|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                                                           
|or                                                                                       
|                                                                                         
|oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|                                                                                         

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

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

|Sterling Bancorp                                      
|------------------------------------------------------
|                                                      
|(Exact name of registrant as specified in its charter)
|                                                      

|New York                                                       |  | 13-2565216                      
|-------------------------------------------------------------- |  | --------------------------------
|                                                              
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification)
|                                                               |  |                                 

|650 Fifth Avenue, New York, N.Y.         |  | 10019-6108
|---------------------------------------- |  | ----------
|                                        
|(Address of principal executive offices) |  | (Zip Code)
|                                         |  |           

|212-757-3300                                                                      
|----------------------------------------------------------------------------------
|                                                                                  
|(Registrants telephone number, including area code)                              
|                                                                                  
|N/A                                                                               
|                                                                                  
|(Former name, former address and former fiscal year, if changed since last report)
|                                                                                  

|Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
xYes  o No
Indicate by check mark whether the registrant is an accelerated filer as defined
in Rule 12b-2 of the Exchange Act,
xYes  o No
As
of April 30, 2005 there were 18,346,597 shares of common stock,
$1.00 par value, outstanding.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|



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

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

|2
|-



|STERLING BANCORP AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
|-------------------------------------------------------------------------
|                                                                         

|ASSETS                                                                                                              | March 31,
2005 |               | December 31,
2004 |  
|------------------------------------------------------------------------------------------------------------------- | -------------- | ------------- | ----------------- | -
|                                                                                                                    |                |               |                   |  
|Cash and due from banks                                                                                             | $              | 66,568,719    |                   | $
|Interest-bearing deposits with other banks                                                                          |                | 4,088,863     |                   |  
|Federal funds sold                                                                                                  |                | 35,000,000    |                   |  
|                                                                                                                    |                |               |                   |  
|Securities available for sale                                                                                       |                | 136,046,825   |                   |  
|Securities available for sale - pledged                                                                             |                | 83,057,892    |                   |  
|Securities held to maturity                                                                                         |                | 329,712,425   |                   |  
|Securities held to maturity - pledged                                                                               |                | 157,738,965   |                   |  
|                                                                                                                    |                |               |                   |  
|Total investment securities                                                                                         |                | 706,556,107   |                   |  
|                                                                                                                    |                |               |                   |  
|                                                                                                                    |                |               |                   |  
|Loans held for sale                                                                                                 |                | 26,614,855    |                   |  
|                                                                                                                    |                |               |                   |  
|Loans held in portfolio, net of unearned discounts                                                                  |                | 976,607,955   |                   |  
|Less allowance for loan losses                                                                                      |                | 16,782,405    |                   |  
|                                                                                                                    |                |               |                   |  
|Loans, net                                                                                                          |                | 959,825,550   |                   |  
|                                                                                                                    |                |               |                   |  
|Customers liability under acceptances                                                                              |                | 807,341       |                   |  
|Excess cost over equity in net assets of the
  banking subsidiary                                                   |                | 21,158,440    |                   |  
|Premises and equipment, net                                                                                         |                | 10,726,956    |                   |  
|Other real estate                                                                                                   |                | 534,382       |                   |  
|Accrued interest receivable                                                                                         |                | 5,987,105     |                   |  
|Bank owned life insurance                                                                                           |                | 26,803,160    |                   |  
|Other assets                                                                                                        |                | 36,580,778    |                   |  
|                                                                                                                    |                |               |                   |  
|                                                                                                                    | $              | 1,901,252,256 |                   | $
|                                                                                                                    |                |               |                   |  
|                                                                                                                    |                |               |                   |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                |                |               |                   |  
|Deposits                                                                                                            |                |               |                   |  
|Noninterest-bearing deposits                                                                                        | $              | 468,713,500   |                   | $
|Interest-bearing deposits                                                                                           |                | 919,868,989   |                   |  
|                                                                                                                    |                |               |                   |  
|Total deposits                                                                                                      |                | 1,388,582,489 |                   |  
|Securities sold under agreements to repurchase - customers                                                          |                | 82,980,843    |                   |  
|Securities sold under agreements to repurchase - dealers                                                            |                | 43,697,000    |                   |  
|Federal funds purchased                                                                                             |                |              |                   |  
|Commercial paper                                                                                                    |                | 38,810,149    |                   |  
|Other short-term borrowings                                                                                         |                | 387,130       |                   |  
|Acceptances outstanding                                                                                             |                | 807,341       |                   |  
|Accrued expenses and other liabilities                                                                              |                | 80,705,168    |                   |  
|Long-term debt                                                                                                      |                | 115,774,000   |                   |  
|                                                                                                                    |                |               |                   |  
|Total liabilities                                                                                                   |                | 1,751,744,120 |                   |  
|                                                                                                                    |                |               |                   |  
|                                                                                                                    |                |               |                   |  
|Shareholders equity                                                                                                |                |               |                   |  
|Common stock, $1 par value. Authorized 50,000,000 shares;
    issued 19,945,008 and 19,880,521 shares, respectively |                | 19,945,008    |                   |  
|Capital surplus                                                                                                     |                | 146,263,037   |                   |  
|Retained earnings                                                                                                   |                | 30,972,751    |                   |  
|Accumulated other comprehensive loss, net of tax                                                                    |                | (4,263,610    | )                 |  
|                                                                                                                    |                |               |                   |  
|                                                                                                                    |                | 192,917,186   |                   |  
|                                                                                                                    |                |               |                   |  
|                                                                                                                    |                |               |                   |  
|Less                                                                                                                |                |               |                   |  
|Common shares in treasury at cost, 1,652,567
    and 1,642,996 shares, respectively                                 |                | 43,189,007    |                   |  
|Unearned compensation                                                                                               |                | 220,043       |                   |  
|                                                                                                                    |                |               |                   |  
|Total shareholders equity                                                                                          |                | 149,508,136   |                   |  
|                                                                                                                    |                |               |                   |  
|                                                                                                                    | $              | 1,901,252,256 |                   | $
|                                                                                                                    |                |               |                   |  

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

|3
|-



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

|                                                      | Three Months Ended
March 31, |           
|----------------------------------------------------- | ---------------------------- | ----------
|                                                      | 2005                         |           
|                                                      |                              |           
|INTEREST INCOME                                       |                              |           
|Loans                                                 | $                            | 18,376,415
|Investment securities                                 |                              |           
|Available for sale                                    |                              | 2,501,644 
|Held to maturity                                      |                              | 5,210,223 
|Federal funds sold                                    |                              | 109,861   
|Deposits with other banks                             |                              | 6,183     
|                                                      |                              |           
|Total interest income                                 |                              | 26,204,326
|                                                      |                              |           
|                                                      |                              |           
|INTEREST EXPENSE                                      |                              |           
|Deposits                                              |                              | 3,451,595 
|Securities sold under agreements
    to repurchase    |                              | 585,647   
|Federal funds purchased                               |                              | 20,782    
|Commercial paper                                      |                              | 160,066   
|Other short-term borrowings                           |                              | 5,003     
|Long-term debt                                        |                              | 1,478,953 
|                                                      |                              |           
|Total interest expense                                |                              | 5,702,046 
|                                                      |                              |           
|Net interest income                                   |                              | 20,502,280
|Provision for loan losses                             |                              | 2,648,500 
|                                                      |                              |           
|Net interest income after provision
  for loan losses |                              | 17,853,780
|                                                      |                              |           
|                                                      |                              |           
|NONINTEREST INCOME                                    |                              |           
|Factoring income                                      |                              | 1,417,314 
|Mortgage banking income                               |                              | 3,875,847 
|Service charges on deposit accounts                   |                              | 1,197,024 
|Trade finance income                                  |                              | 420,454   
|Trust fees                                            |                              | 172,278   
|Other service charges and fees                        |                              | 302,260   
|Bank owned life insurance income                      |                              | 250,014   
|Securities gains                                      |                              | 196,680   
|Other income                                          |                              | 164,329   
|                                                      |                              |           
|Total noninterest income                              |                              | 7,996,200 
|                                                      |                              |           
|                                                      |                              |           
|NONINTEREST EXPENSES                                  |                              |           
|Salaries                                              |                              | 8,156,603 
|Employee benefits                                     |                              | 1,750,205 
|                                                      |                              |           
|Total personnel expense                               |                              | 9,906,808 
|Occupancy expenses, net                               |                              | 1,314,682 
|Equipment expenses                                    |                              | 764,158   
|Advertising and marketing                             |                              | 1,116,323 
|Professional fees                                     |                              | 1,531,179 
|Data processing fees                                  |                              | 257,510   
|Stationery and printing                               |                              | 194,099   
|Communications                                        |                              | 383,281   
|Other expenses                                        |                              | 1,508,388 
|                                                      |                              |           
|Total noninterest expenses                            |                              | 16,976,428
|                                                      |                              |           
|Income before income taxes                            |                              | 8,873,552 
|Provision for income taxes                            |                              | 3,106,829 
|                                                      |                              |           
|Net income                                            | $                            | 5,766,723 
|                                                      |                              |           
|Average number of common
 shares outstanding          |                              |           
|Basic                                                 |                              | 18,258,783
|Diluted                                               |                              | 18,926,688
|Earnings per average common share                     |                              |           
|Basic                                                 | $                            | 0.32      
|Diluted                                               |                              | 0.30      
|Dividends per common share                            |                              | 0.19      

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

|4
|-



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

|                                                                | Three Months Ended
  March 31, |           
|--------------------------------------------------------------- | ------------------------------ | ----------
|
|                                                                |                                |           
|                                                                |                                |           
|Net Income                                                      | $                              | 5,766,723 
|                                                                |                                |           
|Other comprehensive income, net of tax:                         |                                |           
|Unrealized holding (losses)/gains
   arising during the period  |                                | (1,848,451
|                                                                |                                |           
|Reclassification adjustment for
   gains included in net income |                                | (106,404  
|                                                                |                                |           
|Unrealized (losses)/gains supplemental pension                  |                                | (387,695  
|                                                                |                                |           
|                                                                |                                |           
|Comprehensive income                                            | $                              | 3,424,173 
|                                                                |                                |           

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

|5
|-



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

|                                                                                         | Three Months
      Ended
      March 31, |            
|---------------------------------------------------------------------------------------- | ---------------------------------------- | -----------
|
|                                                                                         |                                          |            
|Preferred
      Stock                                                                    |                                          |            
|Balance
      at January 1                                                               | $                                        |           
|Conversions
      of Series D shares                                                     |                                          |           
|                                                                                         |                                          |            
|Balance
      at March 31                                                                | $                                        |           
|                                                                                         |                                          |            
|Common Stock                                                                             |                                          |            
|Balance
      at January 1                                                               | $                                        | 19,880,521 
|Conversions
      of preferred shares into common shares                                 |                                          |           
|Common
      shares issued under stock incentive plan                                    |                                          | 64,487     
|                                                                                         |                                          |            
|Balance
      at March 31                                                                | $                                        | 19,945,008 
|                                                                                         |                                          |            
|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 |                                          | 952,292    
|                                                                                         |                                          |            
|Balance
      at March 31                                                                | $                                        | 146,263,037
|                                                                                         |                                          |            
|Retained
      Earnings                                                                  |                                          |            
|Balance
      at January 1                                                               | $                                        | 28,664,568 
|Net
      Income                                                                         |                                          | 5,766,723  
|Cash
      dividends paid - common shares                                                |                                          | (3,458,540 
|                                                                                         |                                          |            
|Balance
      at March 31                                                                | $                                        | 30,972,751 
|                                                                                         |                                          |            
|Accumulated
      Other Comprehensive Income                                            
|Balance
      at January 1                                                               | $                                        | (1,921,060 
|                                                                                         |                                          |            
|Unrealized
      holding (losses)/gains                                                 
|arising
      during the period:                                                        
|Before
      tax                                                                         |                                          | (3,416,732 
|Tax
      effect                                                                         |                                          | 1,568,281  
|                                                                                         |                                          |            
|Net
      of tax                                                                         |                                          | (1,848,451 
|                                                                                         |                                          |            
|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                                                                         |                                          | (716,630   
|Tax
      effect                                                                         |                                          | 328,935    
|                                                                                         |                                          |            
|Net
      of tax                                                                         |                                          | (387,695   
|                                                                                         |                                          |            
|Balance
      at March 31                                                                | $                                        | (4,263,610 
|                                                                                         |                                          |            
|Treasury
      Stock                                                                     |                                          |            
|Balance
      at January 1                                                               | $                                        | (42,939,969
|Surrender
      of shares issued under                                                   |                                          |            
|incentive
      compensation plan                                                        |                                          | (249,038   
|                                                                                         |                                          |            
|Balance
      at March 31                                                                | $                                        | (43,189,007
|                                                                                         |                                          |            
|Unearned
      Compensation                                                              |                                          |            
|Balance
      at January 1                                                               | $                                        | (291,212   
|Amortization
      of unearned compensation                                              |                                          | 71,169     
|                                                                                         |                                          |            
|Balance
      at March 31                                                                | $                                        | (220,043   
|                                                                                         |                                          |            
|Total Shareholders
      Equity                                                         |                                          |            
|Balance
      at January 1                                                               | $                                        | 148,703,593
|Net
      changes during the period                                                      |                                          | 804,543    
|                                                                                         |                                          |            
|Balance
      at March 31                                                                | $                                        | 149,508,136
|                                                                                         |                                          |            

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

|6
|-



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

|                                                         | Three Months Ended 
      March 31, |            
|-------------------------------------------------------- | ----------------------------------- | -----------
|
|                                                         |                                     |            
|Operating Activities                                     |                                     |            
|Net Income                                               | $                                   | 5,766,723  
|Adjustments to reconcile net income to net cash provided |                                     |            
|by (used in) operating activities:                       |                                     |            
|Provision for loan losses                                |                                     | 2,648,500  
|Depreciation and amortization of premises and equipment  |                                     | 454,454    
|Securities gains                                         |                                     | (196,680   
|Income from bank owned life insurance                    |                                     | (250,014   
|Deferred income tax benefit                              |                                     | (189,692   
|Net change in loans held for sale                        |                                     | 10,443,818 
|Amortization of unearned compensation                    |                                     | 71,169     
|Amortization of premiums on securities                   |                                     | 266,241    
|Accretion of discounts on securities                     |                                     | (148,267   
|Increase in accrued interest receivable                  |                                     | (382,324   
|Decrease in accrued expenses and                         |                                     |            
|other liabilities                                        |                                     | (10,624,338
|Increase in other assets                                 |                                     | (2,415,307 
|Other, net                                               |                                     | (636,733   
|                                                         |                                     |            
|Net cash provided by (used in) operating activities      |                                     | 4,807,550  
|                                                         |                                     |            
|                                                         |                                     |            
|Investing Activities                                     |                                     |            
|Purchase of premises and equipment                       |                                     | (506,702   
|Net increase in interest-bearing deposits                |                                     |            
|with other banks                                         |                                     | (2,759,760 
|Increase in Federal funds sold                           |                                     | (35,000,000
|Net decrease in loans held in portfolio                  |                                     | 43,483,901 
|Decrease (Increase) in other real estate                 |                                     | 232,238    
|Proceeds from prepayments, redemptions or maturities     |                                     |            
|of securities - held to maturity                         |                                     | 22,878,255 
|Purchases of securities - held to maturity               |                                     | (63,978,499
|Proceeds from sales of securities - available for sale   |                                     | 2,932,250  
|Proceeds from prepayments, redemptions or maturities     |                                     |            
|of securities - available for sale                       |                                     | 16,658,176 
|Purchases of securities - available for sale             |                                     | (8,361,260 
|                                                         |                                     |            
|Net cash (used in) provided by investing activities      |                                     | (24,421,401
|                                                         |                                     |            
|                                                         |                                     |            
|Financing Activities                                     |                                     |            
|Net decrease in noninterest-bearing deposits             |                                     | (42,593,518
|Net increase in interest-bearing deposits                |                                     | 87,324,892 
|Decrease in Federal funds purchased                      |                                     | (32,500,000
|Net increase in securities sold under agreements         |                                     |            
|to repurchase                                            |                                     | 36,861,673 
|Net increase (decrease) in commercial paper and          |                                     |            
|other short-term borrowings                              |                                     | 10,688,866 
|Net decrease in long-term borrowings                     |                                     | (20,000,000
|Proceeds from exercise of stock options                  |                                     | 1,016,779  
|Cash dividends paid on common and preferred stock        |                                     | (3,458,540 
|                                                         |                                     |            
|Net cash provided by (used in) financing activities      |                                     | 37,340,152 
|                                                         |                                     |            
|                                                         |                                     |            
|Net increase (decrease) in cash and due from banks       |                                     | 17,726,301 
|Cash and due from banks - beginning of period            |                                     | 48,842,418 
|                                                         |                                     |            
|Cash and due from banks - end of period                  | $                                   | 66,568,719 
|                                                         |                                     |            
|                                                         |                                     |            
|Supplemental disclosures:                                |                                     |            
|Interest paid                                            | $                                   | 5,584,920  
|Income taxes paid                                        |                                     | 7,756,600  

|                                               
|-----------------------------------------------
|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 March 31, 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 have been restated to reflect
the effect of the stock splits and stock dividends.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|2. | At March 31, 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 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 Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, to the stock-based employee compensation plans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

| | Three Months Ended March 31,            | 2005 |           | 2004 |  
| | --------------------------------------- | ---- | --------- | ---- | -
| |                                         |      |           |      |  
| | Net income available for                |      |           |      |  
| | common shareholders                     | $    | 5,766,723 |      | $
| | 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                   | $    | 5,705,328 |      | $
| |                                         |      |           |      |  
| |                                         |      |           |      |  
| | Earnings per average common share:      |      |           |      |  
| | Basic- as reported                      | $    | 0.32      |      | $
| | Basic- pro forma                        |      | 0.31      |      |  
| | Diluted- as reported                    |      | 0.30      |      |  
| | Diluted- pro forma                      |      | 0.30      |      |  

|8
|-



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

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

| |                                  |   | March 31,   | 
| | -------------------------------- | - | ----------- | 
| |                                  |   |            
| |                                  |   | 2005        | 
| |                                  |   |             | 
| |                                  |   |             | 
| | Loans held for sale              |   |             | 
| | Real estate-mortgage             | $ | 26,614,855  | 
| |                                  |   |             | 
| | Loans held in portfolio          |   |             | 
| | Commercial and industrial        | $ | 556,229,669 | 
| | Lease financing                  |   | 186,476,009 | 
| | Real estate-mortgage             |   | 241,517,928 | 
| | Real estate-construction         |   | 2,313,541   | 
| | Installment                      |   | 13,372,051  | 
| | Loans to depository institutions |   |            | 
| |                                  |   |             | 
| |                                  |   |             | 
| | Loans held in portfolio, gross   |   | 999,909,198 | 
| | Less unearned discounts          |   | 23,301,243  | 
| |                                  |   |             | 
| |                                  |   |             | 
| | Loans held in portfolio, net of  |   |             | 
| | unearned discounts               | $ | 976,607,955 | 
| |                                  |   |             | 

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4. | SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, established standards for the way that public business enterprises report and disclose selected
information about operating segments in interim financial statements provided to stockholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | 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 58.2% loans (corporate lending was 68.4% and
real estate lending was 28.1% of total loans, respectively) and 40.6% 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 the provisions of SFAS No. 131, the Company has determined that it
has three reportable operating segments: corporate lending, real estate lending and company-wide treasury.

|9
|-



|STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
The following tables provide certain information regarding the Companys operating segments for the
three-month periods ended March 31, 2005 and 2004:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                               

|                                        | Corporate
      Lending |             | Real Estate
      Lending |   | Company-wide
      Treasury |  | Totals |            
|--------------------------------------- | ----------------------- | ----------- | ------------------------- | - | --------------------------- |  | ------ | -----------
|                                        |                         |             |                           |   |                             |  |        |            
|Three
      Months Ended March 31, 2005 |                         |             |                           |   |                             |  |        |            
|Net interest
      income               | $                       | 9,238,064   |                           | $ | 4,854,012                   |  | $      | 5,719,571  
|Noninterest
      income                |                         | 2,963,485   |                           |   | 3,937,645                   |  |        | 462,656    
|Depreciation
      and amortization     |                         | 92,809      |                           |   | 88,960                      |  |        | 606        
|Segment income
      before taxes       |                         | 3,833,990   |                           |   | 4,581,958                   |  |        | 7,648,608  
|Segment assets                          |                         | 678,858,374 |                           |   | 317,412,358                 |  |        | 857,394,953
|                                       
|                                       
|Three
      Months Ended March 31, 2004 |                         |             |                           |   |                             |  |        |            
|Net interest
      income               | $                       | 8,343,016   |                           | $ | 3,806,233                   |  | $      | 6,400,231  
|Noninterest
      income                |                         | 2,925,051   |                           |   | 3,703,428                   |  |        | 849,373    
|Depreciation
      and amortization     |                         | 60,781      |                           |   | 99,771                      |  |        |           
|Segment income
      before taxes       |                         | 2,623,245   |                           |   | 4,068,608                   |  |        | 7,906,229  
|Segment assets                          |                         | 677,522,971 |                           |   | 221,637,058                 |  |        | 801,324,440

|                                                                                                                                                                                    
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 March 31,** |              
|--------------------------------------------- | -------------------------------------- | -------------
|
|
|                                              |                                        |              
|                                              |                                        |              
|Net interest
      income:                    |                                        |              
|Total
      for reportable operating segments | $                                      | 19,811,647   
|Other
      [1]                               |                                        | 690,633      
|                                              |                                        |              
|                                              |                                        |              
|Consolidated
      net interest income        | $                                      | 20,502,280   
|                                              |                                        |              
|                                              |                                        |              
|Noninterest
      income:                     |                                        |              
|Total
      for reportable operating segments | $                                      | 7,363,786    
|Other
      [1]                               |                                        | 632,414      
|                                              |                                        |              
|                                              |                                        |              
|Consolidated
      noninterest income         | $                                      | 7,996,200    
|                                              |                                        |              
|                                              |                                        |              
|Income before
      taxes:                    |                                        |              
|Total
      for reportable operating segments | $                                      | 16,064,556   
|Other
      [1]                               |                                        | (7,191,004   
|                                              |                                        |              
|                                              |                                        |              
|Consolidated
      income before income taxes | $                                      | 8,873,552    
|                                              |                                        |              
|                                              |                                        |              
|Assets:                                       |                                        |              
|Total
      for reportable operating segments | $                                      | 1,853,665,685
|Other
      [1]                               |                                        | 47,586,571   
|                                              |                                        |              
|                                              |                                        |              
|Consolidated
      assets                     | $                                      | 1,901,252,256
|                                              |                                        |              

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

|10
|--



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

|5. | The following information is provided in connection with the sales of available for sale securities:
|-- | ----------------------------------------------------------------------------------------------------
|   |                                                                                                     

| | Three Months Ended March 31, | 2005 |           | 2004 |  
| | ---------------------------- | ---- | --------- | ---- | -
| |                              |      |           |      |  
| | Proceeds                     | $    | 2,932,250 |      | $
| |                              |      |           |      |  
| | Gross Gains                  |      | 196,680   |      |  
| |                              |      |           |      |  
| | Gross Losses                 |      |          |      |  

|   |                                                                                                            
|-- | -----------------------------------------------------------------------------------------------------------
|6. | In February 2004, 224,432 Series D preferred shares were converted into 428,304 common shares.             
|   |                                                                                                            
|7. | The following tables set forth the disclosures required for net periodic benefit cost and net benefit
cost:
|   |                                                                                                            

| | Three Months Ended March 31,       | 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 March 31, 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.

|11
|--



|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 March 31, 2005, the banks average earning assets represented approximately
96.5% of the Companys average earning assets. Loans represented 58.2% and investment securities
represented 40.6% of the banks average earning assets for the first quarter of 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 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.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|12
|--



|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 Page 22. Information as to the components of interest income
and interest expense and average rates is provided in the Average Balance Sheets shown on page 21.
Comparisons of the Three Months Ended March 31, 2005 and 2004
The Company reported net income for the three months ended March 31, 2005 of $5.8 million, representing
$0.30 per share, calculated on a diluted basis, compared to $5.2 million, or $0.27 per share calculated
on a diluted basis, for the first quarter of 2004. This increase reflects continued growth in net
interest income and a lower provision for income taxes which more than offset a decrease in noninterest
income and increases in the provision for loan losses and in noninterest expenses.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|13
|--



|Net Interest Income
Net interest income on a tax-equivalent basis, increased to $20.7 million for the first quarter of
2005 from $19.2 million for the 2004 period, due to higher average earning assets outstanding coupled
with lower average cost of funding partially offset by higher rates paid on interest-bearing deposit
balances. The net interest margin, on a tax-equivalent basis, was 4.91% for the first three
months of 2005 compared to 4.90% 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 partially offset by the impact of higher average interest-bearing deposits.
Total interest income, on a tax-equivalent basis, aggregated $26.4 million for the first three months
of 2005, up from $23.8 million for the 2004 period. The tax-equivalent yield on interest-earning
assets was 6.32% for the first quarter of 2005 compared to 6.09% for the 2004 period.
Interest earned on the loan portfolio amounted to $18.4 million for the first three months of 2005,
up $3.3 million from a year ago. Average loan balances amounted to $993.0 million an increase
of $130.4 million from an average of $862.6 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 $2.2 million of the $3.3 million increase in interest earned on loans. The increase in the yield
on the domestic loan portfolio to 7.72% for the first quarter 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 $7.9 million for
the first quarter of 2005 from $8.6 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 decreased to $692.6 million (40.6% of average earning assets for
the first quarter of 2005) from $695.1 million (43.9% of average earning assets)
in the prior year period. The average life of the securities portfolio was
approximately 4.3 years at March 31, 2005 compared to 3.4 years at March 31,
2004, reflecting the impact of purchases made during 2004.

Total interest expense increased to $5.7 million for the first three months 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 $3.5 million for the first quarter of 2005 from $2.5 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 $894.2 million for the first quarter of 2005 from $793.7 million in the 2004 period primarily
the result of the Companys branching initiatives and other business development activities. Average
rate paid on interest-bearing deposits was 1.57%
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|14
|--



|which was 32 basis points higher than the prior year period. The increase in average cost of deposits
reflects higher interest rate environment during 2005.
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 three months of 2005 increased to $2.6 million from $2.4 million
for the prior year period. Factors affecting the level of provision
included the growth in the loan portfolios, changes in general economic
onditions and the amount of nonaccrual loans.

Noninterest Income
Noninterest income decreased to $8.0 million for the first quarter of 2005 from $8.2 million in the
2004 period, primarily due to lower gains on sales of available for sale securities. Partially offsetting
this decrease were higher revenues from mortgage banking activities and fees for deposit services.
Noninterest Expenses
Noninterest expenses increased $1.0 million for the first quarter of 2005 when compared to the 2004 period.
The increase was primarily due to higher professional fees related to compliance efforts and investments
in the Sterling franchise, including the new branches, with higher expenses related to salaries and
occupancy costs.
Provision for Income Taxes
The provision for income taxes for the first quarter of 2005 decreased by $0.5 million from the 2004 period because a greater
portion of employee benefits expense for the first quarter of 2005 is deductible for income tax purposes.
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 along with other debt and equity securities.
In 2004, the Company undertook certain balance sheet initiatives designed to reduce the risks associated
with rising interest rates and to react to a flattening yield curve. Since January 1, 2004 the Company
sold approximately $87.3 million of mortgage-backed securities with average lives ranging between
4 years and 7 years and with yields between 4.25% and 5.94%. The proceeds from these sales along
with principal prepayments were utilized to purchase mortgage-backed securities with average lives
ranging between 1.8 years and 5.2 years at yields between 3.56% and 5.03%. At March 31, 2005, the
Companys portfolio of securities totaled $706.6 million, of which U.S. government corporation and
agency guaranteed mortgage-backed securities and collateralized mortgage obligations having an average
life of approximately 4.7 years amounted to $599.6 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
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|15
|--



|maturity securities were $2.2 million and $8.1 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 $1.2 million and gross unrealized losses
of $4.6 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:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

|March 31, 2005                                                                                      | Gross
      Amortized
      Cost |             | Gross
      Unrealized
      Gains |   | Gross
      Unrealized
      Losses |  | Market
      Value |          
|--------------------------------------------------------------------------------------------------- | -------------------------------- | ----------- | ---------------------------------- | - | ----------------------------------- |  | ------------------ | ---------
|                                                                                                    |                                  |             |                                    |   |                                     |  |                    |          
|Obligations of U.S. govern-  
   ment corporations and
   agencies  mortgage-backed
    securities | $                                | 120,542,814 |                                    | $ | 573,969                             |  | $                  | 2,001,289
|Obligations of U.S. govern-                                                                         |                                  |             |                                    |   |                                     |  |                    |          
|ment corporations and                                                                               |                                  |             |                                    |   |                                     |  |                    |          
|agencies  collateralized                                                                           |                                  |             |                                    |   |                                     |  |                    |          
|mortgage obligations                                                                                |                                  | 41,313,621  |                                    |   |                                    |  |                    | 2,039,851
|Obligations of state and                                                                            |                                  |             |                                    |   |                                     |  |                    |          
|political institutions                                                                              |                                  | 26,019,503  |                                    |   | 584,167                             |  |                    | 258      
|Other debt securities                                                                               |                                  | 26,995,640  |                                    |   |                                    |  |                    | 525,327  
|Federal Reserve Bank and                                                                            |                                  |             |                                    |   |                                     |  |                    |          
|other equity securities                                                                             |                                  | 7,623,242   |                                    |   | 18,486                              |  |                    |         
|                                                                                                    |                                  |             |                                    |   |                                     |  |                    |          
|                                                                                                    |                                  |             |                                    |   |                                     |  |                    |          
|Total                                                                                               | $                                | 222,494,820 |                                    | $ | 1,176,622                           |  | $                  | 4,566,725
|                                                                                                    |                                  |             |                                    |   |                                     |  |                    |          

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

|March 31, 2005                                                                                         | Carrying
      Value |             | Gross
      Unrealized
      Gains |   | Gross
      Unrealized
      Losses |  | Estimated
      Market
      Value |          
|------------------------------------------------------------------------------------------------------ | -------------------- | ----------- | ---------------------------------- | - | ----------------------------------- |  | ---------------------------------- | ---------
|                                                                                                       |                      |             |                                    |   |                                     |  |                                    |          
|Obligations of U.S. govern-
  ment corporations and
  agencies  mortgage-backed
  securities          | $                    | 386,830,159 |                                    | $ | 2,244,968                           |  | $                                  | 5,321,827
|Obligations of U.S. govern-
  ment corporations and
  agencies  collateralized
  mortgage obligations |                      | 54,379,198  |                                    |   |                                    |  |                                    | 2,086,856
|Other Debt securities                                                                                  |                      | 44,992,033  |                                    |   |                                    |  |                                    | 671,721  
|Debt securities issued by                                                                             
|foreign governments                                                                                    |                      | 1,250,000   |                                    |   |                                    |  |                                    |         
|                                                                                                       |                      |             |                                    |   |                                     |  |                                    |          
|                                                                                                       |                      |             |                                    |   |                                     |  |                                    |          
|Total                                                                                                  | $                    | 487,451,390 |                                    | $ | 2,244,968                           |  | $                                  | 8,080,404
|                                                                                                       |                      |             |                                    |   |                                     |  |                                    |          

|16
|--



|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 55% 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 27% 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.
The following table sets forth the composition of the Companys loans held for sale and loans
held in portfolio:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|                                       | **March
      31,** |          
|-------------------------------------- | ------------------- | ---------
|
|
|
|
|
|                                       |                     |          
|Domestic                               |                     |          
|Commercial
      and industrial        | $                   | 555,981  
|Equipment
      lease financing        |                     | 163,425  
|Real
      estate - mortgage           |                     | 268,133  
|Real
      estate - construction       |                     | 2,314    
|Installment
      - individuals        |                     | 13,370   
|Loans
      to depository institutions |                     |         
|                                       |                     |          
|                                       |                     |          
|                                       |                     |          
|Loans,
      net of unearned discounts | $                   | 1,003,223
|                                       |                     |          

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Asset Quality
Intrinsic to the lending process is the possibility of loss. In times of economic slowdown, the risk
of loss inherent in the Companys portfolio of loans may be increased. While management endeavors
to minimize this risk, it recognizes that loan losses will occur and that the amount of these losses
will fluctuate depending on the risk characteristics of the loan portfolio which in turn depend on
current and expected economic conditions, the financial condition of borrowers, the realization of
collateral, and the credit management process.
Management views the allowance for loan losses as a critical accounting policy due to its subjectivity.
The allowance for loan losses is maintained through the

|17
|--



|provision for loan losses, which is a charge to operating earnings. The adequacy of the provision and
the resulting allowance for loan losses is determined by a management evaluation process of the loan
portfolio, including identification and review of individual problem situations that may affect the
borrowers ability to repay, review of overall portfolio quality through an analysis of current charge-offs,
delinquency and nonperforming loan data, estimates of the value of any underlying collateral,
an assessment of current and expected economic conditions and changes in the size and character of
the loan portfolio. Other data utilized by management in determining the adequacy of the allowance
for loan losses includes, but is not limited to, the results of regulatory reviews, the amount of,
trend of and/or borrower characteristics on loans that are identified as requiring special attention
as part of the credit review process, and peer group comparisons. The impact of this other data might
result in an allowance which will be greater than that indicated by the evaluation process previously
described. The allowance reflects managements evaluation both of loans presenting identified loss
potential and of the risk inherent in various components of the loan portfolio, including loans identified
as impaired as required by SFAS No. 114. Thus, an increase in the size of the portfolio or in any
of its components could necessitate an increase in the allowance even though there may not be a decline
in credit quality or an increase in potential problem loans. A significant change in any of the evaluation
factors described above could result in future additions to the allowance. At March 31, 2005, the
ratio of the allowance to loans held in portfolio, net of unearned discounts, was 1.72% and the allowance
was $16.8 million. At such date, the Companys nonaccrual loans amounted to $3.4 million; $1.1 million
of such loans was judged to be impaired within the scope of SFAS No. 114. Loans 90 days past due
and still accruing amounted to $1.3 million. Nonacrrual loans and loans 90 days past due and still
accruing include leases, in the amount of $0.7 million and $1.1 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 March 31, 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 quarter 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 $3.8 million at March 31, 2005.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|18
|--



|Deposits
A significant source of funds for the Company continues to be deposits, consisting of demand (noninterest-bearing),
NOW, savings, money market and time deposits (principally certificates of deposit).
The following table provides certain information with respect to the Companys deposits:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                         

|                        | **March 31,** |          
|----------------------- | ------------- | ---------
|
|
|
|
|
|                        |               |          
|Domestic                |               |          
|Demand                  | $             | 468,714  
|NOW                     |               | 152,607  
|Savings                 |               | 28,864   
|Money market            |               | 251,105  
|Time deposits           |               | 484,283  
|                        |               |          
|                        |               |          
|Total domestic deposits |               | 1,385,573
|                        |               |          
|Foreign                
|Time deposits           |               | 3,010    
|                        |               |          
|                        |               |          
|Total deposits          | $             | 1,388,583
|                        |               |          

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Fluctuations of balances in total or among categories at any date may occur based on the Companys
mix of assets and liabilities as well as on customers balance sheet strategies. Historically,
however, average balances for deposits have been relatively stable. Information regarding these average
balances is presented on page 21.
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 23. 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 March 31, 2005, the Company and the bank exceeded the requirements for well capitalized institutions.

|19
|--



|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 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.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|20
|--



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

|                                                                           |  | 2005 |           | 2004 |  
|-------------------------------------------------------------------------- |  | ---- | --------- | ---- | -
|
|
|
|Interest-bearing
      deposits
        with other banks                   |  | $    | 2,380     |      | $
|                                                                           |  |      |           |      |  
|Securities
      available for sale                                        |  |      | 204,234   |      |  
|Securities
      held to maturity                                          |  |      | 461,968   |      |  
|Securities
      tax-exempt [2]                                            |  |      | 26,432    |      |  
|                                                                           |  |      |           |      |  
|Total
      investment securities                                          |  |      | 692,634   |      |  
|Federal funds
      sold                                                   |  |      | 18,556    |      |  
|Loans, net
      of unearned discounts [3]                                 |  |      | 993,046   |      |  
|                                                                           |  |      |           |      |  
|TOTAL INTEREST-EARNING
      ASSETS                                        |  |      | 1,706,616 |      |  
|                                                                           |  |      |           |      |  
|Cash and
      due from banks                                              |  |      | 64,038    |      |  
|Allowance
      for loan losses                                            |  |      | (17,246   | )    |  
|Goodwill                                                                   |  |      | 21,158    |      |  
|Other assets                                                               |  |      | 80,115    |      |  
|                                                                           |  |      |           |      |  
|TOTAL
      ASSETS                                                         |  | $    | 1,854,681 |      |  
|                                                                           |  |      |           |      |  
|LIABILITIES
      AND SHAREHOLDERS
        EQUITY                         |  |      |           |      |  
|Interest-bearing
      deposits                                            |  |      |           |      |  
|Domestic                                                                   |  |      |           |      |  
|Savings                                                                    |  | $    | 29,034    |      |  
|NOW                                                                        |  |      | 142,205   |      |  
|Money
      market                                                         |  |      | 226,516   |      |  
|Time                                                                       |  |      | 493,471   |      |  
|Foreign
         Time                                                      |  |      | 3,002     |      |  
|                                                                           |  |      |           |      |  
|Total
      interest-bearing deposits                                      |  |      | 894,228   |      |  
|                                                                           |  |      |           |      |  
|Borrowings                                                                 |  |      |           |      |  
|Securities
      sold under agreements 
         to repurchase - customers |  |      | 85,763    |      |  
|Securities
      sold under agreements
         to repurchase - dealers    |  |      | 38,461    |      |  
|Federal
      funds purchased                                              |  |      | 3,336     |      |  
|Commercial
      paper                                                     |  |      | 35,603    |      |  
|Other
      short-term debt                                                |  |      | 775       |      |  
|Long-term
      debt                                                       |  |      | 122,552   |      |  
|                                                                           |  |      |           |      |  
|Total
      borrowings                                                     |  |      | 286,490   |      |  
|                                                                           |  |      |           |      |  
|TOTAL INTEREST-BEARING
      LIABILITIES                                   |  |      | 1,180,718 |      |  
|                                                                           |  |      |           |      |  
|Noninterest-bearing
      deposits                                         |  |      | 436,509   |      |  
|Other liabilities                                                          |  |      | 89,909    |      |  
|                                                                           |  |      |           |      |  
|Total
      liabilities                                                    |  |      | 1,707,136 |      |  
|                                                                           |  |      |           |      |  
|Shareholders
      equity                                                 |  |      | 147,545   |      |  
|                                                                           |  |      |           |      |  
|TOTAL
      LIABILITIES AND
                  SHAREHOLDERS
      EQUITY   |  | $    | 1,854,681 |      |  
|                                                                           |  |      |           |      |  
|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.                                                                                             

|21
|--



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

|                                                               | Increase/(Decrease)
Three Months Ended
March 31, 2005 to March 31, 2004 |      
|-------------------------------------------------------------- | ----------------------------------------------------------------------- | -----
|
|
|                                                               |                                                                         |      
|INTEREST INCOMEInterest-bearing deposits with other banks      | $                                                                       |     
|                                                               |                                                                         |      
|                                                               |                                                                         |      
|                                                              
|Securities available for sale                                  |                                                                         | (990 
|Securities held to maturity                                    |                                                                         | 1,042
|Securities tax-exempt                                          |                                                                         | (85  
|                                                               |                                                                         |      
|Total investment securities                                    |                                                                         | (33  
|                                                               |                                                                         |      
|Federal funds sold                                             |                                                                         | (8   
|                                                               |                                                                         |      
|Loans, net of unearned discounts [3]                           |                                                                         | 2,209
|                                                               |                                                                         |      
|                                                               |                                                                         |      
|                                                               |                                                                         |      
|TOTAL INTEREST INCOME                                          | $                                                                       | 2,168
|                                                               |                                                                         |      
|                                                               |                                                                         |      
|INTEREST EXPENSE                                               |                                                                         |      
|Interest-bearing deposits                                      |                                                                         |      
|Domestic                                                       |                                                                         |      
|Savings                                                        | $                                                                       | (4   
|NOW                                                            |                                                                         | 8    
|Money market                                                   |                                                                         | 29   
|Time                                                           |                                                                         | 391  
|Foreign
    Time                                               |                                                                         |     
|                                                               |                                                                         |      
|Total interest-bearing deposits                                |                                                                         | 424  
|                                                               |                                                                         |      
|Borrowings                                                     |                                                                         |      
|Securities sold under agreements
    to repurchase  customers |                                                                         | 31   
|Securities sold under agreements
    to repurchase  dealers   |                                                                         | 4    
|Federal funds purchased                                        |                                                                         | (9   
|Commercial paper                                               |                                                                         | 41   
|Other short-term debt                                          |                                                                         | (141 
|Long-term debt                                                 |                                                                         | (162 
|                                                               |                                                                         |      
|Total borrowings                                               |                                                                         | (236 
|                                                               |                                                                         |      
|                                                               |                                                                         |      
|TOTAL INTEREST EXPENSE                                         | $                                                                       | 188  
|                                                               |                                                                         |      
|                                                               |                                                                         |      
|NET INTEREST INCOME                                            | $                                                                       | 1,980
|                                                               |                                                                         |      

|    |                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[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.                                                  

|22
|--



|STERLING BANCORP AND SUBSIDIARIESRegulatory 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                                  |        | $ | 172,171                            |  |                              | 14.81
|The bank                                     |        |   | 135,102                            |  |                              | 12.38
|                                             |       
|Tier 1 Capital (to Risk Weighted Assets):    |        |   |                                    |  |                              |      
|The Company                                  |        |   | 157,613                            |  |                              | 13.56
|The bank                                     |        |   | 121,433                            |  |                              | 11.13
|                                             |       
|Tier 1 Leverage Capital (to Average Assets): |        |   |                                    |  |                              |      
|The Company                                  |        |   | 157,613                            |  |                              | 8.60 
|The bank                                     |        |   | 121,433                            |  |                              | 6.88 
|                                             |        |   |                                    |  |                              |      
|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 

|23
|--



|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 and approved by the Asset/Liability Committee. This committee, which is comprised
of members of senior management, meets to review, among other things, economic conditions, interest
rates, yield curve, cash flow projections, expected customer actions, liquidity levels, capital ratios
and repricing characteristics of assets, liabilities and financial instruments.
Market Risk
Market risk is the risk of loss in a financial instrument arising from adverse changes in market indices
such as interest rates, foreign exchange rates and equity prices. The Companys principal market
risk exposure is interest rate risk, with no material impact on earnings from changes in foreign
exchange rates or equity prices.
Interest rate risk is the exposure to changes in market interest rates. Interest
rate sensitivity is the relationship between market interest rates and net interest income due to the repricing characteristics of assets and
liabilities. The Company monitors the interest rate sensitivity of its balance sheet positions by
examining its near-term sensitivity and its longer-term gap position. In its management of interest
rate risk, the Company utilizes several financial and statistical tools, including traditional gap
analysis and sophisticated income simulation models.
A traditional gap analysis is prepared based on the maturity and repricing characteristics of interest-earning
assets and interest-bearing liabilities for selected time bands. The mismatch between repricings
or maturities within a time band is commonly referred to as the gap for that period. A positive
gap (asset sensitive) where interest rate sensitive assets exceed interest rate sensitive liabilities
generally will result in the net interest margin increasing in a rising rate environment and decreasing
in a falling rate environment. A negative gap (liability sensitive) will generally have the opposite
result on the net interest margin. However, the traditional gap analysis does not assess the relative
sensitivity of assets and liabilities to changes in interest rates and other factors that could have
an impact on interest rate sensitivity or net interest income. The Company utilizes the gap analysis
to complement its income simulations modeling, primarily focusing on the longer-term structure of
the balance sheet.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|24
|--



|The Companys balance sheet structure is primarily short-term in nature with a substantial portion
of assets and liabilities repricing or maturing within one year. The Companys gap analysis at March
31, 2005, presented on page 28, 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 first quarter of 2005, the Company did not enter into
any derivative contracts to hedge its interest rate risk. At March 31, 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 March 31, 2005, the model indicated the impact of a 200 basis point parallel and pro rata
rise in rates over 12 months would approximate a 2.3% ($1.9 million) increase in net interest income,
while the impact of a 200 basis point decline in rates over the same period would approximate a 2.8%
($2.3 million) decline from an unchanged rate environment.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|25
|--



|The preceding sensitivity analysis does not represent a Company forecast and should not be relied upon
as being indicative of expected operating results. These hypothetical estimates are based upon numerous
assumptions including: the nature and timing of interest rate levels including yield curve shape,
pre-payments on loans and securities, deposit decay rates, pricing decisions on loans and deposits,
reinvestment/replacement of asset and liability cash flows, and others. While assumptions are developed
based upon current economic and local market conditions, the Company cannot provide any assurances
as to the predictive nature of these assumptions, including how customers preferences or competitor
influences might change.
Also, as market conditions vary from those assumed in the sensitivity analysis, actual results will
also differ due to: pre-payment/refinancing levels likely deviating from those assumed, the varying
impact of interest rate change caps or floors on adjustable rate assets, the potential effect of
changing debt service levels on customers with adjustable rate loans, depositor early withdrawals
and product preference changes, and other variables. Furthermore, the sensitivity analysis does not
reflect actions that the Asset/Liability Committee might take in responding to or anticipating changes
in interest rates.

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 included domestic noninterest-bearing
and interest-bearing retail deposits, which historically have been relatively stable. The parent
company and the bank believe that they have significant unused borrowing capacity. Contingency plans
exist which we believe could be implemented on a timely basis to mitigate the impact of any dramatic
change in market conditions.
While the parent company generates income from its own operations, it also depends for its cash requirements
on funds maintained or generated by its subsidiaries, principally the bank. Such sources have been
adequate to meet the parent companys cash requirements throughout its history.
Various legal restrictions limit the extent to which the bank can supply funds to the parent company
and its nonbank subsidiaries. All national banks are limited in the payment of dividends without
the approval of the Comptroller of the Currency to an amount not to exceed the net profits as defined,
for the year to date combined with its retained net profits for the preceding two calendar years.
At March 31, 2005, the parent companys short-term debt, consisting principally of commercial paper
used to finance ongoing current business activities, was approximately $39.2 million. The parent
company had cash, interest-bearing deposits with banks and other current assets aggregating $30.6
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.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|26
|--



|The following table sets forth
information regarding the Companys obligations and commitments to make future
payments under contract as of March 31, 2005:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------

|                                         | Payments
      Due by Period | 
|---------------------------------------- | ---------------------------- | 
|                                        
|Contractual
      Obligations           
|                                        
|                                         |                              | 
|                                         |                              | 
|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 March 31, 2005:
|---------------------------------------------------------------------------------------------------------------------------------------

|                                         |  |  | Amount
      of Commitment Expiration Per Period |        
|---------------------------------------- |  |  | ------------------------------------------------ | -------
|                                        
|Other
      Commercial
      Commitments
|
|(in
      thousands)                    
|                                         |  |  |                                                  |        
|Residential
      loans                  |  |  | $                                                | 37,238 
|Commercial
      Loans                   |  |  |                                                  | 19,423 
|                                         |  |  |                                                  |        
|Total Loans                              |  |  |                                                  | 56,661 
|Standby Letters
      of Credit          |  |  |                                                  | 39,056 
|Other Commercial
      Commitments       |  |  |                                                  | 9,402  
|                                         |  |  |                                                  |        
|                                         |  |  |                                                  |        
|Total Commercial
      Commitments       |  |  | $                                                | 105,119
|                                         |  |  |                                                  |        

|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.










27
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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

|                                                                              | Repricing
      Date |  
|----------------------------------------------------------------------------- | -------------------- | -
|
|
|
|ASSETS                                                                        |                      |  
|Interest-bearing
      deposits
          with other banks                    |                      | $
|Federal
      funds sold                                                      |                      |  
|Investment
      securities                                                   |                      |  
|Loans,
      net of unearned
          discounts                              |                      |  
|Commercial
      and industrial                                               |                      |  
|Loans
      to depository
             institutions                           |                      |  
|Lease
      financing                                                         |                      |  
|Real
      estate                                                             |                      |  
|Installment                                                                   |                      |  
|Noninterest-earning
          assets and allowance 
          for loan losses |                      |  
|                                                                             
|Total
      Assets                                                            |                      |  
|                                                                             
|                                                                             
|                                                                              |                      |  
|LIABILITIES
      AND
      SHAREHOLDERS EQUITY                              |                      |  
|Interest-bearing
      deposits                                               |                      |  
|Savings [1]                                                                   |                      |  
|NOW
      [1]                                                                 |                      |  
|Money
      market [1]                                                        |                      |  
|Time
      - domestic                                                         |                      |  
|-
      foreign                                                               |                      |  
|Securities
      sold u/a/r - customers                                       |                      |  
|Securities
      sold u/a/r - dealers                                         |                      |  
|Federal
      funds purchased                                                 |                      |  
|Commercial
      paper                                                        |                      |  
|Other
      short-term borrowings                                             |                      |  
|Long-term
      borrowings - FHLB                                             |                      |  
|Noninterest-bearing
      liabilities
         and shareholders equity       |                      |  
|                                                                             
|                                                                              |                      |  
|Total
      Liabilities and
              Shareholders Equity                |                      |  
|                                                                             
|                                                                              |                      |  
|                                                                              |                      |  
|Net
      Interest Rate
          Sensitivity Gap                             |                      | $
|                                                                              |                      |  
|                                                                              |                      |  
|                                                                              |                      |  
|Cumulative
      Gap
          March 31, 2005                                 |                      | $
|                                                                              |                      |  
|                                                                              |                      |  
|                                                                              |                      |  
|Cumulative
      Gap
          March 31, 2004                                 |                      | $
|                                                                              |                      |  
|                                                                              |                      |  
|                                                                              |                      |  
|Cumulative
      Gap
          December 31, 2004                              |                      | $
|                                                                              |                      |  
|                                                                              |                      |  

|    |                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[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.

|28
|--



|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 changes 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 March 31, 2005: The Company
developed and implemented procedures for monthly expensing of premiums paid and or prepaid
for Company-owned split-dollar life insurance policies on the lives of certain officers of
the Company, retained actuarial assistance in determining the appropriate amounts to be
expensed in respect of the Companys obligations to pay future premiums on
split-dollar life insurance policies issued as part of a transaction in which an officer
relinquishes his right to receive pension payments in exchange for the insurance policy
and in respect of the Companys obligations to pay future post-retirement premiums on
certain split-dollar life insurance policies, and retained life insurance consultants for
assistance in determining the appropriate amounts to be credited in respect of increases
in the cash surrender values of these various policies.
The Company will conduct tests of
these new procedures and other changes to its internal control over financial reporting.
The Company intends also to add personnel with greater expertise in accounting for
employee benefits and related transactions under generally accepted accounting principles.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|29
|--



|PART II - OTHER INFORMATION
|---------------------------
|                           

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

|30
|--



|SIGNATURES
|----------
|          

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

| |              |              |  |     | STERLING BANCORP                                                              
| | ------------ | ------------ |  | --- | ------------------------------------------------------------------------------
| | (Registrant)
| |             
| |             
| | Date         | May 10, 2005 |  | /s/ | Louis J. Cappelli                                                             
| |              |   |  |     |                                                                
| |              |              |  |     | Louis J. Cappelli
Chairman andChief Executive Officer                         
| |              |              |  |     |                                                                               
| | Date         | May 10, 2005 |  | /s/ | John W. Tietjen                                                               
| |              |   |  |     |                                                                
| |              |              |  |     | John W. Tietjen
Executive Vice President, Treasurerand Chief Financial Officer

|31
|--



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

|Exhibit
Number |  | Description                                                                                            | Sequential
Page No.
|-------------- |  | ------------------------------------------------------------------------------------------------------ | -------------------
|               |  |                                                                                                        |                    
|               |  |                                                                                                        |                    
|11             |  | Statement re: Computation
of Per Share Earnings.                                                       | 33                 
|               |  |                                                                                                        |                    
|31             |  | Certifications of the CEO and CFO pursuant to
Exchange Act Rule 13a-14(a).                             | 34                 
|               |  |                                                                                                        |                    
|32             |  | Certifications of the CEO and CFO required by
Section 1350 of Chapter 63 of Title 18 of the
U.S. Code. | 36                 

|32
|--