  |                                    |   | 62,682                              |  |                                    | 712,192  
|Other Debt securities                                                                                          |                      | 44,992,657  |                                    |   |                                    |  |                                    | 466,094  
|Debt securities issued by
  foreign governments                                                                |                      | 1,250,000   |                                    |   |                                    |  |                                    |         
|                                                                                                               |                      |             |                                    |   |                                     |  |                                    |          
|                                                                                                              
|Total                                                                                                          | $                    | 511,299,854 |                                    | $ | 3,405,004                           |  | $                                  | 3,163,812
|                                                                                                               |                      |             |                                    |   |                                     |  |                                    |          

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Loan Portfolio
A management objective is to maintain the quality of the loan portfolio. The Company seeks to achieve
this objective by maintaining rigorous underwriting standards coupled with regular evaluation of
the creditworthiness of and the designation of lending limits for each borrower. The portfolio strategies
include seeking industry and loan size diversification in order to minimize credit exposure and originating loans
in markets with which the Company is familiar.
The Companys commercial and industrial loan portfolio represents approximately 52% of all loans.
Loans in this category are typically made to small and medium-sized businesses and range between
$25,000 and $10 million. Sources of repayment are from the borrowers operating profits, cash
flows and liquidation of pledged collateral. Based on underwriting standards, loans may be secured
in whole or in part by collateral such as liquid assets, accounts receivable, equipment, inventory,
and real property. The Companys real estate loan portfolio, which represents approximately
28% of all loans, is secured by mortgages on real property located principally in the states of New
York and Virginia. The Companys leasing portfolio, which consists of finance leases for various
types of business equipment, represents approximately 16% of all loans. The collateral securing any
loan may vary in value based on market conditions.

|20
|--



|The following table sets forth the composition of the Companys loans held for sale and loans held in portfolio:
|----------------------------------------------------------------------------------------------------------------

|                                 | June 30, |          
|-------------------------------- | -------- | ---------
|
|
|
|
|
|                                 |          |          
|Domestic                         |          |          
|Commercial and industrial        | $        | 547,142  
|Equipment lease financing        |          | 166,236  
|Real estate - mortgage           |          | 290,812  
|Real estate - construction       |          | 2,310    
|Installment - individuals        |          | 11,462   
|Loans to depository institutions |          | 27,000   
|                                 |          |          
|                                 |          |          
|                                
|Loans, net of unearned discounts | $        | 1,044,962
|                                 |          |          

|Asset Quality
Intrinsic to the lending process is the possibility of loss. In times of economic slowdown, the risk
of loss inherent in the Companys portfolio of loans may be increased. While management endeavors
to minimize this risk, it recognizes that loan losses will occur and that the amount of these losses
will fluctuate depending on the risk characteristics of the loan portfolio which in turn depend on
current and expected economic conditions, the financial condition of borrowers, the realization of
collateral, and the credit management process.
Management views the allowance for loan losses as a critical accounting policy due to its subjectivity.
The allowance for loan losses is maintained through theprovision for loan losses, which is a charge to operating earnings. The adequacy of the provision and
the resulting allowance for loan losses is determined by a management evaluation process of the loan
portfolio, including identification and review of individual problem situations that may affect the
borrowers ability to repay, review of overall portfolio quality through an analysis of current
charge-offs, delinquency and nonperforming loan data, estimates of the value of any underlying
collateral, an assessment of current and expected economic conditions and changes in the size and
character of the loan portfolio. Other data utilized by management in determining the adequacy of
the allowance for loan losses includes, but is not limited to, the results of regulatory reviews,
the amount of, trend of and/or borrower characteristics on loans that are identified as requiring
special attention as part of the credit review process, and peer group comparisons. The impact of
this other data might result in an allowance which will be greater than that indicated by the evaluation
process previously described. The allowance reflects managements evaluation both of loans presenting
identified loss potential and of the risk inherent in various components of the loan portfolio, including
loans identified as impaired as required by SFAS No. 114. Thus, an increase in the size of the portfolio
or in any of its components could necessitate an increase in the allowance even though there may
not be a decline in credit quality or an increase in potential problem loans. A significant change
in any of the evaluation factors described above could result in future additions to the allowance.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|21
|--



|At June 30, 2005, the ratio of the allowance to loans held in portfolio, net of unearned discounts,
was 1.60% and the allowance was $16.2 million. At such date, the Companys nonaccrual loans
amounted to $4.3 million; $1.2 million of such loans was judged to be impaired within the scope of
SFAS No. 114. Loans 90 days past due and still accruing amounted to $0.9 million. Nonacrrual loans
and loans 90 days past due and still accruing include leases, in the amount of $0.5 million and $0.9
million, respectively, of telecommunications equipment from a company that went into bankruptcy in
July 2004. The service provider to the lessees discontinued service, resulting in the failure of
certain lessees to make payments. While pursuing collection of the lease payments, past due amounts
accrue. Legal action is typically commenced against lessees whose accounts are not paid within 180
days and are placed in nonaccrual status. Lessees remain unconditionally obligated to make payments.
All are creditworthy and personally guaranteed; the reported delinquencies are not due to credit
issues. Based on the foregoing, as well as managements judgment as to the current risks inherent
in loans held in portfolio, the Companys allowance for loan losses was deemed adequate to absorb
all reasonably anticipated losses on specifically known and other possible credit risks associated
with the portfolio as of June 30, 2005. Net losses within loans held in portfolio are not statistically
predictable and changes in conditions in the next twelve months could result in future provisions
for loan losses varying from the level taken in the first six months of 2005. Potential problem loans,
which are loans that are currently performing under present loan repayment terms but where known
information about possible credit problems of borrowers causes management to have serious doubts
as to the ability of the borrowers to continue to comply with the present repayment terms, aggregated
$2.1 million at June 30, 2005.
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:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

|                        | June 30, |          
|----------------------- | -------- | ---------
|
|
|
|
|
|
|Domestic                |          |          
|Demand                  | $        | 457,565  
|NOW                     |          | 144,646  
|Savings                 |          | 27,698   
|Money market            |          | 233,474  
|Time deposits           |          | 508,240  
|                        |          |          
|
|                       
|Total domestic deposits |          | 1,371,623
|Foreign                
|Time deposits           |          | 3,015    
|                        |          |          
|
|                       
|Total deposits          | $        | 1,374,638
|
|                        |          |          

|22
|--



|Fluctuations of balances in total or among categories at any date may occur based on the Companys
mix of assets and liabilities as well as on customers balance sheet strategies. Historically,
however, average balances for deposits have been relatively stable. Information regarding these average
balances is presented onpages 25 and 26.
CAPITAL
The Company and the bank are subject to risk-based capital regulations which quantitatively measure
capital against risk-weighted assets, including certain off-balance sheet items. These regulations
define the elements of the Tier 1 and Tier 2 components of Total Capital and establish minimum ratios
of 4% for Tier 1 capital and 8% for Total Capital for capital adequacy purposes. Supplementing these
regulations is a leverage requirement. This requirement establishes a minimum leverage ratio (at
least 3% to 5%) which is calculated by dividing Tier 1 capital by adjusted quarterly average assets
(after deducting goodwill). Information regarding the Companys and the banks risk-based
capital is presented on page 29. In addition, the bank is subject to the Federal Deposit Insurance
Corporation Improvement Act of 1981 (FDICIA) which imposes a number of mandatory supervisory
measures. Among other matters, five capital categories, ranging from well capitalized
to critically under capitalized, are used by regulatory agencies to determine a banks
deposit insurance premium, approval of applications authorizing institutions to increase their asset
size or otherwise expand business activities or acquire other institutions. Under FDICIA, a well
capitalized bank must maintain minimum leverage, Tier 1 and Total Capital ratios of 5%, 6%
and 10%, respectively. The Federal Reserve Board applies comparable tests for holding companies such
as the Company. At June 30, 2005, the Company and the bank exceeded the requirements for well
capitalized institutions.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this quarterly report, including but not limited to, statements concerning
future results of operations or financial position, borrowing capacity and future liquidity, future
investment results, future credit exposure, future loan losses and plans and objectives for future
operations, and other statements contained herein regarding matters that are not historical facts,
are forward-looking statements as defined in the Securities Exchange Act of 1934. These
statements are not historical facts but instead are subject to numerous assumptions, risks and uncertainties,
and represent only our belief regarding future events, many of which, by their nature, are inherently
uncertain and outside our control. Any forward-looking statements we may make speak only as of the
date on which such statements are made. Our actual results and financial position may differ materially
from the anticipated results and financial condition indicated in or implied by these forward-looking
statements.
Factors that could cause our actual results to differ materially from those in the forward-looking
statements include, but are not limited to, the following: inflation, interest rates, market and
monetary fluctuations; geopolitical developments including acts of war and terrorism and their impact
on economic conditions; the effects of, and changes in, trade, monetary and fiscal policies and laws,
including interest rate policies of the Board of Governors of the Federal Reserve System; changes,
particularly declines, in general economic conditions and
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|23
|--



|in the local economies in which the Company
operates; the financial condition of the Companys borrowers; competitive pressures on loan and deposit pricing and demand; changes in technology and their impact on the marketing of new products and services and the acceptance of these products and services by new and existing customers; the willingness of customers to substitute competitors products and services for the Companys products and services; the impact of changes in the financial services laws and regulations (including laws concerning taxes, banking, securities and insurance); changes in accounting principles, policies and guidelines; the success of the Company at managing the risks involved in the foregoing as well as other risks and uncertainties indicated from time to time in press releases and other public filings. The foregoing list of
important factors is not exclusive, and we will not update any forward-looking statement, whether written or oral, that may be made from time to time.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|24
|--



|STERLING BANCORP AND SUBSIDIARIES Average Balance Sheets [1] 
Three Months Ended June 30, 
(Unaudited)
|------------------------------------------------------------------------------------------------------
|                                                                                                      
|(dollars in thousands)                                                                                
|                                                                                                      

|                                                                | 2005 |   | 2004      |  
|--------------------------------------------------------------- | ---- | - | --------- | -
|
|
|
|Interest-bearing deposits
  with other banks                    |      | $ | 3,155     |  
|Securities available for sale                                   |      |   | 197,236   |  
|Securities held to maturity                                     |      |   | 511,387   |  
|Securities tax-exempt [2]                                       |      |   | 25,130    |  
|                                                                |      |   |           |  
|Total investment securities                                     |      |   | 733,753   |  
|Federal funds sold                                              |      |   | 16,066    |  
|Loans, net of unearned discounts [3]                            |      |   | 1,019,245 |  
|                                                                |      |   |           |  
|TOTAL INTEREST-EARNING ASSETS                                   |      |   | 1,772,219 |  
|                                                                |      |   |           |  
|Cash and due from banks                                         |      |   | 61,229    |  
|Allowance for loan losses                                       |      |   | (17,652   | )
|Goodwill                                                        |      |   | 21,158    |  
|Other assets                                                    |      |   | 79,013    |  
|                                                                |      |   |           |  
|TOTAL ASSETS                                                    |      | $ | 1,915,967 |  
|                                                                |      |   |           |  
|                                                                |      |   |           |  
|LIABILITIES AND SHAREHOLDERS
  EQUITY                          |      |   |           |  
|Interest-bearing deposits                                       |      |   |           |  
|Domestic                                                        |      |   |           |  
|Savings                                                         |      | $ | 28,577    |  
|NOW                                                             |      |   | 155,218   |  
|Money market                                                    |      |   | 214,740   |  
|Time                                                            |      |   | 523,697   |  
|Foreign                                                         |      |   |           |  
|Time                                                            |      |   | 3,012     |  
|                                                                |      |   |           |  
|Total interest-bearing deposits                                 |      |   | 925,244   |  
|                                                                |      |   |           |  
|Borrowings                                                      |      |   |           |  
|Securities sold under agreements
     to repurchase - customers |      |   | 86,793    |  
|Securities sold under agreements
     to repurchase - dealers   |      |   | 54,284    |  
|Federal funds purchased                                         |      |   | 20,223    |  
|Commercial paper                                                |      |   | 37,211    |  
|Other short-term debt                                           |      |   | 7,760     |  
|Long-term debt                                                  |      |   | 108,082   |  
|                                                                |      |   |           |  
|Total borrowings                                                |      |   | 314,353   |  
|                                                                |      |   |           |  
|TOTAL INTEREST-BEARING LIABILITIES                              |      |   | 1,239,597 |  
|                                                                |      |   |           |  
|                                                                |      |   |           |  
|Noninterest-bearing deposits                                    |      |   | 445,933   |  
|Other liabilities                                               |      |   | 79,973    |  
|                                                                |      |   |           |  
|Total liabilities                                               |      |   | 1,765,503 |  
|                                                                |      |   |           |  
|                                                                |      |   |           |  
|Shareholders equity                                            |      |   | 150,464   |  
|                                                                |      |   |           |  
|TOTAL LIABILITIES AND
          SHAREHOLDERS EQUITY            |      | $ | 1,915,967 |  
|                                                                |      |   |           |  
|Net interest income/spread                                      |      |   |           |  
|                                                                |      |   |           |  
|Net yield on interest-earning
  assets (margin)                 |      |   |           |  
|                                                                |      |   |           |  
|Less: Tax equivalent adjustment                                 |      |   |           |  
|                                                                |      |   |           |  
|Net interest income                                             |      |   |           |  
|                                                                |      |   |           |  

|    |  |                                                                                                                                                                                                                                                                                                 
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[1] |  | The average balances of assets, liabilities and shareholders equity are computed on the
      basis of daily averages. Average rates are presented on a tax-equivalent basis. Certain
    reclassifications have been made to amounts for prior periods to conform to the current presentation.
|    |  |                                                                                                                                                                                                                                                                                                 
|[2] |  | Interest on tax-exempt securities is presented on a tax-equivalent basis.                                                                                                                                                                                                                       
|    |  |                                                                                                                                                                                                                                                                                                 
|[3] |  | Includes loans held for sale and loans held in portfolio; all loans are domestic. Nonaccrual
      loans are included in amounts outstanding and income has been included to the extent earned.                                                                                                 

|25
|--



|STERLING BANCORP AND SUBSIDIARIES 
Average Balance Sheets [1] 
Six Months Ended June 30, 
(Unaudited)
|-----------------------------------------------------------------------------------------------------
|                                                                                                     
|(dollars in thousands)                                                                               
|                                                                                                     

|                                                              | 2005 |   | 2004      |  
|------------------------------------------------------------- | ---- | - | --------- | -
|
|
|
|Interest-bearing deposits
  with other banks                  |      | $ | 2,770     |  
|Securities available for sale                                 |      |   | 200,717   |  
|Securities held to maturity                                   |      |   | 486,814   |  
|Securities tax-exempt [2]                                     |      |   | 25,777    |  
|                                                              |      |   |           |  
|Total investment securities                                   |      |   | 713,308   |  
|Federal funds sold                                            |      |   | 17,304    |  
|Loans, net of unearned discounts [3]                          |      |   | 1,006,064 |  
|                                                              |      |   |           |  
|TOTAL INTEREST-EARNING ASSETS                                 |      |   | 1,739,446 |  
|                                                              |      |   |           |  
|Cash and due from banks                                       |      |   | 62,625    |  
|Allowance for loan losses                                     |      |   | (17,450   | )
|Goodwill                                                      |      |   | 21,158    |  
|Other assets                                                  |      |   | 79,559    |  
|                                                              |      |   |           |  
|TOTAL ASSETS                                                  |      | $ | 1,885,338 |  
|                                                              |      |   |           |  
|                                                              |      |   |           |  
|LIABILITIES AND SHAREHOLDERS
  EQUITY                        |      |   |           |  
|Interest-bearing deposits                                     |      |   |           |  
|Domestic                                                      |      |   |           |  
|Savings                                                       |      | $ | 28,804    |  
|NOW                                                           |      |   | 148,748   |  
|Money market                                                  |      |   | 220,595   |  
|Time                                                          |      |   | 508,667   |  
|Foreign                                                       |      |   |           |  
|Time                                                          |      |   | 3,007     |  
|                                                              |      |   |           |  
|Total interest-bearing deposits                               |      |   | 909,821   |  
|                                                              |      |   |           |  
|                                                              |      |   |           |  
|Borrowings                                                    |      |   |           |  
|Securities sold under agreements
   to repurchase - customers |      |   | 86,281    |  
|Securities sold under agreements
   to repurchase - dealers   |      |   | 46,416    |  
|Federal funds purchased                                       |      |   | 11,826    |  
|Commercial paper                                              |      |   | 36,412    |  
|Other short-term debt                                         |      |   | 4,287     |  
|Long-term debt                                                |      |   | 115,276   |  
|                                                              |      |   |           |  
|Total borrowings                                              |      |   | 300,498   |  
|                                                              |      |   |           |  
|TOTAL INTEREST-BEARING LIABILITIES                            |      |   | 1,210,319 |  
|                                                              |      |   |           |  
|Noninterest-bearing deposits                                  |      |   | 441,247   |  
|Other liabilities                                             |      |   | 84,760    |  
|                                                              |      |   |           |  
|Total liabilities                                             |      |   | 1,736,326 |  
|                                                              |      |   |           |  
|                                                              |      |   |           |  
|Shareholders equity                                          |      |   | 149,012   |  
|                                                              |      |   |           |  
|TOTAL LIABILITIES AND
          SHAREHOLDERS EQUITY          |      | $ | 1,885,338 |  
|                                                              |      |   |           |  
|Net interest income/spread                                    |      |   |           |  
|                                                              |      |   |           |  
|Net yield on interest-earning
  assets (margin)               |      |   |           |  
|                                                              |      |   |           |  
|Less: Tax equivalent adjustment                               |      |   |           |  
|                                                              |      |   |           |  
|Net interest income                                           |      |   |           |  
|                                                              |      |   |           |  
|                                                              |      |   |           |  

|    |  |                                                                                                                                                                                                                                                                                                 
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[1] |  | The average balances of assets, liabilities and shareholders equity are computed on the
      basis of daily averages. Average rates are presented on a tax-equivalent basis. Certain
    reclassifications have been made to amounts for prior periods to conform to the current presentation.
|    |  |                                                                                                                                                                                                                                                                                                 
|[2] |  | Interest on tax-exempt securities is presented on a tax-equivalent basis.                                                                                                                                                                                                                       
|    |  |                                                                                                                                                                                                                                                                                                 
|[3] |  | Includes loans held for sale and loans held in portfolio; all loans are domestic. Nonaccrual
      loans are included in amounts outstanding and income has been included to the extent earned.                                                                                                 

|26
|--



|STERLING BANCORP AND SUBSIDIARIESRate/Volume Analysis [1]
(Unaudited)
|---------------------------------------------------------------------
|                                                                     
|(in thousands)                                                       
|                                                                     

|                                                               | Increase/(Decrease)
Three Months Ended
June 30, 2005 to June 30, 2004 |  
|-------------------------------------------------------------- | --------------------------------------------------------------------- | -
|
|
|
|INTEREST INCOME                                                |                                                                       |  
|Interest-bearing deposits with other banks                     |                                                                       | $
|                                                               |                                                                       |  
|                                                               |                                                                       |  
|Securities available for sale                                  |                                                                       |  
|Securities held to maturity                                    |                                                                       |  
|Securities tax-exempt                                          |                                                                       |  
|                                                               |                                                                       |  
|Total investment securities                                    |                                                                       |  
|                                                               |                                                                       |  
|                                                               |                                                                       |  
|Federal funds sold                                             |                                                                       |  
|                                                               |                                                                       |  
|Loans, net of unearned discounts [3]                           |                                                                       |  
|                                                               |                                                                       |  
|                                                               |                                                                       |  
|TOTAL INTEREST INCOME                                          |                                                                       | $
|                                                               |                                                                       |  
|                                                               |                                                                       |  
|INTEREST EXPENSE                                               |                                                                       |  
|Interest-bearing deposits                                      |                                                                       |  
|Domestic                                                       |                                                                       |  
|Savings                                                        |                                                                       | $
|NOW                                                            |                                                                       |  
|Money market                                                   |                                                                       |  
|Time                                                           |                                                                       |  
|Foreign                                                        |                                                                       |  
|Time                                                           |                                                                       |  
|                                                               |                                                                       |  
|Total interest-bearing deposits                                |                                                                       |  
|                                                               |                                                                       |  
|                                                               |                                                                       |  
|Borrowings                                                     |                                                                       |  
|Securities sold under agreements
    to repurchase - customers |                                                                       |  
|Securities sold under agreements
    to repurchase - dealers   |                                                                       |  
|Federal funds purchased                                        |                                                                       |  
|Commercial paper                                               |                                                                       |  
|Other short-term debt                                          |                                                                       |  
|Long-term debt                                                 |                                                                       |  
|                                                               |                                                                       |  
|Total borrowings                                               |                                                                       |  
|                                                               |                                                                       |  
|                                                               |                                                                       |  
|TOTAL INTEREST EXPENSE                                         |                                                                       | $
|                                                               |                                                                       |  
|                                                               |                                                                       |  
|NET INTEREST INCOME                                            |                                                                       | $
|                                                               |                                                                       |  

|    |  |                                                                                                                                                                                                                                                        
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[1] |  | This table is presented on a tax-equivalent basis.                                                                                                                                                                                                     
|    |  |                                                                                                                                                                                                                                                        
|[2] |  | Changes in interest income and interest expense due to a combination of both volume
      and rate have been allocated to the change due to volume and the change due to rate
      in proportion to the relationship of the change due solely to each.
|    |  |                                                                                                                                                                                                                                                        
|[3] |  | Includes loans held for sale and loans held in portfolio; all loans are domestic. Nonaccrual
      loans are included in amounts outstanding and income has been included to the extent earned.                                                        

|27
|--



|STERLING BANCORP AND SUBSIDIARIES
Rate/Volume Analysis [1]
(Unaudited)
|----------------------------------------------------------------------
|                                                                      
|(in thousands)                                                        
|                                                                      

|                                                               | Increase/(Decrease)
Six Months Ended
June 30, 2005 to June 30, 2004 |  
|-------------------------------------------------------------- | ------------------------------------------------------------------- | -
|
|
|
|INTEREST INCOME                                                |                                                                     |  
|Interest-bearing deposits with other banks                     |                                                                     | $
|                                                               |                                                                     |  
|                                                               |                                                                     |  
|Securities available for sale                                  |                                                                     |  
|Securities held to maturity                                    |                                                                     |  
|Securities tax-exempt                                          |                                                                     |  
|                                                               |                                                                     |  
|Total investment securities                                    |                                                                     |  
|                                                               |                                                                     |  
|                                                               |                                                                     |  
|Federal funds sold                                             |                                                                     |  
|                                                               |                                                                     |  
|Loans, net of unearned discounts [3]                           |                                                                     |  
|                                                               |                                                                     |  
|                                                               |                                                                     |  
|TOTAL INTEREST INCOME                                          |                                                                     | $
|                                                               |                                                                     |  
|                                                               |                                                                     |  
|INTEREST EXPENSE                                               |                                                                     |  
|Interest-bearing deposits                                      |                                                                     |  
|Domestic                                                       |                                                                     |  
|Savings                                                        |                                                                     | $
|NOW                                                            |                                                                     |  
|Money market                                                   |                                                                     |  
|Time                                                           |                                                                     |  
|Foreign                                                        |                                                                    
|Time                                                           |                                                                     |  
|                                                               |                                                                     |  
|Total interest-bearing deposits                                |                                                                     |  
|                                                               |                                                                     |  
|                                                               |                                                                     |  
|Borrowings                                                     |                                                                     |  
|Securities sold under agreements
    to repurchase - customers |                                                                     |  
|Securities sold under agreements
    to repurchase - dealers   |                                                                     |  
|Federal funds purchased                                        |                                                                     |  
|Commercial paper                                               |                                                                     |  
|Other short-term debt                                          |                                                                     |  
|Long-term debt                                                 |                                                                     |  
|                                                               |                                                                     |  
|Total borrowings                                               |                                                                     |  
|                                                               |                                                                     |  
|                                                               |                                                                     |  
|TOTAL INTEREST EXPENSE                                         |                                                                     | $
|                                                               |                                                                     |  
|                                                               |                                                                     |  
|NET INTEREST INCOME                                            |                                                                     | $
|                                                               |                                                                     |  

|    |  |                                                                                                                                                                                                                                                                                                                                 
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[1] |  | This table is presented on a tax-equivalent basis.                                                                                                                                                                                                                                                                              
|    |  |                                                                                                                                                                                                                                                                                                                                 
|[2] |  | Changes in interest income and interest expense due to a combination of both volume
  and rate have been allocated to the change due to volume and the change due to rate
  in proportion to the relationship of the change due solely to each. The effect of the
  extra day in 2004 has been included in the change in volume.
|    |  |                                                                                                                                                                                                                                                                                                                                 
|[3] |  | Includes loans held for sale and loans held in portfolio; all loans are domestic. Nonaccrual
  loans are included in amounts outstanding and income has been included to the extent earned.                                                                                                                                     

|28
|--



|STERLING BANCORP AND SUBSIDIARIES
|---------------------------------
|Regulatory Capital and Ratios    
|                                 
|Ratios and Minimums              
|(dollars in thousands)           
|                                 

|                                            | Actual |   | For Capital
    Adequacy Minimum |  | To Be Well
    Capitalized |      
|------------------------------------------- | ------ | - | -------------------------------- |  | -------------------------- | -----
|
|
|
|Total Capital(to Risk Weighted Assets):     |        |   |                                  |  |                            |      
|The Company                                 |        | $ | 176,139                          |  |                            | 15.15
|The bank                                    |        |   | 131,411                          |  |                            | 12.03
|                                            |        |   |                                  |  |                            |      
|Tier 1 Capital(to Risk Weighted Assets):    |        |   |                                  |  |                            |      
|The Company                                 |        |   | 161,583                          |  |                            | 13.89
|The bank                                    |        |   | 117,736                          |  |                            | 10.78
|                                            |        |   |                                  |  |                            |      
|Tier 1 Leverage Capital(to Average Assets): |        |   |                                  |  |                            |      
|The Company                                 |        |   | 161,583                          |  |                            | 8.53 
|The bank                                    |        |   | 117,736                          |  |                            | 6.45 
|                                            |        |   |                                  |  |                            |      
|As of December 31, 2004                     |        |   |                                  |  |                            |      
|                                            |        |   |                                  |  |                            |      
|Total Capital(to Risk Weighted Assets):     |        |   |                                  |  |                            |      
|The Company                                 |        | $ | 169,226                          |  |                            | 14.35
|The bank                                    |        |   | 129,267                          |  |                            | 11.56
|                                            |        |   |                                  |  |                            |      
|Tier 1 Capital(to Risk Weighted Assets):    |        |   |                                  |  |                            |      
|The Company                                 |        |   | 154,467                          |  |                            | 13.10
|The bank                                    |        |   | 115,262                          |  |                            | 10.31
|                                            |        |   |                                  |  |                            |      
|Tier 1 Leverage Capital(to Average Assets): |        |   |                                  |  |                            |      
|The Company                                 |        |   | 154,467                          |  |                            | 8.49 
|The bank                                    |        |   | 115,262                          |  |                            | 6.56 

|29
|--



|ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ASSET/LIABILITY MANAGEMENT
The Companys primary earnings source is its net interest income; therefore the Company devotes
significant time and has invested in resources to assist in the management of interest rate risk
and asset quality. The Companys net interest income is affected by changes in market interest
rates, and by the level and composition of interest-earning assets and interest-bearing liabilities.
The Companys objectives in its asset/liability management are to utilize its capital effectively,
to provide adequate liquidity and to enhance net interest income, without taking undue risks or subjecting
the Company unduly to interest rate fluctuations.
The Company takes a coordinated approach to the management of its liquidity, capital and interest rate
risk. This risk management process is governed by policies and limits established by senior management
which are reviewed andapproved by the Asset/Liability Committee. This committee, which is comprised of members of senior
management, meets to review, among other things, economic conditions, interest rates, yield curve,
cash flow projections, expected customer actions, liquidity levels, capital ratios and repricing
characteristics of assets, liabilities and financial instruments.
Market Risk
Market risk is the risk of loss in a financial instrument arising from adverse changes in market indices
such as interest rates, foreign exchange rates and equity prices. The Companys principal market
risk exposure is interest rate risk, with no material impact on earnings from changes in foreign
exchange rates or equity prices.
Interest rate risk is the exposure to changes in market interest rates. Interest rate sensitivity is
the relationship between market interest rates and net interest income due to the repricing characteristics
of assets and liabilities. The Company monitors the interest rate sensitivity of its balance sheet
positions by examining its near-term sensitivity and its longer-term gap position. In its management
of interest rate risk, the Company utilizes several financial and statistical tools, including traditional
gap analysis and sophisticated income simulation models.
A traditional gap analysis is prepared based on the maturity and repricing characteristics of interest-earning
assets and interest-bearing liabilities for selected time bands. The mismatch between repricings
or maturities within a time band is commonly referred to as the gap for that period.
A positive gap (asset sensitive) where interest rate sensitive assets exceed interest rate sensitive
liabilities generally will result in the net interest margin increasing in a rising rate environment
and decreasing in a falling rate environment. A negative gap (liability sensitive) will generally
have the opposite result on the net interest margin. However, the traditional gap analysis does not
assess the relative sensitivity of assets and liabilities to changes in interest rates and other
factors that could have an impact on interest rate sensitivity or net interest income. The Company
utilizes the gap analysis to complement its income simulations modeling, primarily focusing on the
longer-term structure of the balance sheet.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|30
|--



|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 June 30, 2005, presented on page 34, indicates that net interest income would increase during
periods of rising interest rates and decrease during periods of falling interest rates, but, as mentioned
above, gap analysis may not be an accurate predictor of net interest income.
As part of its interest rate risk strategy, the Company may use financial instrument derivatives to
hedge the interest rate sensitivity of assets with the corresponding amortization reflected in the
yield of the related balance sheet assets being hedged. The Company has written policy guidelines,
approved by the Board of Directors, governing the use of financial instruments, including approved
counterparties, risk limits and appropriate internal control procedures. The credit risk of derivatives
arises principally from the potential for a counterparty to fail to meet its obligation to settle
a contract on a timely basis. During the second quarter of 2005, the Company did not enter into any
derivative contracts to hedge its interest rate risk. At June 30,2005 and 2004, the Company was not
a party to any derivative contracts to hedge its interest rate risk.
The Company utilizes income simulation models to complement its traditional gap analysis. While the
Asset/Liability Committee routinely monitors simulated net interest income sensitivity over a rolling
two-year horizon, it also utilizes additional tools to monitor potential longer-term interest rate
risk.
The income simulation models measure the Companys net interest income volatility or sensitivity
to interest rate changes utilizing statistical techniques that allow the Company to consider various
factors which impact net interest income. These factors include actual maturities, estimated cash
flows, repricing characteristics,deposits growth/retention and, most importantly, the relative sensitivity of the Companys assets
and liabilities to changes in market interest rates. This relative sensitivity is important to consider
as the Companys core deposit base has not been subject to the same degree of interest rate
sensitivity as its assets. The core deposit costs are internally managed and tend to exhibit less
sensitivity to changes in interest rates than the Companys adjustable rate assets whose yields
are based on external indices and generally change in concert with market interest rates.
The Companys interest rate sensitivity is determined by identifying the probable impact of changes
in market interest rates on the yields on the Companys assets and the rates that would be paid
on its liabilities. This modeling technique involves a degree of estimation based on certain assumptions
that management believes to be reasonable. Utilizing this process, management projects the impact
of changes in interest rates on net interest margin. The Company has established certain policy limits
for the potential volatility of its net interest margin assuming certain levels of changes in market
interest rates with the objective of maintaining a stable net interest margin under various probable
rate scenarios. Management generally has maintained a risk position well within the policy limits.
As of June 30, 2005, the model indicated the impact of a 200 basis point parallel and pro rata rise
in rates over 12 months would approximate a 1.9% ($1.6 million) increase in net interest income,
while the impact of a 200 basis point decline in rates over the same period would approximate a 3.0%
($2.6 million) decline from an unchanged rate environment.
The preceding sensitivity analysis does not represent a Company forecast and should not be relied upon
as being indicative of expected operating results. These hypothetical estimates are based upon numerous
assumptions including: the nature
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|31
|--



|and timing of interest rate levels including yield curve shape, pre-payments on loans and securities,
deposit decay rates, pricing decisions on loans and deposits, reinvestment/replacement of asset and liability cash flows, and others. While assumptions are developed based upon current economic and local market conditions, the Company cannot
provide any assurances as to the predictive nature of these assumptions, including how 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: pre-payment/refinancing levels likely deviating from those assumed, the varying
impact of interest rate change caps or floors on adjustable rate assets, the potential effect of
changing debt service levels on customers with adjustable rate loans, depositor early withdrawals
and product preference changes, and other variables. Furthermore, the sensitivity analysis does not
reflect actions that the Asset/Liability Committee might take in responding to or anticipating changes
in interest rates.
The shape of the yield curve can cause downward pressure on net interest income. In general, if and
to the extent that the yield curve is flatter (i.e., the differences between interest rates for different
maturities are relatively smaller) than previously anticipated, then the yield on the Companys
interest-earning assets and its cash flows will tend to be lower. Management believes that a relatively
flat yield curve shape could adversely affect the Companys results in 2005.
Liquidity Risk
Liquidity is the ability to meet cash needs arising from changes in various categories of assets and liabilities.
Liquidity is constantly monitored and managed at both the parent company and the bank levels. Liquid
assets consist of cash and due from banks, interest-bearing deposits in banks and Federal funds sold
and securities available for sale. Primary funding sources include core deposits, capital market funds and other money market sources. Core deposits include domestic noninterest-bearing
and interest-bearing retail deposits, which historically have been relatively stable. The parent
company and the bank believe that they have significant unused borrowing capacity. Contingency plans
exist which we believe could be implemented on a timely basis to mitigate the impact of any dramatic change in market conditions.
While the parent company generates income from its own operations, it also depends for its cash requirements
on funds maintained or generated by its subsidiaries, principally the bank. Such sources have been
adequate to meet the parent companys cash requirements throughout its history.
Various legal restrictions limit the extent to which the bank can supply funds to the parent company
and its nonbank subsidiaries. All national banks are limited in the payment of dividends without
the approval of the Comptroller of the Currency to an amount not to exceed the net profits as defined,
for the year to date combined with its retained net profits for the preceding two calendar years.
At June 30, 2005, the parent companys short-term debt, consisting principally of commercial paper
used to finance ongoing current business activities, was approximately $38.0 million. The parent
company had cash, interest-bearing deposits with banks and other current assets aggregating $31.7
million. The parent company also has back-up credit lines with banks of $24.0 million. Since 1979,
the parent company has had no need to use the available back-up lines of credit.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|32
|--



|The following table sets forth information regarding the Companys obligations and commitments to make future payments under contract as of June 30, 2005:
|----------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                          

|Payments
      Due by Period             |                     
|---------------------------------------- | --------------------
|                                        
|Contractual
        Obligations         
|                                         |                     
|                                         | (in
      thousands)
|                                         |                     
|Long-Term
      Debt                     | $                   
|Operating
      Leases                   |                     
|                                         |                     
|                                         |                     
|Total Contractual
      Cash Obligations | $                   
|                                         |                     
|                                         |                     

|                                                                                                                                      
|--------------------------------------------------------------------------------------------------------------------------------------
|The following table sets forth information regarding the Companys obligations under other commercial
commitments as of June 30, 2005:
|                                                                                                                                      

|Amount of Commitment Expiration Per Period |               
|------------------------------------------ | --------------
|                                          
|Other Commercial
      Commitments        
|                                           |               
|                                           | (in thousands)
|                                           |               
|Residential loans                          | $             
|Commercial Loans                           |               
|                                           |               
|Total Loans                                |               
|Standby Letters of Credit                  |               
|Other Commercial Commitments               |               
|                                           |               
|                                          
|Total Commercial Commitments               | $             
|                                           |               
|                                           |               

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|INFORMATION AVAILABLE ON OUR WEB SITE
Our Internet address is www.sterlingbancorp.com and the investor relations section of our web site is located at www.sterlingbancorp.com/ir/investor.cfm. We make available free of charge, on or through the investor relations section of our web site, annual
reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments
to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 as soon as reasonably practicable after we electronically file such material with, or
furnish it to, the Securities and Exchange Commission.
Also posted on our web site, and available in print upon request of any shareholder to our Investor
Relations Department, are the charters for our Board of Directors Audit Committee, Compensation
Committee and Corporate Governance and Nominating Committee, our Corporate Governance Guidelines,
our Method for Interested Persons to Communicate with Non-Management Directors and a Code of Business
Conduct and Ethics governing our directors, officers and employees. Within the time period required
by the Securities and Exchange Commission and the New York Stock Exchange, we will post on our web
site any amendment to the Code of Business Conduct and Ethics and any waiver applicable to our senior
financial officers, as defined in the Code, or our executive officers or directors. In addition,
information concerning purchases and sales of our equity securities by our executive officers and
directors is posted on our web site.

|33
|--



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|STERLING BANCORP AND SUBSIDIARIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Interest Rate Sensitivity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|To mitigate the vulnerability of earnings to changes in interest rates, the Company manages the repricing characteristics of assets and liabilities in an attempt to control net interest rate sensitivity. Management attempts to confine significant rate sensitivity gaps predominantly to repricing intervals of a year or less so that adjustments can be made quickly. Assets and liabilities with predetermined repricing dates are classified based on the earliest repricing period. Amounts are presented in thousands.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|                                                                     | Repricing Date |        
|-------------------------------------------------------------------- | -------------- | -------
|
|
|                                                                     |                |        
|ASSETS                                                               |                |        
|Interest-bearing deposits
    with other banks                       | $              | 1,039  
|Federal funds sold                                                   |                |       
|Investment securities                                                |                | 1,326  
|Loans, net of unearned
    discounts
      Commercial and industrial |                | 529,323
|Loans to depository
         institutions                            |                | 27,000 
|Lease financing                                                      |                | 14,810 
|Real estate                                                          |                | 99,965 
|Installment                                                          |                | 11,464 
|Noninterest-earning
    assets and allowance
    for loan losses     |                |       
|                                                                     |                |        
|Total Assets                                                         |                | 684,927
|                                                                     |                |        
|                                                                     |                |        
|LIABILITIES AND
    SHAREHOLDERS EQUITY                             |                |        
|Interest-bearing deposits
    Savings [1]                            |                |       
|NOW [1]                                                              |                |       
|Money market [1]                                                     |                | 191,351
|Time - domestic                                                      |                | 238,318
|- foreign                                                            |                | 1,645  
|Securities sold u/a/r - cust                                         |                | 63,502 
|Securities sold u/a/r - deal                                         |                | 74,728 
|Federal funds purchased                                              |                | 20,000 
|Commercial paper                                                     |                | 36,533 
|Other short-term borrowings                                          |                | 1,448  
|Long-term borrowings - FHLB                                          |                |       
|Noninterest-bearing liabilities
   and shareholders equity          |                |       
|                                                                     |                |        
|Total Liabilities and
        Shareholders Equity                   |                | 627,525
|                                                                     |                |        
|Net Interest Rate
    Sensitivity Gap                                | $              | 57,402 
|                                                                     |                |        
|Cumulative Gap
    June 30, 2005                                     | $              | 57,402 
|                                                                     |                |        
|Cumulative Gap
    June 30, 2004                                     | $              | 124,098
|                                                                     |                |        
|Cumulative Gap
    December 31, 2004                                 | $              | 250,603
|                                                                     |                |        

|    |                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[1] | Historically, balances in non-maturity deposit accounts have remained relatively stable despite changes in levels of interest rates. Balances are shown in repricing periods based on managements historical repricing practices and run-off experience.

|34
|--



|ITEM 4.   CONTROLS AND PROCEDURES
An evaluation was carried out under the supervision and with the participation of the Companys
management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness
of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e)
under the Securities Exchange Act of 1934) as of the end of the period covered by this quarterly
report. Based upon that evaluation, and the identification of a material weakness in the Companys
internal control over financial reporting as of December 31, 2004 (relating to inadequate resources
for controls over the accounting for Company-owned split-dollar life insurance policies on the lives
of certain officers of the Company) described in Item 9A of the Companys annual report on Form
10-K for the fiscal year ended December 31, 2004, as amended by Amendment No. 1 on Form 10-K/A, the
Companys management, including the Chief Executive Officer and Chief Financial Officer, have
concluded that, as of the end of the period covered by this quarterly report, the Companys
disclosure controls and procedures were not effective to ensure that information required to be disclosed
by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in SEC rules and forms. For
a discussion of the reasons and matters on which this conclusion was based, see Item 9A of the Companys
annual report on Form 10-K for the fiscal year ended December 31, 2004, as amended by Amendment No. 1 on Form 10-K/A.
The Company is currently working to eliminate the material weakness referred to above, and the following
change in the Companys internal control over financial reporting (as defined in Rule 13a-15(f)
under the Securities Exchange Act of 1934) occurred during the quarter ended June 30,2005: The Company
enhanced its staffing by hiring an additional person with expertise in generally accepted accounting
principles.
For a discussion of the development and implementation of new procedures and other changes in the Companys
internal control over financial reporting that occurred during the first quarter of 2005, see Item
4 of Part I of the Companys quarterly report on Form 10-Q for the quarter ended March 31, 2005.
The Company will conduct tests of these new procedures and other changes to its internal control
over financial reporting.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|35
|--



|PART II - OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Under its share repurchase program, the Company buys back common shares from time to time. The following
table discloses the Companys repurchases of the Companys common shares during the
second quarter of 2005.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                    

|ISSUER PURCHASES OF EQUITY SECURITIES |        | 
|------------------------------------- | ------ | 
|                                     
|
|                                     
|April 1-30, 2005                      |       | 
|                                      |        | 
|May 1-31, 2005                        | 14,000 | 
|                                      |        | 
|                                      |        | 
|June 1-30,2005                        | 17,100 | 
|                                      |        | 
|                                      |        | 
|Total                                 | 31,100 | 
|                                      |        | 
|                                      |        | 

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|All shares were repurchased through the Companys share repurchase program.
The Board of Directors initially authorized the repurchase of common shares in 1997 and since then
has approved increases in the number of common shares that the Company is authorized to repurchase.
The last increase prior to 2005 was announced on February 27, 2002, when the Board of Directors increased
the Companys authority to repurchase common shares by an additional 700,000 shares, thereby
raising the number of shares that could then be repurchased to approximately 900,000. As of January
1, 2005, the remaining number of shares that could be repurchased was 147,919. On June 16, 2005,
the Company announced that the Board of Directorsincreased the Companys authority to repurchase common shares by an additional 800,000 shares.

|36
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|Item 6. | Exhibits                                                
|------- | --------------------------------------------------------
|        |                                                         
|        | The following exhibits are filed as part of this report:
|        |                                                         
|        |                                                         
|        |                                                         
|        |                                                         
|        |                                                         
|        |                                                         
|        |                                                         
|        |                                                         
|        |                                                         
|        |                                                         

|37
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|SIGNATURES                                                                                                                                                                                
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                          
|Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
  this report to be signed on its behalf by the undersigned thereunto duly authorized.

| |      |                |  |                             |                  
| | ---- | -------------- |  | --------------------------- | -----------------
| |      |                |  |                             |                  
| |      |                |  | STERLING BANCORP            |                  
| |      |                |  |                             |                  
| |      |                |  |                             |                  
| |      |                |  | (Registrant)                |                  
| |      |                |  |                             |                  
| |      |                |  |                             |                  
| | Date | August 9, 2005 |  | /s/                         | Louis J. Cappelli
| |      |                |  |                             |                  
| |      |                |  | Louis J. Cappelli           |                  
| |      |                |  | Chairman and                |                  
| |      |                |  | Chief Executive Officer     |                  
| |      |                |  |                             |                  
| |      |                |  |                             |                  
| | Date | August 9, 2005 |  | /s/                         | John W. Tietjen  
| |      |                |  |                             |                  
| |      |                |  | John W. Tietjen             |                  
| |      |                |  | Executive Vice President    |                  
| |      |                |  | and Chief Financial Officer |                  

|38
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|STERLING BANCORP AND SUBSIDIARIES
  EXHIBIT INDEX
|-------------------------------------------------
|                                                 

|  
|--
|
|
|11
|  
|31
|  
|32
|  

|39
|--