<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended September 30, 2002

                                       or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934


For the transition period from _______________ to _________________


Commission File Number: 1-5273-1


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


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


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

                                  212-757-3300
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


                                       N/A
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)


    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                  [X] Yes [] No

       As of October 31, 2002 there were 9,887,996 shares of common stock,
                         $1.00 par value, outstanding.
<PAGE>
                                STERLING BANCORP

<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION                                                    Page
                                                                                 ----
<S>                 <C>                                                          <C>

        Item 1.     Financial Statements (Unaudited)

                    Consolidated Financial Statements                             3
                    Notes to Consolidated Financial Statements                    8

        Item 2.     Management's Discussion and Analysis of Financial
                      Condition and Results of Operations

                    Business                                                     13
                    Results for Three Months                                     13
                    Results for Nine Months                                      15
                    Balance Sheet Analysis                                       17
                    Capital                                                      21
                    Average Balance Sheets                                       22
                    Rate/Volume Analysis                                         24
                    Regulatory Capital and Ratios                                26

        Item 3.     Quantitative and Qualitative Disclosures About
                      Market Risk

                    Asset/Liability Management                                   27
                    Interest Rate Sensitivity                                    30

        Item 4.     Controls and Procedures                                      31


PART II. OTHER INFORMATION


        Item 6.     Exhibits and Reports on Form 8-K                             31



SIGNATURES                                                                       31


EXHIBIT INDEX

        Exhibit 11           Computation of Per Share Earnings                   33

        Exhibit 99.1         Certifications of Chief Executive
                             Officer pursuant to Section 302 of the
                             Sarbanes-Oxley Act of 2002                          34

        Exhibit 99.2         Certifications of Chief Financial
                             Officer pursuant to Section 302 of the
                             Sarbanes-Oxley Act of 2002                          35
</TABLE>

                                        2
<PAGE>
                        STERLING BANCORP AND SUBSIDIARIES
                           Consolidated Balance Sheets
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                   September 30,                 December 31,
ASSETS                                                                 2002                         2001
                                                                  --------------                --------------
<S>                                                               <C>                           <C>
Cash and due from banks                                           $   49,427,001                $   50,362,016
Interest-bearing deposits with other banks                             1,905,755                     2,487,178
Federal funds sold                                                          --                      10,000,000

Securities available for sale                                        190,866,033                   177,810,042
Securities available for sale - pledged                               81,055,633                    91,752,370
Securities held to maturity                                          138,013,251                   101,077,406
Securities held to maturity - pledged                                182,457,720                   205,387,986
                                                                  --------------                --------------
        Total investment securities                                  592,392,637                   576,027,804
                                                                  --------------                --------------

Loans held for sale                                                   33,093,148                    48,602,841
Loans held in portfolio, net of unearned discounts                   795,197,068                   760,084,033
Less allowance for loan losses                                        12,822,381                    14,038,322
                                                                  --------------                --------------
        Loans, net                                                   815,467,835                   794,648,552
                                                                  --------------                --------------
Customers' liability under acceptances                                 1,524,201                       608,660
Excess cost over equity in net assets of the
  banking subsidiary                                                  21,158,440                    21,158,440
Premises and equipment, net                                            8,562,325                     7,852,362
Other real estate                                                        998,668                       809,184
Accrued interest receivable                                            5,746,802                     5,867,121
Bank owned life insurance                                             20,814,366                          --
Other assets                                                          11,779,426                    13,049,654
                                                                  --------------                --------------
                                                                  $1,529,777,456                $1,482,870,971
                                                                  ==============                ==============

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
  Noninterest-bearing deposits                                    $  326,243,038                $  356,303,308
  Interest-bearing deposits                                          707,781,772                   628,620,646
                                                                  --------------                --------------
        Total deposits                                             1,034,024,810                   984,923,954
Federal funds purchased and securities
  sold under agreements to repurchase                                 78,073,794                   147,095,635
Commercial paper                                                      29,712,600                    42,103,200
Other short-term borrowings                                           24,917,302                     8,687,671
Acceptances outstanding                                                1,524,201                       608,660
Accrued expenses and other liabilities                                83,038,063                    75,624,435
Long-term debt - FHLB                                                125,000,000                    95,350,000
                                                                  --------------                --------------
        Total liabilities                                          1,376,290,770                 1,354,393,555
                                                                  --------------                --------------

Corporation Obligated Mandatorily Redeemable
  Capital Securities of Subsidiary Trust                              25,000,000                          --
                                                                  --------------                --------------
Shareholders' equity
Preferred stock, $5 par value. Authorized
  644,389 shares Series D; issued 232,305
   and 234,606 shares, respectively                                    2,323,050                     2,346,060
Common stock, $1 par value. Authorized
  20,000,000 shares; issued 11,148,692
   and 10,834,853 shares, respectively                                11,148,692                    10,834,853
Capital surplus                                                      102,745,307                    98,487,765
Retained earnings                                                     43,033,863                    32,419,767
Accumulated other comprehensive income, net of tax                     3,984,283                     1,119,223
                                                                  --------------                --------------
                                                                     163,235,195                   145,207,668
Less
  Common shares in treasury at cost, 1,262,516
   and 745,023 shares, respectively                                   32,435,473                    15,542,454
  Unearned compensation                                                2,313,036                     1,187,798
                                                                  --------------                --------------
        Total shareholders' equity                                   128,486,686                   128,477,416
                                                                  --------------                --------------
                                                                  $1,529,777,456                $1,482,870,971
                                                                  ==============                ==============
</TABLE>

See Notes to Consolidated Financial Statements.

                                        3
<PAGE>
                        STERLING BANCORP AND SUBSIDIARIES
                        Consolidated Statements of Income
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                          Three Months Ended                          Nine Months Ended
                                                             September 30,                               September 30,
                                                 ----------------------------------            ----------------------------------
                                                    2002                   2001                   2002                   2001
                                                 -----------            -----------            -----------            -----------
<S>                                              <C>                    <C>                    <C>                    <C>
INTEREST INCOME
  Loans                                          $14,547,213            $16,327,504            $42,959,229            $50,342,902
  Investment securities
    Available for sale                             4,174,794              3,232,726             12,764,113              8,843,426
    Held to maturity                               4,942,536              4,033,164             14,742,343             13,107,623
  Federal funds sold                                  44,352                 54,933                225,341                 79,494
  Deposits with other banks                            6,708                 28,296                 26,314                 86,224
                                                 -----------            -----------            -----------            -----------
        Total interest income                     23,715,603             23,676,623             70,717,340             72,459,669
                                                 -----------            -----------            -----------            -----------

INTEREST EXPENSE
  Deposits                                         3,110,679              4,831,922              9,743,232             15,071,425
  Federal funds purchased and
    securities sold under agreements
    to repurchase                                    296,377                547,627              1,099,966              3,680,591
  Commercial paper                                   156,643                357,027                515,699              1,225,377
  Other short-term borrowings                        135,132                 38,698                372,880                124,114
  Long-term debt                                   1,148,669                466,803              3,334,251              1,228,443
                                                 -----------            -----------            -----------            -----------
        Total interest expense                     4,847,500              6,242,077             15,066,028             21,329,950
                                                 -----------            -----------            -----------            -----------

Net interest income                               18,868,103             17,434,546             55,651,312             51,129,719
Provision for loan losses                          2,153,100              2,017,800              8,432,400              5,231,400
                                                 -----------            -----------            -----------            -----------
Net interest income after provision
  for loan losses                                 16,715,003             15,416,746             47,218,912             45,898,319
                                                 -----------            -----------            -----------            -----------

NONINTEREST INCOME
  Factoring income                                 1,807,632              1,371,780              4,736,535              4,086,996
  Mortgage banking income                          2,381,723              2,216,606              7,594,777              5,639,722
  Service charges on deposit accounts              1,300,524              1,478,183              3,688,455              4,242,980
  Trade finance income                               797,794                646,189              1,875,722              1,943,501
  Trust fees                                         124,334                171,178                475,994                556,797
  Other service charges and fees                     416,389                475,376              1,459,326              1,208,797
  Bank owned life insurance income                   298,185                   --                  814,366                   --
  Securities gains                                    24,947                   --                  869,290                   --
  Other income                                       141,854                158,297                426,155                307,653
                                                 -----------            -----------            -----------            -----------
        Total noninterest income                   7,293,382              6,517,609             21,940,620             17,986,446
                                                 -----------            -----------            -----------            -----------

NONINTEREST EXPENSES
  Salaries and employee benefits                   8,253,632              7,072,561             24,334,467             20,944,900
  Occupancy expenses, net                          1,294,747              1,346,724              3,793,331              3,545,329
  Equipment expenses                                 602,868                698,595              1,964,564              1,851,252
  Advertising and marketing                          895,641                670,824              2,522,137              2,425,167
  Professional fees                                  848,642              1,351,293              2,337,445              3,956,745
  Data processing fees                               259,246                328,329                987,161              1,001,480
  Stationery and printing                            296,386                213,615                838,699                611,745
  Communications                                     403,992                456,092              1,196,668              1,159,947
  Capital securities costs                           534,449                   --                1,268,114                   --
  Other expenses                                   1,517,477              1,383,725              5,132,621              4,561,068
                                                 -----------            -----------            -----------            -----------
        Total noninterest expenses                14,907,080             13,521,758             44,375,207             40,057,633
                                                 -----------            -----------            -----------            -----------

Income before income taxes                         9,101,305              8,412,597             24,784,325             23,827,132
Provision for income taxes                         3,556,613              3,419,876              8,742,723              9,592,899
                                                 -----------            -----------            -----------            -----------
Net income                                       $ 5,544,692            $ 4,992,721            $16,041,602            $14,234,233
                                                 ===========            ===========            ===========            ===========

Average number of common
 shares outstanding
  Basic                                            9,922,478             10,250,508             10,021,703             10,129,812
  Diluted                                         10,526,878             10,933,626             10,686,925             10,686,655
Per average common share
  Basic                                          $      0.56            $      0.49            $      1.59            $      1.40
  Diluted                                               0.52                   0.46                   1.49                   1.33
Dividends per common share                              0.18                   0.16                   0.54                   0.48
</TABLE>

See Notes to Consolidated Financial Statements.

                                        4

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

<TABLE>
<CAPTION>
                                                       Three Months Ended                               Nine Months Ended
                                                           September 30,                                    September 30,
                                              -------------------------------------            -------------------------------------
                                                 2002                      2001                    2002                     2001
                                              ------------             ------------            ------------             ------------
<S>                                           <C>                      <C>                     <C>                      <C>
Net income                                    $  5,544,692             $  4,992,721            $ 16,041,602             $ 14,234,233

Other comprehensive income,
 net of tax:
   Unrealized holding gains
   arising during the period                     1,664,427                2,280,244               3,335,346                3,021,501

   Reclassification adjustment for
   gains included in net income                    (13,496)                    --                  (470,286)                    --
                                              ------------             ------------            ------------             ------------

Comprehensive income                          $  7,195,623             $  7,272,965            $ 18,906,662             $ 17,255,734
                                              ============             ============            ============             ============
</TABLE>

See Notes to Consolidated Financial Statements.

                                        5
<PAGE>
                        STERLING BANCORP AND SUBSIDIARIES
           Consolidated Statements of Changes in Shareholders' Equity
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                     Nine Months Ended
                                                                                        September 30,
                                                                           ---------------------------------------
                                                                               2002                       2001
                                                                           -------------             -------------
<S>                                                                        <C>                       <C>
Preferred Stock
  Balance at January 1                                                     $   2,346,060             $   2,402,760
  Conversions of Series B shares                                                    --                      (2,460)
  Redemption of Series B shares                                                     --                     (21,520)
  Conversions of Series D shares                                                 (23,010)                  (26,990)
                                                                           -------------             -------------
  Balance at September 30                                                  $   2,323,050             $   2,351,790
                                                                           =============             =============

Common Stock
  Balance at January 1                                                     $  10,834,853             $   9,563,329
  Conversions of preferred shares into common shares                               2,919                     3,390
  Options exercised                                                              310,920                   310,155
                                                                           -------------             -------------
  Balance at September 30                                                  $  11,148,692             $   9,876,874
                                                                           =============             =============

Capital Surplus
  Balance at January 1                                                     $  98,487,765             $  67,450,110
  Conversions of preferred shares into common shares                              20,091                    26,064
  Redemption of Series B shares                                                     --                      (8,612)
  Issuance of shares under incentive compensation plan                           386,400                      --
  Options exercised                                                            3,851,051                 3,512,043
                                                                           -------------             -------------
  Balance at September 30                                                  $ 102,745,307             $  70,979,605
                                                                           =============             =============

Retained Earnings
  Balance at January 1                                                     $  32,419,767             $  47,466,602
  Net Income                                                                  16,041,602                14,234,233
  Cash dividends paid - common shares                                         (5,342,879)               (4,401,484)
                      - preferred shares                                         (84,627)                  (73,731)
                                                                           -------------             -------------
  Balance at September 30                                                  $  43,033,863             $  57,225,620
                                                                           =============             =============

Accumulated Other Comprehensive Income
  Balance at January 1                                                     $   1,119,223             $     (22,652)
                                                                           -------------             -------------
  Unrealized holding gains arising during the period:
     Before tax                                                                6,165,148                 5,585,026
     Tax effect                                                               (2,829,802)               (2,563,525)
                                                                           -------------             -------------
       Net of tax                                                              3,335,346                 3,021,501
                                                                           -------------             -------------

  Reclassification adjustment for gains included in net income:
     Before tax                                                                 (869,290)                     --
     Tax effect                                                                  399,004                      --
                                                                           -------------             -------------
       Net of tax                                                               (470,286)                     --
                                                                           -------------             -------------
  Balance at September 30                                                  $   3,984,283             $   2,998,849
                                                                           =============             =============

Treasury Stock
  Balance at January 1                                                     $ (15,542,454)            $  (7,986,763)
  Issuance of shares under incentive compensation plan                         1,267,200                      --
  Surrender of shares issued under incentive
   compensation plan                                                          (3,034,547)               (1,459,673)
  Purchase of common shares                                                  (15,125,672)                 (955,167)
                                                                           -------------             -------------
  Balance at September 30                                                  $ (32,435,473)            $ (10,401,603)
                                                                           =============             =============

Unearned Compensation

  Balance at January 1                                                     $  (1,187,798)            $  (1,857,292)
  Issuance of shares under incentive compensation plan                        (1,653,600)                     --
  Amortization of unearned compensation                                          528,362                   299,178
                                                                           -------------             -------------
  Balance at September 30                                                  $  (2,313,036)            $  (1,558,114)
                                                                           =============             =============

Total Shareholders' Equity
  Balance at January 1                                                     $ 128,477,416             $ 117,016,094
  Net changes during the period                                                    9,270                14,456,927
                                                                           -------------             -------------
  Balance at September 30                                                  $ 128,486,686             $ 131,473,021
                                                                           =============             =============
</TABLE>

See Notes to Consolidated Financial Statements.

                                        6
<PAGE>
                        STERLING BANCORP AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                      Nine Months Ended
                                                                                         September 30,
                                                                         -----------------------------------------
                                                                             2002                        2001
                                                                         -------------               -------------
<S>                                                                      <C>                         <C>
Operating Activities
  Net Income                                                             $  16,041,602               $  14,234,233
  Adjustments to reconcile net income to net cash provided
   by operating activities:
    Provision for loan losses                                                8,432,400                   5,231,400
    Depreciation and amortization of premises and equipment                  1,263,032                   1,272,689
    Securities gains                                                          (869,290)                       --
    Income from bank owned life insurance                                     (814,366)                       --
    Deferred income tax provision (benefit)                                    435,151                    (716,738)
    Net decrease (increase) in loans held for sale                          15,509,693                 (11,945,324)
    Amortization of unearned compensation                                      528,362                     299,178
    Amortization of premiums of securities                                   1,042,469                     950,159
    Accretion of discounts on securities                                      (666,212)                   (518,548)
    Decrease (Increase) in accrued interest receivable                         120,319                    (871,433)
    Increase in accrued expenses and
     other liabilities                                                       7,413,628                  14,405,230
    Increase in other assets                                                  (289,623)                 (3,562,160)
    Issuance cost for preferred securities,
     net of amortization                                                      (916,667)                       --
    Other, net                                                              (2,486,501)                 (1,459,669)
                                                                         -------------               -------------
     Net cash provided by operating activities                              44,743,997                  17,319,017
                                                                         -------------               -------------
Investing Activities
  Purchase of premises and equipment                                        (1,972,995)                 (3,035,413)
  Decrease (Increase) in interest-bearing deposits                             581,423                  (1,554,336)
  Decrease (Increase) in Federal funds sold                                 10,000,000                  (5,000,000)
  Increase in other real estate                                               (189,484)                    (25,062)
  Net increase in loans                                                    (44,761,376)                (25,119,433)
  Purchase of investment in bank owned life insurance                      (20,000,000)                       --
  Proceeds from prepayments, redemptions or maturities
   of securities - held to maturity                                         69,589,504                  58,972,243
  Purchases of securities - held to maturity                               (83,926,203)                (20,133,093)
  Purchases of securities - available for sale                            (163,152,563)               (122,725,448)
  Proceeds from sales of securities - available for sale                    39,923,352                        --
  Proceeds from prepayments, redemptions or maturities
   of securities - available for sale                                      126,989,991                  36,799,427
                                                                         -------------               -------------
     Net cash used in investing activities                                 (66,918,351)                (81,821,115)
                                                                         -------------               -------------
Financing Activities
  Decrease in noninterest-bearing deposits                                 (30,060,270)                (17,428,710)
  Increase in interest-bearing deposits                                     79,161,126                 151,959,555
  Net proceeds from issuance of Corporation Obligated
   Mandatorily Redeemable Preferred Securities of Subsidiary Trust          24,062,500                        --
  Decrease in Federal funds purchased
   and securities sold under agreements to repurchase                      (69,021,841)               (101,336,218)
  Increase in commercial paper and
   other short-term borrowings                                               3,839,031                     927,493
  Purchase of treasury stock                                               (15,125,672)                   (955,167)
  Redemption of preferred stock                                                   --                       (30,132)
  Increase in other long-term debt                                          29,650,000                  29,650,000
  Proceeds from exercise of stock options                                    4,161,971                   3,822,198
  Cash dividends paid on common and preferred stock                         (5,427,506)                 (4,475,215)
                                                                         -------------               -------------
        Net cash provided by financing activities                           21,239,339                  62,133,804
                                                                         -------------               -------------

Net decrease in cash and due from banks                                       (935,015)                 (2,368,294)
Cash and due from banks - beginning of period                               50,362,016                  50,212,689
                                                                         -------------               -------------
Cash and due from banks - end of period                                  $  49,427,001               $  47,844,395
                                                                         =============               =============
Supplemental disclosures:
  Interest paid                                                          $  15,707,793               $  21,400,448
  Income taxes paid                                                          9,678,303                   8,839,390
</TABLE>

See Notes to Consolidated Financial Statements.

                                        7
<PAGE>
                        STERLING BANCORP AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (Unaudited)


1.       The consolidated financial statements include the accounts of Sterling
         Bancorp ("the parent company") and its subsidiaries, principally
         Sterling National Bank and its subsidiaries ("the bank"), after
         elimination of material intercompany transactions. The term "the
         Company" refers to Sterling Bancorp and its subsidiaries. The Company
         follows accounting principles generally accepted in the United States
         of America and prevailing practices within the banking industry. The
         consolidated financial statements as of and for the interim periods
         ended September 30, 2002 and 2001 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 2001 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, 2001. The Company paid stock dividends as follows: a 10%
         stock dividend on December 10, 2001; a 10% stock dividend on December
         11, 2000; and a 5% stock dividend on December 14, 1999. Fractional
         shares were cashed-out and payments were made to shareholders in lieu
         of fractional shares. The basic and diluted average number of shares
         outstanding and earnings per share information for all prior reporting
         periods have been restated to reflect the effect of the stock dividend.

2.       For purposes of reporting cash flows, cash and cash equivalents include
         cash and due from banks.

3.       The Company's outstanding Preferred Shares comprise 232,305 Series D
         shares (300,000 Series D shares authorized). Each Series D share (all
         of such shares are owned by the Company's Employee Stock Ownership
         Trust) is entitled to dividends at the rate of $0.6125 per year, is
         convertible into 1.2723 Common Shares, and is entitled to a liquidation
         preference of $10 (together with accrued dividends). All preferred
         shares are entitled to one vote per share (voting with the Common
         Shares except as otherwise required by law).

4.       The Financial Accounting Standards Board Statement of Financial
         Accounting Standards ("SFAS") No. 131, "Disclosures about Segments of
         an Enterprise and Related Information," established standards for the
         way that public business enterprises report and disclose selected
         information about operating segments in interim financial statements
         issued to stockholders.


                                        8
<PAGE>
                        STERLING BANCORP AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

         The Company provides a full range of financial products and services,
including commercial loans, asset-based financing, accounts receivable
management services, trade financing, equipment leasing, business 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 2002
year-to-date average interest-earning assets were 54.1% loans (business lending
was 75.6% and real estate lending was 21.3% of total loans, respectively) and
45.9% investment securities and money market investments. There are no industry
concentrations exceeding 10% of loans, gross, in the business loan portfolio.
Approximately 67% of loans are to borrowers located in the metropolitan New York
area. The Company has determined that it has three reportable operating
segments: business lending, real estate lending and company-wide treasury.

         The following tables provide certain information regarding the
Company's operating segments for the three and nine month periods ended
September 30, 2002 and 2001:

<TABLE>
<CAPTION>
                                                Business            Real Estate           Company-wide
                                                Lending               Lending               Treasury               Totals
                                             --------------        --------------        --------------        --------------
<S>                                          <C>                   <C>                   <C>                   <C>
Three Months Ended September 30, 2002
Net interest income                          $    7,530,877        $    3,436,493        $    7,487,737        $   18,455,107
Noninterest income                                3,720,570             2,403,740               349,942             6,474,252
Depreciation and amortization                        48,060                52,189                  --                 100,249
Segment profit                                    4,625,923             2,571,043             7,873,208            15,070,174
Segment assets                                  620,991,983           165,103,648           696,465,329         1,482,560,960


Three Months Ended September 30, 2001
Net interest income                          $    7,386,074        $    3,606,566        $    5,978,522        $   16,971,162
Noninterest income                                3,283,578             2,240,090                20,820             5,544,488
Depreciation and amortization                        54,234                64,783                    86               119,103
Segment profit                                    4,206,830             3,166,087             6,653,391            14,026,308
Segment assets                                  598,165,252           148,412,334           572,071,246         1,318,648,832



Nine Months Ended September 30, 2002
Net interest income                          $   21,805,357        $   10,068,686        $   22,594,118        $   54,468,161
Noninterest income                                9,729,831             7,578,130             1,750,153            19,058,114
Depreciation and amortization                       141,559               146,332                  --                 287,891
Segment profit                                   12,439,592             8,342,383            24,618,085            45,400,060
Segment assets                                  620,991,983           165,103,648           696,465,329         1,482,560,960


Nine Months Ended September 30, 2001
Net interest income                          $   23,098,725        $   10,553,734        $   15,976,248        $   49,628,707
Noninterest income                                9,665,583             5,807,984                93,108            15,566,675
Depreciation and amortization                       140,721               163,366                   256               304,343
Segment profit                                   13,720,942             8,720,781            18,446,963            40,888,686
Segment assets                                  598,165,252           148,412,334           572,071,246         1,318,648,832
</TABLE>

                                        9
<PAGE>
                        STERLING BANCORP AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (Unaudited)



         The following table sets forth reconciliations of net interest income,
noninterest income, profits and assets of reportable operating segments to the
Company's consolidated totals:

<TABLE>
<CAPTION>
                                                   Three Months Ended September 30,            Nine Months Ended September 30,
                                                -------------------------------------       -------------------------------------
                                                     2002                   2001                  2002                  2001
                                                ---------------       ---------------       ---------------       ---------------
<S>                                             <C>                   <C>                   <C>                   <C>
Net interest income:
   Total for reportable operating segments      $    18,455,107       $    16,971,162       $    54,468,161       $    49,628,707
   Other [1]                                            412,996               463,384             1,183,151             1,501,012
                                                ---------------       ---------------       ---------------       ---------------


Consolidated net interest income                $    18,868,103       $    17,434,546       $    55,651,312       $    51,129,719
                                                ===============       ===============       ===============       ===============

Noninterest income:
   Total for reportable operating segments      $     6,474,252       $     5,544,488       $    19,058,114       $    15,566,675
   Other [1]                                            819,130               973,121             2,882,506             2,419,771
                                                ---------------       ---------------       ---------------       ---------------


Consolidated noninterest income                 $     7,293,382       $     6,517,609       $    21,940,620       $    17,986,446
                                                ===============       ===============       ===============       ===============


Profit:
   Total for reportable operating segments      $    15,070,174       $    14,026,308       $    45,400,060       $    40,888,686
   Other [1]                                         (5,968,869)           (5,613,711)          (20,615,735)          (17,061,554)
                                                ---------------       ---------------       ---------------       ---------------


Consolidated income before income taxes         $     9,101,305       $     8,412,597       $    24,784,325       $    23,827,132
                                                ===============       ===============       ===============       ===============

Assets:
   Total for reportable operating segments      $ 1,482,560,960       $ 1,318,648,832       $ 1,482,560,960       $ 1,318,648,832
   Other [1]                                         47,216,496            45,080,431            47,216,496            45,080,431
                                                ---------------       ---------------       ---------------       ---------------


Consolidated assets                             $ 1,529,777,456       $ 1,363,729,263       $ 1,529,777,456       $ 1,363,729,263
                                                ===============       ===============       ===============       ===============
</TABLE>

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

5.       In July 2001, the Financial Accounting Standards Board issued SFAS No.
         142, "Goodwill and Other Intangible Assets." SFAS No. 142 changes the
         accounting for goodwill, including goodwill recorded in past business
         combinations. The previous accounting principles governing goodwill
         generated from a business combination ceased upon adoption of SFAS No.
         142 on January 1, 2002. The adoption of SFAS No. 142 had no impact on
         the Company's balance sheet and statement of income

                                       10
<PAGE>
                        STERLING BANCORP AND SUBSIDIARIES
                   Notes on Consolidated Financial Statements
                                   (Unaudited)


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

<TABLE>
<CAPTION>
                               Three Months Ended September 30,                      Nine Months Ended September 30,
                            --------------------------------------                --------------------------------------
                               2002                       2001                        2002                       2001
                            -----------                -----------                -----------                -----------
<S>                         <C>                        <C>                        <C>                        <C>
Proceeds                    $   354,838                $      --                  $39,923,352                $      --
Gross gains                      24,947                       --                      869,290                       --
Gross losses                       --                         --                         --                         --
</TABLE>

                                       11
<PAGE>
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
consolidated results of operations and financial condition of Sterling Bancorp
(the "parent company"), a bank holding company and a financial holding company
as defined by the Bank Holding Company Act of 1956, as amended, and its wholly-
owned subsidiaries Sterling Financial Services Company, Inc., Sterling Banking
Corporation and Sterling National Bank. Sterling National Bank, which is the
principal subsidiary, owns all of the outstanding shares of Sterling Factors
Corporation, Sterling National Mortgage Company, Inc., Sterling National
Servicing, Inc., Sterling Trade Services, Inc. and Sterling Holding Company of
Virginia, Inc. Sterling Trade Services, Inc. owns all of the outstanding Common
Shares of Sterling National Asia Limited, Hong Kong. Sterling Holding Company of
Virginia, Inc. owns all of the outstanding shares of Sterling Real Estate
Holding Company, Inc. Throughout this discussion and analysis, the term "the
Company" refers to Sterling Bancorp and its subsidiaries and the term "the bank"
refers to Sterling National Bank and its subsidiaries. This discussion and
analysis should be read in conjunction with the Company's annual report on Form
10-K for the year ended December 31, 2001.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained herein, 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" within the meaning of the Private
Securities Litigation Reform Act of 1995. 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. It is possible that our actual results and financial position may differ,
possibly materially, from the anticipated results and financial condition
indicated in or implied by these forward-looking statements.

         Factors that could cause our actual results to differ, possibly
materially, from those in the forward-looking statements include, but are not
limited to, the following: inflation, interest rates, market and monetary
fluctuations; geopolitical developments including acts of war and terrorism and
their 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; changes, particularly declines, in
general economic conditions and in the local economies in which the Company
operates; the financial condition of the Company's borrowers; competitive
pressures on loan and deposit pricing and demand; changes in technology and
their impact on the marketing of new products and services and the acceptance of
these products and services by new and existing customers; the willingness of
customers to substitute competitors' products and services for the Company's
products and services; the impact of changes in financial services' laws and
regulations (including laws concerning taxes, banking, securities and
insurance); changes in accounting principles, policies and guidelines; the
success of the Company at managing the risks involved in the foregoing as well
as other risks and uncertainties detailed from time to time in press releases
and other public filings. The foregoing list of important factors is not
exclusive, and we will not update any forwarding-looking statement, whether
written or oral, that may be made from time to time.

                                       12
<PAGE>
BUSINESS

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

         There is intense competition in all areas in which the Company conducts
its business. In addition to competing with other banks, the Company competes in
most areas of its business with other financial institutions. At September 30,
2002, the bank's year-to-date average earning assets (of which loans were 52%
and investment securities were 46%) represented approximately 96% of the
Company's year-to-date average earning assets.

         The Company regularly evaluates acquisition opportunities and conducts
due diligence activities in connection with possible acquisitions. As a result,
acquisition discussions and, in some cases negotiations, regularly take place
and future acquisitions could occur.

         Results for the Three Months Ended September 30, 2002 and 2001


OVERVIEW

The Company reported net income for the three months ended September 30, 2002 of
$5.5 million, representing $0.52 per share, calculated on a diluted basis,
compared to $5.0 million, or $0.46 per share, calculated on a diluted basis, for
the like period in 2001. This increase reflects higher net interest income and
continued growth in noninterest income, which together more than offset
increases in noninterest expenses.

         Net interest income, on a tax equivalent basis, increased to $19.1
million for the third quarter of 2002 compared with $17.7 million for the same
period in 2001, due to higher average earning assets outstanding coupled with
lower average cost of funding. The net interest margin, on a tax equivalent
basis, was 5.79% for the third quarter of 2002 compared to 6.16% for the like
2001 period. The decrease in the net interest margin was the result of a higher
proportion of earning assets funded with interest-bearing liabilities and the
decrease of 109 basis points in the average yield on earning assets partially
offset by a decrease of 119 basis points in the average cost of funds.

         Noninterest income rose to $7.3 million for the three months ended
September 30, 2002 compared to $6.5 million for the like 2001 period principally
due to growth in income from factoring, mortgage banking and trade finance
activities, and from a bank-owned life insurance program implemented in January
2002.

INCOME STATEMENT ANALYSIS

Net Interest Income

Net interest income, which represents the difference between interest earned on
interest-earning assets and interest incurred on interest-bearing liabilities,
is the Company's primary source of earnings. Net interest income can be affected
by changes in market interest rates as well as the level and composition of
assets, liabilities and shareholders' equity. Net interest spread is the


                                       13
<PAGE>
difference between the average rate earned, on a tax-equivalent basis, on
interest-earning assets and the average rate paid on interest-bearing
liabilities. The net yield on interest-earning assets ("net interest margin") is
calculated by dividing tax equivalent net interest income by average interest-
earning assets. Generally, the net interest margin will exceed the net interest
spread because a portion of interest-earning assets are funded by various
noninterest-bearing sources, principally noninterest-bearing deposits and
shareholders' equity. The increases (decreases) in the components of interest
income and interest expense, expressed in terms of fluctuation in average volume
and rate are provided in the Rate/Volume Analysis shown on page 24. Information
as to the components of interest income and interest expense and average rates
is provided in the Average Balance Sheets shown on page 22.

         Net interest income, on a tax equivalent basis, for the three months
ended September 30, 2002 increased to $19,117,000, from $17,699,000 for the
comparable period in 2001.

         Total interest income, on a tax equivalent basis, aggregated
$23,964,000 for the third quarter of 2002, substantially unchanged from
$23,941,000 for the same period of 2001. The tax equivalent yield on interest
earning assets was 7.29% for the three months ended September 30, 2002 compared
with 8.38% for the same period in 2001.

         Interest earned on the loan portfolio amounted to $14,547,000 for the
third quarter of 2002 was down $1,781,000 from a year ago. Average loan balances
amounted to $745,821,000 which were up $34,835,000 from the prior year period.
The increase in the average loans was primarily in the commercial and
industrial, leasing and real estate loan segments. The decrease in the yield on
the domestic loan portfolio to 8.25% for the three months ended September 30,
2002 from 9.63% for the comparable 2001 period was primarily attributable to a
lower interest rate environment on average in the 2002 period.

         Interest earned on the securities portfolio, on a tax equivalent basis,
increased to $9,367,000 for the three months ended September 30, 2002 from
$7,530,000 in the prior year period. Average outstandings increased to
$593,295,000 which were up $143,049,000 from $450,246,000 in the prior year
period. The increase in average securities balances, the result of the
implementation of asset/liability management strategies designed to take
advantage of the steepness of the yield curve principally in the fourth quarter
of 2001 and the first quarter of 2002, was primarily in mortgage-backed
securities and collateralized mortgage obligations of U.S. government
corporations and agencies.

         Interest expense on deposits decreased $1,720,000 for the three months
ended September 30, 2002 to $3,111,000 from $4,831,000 for the comparable 2001
period due to lower rates paid. Average savings, NOW, and money market deposits,
which historically have represented a stable funding source, decreased to
$310,923,000 for the quarter ended September 30, 2002 from $326,825,000 in the
prior year period. Average domestic time deposits increased $83,748,000 to
$374,160,000 for the three months ended September 30, 2002. The growth in
deposit balances was due to the current economic and interest rate environment,
the branch opening in Great Neck, Long Island, and ongoing business development
activities, including cross-selling of these products to existing customers.
Average rate paid on interest-bearing deposits was 1.79% which was 130 basis
points lower than the prior year period. The decrease in average cost of
deposits reflects the lower interest rate environment during the 2002 period.


                                       14
<PAGE>
Interest expense associated with borrowed funds increased to $1,736,000 for the
third quarter of 2002 from $1,411,000 in the comparable 2001 period principally
as a result of higher average long-term debt outstandings partially offset by
lower rates paid. Average amounts of long-term debt outstanding were up
$84,650,000 to $125,000,000 from $40,350,000 in the prior year period. These
borrowings were advances from the Federal Home Loan Bank of New York utilized in
connection with the asset/liability management strategies discussed above. The
average cost of borrowings was 2.88% for the three months ended September 30,
2002 compared with 4.07% in the comparable prior year period.

Noninterest Income

Noninterest income increased $775,000 for the third quarter of 2002 when
compared with the like 2001 period primarily as a result of increased income
from factoring, mortgage banking and trade finance activities, from fees for
various other services, and from a bank-owned life insurance program implemented
in January, 2002.

Noninterest Expenses

Noninterest expenses increased $1,385,000 for the third quarter of 2002 when
compared with the like 2001 period primarily due to increased salary expenses,
pension costs, advertising and marketing expenses, expenses related to the trust
preferred securities placement of which was completed in February, 2002, losses
on sales of assets, and various other expenses incurred to support growing
levels of business activity and continued investment in the business franchise.
Partially offsetting these increases were reductions in fees for various
professional services.

          Results for the Nine Months Ended September 30, 2002 and 2001


OVERVIEW

The Company reported net income for the nine months ended September 30,2002 of
$16.0 million, representing $1.49 per share, calculated on a diluted basis,
compared to $14.2 million, or $1.33 per share calculated on a diluted basis, for
the like period in 2001. This increase reflects continued growth in both net
interest income and noninterest income, which together with a lower provision
for income taxes, more than offset increases in noninterest expenses and the
provision for loan losses.

         Net interest income, on a tax equivalent basis, increased to $56.4
million for the first nine months of 2002 compared with $51.9 million for the
same period in 2001, due to higher average earning assets outstanding coupled
with lower average cost of funding. The net interest margin, on a tax equivalent
basis, was 5.81% for the first nine months of 2002 compared to 6.27% for the
like 2001 period. The decrease in the net interest margin was the result of a
higher proportion of earning assets funded with interest-bearing liabilities and
the decrease of 151 basis points in the average yield on earning assets
partially offset by a decrease of 164 basis points in the average cost of funds.

         Noninterest income rose to $21.9 million for the nine months ended
September 30,2002 compared to $18.0 million for the like 2001 period principally
due to growth in fees from mortgage banking, factoring and other services, from
gains on sales of available for sale securities and from a bank-owned life
insurance program implemented in January 2002.

INCOME STATEMENT ANALYSIS

Net Interest Income

Net interest income, which represents the difference between interest earned on
interest-earning assets and interest incurred on interest-bearing liabilities,
is the Company's primary source of earnings. Net interest income can be affected
by changes in market interest rates as well as the level and composition of


                                       15
<PAGE>
assets, liabilities and shareholders' equity. Net interest spread is the
difference between the average rate earned, on a tax-equivalent basis, on
interest-earning assets and the average rate paid on interest-bearing
liabilities. The net yield on interest-earning assets ("net interest margin") is
calculated by dividing tax equivalent net interest income by average interest-
earning assets. Generally, the net interest margin will exceed the net interest
spread because a portion of interest-earning assets are funded by various
noninterest-bearing sources, principally noninterest-bearing deposits and
shareholders' equity. The increases (decreases) in the components of interest
income and interest expense for the first nine months, expressed in terms of
fluctuation in average volume and rate are provided in the Rate/Volume Analysis
shown on page 25. Information as to the components of interest income and
interest expense and average rates for the first nine months is provided in the
Average Balance Sheets shown on page 23.

         Net interest income, on a tax equivalent basis, for the nine months
ended September 30,2002 increased $4,524,000 to $56,425,000 from $51,901,000 for
the comparable period in 2001.

         Total interest income, on a tax equivalent basis, aggregated
$71,491,000 for the first nine months of 2002, down $1,740,000 from $73,231,000
for the same period of 2001. The tax equivalent yield on interest-earning assets
was 7.38% for the first nine months of 2002 compared with 8.89% for the same
period in 2001.

         Interest earned on the loan portfolio amounted to $42,959,000 for the
first nine months of 2002, down $7,384,000 from a year ago. Average loan
balances amounted to $728,405,000 up $30,534,000 from an average of $697,871,000
in the prior year period. The increase in the average loans, primarily in the
leasing and real estate loan portfolios, accounted for the increase in interest
earned on loans. The decrease in the yield on the domestic loan portfolio to
8.51% for the nine months ended September 30,2002 from 10.41% for the comparable
2001 period was primarily attributable to the lower interest rate environment in
the 2002 period.

         Interest earned on the securities portfolio, on a tax equivalent basis,
increased to $28,281,000 for the nine months ended September 30, 2002 from
$22,722,000 in the prior year period. Average outstandings increased to
$596,204,000 which were up $149,461,000 from $446,743,000 in the prior year
period. The increase in average securities balances, the result of the
implementation of asset/liability management strategies designed to take
advantage of the steepness of the yield curve principally in the fourth quarter
of 2001 and the first quarter of 2002, was primarily in mortgage-backed
securities and collateralized mortgage obligations of U.S. government
corporations and agencies. The decrease in yields on most of the securities
portfolio reflects the impact of the lower rate environment on average in the
2002 period.

         Total interest expense decreased $6,264,000 to $15,066,000 for the
first nine months of 2002 from $21,330,000 for the comparable period in 2001.
The decrease in interest expense was primarily due to lower average rates paid
partially offset by higher average balances principally for domestic time
deposits and long-term debt.

         Interest expense on deposits decreased $5,328,000 for the nine months
ended September 30,2002 to $9,743,000 from $15,071,000 for the comparable 2001
period due to the decrease in the cost of funds partially offset by higher
average domestic time deposit balances. Average savings, NOW, and money market
deposits, which historically have represented a stable funding source, were
$301,972,000 for the nine months ended September 30, 2002, compared to
$299,320,000 in the prior year period. Average time deposits increased
$100,391,000 to $372,000,000 for the nine months ended September 30, 2002. The
growth in deposit balances was due to the current economic and interest rate
environment, the branch opening


                                       16
<PAGE>
in Great Neck, Long Island, and ongoing business development activities,
including cross-selling of these products to existing customers. Average rate
paid on interest-bearing deposits was 1.93% which was 160 basis points lower
than the prior year period. The decrease in average cost of deposits reflects
the lower interest rate environment during the 2002 period.

         Interest expense associated with borrowed funds decreased to $5,323,000
for the first nine months of 2002 from $6,259,000 in the comparable 2001 period
as a result of lower rates paid partially offset by higher average long-term
debt outstandings. The average cost of borrowings was 2.85% for the first nine
months ended September 30, 2002 compared with 4.74% in the comparable prior year
period. Average amounts of long-term debt outstanding were up $84,102,000 to
$119,552,000 from $35,450,000 in the prior year period. These borrowings were
advances from the Federal Home Loan Bank of New York utilized in connection with
the asset/liability management strategies discussed above.

Provision for Loan Losses

Based on management's continuing evaluation of the loan portfolio (discussed
under "Asset Quality" below), and principally as the result of the charge-off of
one loan as well as the growth in the loan portfolios, the provision for loan
losses for the first nine months of 2002 increased to $8,432,000 from $5,231,000
for the comparable prior year period. During the second quarter of 2002 a $5.4
million loan to a corporate borrower which had become the subject of an
involuntary bankruptcy was charged off.

Noninterest Income

Noninterest income increased $3,955,000 for the first nine months of 2002 when
compared with the like 2001 period primarily as a result of increased income
from mortgage banking and factoring activities, from fees for various other
services, from gains on sales of available for sale securities, and from a
bank-owned life insurance program implemented in January, 2002.

Noninterest Expenses

Noninterest expenses increased $4,317,000 for the first nine months of 2002 when
compared with the like 2001 period primarily due to increased salary expenses,
pension costs, occupancy, equipment, stationery and printing expenses, expenses
related to the trust preferred securities placement completed in February, 2002,
losses on sales of assets, and various other expenses incurred to support
growing levels of business activity and continued investment in the business
franchise. Partially offsetting these increases were reductions in fees for
various professional services.

Provision for Income Taxes

The provision for income taxes decreased $850,000 for the first nine months of
2002 when compared with the like 2001 period. During the second quarter of 2002,
New York State completed an examination of Sterling's tax returns through 1998
and issued a no charge finding. As a result, based on management's review of
required tax reserves with outside professionals, approximately $1.0 million in
excess reserves was adjusted through the provision that quarter.

BALANCE SHEET ANALYSIS

Securities

The Company's securities portfolios are comprised of principally U.S. Government
and U.S. Government corporation and agency guaranteed mortgage-backed securities
along with other debt and equity securities. At September 30, 2002, the
Company's portfolio of securities totalled $592,393,000 of which U.S. Treasury
and U.S. Government corporations and agencies guaranteed mortgage-backed and
collateralized mortgage obligations securities having an average life of
approximately 3.0 years amounted to $541,150,000.


                                       17
<PAGE>
         Securities classified as "available for sale" may be sold in the
future, prior to maturity. These securities are carried at market value. Net
aggregate unrealized gains or losses on these securities are included in a
valuation allowance account and are shown net of taxes, as a component of
shareholders' equity. The following table presents information regarding
securities available for sale:

<TABLE>
<CAPTION>
                                                                  Gross                   Gross                 Estimated
                                        Amortized              Unrealized               Unrealized                Market
September 30, 2002                         Cost                   Gains                   Losses                  Value
------------------                     ------------            ------------            ------------            ------------
<S>                                    <C>                     <C>                     <C>                     <C>
U.S. Treasury securities               $  2,496,430            $        602            $       --              $  2,497,032
Obligations of U.S. govern-
  ment corporations and
  agencies--mortgage-backed
  securities                             91,122,034               3,064,911                   1,600              94,185,345
Obligations of U.S. govern-
  ment corporations and
  agencies-collateralized
  mortgage obligations                  126,448,770               1,545,125                    --               127,993,895
Obligations of state and
  political institutions                 32,564,497               2,496,570                    --                35,061,067
Trust preferred securities                3,222,628                 241,527                    --                 3,464,155
Federal Reserve Bank and
  other equity securities                 8,702,642                  17,957                     427               8,720,172
                                       ------------            ------------            ------------            ------------

        Total                          $264,557,001            $  7,366,692            $      2,027            $271,921,666
                                       ============            ============            ============            ============
</TABLE>

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 in nature.

        The Company has the intent and ability to hold to maturity securities
classified as "held to maturity." These securities are carried at cost, adjusted
for amortization of premiums and accretion of discounts. The following table
presents information regarding securities held to maturity:

<TABLE>
<CAPTION>
                                                                  Gross                   Gross                 Estimated
                                        Carrying               Unrealized              Unrealized                 Market
September 30, 2002                        Value                   Gains                   Losses                  Value
------------------                     ------------            ------------            ------------            ------------
<S>                                    <C>                     <C>                     <C>                     <C>
Obligations of U.S. govern-
  ment corporations and
  agencies--mortgage-backed
  securities                           $284,064,419            $ 11,480,320            $     70,852            $295,473,887
Obligations of U.S. govern-
  ment corporations and
  agencies-collateralized
  mortgage obligations                   34,906,552                 125,301                  14,636              35,017,217
Debt securities issued by
  foreign governments                     1,500,000                    --                      --                 1,500,000
                                       ------------            ------------            ------------            ------------

        Total                          $320,470,971            $ 11,605,621            $     85,488            $331,991,104
                                       ============            ============            ============            ============
</TABLE>

                                       18
<PAGE>
Loans Held In Portfolio

A key management objective is to maintain the quality of the loan portfolio. The
Company seeks to achieve this objective by maintaining rigorous underwriting
standards coupled with regular evaluation of the creditworthiness and the
designation of lending limits for each borrower. The portfolio strategies seek
to avoid concentrations by industry or loan size in order to minimize credit
exposure and to originate loans in markets with which the Company is familiar.

        The Company's commercial and industrial loan portfolio represents
approximately 61% of gross loans. Loans in this category are typically made to
small and medium sized businesses and range between $250,000 and $10 million.
The primary source of repayment is from the borrower's operating profits and
cash flows. Based on underwriting standards, loans may be secured in whole or in
part by collateral such as liquid assets, accounts receivable, equipment,
inventory or real property. The Company's real estate loan portfolio, which
represents approximately 19% of gross loans, is secured by mortgages on real
property located principally in the State of New York and the Commonwealth of
Virginia. Included in the Company's real estate loan portfolio are $33,093,000
of loans held for sale. These loans are collateralized by mortgages on 1-4
family residential properties and are carried at the lower of cost or market.
The Company's leasing portfolio, which consists of finance leases for various
types of business equipment, represents approximately 16% of gross loans. The
collateral securing any loan may vary in value based on market conditions.

        The following table sets forth the composition of the Company's loan
portfolio:

<TABLE>
<CAPTION>
                                                                                September 30,
                                                  -------------------------------------------------------------------------
                                                               2002                                        2001
                                                  ------------------------------              -----------------------------
                                                                              ($ in thousands)
                                                                            % of                                     % of
                                                  Balances                 Gross              Balances              Gross
                                                  --------                 -----              --------             --------
<S>                                               <C>                      <C>                <C>                  <C>
Domestic
  Commercial and industrial                       $512,010                  60.6%              512,068                 64.1%
  Equipment lease financing                        138,260                  16.4               108,125                 13.5
  Real estate                                      157,772                  18.7               144,219                 18.1
  Installment - individuals                          9,016                   1.1                 8,488                  1.1
  Loans to depository institutions                  27,000                   3.2                25,000                  3.1
Foreign
  Government and official institutions                --                    --                     777                  0.1
                                                  --------                 -----              --------             --------
Gross loan                                         844,058                 100.0%              798,677                100.0%
                                                                           =====                                      =====
  Unearned discounts                                15,768                                      15,162
                                                  --------                                    --------

Loans, net of unearned discounts                  $828,290                                    $783,515
                                                  ========                                    ========
</TABLE>

Asset Quality

Intrinsic to the lending process is the possibility of loss. In times of
economic slowdown, the risk inherent in the Company's portfolio of loans may
increase. While management endeavors to minimize this risk, it recognizes that
loan losses will occur and that the amount of these losses will fluctuate
depending on the risk characteristics of the loan portfolio which in turn
depends on current and expected economic conditions, the financial condition of
borrowers and the credit management process.

        The allowance for loan losses is maintained through the provision for
loan losses, which is a charge to operating earnings. The adequacy of the
provision and the resulting allowance for loan losses is determined by
management's continuing review of the loan portfolio, including identification
and review of individual problem situations that may affect the borrower's
ability to repay, review of overall portfolio quality through an analysis of
current charge-offs, delinquency and nonperforming loan data, estimates of the
value of any underlying collateral, review of regulatory examinations, an
assessment of current and expected economic conditions and changes in the size
and character of the loan

                                       19
<PAGE>
portfolio. The allowance reflects management's evaluation of both loans
presenting identified loss potential and of the risk inherent in various
components of the portfolio, including loans identified as impaired as required
by SFAS No. 114. Thus, an increase in the size of the portfolio or in any of its
components could necessitate an increase in the allowance even though there may
not be a decline in credit quality or an increase in potential problem loans. A
significant change in any of the evaluation factors described above could result
in future additions to the allowance. At September 30, 2002 the ratio of the
allowance to loans, net of unearned discounts, was 1.55% and the allowance was
$12,822,000. At such date, the Company's non-accrual loans amounted to
$1,824,000; $556,000 of such loans were judged to be impaired within the scope
of SFAS No. 114 and required valuation allowances of $340,000. Based on the
foregoing, as well as management's judgment as to the current risks inherent in
the loan portfolio, the Company's allowance for loan losses was deemed adequate
to absorb all estimable losses on specifically known and other possible credit
risks associated with the portfolio as of September 30, 2002. Potential problem
loans, which are loans that are currently performing under present loan
repayment terms but where known information about possible credit problems of
borrowers cause management to have serious doubts as to the ability of the
borrowers to continue to comply with the present repayment terms, aggregated
$737,000 at September 30, 2002.

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:

<TABLE>
<CAPTION>
                                                                             September 30,
                                            -----------------------------------------------------------------------------
                                                         2002                                          2001
                                            ------------------------------                -------------------------------
                                                                          ($ in thousands)
                                                                      % of                                         % of
                                             Balances                Total                 Balances                Total
                                            ----------               -----                ----------               ------
<S>                                         <C>                      <C>                  <C>                    <C>
Domestic
  Demand                                    $  326,243                31.6%               $  323,611                32.3%
  NOW                                          114,107                11.0                    99,363                 9.9
  Savings                                       24,997                 2.4                    31,397                 3.1
  Money market                                 175,990                17.0                   221,644                22.2
  Time deposits                                389,688                37.7                   321,823                32.2
                                            ----------               -----                ----------               -----

      Total domestic deposits                1,031,025                99.7                   997,838                99.7
Foreign
  Time deposits                                  3,000                 0.3                     2,975                 0.3
                                            ----------               -----                ----------               -----

      Total deposits                        $1,034,025               100.0%               $1,000,813               100.0%
                                            ==========               =====                ==========               =====
</TABLE>

Fluctuations of balances in total or among categories at any date may occur
based on the Company's mix of assets and liabilities as well as on customer's
balance sheet strategies. Historically, however, average balances for deposits
have been relatively stable. Information regarding these average balances is
presented on pages 22 and 23.

                                       20
<PAGE>
CAPITAL

The Company and the bank are subject to risk-based capital regulations. The
purpose of these regulations is to quantitatively measure capital against risk-
weighted assets, including off-balance sheet items. These regulations define the
elements of total capital into Tier 1 and Tier 2 components and establish
minimum ratios of 4% for Tier 1 capital and 8% for Total Capital for capital
adequacy purposes. Supplementing these regulations is a leverage requirement.
This requirement establishes a minimum leverage ratio (at least 3% to 5%) which
is calculated by dividing Tier 1 capital by adjusted quarterly average assets
(after deducting goodwill). Information regarding the Company's and the bank's
risk-based capital is presented on page 26. In addition, the Company and the
bank are subject to the provisions of the Federal Deposit Insurance Corporation
Improvement Act of 1981 ("FDICIA") which imposes a number of mandatory
supervisory measures. Among other matters, FDICIA established five capital
categories ranging from "well capitalized" to "critically under capitalized."
Such classifications are used by regulatory agencies to determine a bank's
deposit insurance premium, approval of applications authorizing institutions to
increase their asset size or otherwise expand business activities or acquire
other institutions and for other supervisory and regulatory purposes. Under the
provisions of FDICIA a "well capitalized" institution must maintain minimum
leverage, Tier 1 and Total Capital ratios of 5%, 6% and 10%, respectively. At
September 30, 2002, the Company and the bank exceeded the requirements for "well
capitalized" institutions. Under the provisions of the Gramm-Leach-Bliley Act of
1999, in order for the parent company to maintain its status as a financial
holding company, the bank must remain "well capitalized."

                                       21
<PAGE>
                        STERLING BANCORP AND SUBSIDIARIES
                           Average Balance Sheets [1]
                        Three Months Ended September 30,
                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                      2002                                     2001
                                     ----------------------------------     -----------------------------------------
                                       Average               Average           Average                        Average
ASSETS                                 Balance     Interest    Rate            Balance      Interest           Rate
                                     -----------  ---------  ----------     -----------     --------         --------
<S>                                   <C>         <C>        <C>          <C>              <C>               <C>
Interest-bearing deposits
  with other banks                    $    3,067    $     6    0.87 %     $      4,039     $      28             2.78 %
Investment securities:
  Available for sale                     246,248      3,817    6.20            176,281         2,855             6.48
  Held to maturity                       314,303      4,943    6.29            239,305         4,034             6.74
  Tax-exempt  [2]                         32,744        607    7.35             34,660           641             7.34
Federal funds sold                        10,185         44    1.70              6,130            55             3.51
Loans, net of unearned discounts
  Domestic  [3]                          745,821     14,547    8.25            710,209        16,318             9.63
  Foreign                                      -          -       -                777            10             5.20
                                       ----------    ------                 -----------     --------

TOTAL INTEREST-EARNING ASSETS          1,352,368     23,964    7.29 %        1,171,401        23,941             8.38 %
                                                     ------    =====                        --------            =====

Cash and due from banks                   52,606                                38,776
Allowance for loan losses                (12,961)                              (13,691)
Goodwill                                  21,158                                21,158
Other assets                              55,046                                29,689
                                       ----------                           -----------

  TOTAL ASSETS                        $1,468,217                          $  1,247,333
                                       ==========                           ===========

LIABILITIES AND SHAREHOLDERS'
  EQUITY

Interest-bearing deposits
  Domestic
   Savings                            $   24,380         39    0.63 %     $     30,267           165             2.17 %
   NOW                                   120,370        230    0.76             94,777           407             1.70
   Money market                          166,173        295    0.70            201,781         1,080             2.12
   Time                                  374,160      2,533    2.69            290,412         3,147             4.30
  Foreign
   Time                                    3,000         14    1.80              2,975            32             4.22
                                       ----------    ------                 -----------     --------
     Total interest-bearing deposits     688,083      3,111    1.79            620,212         4,831             3.09
                                       ----------    ------                 -----------     --------

Borrowings
  Federal funds purchased and
   securities sold under
   agreements to repurchase               63,438        296    1.85             56,529           548             3.84
  Commercial paper                        29,297        157    2.12             36,552           357             3.88
  Other short-term debt                   22,400        135    2.39              4,335            39             3.54
  Long-term debt                         125,000      1,148    3.67             40,350           467             4.63
                                       ----------    ------                 -----------     --------
       Total borrowings                  240,135      1,736    2.88            137,766         1,411             4.07
                                       ----------    ------                 -----------     --------

TOTAL INTEREST-BEARING LIABILITIES       928,218      4,847    2.08 %          757,978         6,242             3.27 %
                                                     ------    =====                        --------           ======

Noninterest-bearing deposits             314,739                              288,279
Other liabilities                         76,096                               73,743
                                       ----------                           ----------
        Total liabilities              1,319,053                            1,120,000
                                       ----------                           ----------

Corporation Obligated Mandatorily
  Redeemable Preferred Securities         25,000                                    -
                                       ----------                           ----------

Shareholders' equity                     124,164                              127,333
                                       ----------                           ----------
   TOTAL LIABILITIES AND
   SHAREHOLDERS' EQUITY               $1,468,217                          $ 1,247,333
                                       ==========                           ==========

Net interest income/spread                           19,117    5.21 %                         17,699             5.11 %
                                                               ======                                           =====

Net yield on interest-earning
  assets (margin)                                              5.79 %                                            6.16 %
                                                               ======                                           =====

Less: Tax equivalent adjustment                         249                                      264
                                                  ---------                                 --------

Net interest income                               $  18,868                                 $ 17,435
                                                  =========                                 ========
</TABLE>


[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 2001
    amounts to conform to the current presentation.

[2] Interest on tax-exempt securities is presented on a tax equivalent basis.

[3] Nonaccrual loans are included in amounts outstanding and income has been
    included to the extent collected.

                                       22

<PAGE>
                        STERLING BANCORP AND SUBSIDIARIES
                           Average Balance Sheets [1]
                         Nine Months Ended September 30,
                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                    2002                                2001
                                    ----------------------------------  ---------------------------------
                                     Average                  Average     Average                Average
ASSETS                               Balance     Interest      Rate       Balance     Interest    Rate
                                     --------    ---------   ---------  ---------    ---------   --------
<S>                                 <C>          <C>          <C>       <C>          <C>         <C>
Interest-bearing deposits
  with other banks                  $    3,405    $     26    1.03 %    $    3,371   $    86     3.42 %
Investment securities:
  Available for sale                   252,417      11,655    6.16         155,740     7,740     6.63
  Held to maturity                     309,903      14,743    6.34         257,193    13,108     6.80
  Tax-exempt  [2]                       33,884       1,883    7.43          33,810     1,874     7.41
Federal funds sold                      17,791         225    1.67           2,681        80     3.91
Loans, net of unearned discounts
  Domestic  [3]                        728,405      42,959    8.51         697,094    50,306    10.41
  Foreign                                    -           -       -             777        37     6.32
                                     ---------     -------               ----------  -------

TOTAL INTEREST-EARNING ASSETS        1,345,805      71,491    7.38 %     1,150,666    73,231     8.89 %
                                                   -------   =====                   -------    ======

Cash and due from banks                 49,899                              42,510
Allowance for loan losses              (14,119)                            (13,443)
Goodwill                                21,158                              21,158
Other assets                            52,200                              27,536
                                     ---------                           ----------

      TOTAL ASSETS                  $1,454,943                          $1,228,427
                                     =========                           ==========

LIABILITIES AND SHAREHOLDERS'
  EQUITY

Interest-bearing deposits
  Domestic
   Savings                          $   26,072         123    0.63 %    $   27,492       476     2.31 %
   NOW                                 110,514         694    0.84          80,928     1,242     2.05
   Money market                        165,386       1,086    0.88         190,900     3,499     2.45
   Time                                369,001       7,795    2.82         268,634     9,750     4.85
  Foreign
   Time                                  2,999          45    2.00           2,975       104     4.68
                                     ---------     -------                --------    ------
      Total interest-bearing
         deposits                      673,972       9,743    1.93         570,929    15,071     3.53
                                     ---------     -------                --------    ------

Borrowings
  Federal funds purchased and
   securities sold under
   agreements to repurchase             76,578       1,100    1.92         101,195     3,681     4.86
  Commercial paper                      31,982         516    2.16          35,999     1,225     4.55
  Other short-term debt                 21,014         373    2.37           3,588       124     4.62
  Long-term debt                       119,552       3,334    3.72          35,450     1,229     4.62
                                     ---------     -------                --------    ------
      Total borrowings                 249,126       5,323    2.85         176,232     6,259     4.74
                                     ---------     -------                --------    ------

TOTAL INTEREST-BEARING LIABILITIES     923,098      15,066    2.18 %       747,161    21,330     3.82 %
                                                   -------   =====                    ------   ======

Noninterest-bearing deposits           309,486                             287,785
Other liabilities                       76,760                              71,520
                                     ---------                          ----------
          Total liabilities          1,309,344                           1,106,466
                                     ---------                          ----------

Corporation Obligated Mandatorily

  Redeemable Preferred Securities       19,780                                   -
                                     ---------                          ----------

Shareholders' equity                   125,819                             121,961
                                     ---------                          ----------
          TOTAL LIABILITIES AND
          SHAREHOLDERS' EQUITY      $1,454,943                          $1,228,427
                                     =========                          ==========

Net interest income/spread                          56,425    5.20 %                  51,901     5.07 %
                                                             =====                             ======

Net yield on interest-earning
  assets (margin)                                             5.81 %                             6.27 %
                                                             =====                             ======

Less: Tax equivalent adjustment                        774                               771
                                                   -------                           -------

Net interest income                               $ 55,651                           $51,130
                                                   =======                           =======

</TABLE>

[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 2001
    amounts to conform to current presentation.

[2] Interest on tax-exempt securities is presented on a tax equivalent basis.

[3] Nonaccrual loans are included in amounts outstanding and income has been
    included to the extent collected.

                                       23

<PAGE>
                        STERLING BANCORP AND SUBSIDIARIES
                            Rate/Volume Analysis [1]

                                 (in thousands)



<TABLE>
<CAPTION>
                                                     Increase/(Decrease)
                                                      Three Months Ended
                                            September 30, 2002 to September 30, 2001
                                             -----------------------------------------
                                                Volume      Rate      Net [2]
                                                ------    --------   ---------
<S>                                            <C>        <C>        <C>
INTEREST INCOME
Interest-bearing deposits with other banks     $   (6)    $   (16)   $   (22)
                                                 ------    -------   --------
Investment securities

  Available for sale                             1,533       (571)       962
  Held to maturity                               2,077     (1,168)       909
  Tax-exempt                                       (39)         5        (34)
                                                 ------    -------   --------
      Total investment securities                3,571     (1,734)     1,837
                                                 ------    -------   --------

Federal funds sold                                  87        (98)       (11)
                                                 ------    -------   --------

Loans, net of unearned discounts
  Domestic [3]                                   3,341     (5,112)    (1,771)
  Foreign                                           (5)        (5)       (10)
                                                 ------    -------   --------
      Total loans, net of unearned discount      3,336     (5,117)    (1,781)
                                                 ------    -------   --------

TOTAL INTEREST INCOME                          $ 6,988    $(6,965)   $    23
                                                 ======    =======   =======


INTEREST EXPENSE
Interest-bearing deposits
  Domestic
    Savings                                    $   (27)   $   (99)   $  (126)
    NOW                                            379       (556)      (177)
    Money market                                  (164)      (621)      (785)
    Time                                         2,776     (3,390)      (614)
  Foreign
    Time                                             2        (20)       (18)
                                                 ------    -------    -------
      Total interest-bearing deposits            2,966     (4,686)    (1,720)
                                                 ------    -------    -------

Borrowings

  Federal funds purchased and securities sold
    under agreements to repurchase                 273       (525)      (252)
  Commercial paper                                 (61)      (139)      (200)
  Other short-term debt                            158        (62)        96
  Long-term debt                                 1,147       (466)       681
                                                 ------    -------    -------
      Total borrowings                           1,517     (1,192)       325
                                                 ------    -------    -------

TOTAL INTEREST EXPENSE                         $ 4,483    $(5,878)   $(1,395)
                                                 ======    =======    =======

NET INTEREST INCOME                            $ 2,505    $(1,087)   $ 1,418
                                                 ======    =======    =======
</TABLE>



[1] The above 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] Nonaccrual loans have been included in the amounts outstanding and income
    has been included to the extent collected.

                                       24
<PAGE>
                        STERLING BANCORP AND SUBSIDIARIES
                            Rate/Volume Analysis [1]

                                 (in thousands)



<TABLE>
<CAPTION>
                                                            Increase/(Decrease)
                                                            Nine Months Ended
                                                September 30, 2002 to September 30, 2001
                                               -----------------------------------------
                                                 Volume          Rate       Net [2]
                                                 ------        ------       ------
<S>                                            <C>          <C>           <C>
Interest-bearing deposits with other banks     $       1    $     (61)    $    (60)
                                                 --------     --------      -------
Investment securities

  Available for sale                               4,828         (913)       3,915
  Held to maturity                                 3,008       (1,373)       1,635
  Tax-exempt                                           4            5            9
                                                 --------     --------      -------
      Total investment securities                  7,840       (2,281)       5,559
                                                 --------     --------      -------

Federal funds sold                                   241          (96)         145
                                                 --------     --------      -------

Loans, net of unearned discounts
  Domestic [3]                                     3,780      (11,127)      (7,347)
  Foreign                                            (18)         (19)         (37)
                                                 --------     --------      -------
      Total loans, net of unearned discount        3,762      (11,146)      (7,384)
                                                 --------     --------      -------

TOTAL INTEREST INCOME                          $  11,844    $ (13,584)    $ (1,740)
                                                 ========     ========      =======


INTEREST EXPENSE
Interest-bearing deposits
  Domestic
    Savings                                    $     (24)   $  (329)      $   (353)
    NOW                                              540     (1,088)          (548)
    Money market                                    (416)    (1,997)        (2,413)
    Time                                           4,222     (6,177)        (1,955)
  Foreign
    Time                                               1        (60)           (59)
                                                 --------    -------      --------
      Total interest-bearing deposits              4,323     (9,651)        (5,328)
                                                 --------    -------      --------

Borrowings

  Federal funds purchased and securities sold
    under agreements to repurchase                  (740)    (1,841)        (2,581)
  Commercial paper                                  (124)      (585)          (709)
  Other short-term debt                              373       (124)           249
  Long-term debt                                   2,535       (430)         2,105
                                                 --------    -------      --------
      Total borrowings                             2,044     (2,980)          (936)
                                                 --------    -------      --------

TOTAL INTEREST EXPENSE                         $   6,367   $(12,631)      $ (6,264)
                                                 ========  ========       ========

NET INTEREST INCOME                            $   5,477   $   (953)      $  4,524
                                                 ========  ========       ========
</TABLE>

[1] The above 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] Nonaccrual loans have been included in the amounts outstanding and income
    has been included to the extent collected.

                                       25
<PAGE>
                        STERLING BANCORP AND SUBSIDIARIES
                          Regulatory Capital and Ratios

Ratios and Minimums
(dollars in thousands)

<TABLE>
<CAPTION>
                                                                             For Capital              To Be Well
                                                      Actual              Adequacy Minimum            Capitalized
                                             -------------------------  ---------------------  -------------------------
As of September 30, 2002                        Amount     Ratio         Amount    Ratio           Amount     Ratio
-------------------------------------------  -------------------------  ---------------------  --------------------------
<S>                                          <C>          <C>           <C>       <C>          <C            <C>
Total Capital (to Risk Weighted Assets):
  The Company                                   $139,684  15.42     %   $72,451   8.00    %       $90,564    10.00    %
  The bank                                        97,722  11.36          68,829   8.00             86,037    10.00

Tier 1 Capital (to Risk Weighted Assets):
  The Company                                    128,345  14.17          36,226   4.00             54,338     6.00
  The bank                                        86,953  10.11          34,415   4.00             51,622     6.00

Tier 1 Leverage Capital (to Average Assets):
  The Company                                    128,345   8.87          57,882   4.00             72,353     5.00
  The bank                                        86,953   6.21          56,029   4.00             70,036     5.00



As of December 31, 2001
-------------------------------------------
Total Capital (to Risk Weighted Assets):
  The Company                                   $116,912  13.70     %   $68,290   8.00    %       $85,362    10.00    %
  The bank                                        96,158  11.97          64,240   8.00             80,300    10.00

Tier 1 Capital (to Risk Weighted Assets):
  The Company                                    106,200  12.44          34,145   4.00             51,217     6.00
  The bank                                        86,093  10.72          32,120   4.00             48,180     6.00

Tier 1 Leverage Capital (to Average Assets):
  The Company                                    106,200   7.79          54,553   4.00             68,191     5.00
  The bank                                        86,093   6.54          52,681   4.00             65,852     5.00
</Table>


                                       26
<PAGE>
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ASSET/LIABILITY MANAGEMENT

The Company's primary earnings source is net interest income; therefore, the
Company devotes significant time and has invested in resources to assist in the
management of market risk, liquidity risk, capital and asset quality. The
Company's net interest income is affected by changes in market interest rates
and by the level and composition of interest-earning assets and interest-bearing
liabilities. The Company's objectives in its asset/liability management are to
utilize its capital effectively, to provide adequate liquidity and to enhance
net interest income, without taking undue risks or subjecting the Company unduly
to interest rate fluctuations.

      The Company takes a coordinated approach to the management of market risk,
liquidity and capital. This risk management process is governed by policies and
limits established by senior management which are reviewed and approved by the
Asset/Liability Committee. This committee, which is comprised of members of
senior management and the Board, meets to review, among other things, economic
conditions, interest rates, yield curve, cash flow projections, expected
customer actions, liquidity levels, capital ratios and repricing characteristics
of assets, liabilities and off-balance sheet financial instruments.

Market Risk

Market risk is the risk of loss in a financial instrument arising from adverse
changes in market indices such as interest rates, foreign exchange rates and
equity prices. The Company's principal market risk exposure is interest rate
risk, with no material impact on earnings from changes in foreign exchange rates
or equity prices.

      Interest rate risk is the exposure to changes in market interest rates.
Interest rate sensitivity is the relationship between market interest rates and
net interest income due to the repricing characteristics of assets and
liabilities. The Company monitors the interest rate sensitivity of its on- and
off-balance sheet positions by examining its near-term sensitivity and its
longer term gap position. In its management of interest rate risk, the Company
utilizes several tools including traditional gap analysis and sophisticated
income simulation models.

      A traditional gap analysis is prepared based on the maturity and repricing
characteristics of interest-earning assets and interest-bearing liabilities for
selected time bands. The mismatch between repricings or maturities within a time
band is commonly referred to as the "gap" for that period. A positive gap (asset
sensitive) where interest-rate sensitive assets exceed interest-rate sensitive
liabilities generally will result in an institution's net interest margin
increasing in a rising rate environment and decreasing in a falling rate
environment. A negative gap (liability sensitive) will generally have the
opposite result on an institution's net interest margin. However, the
traditional gap analysis does not assess the relative sensitivity of assets and
liabilities to changes in interest rates. The Company utilizes the gap analysis
to complement its income simulations modeling.

      The Company's balance sheet structure is primarily short-term in nature
with a substantial portion of assets and liabilities repricing or maturing
within one year. The Company's gap analysis at September 30, 2002, is presented
on page 30. The results of both the income simulation analysis and the gap
analysis, reveal that net interest income would tend to increase during periods
of rising interest rates and tend to decrease during periods of falling interest
rates.

                                       27
<PAGE>
      As part of its interest rate risk strategy, the Company uses certain
financial instruments (derivatives) to hedge the interest rate sensitivity of
assets with the corresponding amortization reflected in the yield of the related
on-balance sheet assets being hedged. The Company has written policy guidelines,
which have been approved by the Board of Directors based on recommendations of
the Asset/Liability Committee, governing the use of certain financial
instruments (derivatives), including approved counterparties, risk limits and
appropriate internal control procedures. The credit risk of derivatives arises
principally from the potential for a counterparty to fail to meet its obligation
to settle a contract on a timely basis.

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

      At September 30, 2002, the Company utilized four interest rate floor
contracts having a notional amount totalling $100 million consisting of two
contracts with a notional amount of $25 million each and a final maturity of
November 15, 2002 and two contracts with a notional amount of $25 million each
and a final maturity of August 14, 2003. These financial instruments are being
used as part of the Company's interest rate risk management and not for trading
purposes. At September 30, 2002, all counterparties have investment grade credit
ratings from the major rating agencies. Each counterparty is specifically
approved for applicable credit exposure.

      The Company utilizes income simulation models to complement its
traditional gap analysis. While 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
sensitivity or volatility to interest rate changes utilizing statistical
techniques that allow the Company to consider various factors which impact net
interest income. These factors include actual maturities, estimated cash flows,
repricing characteristics, deposits growth/retention and, most importantly, the
relative sensitivity of the Company's assets and liabilities to changes in
market interest rates. This relative sensitivity is important to consider as the
Company's core deposit base is not subject to the same degree of interest rate
sensitivity as its assets. The core deposit costs are internally managed and
tend to exhibit less sensitivity to changes in interest rates than the Company's
adjustable rate assets whose yields are based on external indices and change in
concert with market interest rates.

      The Company's interest rate sensitivity is determined by identifying the
probable impact of changes in market interest rates on the yields on the
Company's assets and the rates which would be paid on its liabilities. This
modeling technique involves a degree of estimation based on certain assumptions
that management believes to be reasonable. Utilizing this process, management
can project the impact of changes in interest rates on net interest margin. The
estimated effects of the Company's interest rate floors are included in the
results of the sensitivity analysis. The Company has established certain limits
for the potential volatility of its net interest margin assuming certain levels
of changes in market interest rates with the objective of maintaining a stable
net interest margin under various probable rate scenarios. Management generally

                                       28
<PAGE>
has maintained a risk position well within the policy limits. As of September
30, 2002, the model indicated the impact of a 200 basis point parallel and pro
rata rise in rates over twelve months would approximate a 2.19% ($1,628,000)
increase in net interest income, while the impact of a 200 basis point decline
in rates over the same period would approximate a 4.95% ($3,677,000) decline
from an unchanged rate environment.

      The preceding sensitivity analysis does not represent a Company forecast
and should not be relied upon as being indicative of expected operating results.
These hypothetical estimates are based upon numerous assumptions including: the
nature and timing of interest rate levels including yield curve shape,
prepayments on loans and securities, deposit decay rates, pricing decisions on
loans and deposits, reinvestment/replacement of asset and liability cash flows,
and others. While assumptions are developed based upon current economic and
local market conditions, the Company cannot make any assurances as to the
predictive nature of these assumptions including how customer preferences or
competitor influences might change.

      Also, as market conditions vary from those assumed in the sensitivity
analysis, actual results will also differ due to: prepayment/refinancing levels
likely deviating from those assumed, the varying impact of interest rate change
"caps" or "floors" on adjustable rate assets, the potential effect of changing
debt service levels on customers with adjustable rate loans, depositor early
withdrawals and product preference changes, and other internal and external
variables. Furthermore, the sensitivity analysis does not reflect actions that
the Asset/Liability Committee might take in responding to or anticipating
changes in interest rates.

Liquidity Risk

Liquidity is the ability to meet cash needs arising from changes in various
categories of assets and liabilities. Liquidity is constantly monitored and
managed throughout the Company. Liquid assets consist of cash and due from
banks, interest-bearing deposits in banks and Federal funds sold and securities
available for sale. Primary funding sources include core deposits, capital
markets funds and other money market sources. Core deposits include domestic
noninterest-bearing and interest-bearing retail deposits, which historically
have been relatively stable. The parent company and the bank have significant
unused borrowing capacity. Contingency plans exist and could be implemented on a
timely basis to minimize the impact of any dramatic change in market conditions.

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

      The bank can supply funds to the parent company and its nonbank
subsidiaries subject to various legal restrictions. All national banks are
limited in the payment of dividends without the approval of the Comptroller of
the Currency to an amount not to exceed the net profits as defined, for that
year to date combined with its retained net profits for the preceding two
calendar years.

      At September 30, 2002, the parent company's short-term debt, consisting
principally of commercial paper used to finance ongoing current business
activities, was approximately $30,063,000. The parent company had cash,
interest-bearing deposits with banks and other current assets aggregating
$52,845,000 and back-up credit lines with banks of $19,000,000. Since 1979, the
parent company has had no need to use available back-up lines of credit.

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

                                       29
<PAGE>
                        STERLING BANCORP AND SUBSIDIARIES
                            Interest Rate Sensitivity

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

<TABLE>
<CAPTION>
                                                                  Repricing Date
                                   ---------------------------------------------------------------------------
                                               More than       More than
                                    3 Months   3 Months        1 Year to    Over        Nonrate
                                    or Less    to 1 Year       5 Years     5 Years     Sensitive     Total
                                   ---------  -----------     ----------  ---------  -----------  ------------
<S>                              <C>          <C>            <C>          <C>        <C>          <C>
ASSETS

  Interest-bearing deposits
    with other banks             $  1,906     $        -     $        -   $       -  $       -    $      1,906
  Investment securities             2,497          1,104         41,085     538,987      8,720         592,393
  Loans, net of unearned
    discounts

      Commercial and industrial   500,476          2,003          9,502          29       (723)        511,287
      Loans to depository
       institutions                27,000              -              -           -          -          27,000
      Lease financing              67,628          3,373         64,750       2,509    (15,004)        123,256
      Real estate                  36,933         27,875         51,247      41,717        (20)        157,752
      Installment                   7,416            421            726         453        (21)          8,995
  Noninterest-earning
    assets and allowance
    for loan losses                     -              -              -           -    107,188         107,188
                                  --------      ---------      ---------    --------  ---------     -----------

      Total Assets                643,856         34,776        167,310     583,695    100,140       1,529,777
                                  --------      ---------      ---------    --------  ---------     -----------

LIABILITIES AND
SHAREHOLDERS' EQUITY
  Interest-bearing deposits

    Savings  [1]                        -              -         24,997           -          -          24,997
    NOW  [1]                            -              -        114,107           -          -         114,107
    Money market  [1]             139,920              -         36,070           -          -         175,990
    Time - domestic               233,729         77,417         78,542           -          -         389,688
         - foreign                  1,180          1,820              -           -          -           3,000
  Federal funds purchased &
    securities sold u/a/r          78,074              -              -           -          -          78,074
  Commercial paper                 29,713              -              -           -          -          29,713
  Other short-term borrowings       4,567         20,350              -           -          -          24,917
  Long-term borrowings - FHLB           -         10,000         15,000     100,000          -         125,000
  Noninterest-bearing
   liabilities and shareholders'
   equity                               -              -              -           -    564,291         564,291
                                  --------      ---------      ---------    --------  ---------     -----------

      Total Liabilities and
        Shareholders' Equity      487,183        109,587        268,716     100,000    564,291       1,529,777
                                  --------      ---------      ---------    --------  ---------     -----------

  Net Interest Rate
    Sensitivity Gap              $156,673     $  (74,811)    $ (101,406)  $ 483,695  $(464,151)   $          -
                                  ========      =========      =========    ========  =========     ===========

  Cumulative Gap
    September 30, 2002           $156,673     $   81,862     $  (19,544)  $ 464,151  $       -    $          -
                                  ========      =========      =========    ========  =========     ===========

  Cumulative Gap
    September 30, 2001           $155,428     $   87,832     $    7,300   $ 464,924  $       -    $          -
                                  ========      =========      =========    ========  =========     ===========

  Cumulative Gap
    December 31, 2001            $129,150     $   64,668     $  (47,649)  $ 483,188  $       -    $          -
                                  ========     =========      ===========  ========  ==========     ===========
</TABLE>



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

                                       30
<PAGE>
ITEM 4. CONTROLS AND PROCEDURES

      Within the 90-day period prior to the filing of this report, an evaluation
      was carried out under the supervision and with the participation of the
      Company's management, including our Chief Executive Officer and Chief
      Financial Officer, of the effectiveness of the design and operation of our
      disclosure controls and procedures (as defined in Rule 13a-14(c) under the
      Securities Exchange Act of 1934). Based upon that evaluation, the Chief
      Executive Officer and Chief Financial Officer concluded that the design
      and operation of these disclosure controls and procedures were effective.
      No significant changes were made in our internal controls or in other
      factors that could significantly affect these controls subsequent to the
      date of their evaluation.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

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

              (11)   Statement Re: Computation of Per Share Earnings
              (99.1) Certifications of the Chief Executive Officer pursuant to
                     Section 302 of the Sarbanes-Oxley Act of 2002
              (99.2) Certifications of the Chief Financial Officer pursuant to
                     Section 302 of the Sarbanes-Oxley Act of 2002

      (b)     In a report on Form 8-K dated August 14, 2002 and filed on August
              15, 2002, the Company reported, under Item 9. "Regulation FD
              Disclosure", (a) the filing by the Company's Chief Executive
              Officer and Chief Financial Officer of certifications relating to
              the Company's Form 10-Q for the quarter ended June 30, 2002
              required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
              and (b) the Company's declaration of a quarterly dividend payable
              September 30, 2002.

                                   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    11/12/02                /s/ Louis J. Cappelli
                  ----------------------         ------------------------------
                                                 Louis J. Cappelli
                                                 Chairman and Chief Executive
                                                 Officer

              Date    11/12/02                /s/ John W. Tietjen
                  ----------------------         -----------------------------
                                                 John W. Tietjen
                                                 Executive Vice President,
                                                 Treasurer and Chief Financial
                                                 Officer

                                       31
<PAGE>
                        STERLING BANCORP AND SUBSIDIARIES


                                  EXHIBIT INDEX







<TABLE>
<CAPTION>
  Sequential                               Incorporated
   Exhibit                                    Herein By      Filed        Page
    Number         Description              Reference To    Herewith       No.
   -------         -----------              ------------    --------       ---
<S>                <C>                      <C>             <C>           <C>
      11           Computation of                              X           33
                   Per Share Earnings


      99.1         Certification of
                   Chief Executive
                   Officer pursuant to
                   Section 302 of the
                   Sarbanes-Oxley Act
                   of 2002                                     X           34


      99.2         Certification of
                   Chief Financial
                   Officer pursuant to
                   Section 302 of the
                   Sarbanes-Oxley Act
                   of 2002                                     X           35
</TABLE>

                                       32