##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
FORM 10-Q

(Mark One)

(XBOX)QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

|                               |  |               
|------------------------------ |  | --------------
|For the quarterly period ended |  | March 31, 2002
|                               |  |               

or

(BOX)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)


|                                         |  |                 
|---------------------------------------- |  | ----------------
|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)      

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.

(XBOX) Yes      (BOX) No

As of March 31, 2002 there were 10,075,985 shares of common stock,
$1.00 par value, outstanding.





---

TABLE OF CONTENTS



|                                          |                                                                                                                    |                                                            |  |  |  |  |  | 
|----------------------------------------- | ------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------- |  |  |  |  |  | 
|                                          |                                                                                                                    | Consolidated Balance Sheets                               
|                                          |                                                                                                                    | (Consolidated Statements of Income)                       
|                                          |                                                                                                                    | Consolidated Statements of Comprehensive
Income           
|                                          |                                                                                                                    | Consolidated Statements of Changes in
Shareholders Equity
|                                          |                                                                                                                    | Consolidated Statements of Cash
Flows                     
|                                          |                                                                                                                    | Notes to Consolidated Financial Statements                
|                                          | Item 2. Managements Discussion and Analysis of Financial                      Condition and Results of Operations
|                                          |                                                                                                                    | BUSINESS                                                  
|                                          |                                                                                                                    | Results for Three Months                                  
|                                          |                                                                                                                    | BALANCE SHEET ANALYSIS                                    
|CAPITAL                                  
|                                          |                                                                                                                    | Rate/Volume Analysis                                      
|                                          |                                                                                                                    | Regulatory Capital and Ratios                             
|                                          | Item 3. Quantitative and Qualitative Disclosures About                      Market Risk                           
|                                          |                                                                                                                    | ASSET/LIABILITY MANAGEMENT                                
|                                          |                                                                                                                    | Interest Rate Sensitivity                                 
|PART II OTHER INFORMATION                
|                                          | Item 6. Exhibits and Reports on Form 8-K                                                                          
|SIGNATURES                               
|EXHIBIT INDEX                            
|EMPLOYMENT AGREEMENT FOR LOUIS J. CAPELLI
|EMPLOYMENT AGREEMENT FOR JOHN C. MILLMAN 
|AMENDMENT TO FORM OF CHANGE OF CONTROL   
|COMPUTATION OF PER SHARE EARNINGS        



---



##### Table of Contents



STERLING BANCORP

|                             |                                                                                                                                                   |                                                                                         |    |   
|---------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------- | -- | --
|PART I FINANCIAL INFORMATION | Page                                                                                                                                             
|                             |                                                                                                                                                   |                                                                                         |    |   
|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
|                            
|                            
|                            
|                            
|                             |                                                                                                                                                   | Balance Sheet Analysis                                                                  |    | 15
|                            
|                            
|                            
|                            
|                             |                                                                                                                                                   | Capital                                                                                 |    | 19
|                            
|                            
|                            
|                            
|                             |                                                                                                                                                   | Average Balance Sheets                                                                  |    | 20
|                            
|                            
|                            
|                            
|                             |                                                                                                                                                   | Rate/Volume Analysis                                                                    |    | 21
|                            
|                            
|                            
|                            
|                             |                                                                                                                                                   | Regulatory Capital and Ratios                                                           |    | 22
|                            
|                            
|                            
|                            
|Item 3.                      |                                                                                                                                                   | Quantitative and Qualitative Disclosures About   Market
Risk                            |    |   
|                            
|                            
|                            
|                            
|                             |                                                                                                                                                   | Asset/Liability Management                                                              |    | 23
|                            
|                            
|                            
|                            
|                             |                                                                                                                                                   | Interest Rate Sensitivity                                                               |    | 26
|                            
|                            
|                            
|                            
|PART II OTHER INFORMATION    |                                                                                                                                                  
|                            
|                            
|                            
|                            
|Item 6.                      |                                                                                                                                                   | Exhibits and Reports on Form 8-K                                                        |    | 27
|                            
|                            
|                            
|                            
|SIGNATURES                   | 27                                                                                                                                               
|                            
|                            
|                            
|                            
|EXHIBIT INDEX                | 28                                                                                                                                               
|                            
|                            
|                            
|                            
|Exhibit 10(i)                | Amended and Restated Employment Agreements Dated March 22, 2002                                                                                  
|                             |                                                                                                                                                   | (a) for Louis J. Capelli                                                                |    | 29
|                             |                                                                                                                                                   | (b) for John C. Millman                                                                 |    | 44
|Exhibit 10(ii)               | Amendment to Form of Change of Control Severence Agreement Dated
February 6, 2002 entered into between the Registrant and Each of Four
Executives |                                                                                         | 59
|Exhibit 11                   |                                                                                                                                                   | Computation of Per Share Earnings                                                       |    | 61

2



---



##### Table of Contents






STERLING BANCORP AND SUBSIDIARIES

Consolidated Balance Sheets


|                                                                                                                        |                                                                                                                            |                             |               |              |               |   |               |             |               | 
|----------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------- | --------------------------- | ------------- | ------------ | ------------- | - | ------------- | ----------- | ------------- | 
|                                                                                                                        |                                                                                                                            | March 31,                   |               | December 31,
|                                                                                                                        |                                                                                                                            | 2001                        |               | 2001        
|                                                                                                                        |                                                                                                                            |                             |               |             
|ASSETS                                                                                                                  |                                                                                                                            |                             |               |              |               |   |               |            
|Cash and due from banks                                                                                                 |                                                                                                                            | $                           | 31,279,014    |              |               | $ | 50,362,016    |            
|Interest-bearing deposits with other banks                                                                              |                                                                                                                            |                             | 1,850,861     |              |               |   | 2,487,178     |            
|Federal funds sold                                                                                                      |                                                                                                                            |                             |              |              |               |   | 10,000,000    |            
|Securities available for sale                                                                                           |                                                                                                                            |                             | 209,112,771   |              |               |   | 177,810,042   |            
|Securities available for sale  pledged                                                                                 |                                                                                                                            |                             | 98,160,881    |              |               |   | 91,752,370    |            
|Securities held to maturity                                                                                             |                                                                                                                            |                             | 163,432,053   |              |               |   | 101,077,406   |            
|Securities held to maturity  pledged                                                                                   |                                                                                                                            |                             | 145,217,604   |              |               |   | 205,387,986   |            
|                                                                                                                        |                                                                                                                            |                             |               |              |               |   |               |            
|                                                                                                                        |                                                                                                                            | Total investment securities |               |              | 615,923,309   |   |               |             | 576,027,804   | 
|                                                                                                                        |                                                                                                                            |                             |               |              |               |   |               |            
|Loans, net of unearned discounts                                                                                        |                                                                                                                            |                             | 778,927,240   |              |               |   | 808,686,874   |            
|Less allowance for loan losses                                                                                          |                                                                                                                            |                             | 14,314,948    |              |               |   | 14,038,322    |            
|                                                                                                                        |                                                                                                                            |                             |               |              |               |   |               |            
|                                                                                                                        |                                                                                                                            | Loans, net                  |               |              | 764,612,292   |   |               |             | 794,648,552   | 
|                                                                                                                        |                                                                                                                            |                             |               |              |               |   |               |            
|Customers liability under acceptances                                                                                  |                                                                                                                            |                             | 1,543,091     |              |               |   | 608,660       |            
|Excess cost over equity in net assets of the
    banking subsidiary                                                     |                                                                                                                            |                             | 21,158,440    |              |               |   | 21,158,440    |            
|Premises and equipment, net                                                                                             |                                                                                                                            |                             | 8,143,458     |              |               |   | 7,852,362     |            
|Other real estate                                                                                                       |                                                                                                                            |                             | 969,367       |              |               |   | 809,184       |            
|Accrued interest receivable                                                                                             |                                                                                                                            |                             | 6,433,596     |              |               |   | 5,867,121     |            
|Other assets                                                                                                            |                                                                                                                            |                             | 36,690,613    |              |               |   | 13,049,654    |            
|                                                                                                                        |                                                                                                                            |                             |               |              |               |   |               |            
|                                                                                                                        |                                                                                                                            | $                           | 1,488,604,041 |              |               | $ | 1,482,870,971 |            
|                                                                                                                        |                                                                                                                            |                             |               |              |               |   |               |            
|LIABILITIES AND SHAREHOLDERS
    EQUITY                                                                                |                                                                                                                            |                             |               |              |               |   |               |            
|Deposits                                                                                                                |                                                                                                                            |                             |               |              |               |   |               |            
|                                                                                                                        | Noninterest-bearing deposits                                                                                               |                             | $             | 307,616,587  |               |   | $             | 356,303,308 |              
|                                                                                                                        | Interest-bearing deposits                                                                                                  |                             |               | 692,669,664  |               |   |               | 628,620,646 |              
|                                                                                                                        |                                                                                                                            |                             |               |              |               |   |               |            
|                                                                                                                        |                                                                                                                            | Total deposits              |               |              | 1,000,286,251 |   |               |             | 984,923,954   | 
|Federal funds purchased and securities sold under
    agreements to repurchase                                          |                                                                                                                            |                             | 89,328,739    |              |               |   | 147,095,635   |            
|Commercial paper                                                                                                        |                                                                                                                            |                             | 31,032,800    |              |               |   | 42,103,200    |            
|Other short-term borrowings                                                                                             |                                                                                                                            |                             | 22,706,975    |              |               |   | 8,687,671     |            
|Acceptances outstanding                                                                                                 |                                                                                                                            |                             | 1,543,091     |              |               |   | 608,660       |            
|Accrued expenses and other liabilities                                                                                  |                                                                                                                            |                             | 77,877,954    |              |               |   | 75,624,435    |            
|                                                                                                                        |                                                                                                                            |                             |               |              |               |   |               |            
|                                                                                                                        |                                                                                                                            |                             | 1,222,775,810 |              |               |   | 1,259,043,555 |            
|Long-term debt  FHLB                                                                                                   |                                                                                                                            |                             | 115,000,000   |              |               |   | 95,350,000    |            
|                                                                                                                        |                                                                                                                            |                             |               |              |               |   |               |            
|                                                                                                                        |                                                                                                                            | Total liabilities           |               |              | 1,337,775,810 |   |               |             | 1,354,393,555 | 
|                                                                                                                        |                                                                                                                            |                             |               |              |               |   |               |            
|Corporation Obligated Mandatorily Redeemable
    Preferred Securities                                                   |                                                                                                                            |                             | 25,000,000    |              |               |   |              |            
|                                                                                                                        |                                                                                                                            |                             |               |              |               |   |               |            
|Shareholders equity                                                                                                    |                                                                                                                            |                             |               |              |               |   |               |            
|                                                                                                                        | Preferred stock, $5 par value. Authorized
    644,389 shares Series D, issued 234,162 and
    234,606 shares, respectively |                             |               | 2,341,620    |               |   |               | 2,346,060   |              
|Common stock, $1 par value. Authorized
    20,000,000 shares; issued 11,011,195 and
    10,834,853 shares, respectively |                                                                                                                            |                             | 11,011,195    |              |               |   | 10,834,853    |            
|Capital surplus                                                                                                         |                                                                                                                            |                             | 100,900,502   |              |               |   | 98,487,765    |            
|Retained earnings                                                                                                       |                                                                                                                            |                             | 35,859,745    |              |               |   | 32,419,767    |            
|Accumulated other comprehensive income, net of tax                                                                      |                                                                                                                            |                             | 193,168       |              |               |   | 1,119,223     |            
|                                                                                                                        |                                                                                                                            |                             |               |              |               |   |               |            
|                                                                                                                        |                                                                                                                            |                             | 150,306,230   |              |               |   | 145,207,668   |            
|Less                                                                                                                    |                                                                                                                            |                             |               |              |               |   |               |            
|                                                                                                                        | Common shares in treasury at cost, 935,055 and
    745,023 shares, respectively                                            |                             |               | 21,793,623   |               |   |               | 15,542,454  |              
|                                                                                                                        | Unearned compensation                                                                                                      |                             |               | 2,684,376    |               |   |               | 1,187,798   |              
|                                                                                                                        |                                                                                                                            |                             |               |              |               |   |               |            
|                                                                                                                        |                                                                                                                            | Total shareholders equity  |               |              | 125,828,231   |   |               |             | 128,477,416   | 
|                                                                                                                        |                                                                                                                            |                             |               |              |               |   |               |            
|                                                                                                                        |                                                                                                                            | $                           | 1,488,604,041 |              |               | $ | 1,482,870,971 |            
|                                                                                                                        |                                                                                                                            |                             |               |              |               |   |               |            

See Notes to Consolidated Financial Statements.

3



---



##### Table of Contents






STERLING BANCORP AND SUBSIDIARIES

(Consolidated Statements of Income)


|                                                        |                                                                                |                    |                            |            |           |            |            |            |           |            | 
|------------------------------------------------------- | ------------------------------------------------------------------------------ | ------------------ | -------------------------- | ---------- | --------- | ---------- | ---------- | ---------- | --------- | ---------- | 
|                                                        |                                                                                |                   
|                                                        |                                                                                | Three Months Ended
|                                                        |                                                                                | March 31,         
|                                                        |                                                                                |                   
|                                                        |                                                                                | 2002               |                            | 2001      
|                                                        |                                                                                |                    |                            |           
|INTEREST INCOME                                         |                                                                                |                    |                            |            |           |            |            |           
|                                                        | Loans                                                                          |                    | $                          | 14,166,374 |           |            | $          | 17,259,102 |          
|                                                        | Investment securities                                                          |                    |                            |            |           |            |            |            |          
|                                                        |                                                                                | Available for sale |                            |            | 4,176,250 |            |            |            | 2,561,771 |           
|                                                        |                                                                                | Held to maturity   |                            |            | 4,942,518 |            |            |            | 4,704,691 |           
|                                                        | Federal funds sold                                                             |                    |                            | 8,681      |           |            |            | 19,492     |          
|                                                        | Deposits with other banks                                                      |                    |                            | 149,183    |           |            |            | 36,444     |          
|                                                        |                                                                                |                    |                            |            |           |            |            |           
|                                                        |                                                                                |                    | Total interest income      |            |           | 23,443,006 |            |            |           | 24,581,500 | 
|                                                        |                                                                                |                    |                            |            |           |            |            |           
|INTEREST EXPENSE                                        |                                                                                |                    |                            |            |           |            |            |           
|                                                        | Deposits                                                                       |                    |                            | 3,323,204  |           |            |            | 5,347,779  |          
|                                                        | Federal funds purchased and securities sold under
    agreements to repurchase |                    |                            | 446,650    |           |            |            | 1,799,365  |          
|                                                        | Commercial paper                                                               |                    |                            | 206,601    |           |            |            | 414,591    |          
|                                                        | Other short-term borrowings                                                    |                    |                            | 107,689    |           |            |            | 59,350     |          
|                                                        | Long-term debt                                                                 |                    |                            | 1,059,975  |           |            |            | 294,867    |          
|                                                        |                                                                                |                    |                            |            |           |            |            |           
|                                                        |                                                                                |                    | Total interest expense     |            |           | 5,144,119  |            |            |           | 7,915,952  | 
|                                                        |                                                                                |                    |                            |            |           |            |            |           
|Net interest income                                     |                                                                                |                    | 18,298,887                 |            |           |            | 16,665,548 |           
|Provision for loan losses                               |                                                                                |                    | 1,679,300                  |            |           |            | 1,685,800  |           
|                                                        |                                                                                |                    |                            |            |           |            |            |           
|Net interest income after provision for loan
    losses |                                                                                |                    | 16,619,587                 |            |           |            | 14,979,748 |           
|                                                        |                                                                                |                    |                            |            |           |            |            |           
|NONINTEREST INCOME                                      |                                                                                |                    |                            |            |           |            |            |           
|                                                        | Factoring income                                                               |                    |                            | 1,376,891  |           |            |            | 1,401,051  |          
|                                                        | Mortgage banking income                                                        |                    |                            | 2,530,339  |           |            |            | 1,289,407  |          
|                                                        | Service charges on deposit accounts                                            |                    |                            | 1,148,235  |           |            |            | 1,401,219  |          
|                                                        | Trade finance income                                                           |                    |                            | 451,257    |           |            |            | 680,392    |          
|                                                        | Trust fees                                                                     |                    |                            | 117,118    |           |            |            | 186,804    |          
|                                                        | Other service charges and fees                                                 |                    |                            | 431,042    |           |            |            | 339,880    |          
|                                                        | Bank owned life insurance income                                               |                    |                            | 222,356    |           |            |            |           |          
|                                                        | Other income                                                                   |                    |                            | 68,903     |           |            |            | 50,370     |          
|                                                        |                                                                                |                    |                            |            |           |            |            |           
|                                                        |                                                                                |                    | Total noninterest income   |            |           | 6,406,141  |            |            |           | 5,349,123  | 
|                                                        |                                                                                |                    |                            |            |           |            |            |           
|NONINTEREST EXPENSES                                    |                                                                                |                    |                            |            |           |            |            |           
|                                                        | Salaries and employee benefits                                                 |                    |                            | 8,044,425  |           |            |            | 6,993,018  |          
|                                                        | Occupancy expenses, net                                                        |                    |                            | 1,176,349  |           |            |            | 1,126,965  |          
|                                                        | Equipment expenses                                                             |                    |                            | 567,989    |           |            |            | 571,671    |          
|                                                        | Other expenses                                                                 |                    |                            | 4,443,437  |           |            |            | 3,924,286  |          
|                                                        |                                                                                |                    |                            |            |           |            |            |           
|                                                        |                                                                                |                    | Total noninterest expenses |            |           | 14,232,437 |            |            |           | 12,615,940 | 
|                                                        |                                                                                |                    |                            |            |           |            |            |           
|Income before income taxes                              |                                                                                |                    | 8,793,291                  |            |           |            | 7,712,931  |           
|Provision for income taxes                              |                                                                                |                    | 3,526,990                  |            |           |            | 3,176,646  |           
|                                                        |                                                                                |                    |                            |            |           |            |            |           
|Net income                                              |                                                                                | $                  | 5,266,301                  |            |           | $          | 4,536,285  |           
|                                                        |                                                                                |                    |                            |            |           |            |            |           
|Average number of common shares outstanding             |                                                                                |                    |                            |            |           |            |            |           
|                                                        | Basic                                                                          |                    |                            | 10,104,482 |           |            |            | 10,028,109 |          
|                                                        | Diluted                                                                        |                    |                            | 10,796,473 |           |            |            | 10,612,817 |          
|Per average common share                                |                                                                                |                    |                            |            |           |            |            |           
|                                                        | Basic                                                                          |                    | $                          | 0.52       |           |            | $          | 0.45       |          
|                                                        | Diluted                                                                        |                    |                            | 0.49       |           |            |            | 0.43       |          
|Dividends per common share                              |                                                                                |                    | 0.18                       |            |           |            | 0.16       |           

See Notes to Consolidated Financial Statements.

4



---



##### Table of Contents






STERLING BANCORP AND SUBSIDIARIES

Consolidated Statements of Comprehensive
Income


|                                        |                                                                 |                    |           |          |   |   |           |         | 
|--------------------------------------- | --------------------------------------------------------------- | ------------------ | --------- | -------- | - | - | --------- | ------- | 
|                                        |                                                                 |                   
|                                        |                                                                 | Three Months Ended
|                                        |                                                                 | March 31,         
|                                        |                                                                 |                   
|                                        |                                                                 | 2002               |           | 2001    
|                                        |                                                                 |                    |           |         
|Net Income                              |                                                                 | $                  | 5,266,301 |          |   | $ | 4,536,285 |        
|Other comprehensive income, net of tax: |                                                                 |                    |           |          |   |   |           |        
|                                        | Unrealized holding (losses) gains arising during
    the period |                    |           | (926,055 | ) |   |           | 957,341 | 
|                                        |                                                                 |                    |           |          |   |   |           |        
|Comprehensive income                    |                                                                 | $                  | 4,340,246 |          |   | $ | 5,493,626 |        
|                                        |                                                                 |                    |           |          |   |   |           |        

See Notes to Consolidated Financial Statements.

5



---



##### Table of Contents






STERLING BANCORP AND SUBSIDIARIES

Consolidated Statements of Changes in
Shareholders Equity


|                                       |                                                                                               |                    |            |             |            |          |   |             |           |         | 
|-------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------ | ---------- | ----------- | ---------- | -------- | - | ----------- | --------- | ------- | 
|                                       |                                                                                               |                   
|                                       |                                                                                               | Three Months Ended
|                                       |                                                                                               | March 31,         
|                                       |                                                                                               |                   
|                                       |                                                                                               | 2002               |            | 2001       
|                                       |                                                                                               |                    |            |            
|Preferred Stock                        |                                                                                               |                    |            |             |            |          |   |            
|                                       | Balance at January 1                                                                          |                    | $          | 2,346,060   |            |          | $ | 2,402,760   |          
|                                       | Conversions of Series D shares                                                                |                    |            | (4,440      | )          |          |   |            |          
|                                       |                                                                                               |                    |            |             |            |          |   |            
|                                       | Balance at March 31,                                                                          |                    | $          | 2,341,620   |            |          | $ | 2,402,760   |          
|                                       |                                                                                               |                    |            |             |            |          |   |            
|Common Stock                           |                                                                                               |                    |            |             |            |          |   |            
|                                       | Balance at January 1                                                                          |                    | $          | 10,834,853  |            |          |   | 9,563,329   |          
|                                       | Conversions of preferred shares into common shares                                            |                    |            | 562         |            |          |   |            |          
|                                       | Options exercised                                                                             |                    |            | 175,780     |            |          |   | 28,580      |          
|                                       |                                                                                               |                    |            |             |            |          |   |            
|                                       | Balance at March 31                                                                           |                    | $          | 11,011,195  |            |          | $ | 9,591,909   |          
|                                       |                                                                                               |                    |            |             |            |          |   |            
|Capital Surplus                        |                                                                                               |                    |            |             |            |          |   |            
|                                       | Balance at January 1                                                                          |                    | $          | 98,487,765  |            |          | $ | 67,450,110  |          
|                                       | Conversions of preferred shares into common shares                                            |                    |            | 3,878       |            |          |   |            |          
|                                       | Issuance of shares under incentive compensation
    plan                                      |                    |            | 386,400     |            |          |   |            |          
|                                       | Options exercised                                                                             |                    |            | 2,022,459   |            |          |   | 338,054     |          
|                                       |                                                                                               |                    |            |             |            |          |   |            
|                                       | Balance at March 31                                                                           |                    | $          | 100,900,502 |            |          | $ | 67,788,164  |          
|                                       |                                                                                               |                    |            |             |            |          |   |            
|Retained Earnings                      |                                                                                               |                    |            |             |            |          |   |            
|                                       | Balance at January 1                                                                          |                    | $          | 32,419,767  |            |          | $ | 47,466,602  |          
|                                       | Net Income                                                                                    |                    |            | 5,266,301   |            |          |   | 4,536,285   |          
|                                       | Cash dividends paid  common
    shares                                 preferred
    shares |                    |            | (1,797,947  | )          |          |   | (1,448,856  | )        
|                                       |                                                                                               |                    |            | (28,376     | )          |          |   | (24,783     | )        
|                                       |                                                                                               |                    |            |             |            |          |   |            
|                                       | Balance at March 31                                                                           |                    | $          | 35,859,745  |            |          | $ | 50,529,248  |          
|                                       |                                                                                               |                    |            |             |            |          |   |            
|Accumulated Other Comprehensive Income |                                                                                               |                    |            |             |            |          |   |            
|                                       | Balance at January 1                                                                          |                    | $          | 1,119,223   |            |          | $ | (22,652     | )        
|                                       |                                                                                               |                    |            |             |            |          |   |            
|                                       | Unrealized holding (losses) gains arising during
    the period:                              |                    |            |             |            |          |   |             |          
|                                       |                                                                                               | Before tax         |            |             | (1,711,748 | )        |   |             | 1,769,576 |        
|                                       |                                                                                               | Tax effect         |            |             | 785,693    |          |   |             | (812,235  | )      
|                                       |                                                                                               |                    |            |             |            |          |   |            
|                                       |                                                                                               |                    | Net of tax |             |            | (926,055 | ) |             |           | 957,341 | 
|                                       |                                                                                               |                    |            |             |            |          |   |            
|                                       | Balance at March 31                                                                           |                    | $          | 193,168     |            |          | $ | 934,689     |          
|                                       |                                                                                               |                    |            |             |            |          |   |            
|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                              |                    |            | (1,655,315  | )          |          |   | (213,129    | )        
|                                       | Purchase of common shares                                                                     |                    |            | (5,863,054  | )          |          |   |            |          
|                                       |                                                                                               |                    |            |             |            |          |   |            
|                                       | Balance at March 31                                                                           |                    | $          | (21,793,623 | )          |          | $ | 8,199,892   | )        
|                                       |                                                                                               |                    |            |             |            |          |   |            
|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                                                         |                    |            | 157,022     |            |          |   | 99,726      |          
|                                       |                                                                                               |                    |            |             |            |          |   |            
|                                       | Balance at March 31                                                                           |                    | $          | (2,684,376  | )          |          | $ | (1,757,566  | )        
|                                       |                                                                                               |                    |            |             |            |          |   |            
|Total Shareholders Equity             |                                                                                               |                    |            |             |            |          |   |            
|                                       | Balance at January 1                                                                          |                    | $          | 128,477,416 |            |          | $ | 117,016,094 |          
|                                       | Net changes during the period                                                                 |                    |            | (2,649,185  | )          |          |   | 4,273,218   |          
|                                       |                                                                                               |                    |            |             |            |          |   |            
|                                       | Balance at March 31                                                                           |                    | $          | 125,828,231 |            |          | $ | 121,289,312 |          
|                                       |                                                                                               |                    |            |             |            |          |   |            

See Notes to Consolidated Financial Statements.

6



---



##### Table of Contents






STERLING BANCORP AND SUBSIDIARIES

Consolidated Statements of Cash
Flows


|                                                  |                                                                                                                             |                                                                   |                                                     |              |             |             |             |             |            |             |  
|------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | --------------------------------------------------- | ------------ | ----------- | ----------- | ----------- | ----------- | ---------- | ----------- | -
|                                                  |                                                                                                                             |                                                                  
|                                                  |                                                                                                                             | Three Months Ended                                               
|                                                  |                                                                                                                             | March 31,                                                        
|                                                  |                                                                                                                             |                                                                  
|                                                  |                                                                                                                             | 2002                                                              |                                                     | 2001        
|                                                  |                                                                                                                             |                                                                   |                                                     |             
|Operating Activities                              |                                                                                                                             |                                                                   |                                                     |              |             |             |             |            
|                                                  | Net Income                                                                                                                  |                                                                   | $                                                   | 5,266,301    |             |             | $           | 4,536,285   |           
|                                                  | Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:                             |                                                                   |                                                     |              |             |             |             |             |           
|                                                  |                                                                                                                             | Provision for loan losses                                         |                                                     |              | 1,679,300   |             |             |             | 1,685,800  |            
|                                                  |                                                                                                                             | Depreciation and amortization of premises and
    equipment       |                                                     |              | 381,907     |             |             |             | 383,539    |            
|                                                  |                                                                                                                             | Deferred income tax benefit                                       |                                                     |              | (116,793    | )           |             |             | (61,050    | )          
|                                                  |                                                                                                                             | Net change in loans held for sale                                 |                                                     |              | 15,377,415  |             |             |             | (5,879,000 | )          
|                                                  |                                                                                                                             | Amortization of unearned compensation                             |                                                     |              | 157,022     |             |             |             | 99,726     |            
|                                                  |                                                                                                                             | Amortization of premiums of securities                            |                                                     |              | 394,818     |             |             |             | 251,438    |            
|                                                  |                                                                                                                             | Accretion of discounts on securities                              |                                                     |              | (237,145    | )           |             |             | (136,765   | )          
|                                                  |                                                                                                                             | Increase in accrued interest receivable                           |                                                     |              | (566,475    | )           |             |             | (112,844   | )          
|                                                  |                                                                                                                             | Increase (Decrease) in other liabilities and
    accrued expenses |                                                     |              | 2,253,519   |             |             |             | (3,470,234 | )          
|                                                  |                                                                                                                             | Increase in other assets                                          |                                                     |              | (22,738,494 | )           |             |             | (203,370   | )          
|                                                  |                                                                                                                             | Issuance premium for preferred securities, net of
amortization    |                                                     |              | 906,250     |             |             |             |           |            
|                                                  |                                                                                                                             | Other, net                                                        |                                                     |              | (1,624,065  | )           |             |             | (213,129   | )          
|                                                  |                                                                                                                             |                                                                   |                                                     |              |             |             |             |            
|                                                  |                                                                                                                             |                                                                   | Net cash provided by (used in) operating activities |              |             | 1,133,065   |             |             |            | (3,119,604  | )
|                                                  |                                                                                                                             |                                                                   |                                                     |              |             |             |             |            
|Investing Activities                              |                                                                                                                             |                                                                   |                                                     |              |             |             |             |            
|                                                  | Purchase of premises and equipment                                                                                          |                                                                   |                                                     | (673,003     | )           |             |             | (439,942    | )         
|                                                  | Decrease in interest-bearing deposits                                                                                       |                                                                   |                                                     | 636,317      |             |             |             | 694,777     |           
|                                                  | Decrease in Federal funds sold                                                                                              |                                                                   |                                                     | 10,000,000   |             |             |             |            |           
|                                                  | Increase in other real estate                                                                                               |                                                                   |                                                     | (160,183     | )           |             |             | (535,880    | )         
|                                                  | Net decrease in loans                                                                                                       |                                                                   |                                                     | 12,979,545   |             |             |             | 27,088,882  |           
|                                                  | Proceeds from prepayments, redemptions or
    maturities of securities  held to maturity                                   |                                                                   |                                                     | 26,830,723   |             |             |             | 15,058,625  |           
|                                                  | Purchases of securities  held to
    maturity                                                                              |                                                                   |                                                     | (29,117,445  | )           |             |             |            |           
|                                                  | Purchases of securities  available for
    sale                                                                            |                                                                   |                                                     | (116,687,877 | )           |             |             | (39,129,630 | )         
|                                                  | Proceeds from prepayments, redemptions or
    maturities of securities  available for sale                                 |                                                                   |                                                     | 77,209,694   |             |             |             | 4,961,872   |           
|                                                  |                                                                                                                             |                                                                   |                                                     |              |             |             |             |            
|                                                  |                                                                                                                             |                                                                   | Net cash (used in) provided by investing activities |              |             | (18,982,229 | )           |             |            | 7,698,704   |  
|                                                  |                                                                                                                             |                                                                   |                                                     |              |             |             |             |            
|Financing Activities                              |                                                                                                                             |                                                                   |                                                     |              |             |             |             |            
|                                                  | Decrease in noninterest-bearing deposits                                                                                    |                                                                   |                                                     | (48,686,721  | )           |             |             | (62,585,565 | )         
|                                                  | Increase in interest-bearing deposits                                                                                       |                                                                   |                                                     | 64,049,018   |             |             |             | 37,841,542  |           
|                                                  | 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                                  |                                                                   |                                                     | (57,766,896  | )           |             |             | (23,513,001 | )         
|                                                  | Increase (Decrease) in commercial paper and other
    short-term borrowings                                                 |                                                                   |                                                     | 2,948,904    |             |             |             | (4,320,524  | )         
|                                                  | Purchase of treasury stock                                                                                                  |                                                                   |                                                     | (5,863,054   | )           |             |             |            |           
|                                                  | Increase in other long-term debt                                                                                            |                                                                   |                                                     | 19,650,000   |             |             |             | 29,650,000  |           
|                                                  | Proceeds from exercise of stock options                                                                                     |                                                                   |                                                     | 2,198,239    |             |             |             | 366,634     |           
|                                                  | Cash dividends paid on common and preferred stock                                                                           |                                                                   |                                                     | (1,826,323   | )           |             |             | (1,473,639  | )         
|                                                  |                                                                                                                             |                                                                   |                                                     |              |             |             |             |            
|                                                  |                                                                                                                             |                                                                   | Net cash used in financing activities               |              |             | (1,234,333  | )           |             |            | (24,034,553 | )
|                                                  |                                                                                                                             |                                                                   |                                                     |              |             |             |             |            
|Net decrease in cash and due from banks           |                                                                                                                             |                                                                   | (19,083,002                                         | )            |             |             | (19,455,453 | )          
|Cash and due from banks  beginning of
    period |                                                                                                                             |                                                                   | 50,362,016                                          |              |             |             | 50,212,689  |            
|                                                  |                                                                                                                             |                                                                   |                                                     |              |             |             |             |            
|Cash and due from banks  end of period           |                                                                                                                             | $                                                                 | 31,279,014                                          |              |             | $           | 30,757,236  |            
|                                                  |                                                                                                                             |                                                                   |                                                     |              |             |             |             |            
|Supplemental disclosures:                         |                                                                                                                             |                                                                   |                                                     |              |             |             |             |            
|                                                  | Interest paid                                                                                                               |                                                                   | $                                                   | 4,811,675    |             |             | $           | 7,729,258   |           
|                                                  | Income taxes paid                                                                                                           |                                                                   |                                                     | 4,870,000    |             |             |             | 621,500     |           

See Notes to Consolidated Financial Statements.

7



---



##### Table of Contents






STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements



|1. |  | The consolidated financial statements include the accounts of Sterling
Bancorp (the parent company) and its subsidiaries, principally Sterling
National Bank and its subsidiaries (the bank), after elimination of material
intercompany transactions. The term the Company refers to Sterling Bancorp
and its subsidiaries. The consolidated financial statements as of and for the
interim periods ended March 31, 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
shown 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 234,162 Series D
shares (of 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



---



##### Table of Contents



STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The Company provides a full range of financial products and services,
including commercial loans, asset-based financing, accounts receivable
management services, trade financing, equipment leasing, corporate and consumer
deposit services, commercial and residential mortgage lending and brokerage,
trust and estate administration and investment management services. The
Companys primary source of earnings is net interest income, which represents
the difference between interest earned on interest-earning assets and the
interest incurred on interest-bearing liabilities. The Companys 2002
year-to-date average interest-earning assets were 53.0% loans (corporate
lending was 73.4% and real estate lending was 21.9% of total loans,
respectively) and 47.0% investment securities and money market investments.
There are no industry concentrations exceeding 10% of loans, gross, in the
corporate loan portfolio. Approximately 68% of loans are to borrowers located
in the metropolitan New York area. The Company has determined that it has
three reportable operating segments: corporate lending, real estate lending and
company-wide treasury.

The following tables provide certain information regarding the Companys
operating segments for the three month periods ended March 31, 2002 and 2001:

|                                  |  |           |             |             |  |              |             |        |  |   |             |  |  |   |               | 
|--------------------------------- |  | --------- | ----------- | ----------- |  | ------------ | ----------- | ------ |  | - | ----------- |  |  | - | ------------- | 
|                                  |  | Corporate |             | Real Estate |  | Company-wide |             |        |  |  
|                                  |  | Lending   |             | Lending     |  | Treasury     |             | Totals
|                                  |  |           |             |             |  |              |             |       
|Three Months Ended March 31, 2002 |  |           |             |             |  |              |             |        |  |   |             |  |  |   |               | 
|                                 
|                                 
|                                 
|                                 
|Net interest income               |  | $         | 7,031,978   |             |  | $            | 3,378,369   |        |  | $ | 7,499,200   |  |  | $ | 17,909,547    | 
|                                 
|                                 
|                                 
|                                 
|Noninterest income                |  |           | 2,836,498   |             |  |              | 2,518,008   |        |  |   | 240,552     |  |  |   | 5,595,058     | 
|                                 
|                                 
|                                 
|                                 
|Depreciation and amortization     |  |           | 45,352      |             |  |              | 47,040      |        |  |   |            |  |  |   | 92,392        | 
|                                 
|                                 
|                                 
|                                 
|Segment profit                    |  |           | 3,650,887   |             |  |              | 2,877,163   |        |  |   | 7,942,111   |  |  |   | 14,470,161    | 
|                                 
|                                 
|                                 
|                                 
|Segment assets                    |  |           | 576,023,598 |             |  |              | 154,896,313 |        |  |   | 711,856,145 |  |  |   | 1,442,776,056 | 
|                                 
|                                 
|                                 
|                                 
|                                  |  |           |             |             |  |              |             |        |  |   |             |  |  |   |               | 
|                                 
|                                 
|                                 
|                                 
|Three Months Ended March 31, 2001 |  |           |             |             |  |              |             |        |  |   |             |  |  |   |               | 
|                                 
|                                 
|                                 
|                                 
|Net interest income               |  | $         | 7,951,788   |             |  | $            | 3,350,229   |        |  | $ | 4,807,329   |  |  | $ | 16,109,346    | 
|                                 
|                                 
|                                 
|                                 
|Noninterest income                |  |           | 3,287,188   |             |  |              | 1,321,539   |        |  |   | 41,731      |  |  |   | 4,650,458     | 
|                                 
|                                 
|                                 
|                                 
|Depreciation and amortization     |  |           | 40,745      |             |  |              | 46,385      |        |  |   | 84          |  |  |   | 87,214        | 
|                                 
|                                 
|                                 
|                                 
|Segment profit                    |  |           | 4,658,360   |             |  |              | 2,597,615   |        |  |   | 5,719,134   |  |  |   | 12,975,109    | 
|                                 
|                                 
|                                 
|                                 
|Segment assets                    |  |           | 560,067,578 |             |  |              | 132,628,549 |        |  |   | 516,059,951 |  |  |   | 1,208,756,078 | 

9



---



##### Table of Contents



STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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

|                                        |                                         |   |                              |               |      |   |               |               |  
|--------------------------------------- | --------------------------------------- | - | ---------------------------- | ------------- | ---- | - | ------------- | ------------- | -
|                                        |                                         |   | Three Months Ended March 31,
|                                        |                                         |   |                             
|                                        |                                         |   | 2002                         |               | 2001
|                                        |                                         |   |                              |               |     
|Net interest income:                    |                                         |   |                              |               |      |   |               |              
|                                       
|                                       
|                                       
|                                       
|                                        | Total for reportable operating segments |   | $                            | 17,909,547    |      |   | $             | 16,109,346    |  
|                                       
|                                       
|                                       
|                                       
|                                        | Other
[1]                               |   |                              | 389,340       |      |   |               | 556,202       |  
|                                        |                                         |   |                              |               |      |   |               |               |  
|Consolidated net interest income        |                                         | $ | 18,298,887                   |               |      | $ | 16,665,548    |              
|                                        |                                         |   |                              |               |      |   |               |               |  
|Noninterest income:                     |                                         |   |                              |               |      |   |               |              
|                                       
|                                       
|                                       
|                                       
|                                        | Total for reportable operating segments |   | $                            | 5,595,058     |      |   | $             | 4,650,458     |  
|                                       
|                                       
|                                       
|                                       
|                                        | Other [1]                               |   |                              | 811,083       |      |   |               | 698,665       |  
|                                        |                                         |   |                              |               |      |   |               |               |  
|Consolidated noninterest income         |                                         | $ | 6,406,141                    |               |      | $ | 5,349,123     |              
|                                        |                                         |   |                              |               |      |   |               |               |  
|Profit:                                 |                                         |   |                              |               |      |   |               |              
|                                       
|                                       
|                                       
|                                       
|                                        | Total for reportable operating segments |   | $                            | 14,470,161    |      |   | $             | 12,975,109    |  
|                                       
|                                       
|                                       
|                                       
|                                        | Other [1]                               |   |                              | (5,676,870    | )    |   |               | (5,262,178    | )
|                                        |                                         |   |                              |               |      |   |               |               |  
|Consolidated income before income taxes |                                         | $ | 8,793,291                    |               |      | $ | 7,712,931     |              
|                                        |                                         |   |                              |               |      |   |               |               |  
|Assets:                                 |                                         |   |                              |               |      |   |               |              
|                                       
|                                       
|                                       
|                                       
|                                        | Total for reportable operating segments |   | $                            | 1,442,776,056 |      |   | $             | 1,208,756,078 |  
|                                       
|                                       
|                                       
|                                       
|                                        | Other [1]                               |   |                              | 45,827,985    |      |   |               | 40,380,991    |  
|                                        |                                         |   |                              |               |      |   |               |               |  
|Consolidated assets                     |                                         | $ | 1,488,604,041                |               |      | $ | 1,249,137,069 |              
|                                        |                                         |   |                              |               |      |   |               |               |  



---

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

10



---



##### Table of Contents



STERLING BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements



|5. |  | In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
Business Combinations, and SFAS No. 142, Goodwill and Other Intangible
Assets. These Statements will change the accounting for business combinations
and goodwill in two ways. First, SFAS No. 141 requires that the purchase
method of accounting be used for all business combinations initiated after June
30, 2001. Second, SFAS No. 142 changes the accounting for goodwill, including
goodwill recorded in past business combinations. The previous accounting
principles governing goodwill generated from a business combination will cease
upon adoption of SFAS No. 142. The effect of adopting these standards is not
expected to have a material impact on the Companys statements of financial
condition and results of operations. SFAS No. 142 became effective for the
Company on January 1, 2002.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|6. |  | Subsequent to the end of the first quarter, the Company became aware
that a corporate borrower with multi-bank lines, and owing it $5.4 million,
has become the subject of an involuntary bankruptcy. If this were to result in a charge
to the loan loss reserve, management believes that the Company would continue
to have adequate loan loss reserves. Although the loan is collateralized by accounts
receivable and other assets, the Company cannot now estimate the amount it
will recover.                                                                                                                                                                                                                                                                                                                                                                                               

11



---



##### Table of Contents






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

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

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 the impact of September 11,
2001 and any future acts or threats of war or terrorism; the effects of, and
changes in, trade, monetary and fiscal policies and laws, including interest
rate policies of the Board of Governors of the Federal Reserve System; a
decline in general economic conditions and the strength of the local economies
in which we operate; the financial condition of our borrowers; competitive
pressures on loan and deposit pricing and demand; changes in technology and
their impact on the marketing of products and services; the timely development
and effective marketing of competitive 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
our 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; our
success 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 factors is not exclusive, and we will not
update any forward-looking statements, whether written or oral, that may be
made from time to time.

12



---



##### Table of Contents






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 March 31,
2002, the banks year-to-date average earning assets (of which loans were 51%
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 March 31, 2002 and 2001

OVERVIEW

The Company reported net income for the three months ended March 31, 2002 of
$5.3 million, representing $0.49 per share, calculated on a diluted basis,
compared to $4.5 million, or $0.43 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.

Net interest income, on a tax equivalent basis, increased to $18.6
million for the first quarter of 2002 compared with $16.9 million for the same
period in 2001, principally due to higher average earning assets outstanding.
The net interest margin, on a tax equivalent basis, was 5.69% for the first
quarter
of 2002 compared to 6.28% for the like 2001 period. The net interest margin
benefitted from a decrease of 214 basis points in the cost of funds partially
offset by a decrease of 200 basis points in the average yield on earning
assets. Also contributing to the decrease was a lower proportion of earning
assets funded from noninterest-bearing sources.

Noninterest income rose to $6.4 million for the three months ended March
31, 2002 compared to $5.3 million for the like 2001 period principally due to
continued growth in income from mortgage banking activities and from a
bank-owned life insurance program implemented in January, 2002.

13



---



##### Table of Contents



INCOME STATEMENT ANALYSIS

Net Interest Income

Net interest income, which represents the difference between interest earned on
interest-earning assets and interest incurred on interest-bearing liabilities,
is the Companys primary source of earnings. Net interest income can be
affected by changes in market interest rates as well as the level and
composition of assets, liabilities and shareholders equity. The increases
(decreases) in the components of interest income and interest expense,
expressed in terms of fluctuation in average volume and rate are shown on page
21. Information as to the components of interest income and interest expense
and average rates is provided in the Average Balance Sheets shown on page 20.

Net interest income, on a tax equivalent basis, for the three months ended
March 31, 2002 increased to $18,561,000 from $16,916,000 for the comparable
period in 2001.

Total interest income, on a tax equivalent basis, aggregated $23,707,000
for the first quarter of 2002 down from $24,832,000 for the same period of
2002. The tax equivalent yield on interest earning assets was 7.32% for the
three months ended March 31, 2002 compared with 9.32% for the comparable period
in 2001. The decrease in interest income was due to a decrease in income
earned on the Companys loan portfolio as a result of lower average yields.
The decrease in yield on earning assets was primarily due to lower yields on
loans. The securities outstanding increased as a result of the implementation
of asset liability management strategies designed to take advantage of the
steepness in the yield curve. Loan balances increased as the result of the
implementation of business plans designed to increase funds employed in the
asset category.

Interest earned on the loan portfolio amounted to $14,166,000 which was
down $3,093,000 when compared to a year ago. Average loan balances amounted to
$708,818,000 which were up $30,570,000 from an average of $678,248,000 in the
prior year period. The increase in the average loans was primarily in the real
estate loan segment of the Companys loan portfolio. The decrease in the yield
on the domestic loan portfolio to 8.52% for the three months ended March 31,
2002 from 11.07% for the comparable 2001 period was primarily attributable to a
lower rate environment on average in the 2002 period.

Interest earned on the securities portfolio increased to $9,383,000 for
the three months ended March 31, 2002 from $7,517,000 in the prior year period.
Average outstandings increased to $589,090,000 which were up $152,442,000 from
$436,648,000 in the prior year period. The increase in average securities
balances was primarily in mortgage-backed securities and collateralized
mortgage obligations of U.S. government corporations and agencies.

Interest expense on deposits decreased $2,024,000 for the three months
ended March 31, 2002 to $3,323,000 from $5,348,000 for the comparable 2001
period principally due to lower rates paid. Average rate paid on
interest-bearing deposits was 2.06% which was 197 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



---



##### Table of Contents



Interest expense associated with borrowed funds decreased to $1,822,000
for the first quarter of 2002 from $2,568,000 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 2.77% for the first three
months of 2002 compared with 5.45% in the comparable prior year period.
Average amounts of long-term debt outstanding were up $86,432,000 to
$111,920,000 from $25,488,000 in the prior year period. These borrowings were
advances from the Federal Home Loan Bank of New York utilized in connection
with the assets liability management strategies discussed above.

Noninterest Income

Noninterest income increased $1,057,000 for the first quarter of 2002 when
compared with the like 2001 period primarily as a result of increased income
from mortgage banking activities and from a bank-owned life insurance program
implemented in January, 2002.

Noninterest Expenses

Noninterest expenses increased $1,616,000 for the first quarter of 2002 when
compared with the like 2001 period primarily due to increased salary expenses
and pension costs, 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.




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
March 31, 2002, the Companys portfolio of securities totalled $615,923,000 of
which U.S. Government and U.S. Government corporations and agencies guaranteed
mortgage-backed and collateralized mortgage obligations securities having an
average life of approximately 4.4 years amounted to $568,528,000.

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

|                                                                                             |       |      |             |             |            |        |            |           |        |   |           |           |  |   |             |             | 
|-------------------------------------------------------------------------------------------- | ----- | ---- | ----------- | ----------- | ---------- | ------ | ---------- | --------- | ------ | - | --------- | --------- |  | - | ----------- | ----------- | 
|                                                                                             |       |      |             |             |            |        | Gross      |           | Gross  |   | Estimated
|                                                                                             |       |      | Amortized   |             | Unrealized |        | Unrealized |           | Market
|March 31, 2002                                                                               |       | Cost |             | Gains       |            | Losses |            | Value    
|                                                                                             |       |      |             |             |            |        |            |          
|U.S. Treasury securities                                                                     |       | $    | 2,493,998   |             |            | $      |           |           |        | $ | 404       |           |  | $ | 2,493,594   |            
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Obligations of U.S. government corporations and
agenciesmortgage-backed
securities          |       |      | 124,048,850 |             |            |        | 955,025    |           |        |   | 724,476   |           |  |   | 124,279,399 |            
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Obligations of U.S. government corporations and
agenciescollateralized
mortgage obligations |       |      | 135,238,138 |             |            |        | 580,851    |           |        |   | 1,214,080 |           |  |   | 134,604,909 |            
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Obligations of state and
political institutions                                              |       |      | 34,400,720  |             |            |        | 866,736    |           |        |   | 11,535    |           |  |   | 35,255,921  |            
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Trust preferred securities                                                                   |       |      | 2,514,745   |             |            |        |           |           |        |   | 113,415   |           |  |   | 2,401,330   |            
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Federal Reserve Bank and
other equity securities                                             |       |      | 8,220,142   |             |            |        | 18,816     |           |        |   | 459       |           |  |   | 8,238,499   |            
|                                                                                             |       |      |             |             |            |        |            |           |        |   |           |           |  |   |             |            
|                                                                                             | Total |      | $           | 306,916,593 |            |        | $          | 2,421,428 |        |   | $         | 2,064,369 |  |   | $           | 307,273,652 | 
|                                                                                             |       |      |             |             |            |        |            |           |        |   |           |           |  |   |             |            

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.

15



---



##### Table of Contents



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

|                                                                                      |       |       |             |             |            |        |            |           |        |   |           |           |  |   |             |             | 
|------------------------------------------------------------------------------------- | ----- | ----- | ----------- | ----------- | ---------- | ------ | ---------- | --------- | ------ | - | --------- | --------- |  | - | ----------- | ----------- | 
|                                                                                      |       |       |             |             |            |        | Gross      |           | Gross  |   | Estimated
|                                                                                      |       |       | Carrying    |             | Unrealized |        | Unrealized |           | Market
|March 31, 2002                                                                        |       | Value |             | Gains       |            | Losses |            | Value    
|                                                                                      |       |       |             |             |            |        |            |          
|Obligations of U.S. government
corporations and agencies 
mortgage-backed securities |       | $     | 307,149,657 |             |            | $      | 4,110,137  |           |        | $ | 3,491,233 |           |  | $ | 307,768,561 |            
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Debt securities issued by
Foreign governments                                         |       |       | 1,500,000   |             |            |        |           |           |        |   |          |           |  |   | 1,500,000   |            
|                                                                                      |       |       |             |             |            |        |            |           |        |   |           |           |  |   |             |            
|                                                                                      | Total |       | $           | 308,649,657 |            |        | $          | 4,110,137 |        |   | $         | 3,491,233 |  |   | $           | 309,268,561 | 
|                                                                                      |       |       |             |             |            |        |            |           |        |   |           |           |  |   |             |            

Loan Portfolio

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

The Companys commercial and industrial loan portfolio represents
approximately 62% 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.

16



---



##### Table of Contents



The Companys leasing portfolio, which consists of finance leases for various
types of business equipment, represents approximately 14% of gross loans. The
collateral securing any loan may vary in value based on market conditions.

The following table sets forth the composition of the Companys loan
portfolio.

|                                 |                                      |   |                  |         |       |  |          |      |       |   |         |         |      |  |       |      |  
|-------------------------------- | ------------------------------------ | - | ---------------- | ------- | ----- |  | -------- | ---- | ----- | - | ------- | ------- | ---- |  | ----- | ---- | -
|                                 |                                      |   | March 31,       
|                                 |                                      |   |                 
|                                 |                                      |   | 2002             |         | 2001 
|                                 |                                      |   |                  |         |      
|                                 |                                      |   | ($ in thousands)
|                                 |                                      |   |                  |         |       |  | % of     |      |       |   |         |         | % of
|                                 |                                      |   | Balances         |         | Gross |  | Balances |      | Gross
|                                 |                                      |   |                  |         |       |  |          |      |      
|Domestic                         |                                      |   |                  |         |       |  |          |      |       |   |         |         |      |  |       |     
|                                
|                                
|                                
|                                
|                                 | Commercial and industrial            |   | $                | 489,591 |       |  |          | 61.8 | %     |   | $       | 471,187 |      |  |       | 63.4 | %
|                                
|                                
|                                
|                                
|                                 | Equipment lease financing            |   |                  | 109,367 |       |  |          | 13.8 |       |   |         | 105,429 |      |  |       | 14.2 |  
|                                
|                                
|                                
|                                
|                                 | Real estate                          |   |                  | 151,089 |       |  |          | 19.1 |       |   |         | 132,785 |      |  |       | 17.9 |  
|                                
|                                
|                                
|                                
|                                 | Installment  individuals            |   |                  | 8,296   |       |  |          | 1.0  |       |   |         | 8,803   |      |  |       | 1.2  |  
|                                
|                                
|                                
|                                
|                                 | Loans to depository institutions     |   |                  | 34,000  |       |  |          | 4.3  |       |   |         | 24,000  |      |  |       | 3.2  |  
|                                
|                                
|                                
|                                
|Foreign                          |                                      |   |                  |         |       |  |          |      |       |   |         |         |      |  |       |     
|                                
|                                
|                                
|                                
|                                 | Government and official institutions |   |                  |        |       |  |          |     |       |   |         | 777     |      |  |       | 0.1  |  
|                                 |                                      |   |                  |         |       |  |          |      |       |   |         |         |      |  |       |     
|Gross loan                       |                                      |   | 792,343          |         |       |  | 100.0    | %    |       |   | 742,981 |         |      |  | 100.0 | %   
|                                 |                                      |   |                  |         |       |  |          |      |       |   |         |         |      |  |       |     
|                                 | Unearned discounts                   |   |                  | 13,416  |       |  |          |      |       |   |         | 14,814  |      |  |       |      |  
|                                 |                                      |   |                  |         |       |  |          |      |       |   |         |         |      |  |       |     
|Loans, net of unearned discounts |                                      | $ | 778,927          |         |       |  |          |      |       | $ | 728,167 |         |      |  |       |     
|                                 |                                      |   |                  |         |       |  |          |      |       |   |         |         |      |  |       |     

Asset Quality

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

The
allowance for 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 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 March 31, 2002, the ratio of the allowance to loans, net of
unearned discounts, was 1.84% and the allowance was $14,315,000. At such
date, the Companys non-accrual loans amounted to $1,643,000; $197,000 of
such loans were judged to be impaired within the scope of SFAS No. 114 and
required valuation allowances of $127,000. 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

17



---



##### Table of Contents



losses was deemed adequate to absorb all estimable losses on specifically known
and other possible credit risks associated with the portfolio as of March 31,
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 $684,000 at March 31, 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:

|                        |               |                |         |                  |           |       |      |          |       |       |         |         |         |      |      |      |       |  
|----------------------- | ------------- | -------------- | ------- | ---------------- | --------- | ----- | ---- | -------- | ----- | ----- | ------- | ------- | ------- | ---- | ---- | ---- | ----- | -
|                        |               |                |         | March 31,       
|                        |               |                |         |                 
|                        |               |                |         | 2002             |           | 2001 
|                        |               |                |         |                  |           |      
|                        |               |                |         | ($ in thousands)
|                        |               |                |         |                  |           |       |      | % of     |       |       |         |         |         | % of
|                        |               |                |         | Balances         |           | Total |      | Balances |       | Total
|                        |               |                |         |                  |           |       |      |          |       |      
|Domestic
Demand         |               | $              | 307,617 |                  |           |       | 30.8 | %        |       | $     | 278,454 |         |         |      | 33.1 | %   
|                       
|                       
|                       
|                       
|                        | NOW           |                |         | 107,896          |           |       |      | 10.8     |       |       |         | 71,924  |         |      |      | 8.5  |      
|                       
|                       
|                       
|                       
|                        | Savings       |                |         | 26,902           |           |       |      | 2.7      |       |       |         | 25,651  |         |      |      | 3.1  |      
|                       
|                       
|                       
|                       
|                        | Money Market  |                |         | 171,443          |           |       |      | 17.1     |       |       |         | 205,401 |         |      |      | 24.4 |      
|                       
|                       
|                       
|                       
|                        | Time deposits |                |         | 383,428          |           |       |      | 38.3     |       |       |         | 257,133 |         |      |      | 30.5 |      
|                        |               |                |         |                  |           |       |      |          |       |       |         |         |         |      |      |     
|Total domestic deposits |               |                | 997,286 |                  |           |       | 99.7 |          |       |       | 838,563 |         |         |      | 99.6 |     
|                       
|                       
|                       
|                       
|Foreign
Time deposits   |               |                | 3,000   |                  |           |       | 0.3  |          |       |       | 2,975   |         |         |      | 0.4  |     
|                        |               |                |         |                  |           |       |      |          |       |       |         |         |         |      |      |     
|                        |               | Total deposits |         | $                | 1,000,286 |       |      |          | 100.0 | %     |         | $       | 841,538 |      |      |      | 100.0 | %
|                        |               |                |         |                  |           |       |      |          |       |       |         |         |         |      |      |     

Fluctuations of balances in total or among categories at any date may occur
based on the Companys mix of assets and liabilities as well as on customers
balance sheet strategies. Historically, however, average balances for deposits
have been relatively stable. Information regarding these average balances is
presented on page 20.

18



---



##### Table of Contents






CAPITAL

The Company and the bank are subject to risk-based capital regulations. The
purpose of these regulations is to quantitatively measure capital against
risk-weighted assets, including off-balance sheet items. These regulations
define the elements of total capital into Tier 1 and Tier 2 components and
establish minimum ratios of 4% for Tier 1 capital and 8% for Total Capital for
capital adequacy purposes. Supplementing these regulations is a leverage
requirement. This requirement establishes a minimum leverage ratio (at least
3% to 5%) which is calculated by dividing Tier 1 capital by adjusted quarterly
average assets (after deducting goodwill). Information regarding the Companys
and the banks risk-based capital is presented on page 22. 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. 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 March 31, 2002, the Company and the bank
exceeded the requirements for well capitalized institutions.

19



---



##### Table of Contents



STERLING BANCORP AND
SUBSIDIARIES

Average Balance Sheets(1)

Three Months Ended March 31,


(dollars in thousands)


|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |       |      |      | 
|--------------------------------------------------------------------- | ------------------------------------------------------------------------------ | ------------ | ------------------------------------------ | -------- | ------- | --------- | ------ | ------- | ----- | -------- | ---- | ------- | ---- | ---- | --------- | ------- | ------- | --------- | ------ | ------ | ----- | ----- | ---- | ----- | ---- | ---- | 
|                                                                      |                                                                                |              |                                            |         
|                                                                      |                                                                                | 2002         |                                            | 2001    
|                                                                      |                                                                                |              |                                            |         
|                                                                      |                                                                                | Average      |                                            |          |         | Average   |        | Average |       |          |      | Average
|                                                                      |                                                                                | Balance      |                                            | Interest |         | Rate      |        | Balance |       | Interest |      | Rate   
|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |        
|ASSETS                                                                |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|Interest-bearing deposits with other banks                            |                                                                                | $            | 3,500                                      |          |         | $         | 9      |         |       |          | 1.01 | %       |      | $    | 2,922     |         |         | $         | 36     |        |       |       | 5.39 | %    
|Investment securities:                                                |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|                                                                      | Available for sale                                                             |              |                                            | 245,262  |         |           |        | 3,799   |       |          |      | 6.20    |      |      |           | 128,151 |         |           |        | 2,204  |       |       |      | 6.88  |     
|                                                                      | Held to maturity                                                               |              |                                            | 309,223  |         |           |        | 4,943   |       |          |      | 6.39    |      |      |           | 275,570 |         |           |        | 4,705  |       |       |      | 6.83  |     
|                                                                      | Tax-exempt(2)                                                                  |              |                                            | 34,605   |         |           |        | 641     |       |          |      | 7.51    |      |      |           | 32,927  |         |           |        | 608    |       |       |      | 7.49  |     
|Federal funds sold                                                    |                                                                                |              | 36,033                                     |          |         |           | 149    |         |       |          | 1.66 |         |      |      | 1,389     |         |         |           | 20     |        |       |       | 5.61 |      
|Loans, net of unearned discounts                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|                                                                      | Domestic(3)                                                                    |              |                                            | 708,818  |         |           |        | 14,166  |       |          |      | 8.52    |      |      |           | 677,471 |         |           |        | 17,244 |       |       |      | 11.07 |     
|                                                                      | Foreign                                                                        |              |                                            |         |         |           |        |        |       |          |      |        |      |      |           | 777     |         |           |        | 15     |       |       |      | 7.63  |     
|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|TOTAL INTEREST-EARNING ASSETS                                         |                                                                                |              | 1,337,441                                  |          |         |           | 23,707 |         |       |          | 7.32 | %       |      |      | 1,119,207 |         |         |           | 24,832 |        |       |       | 9.32 | %    
|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|Cash and due from banks                                               |                                                                                |              | 49,515                                     |          |         |           |        |         |       |          |      |         |      |      | 45,883    |         |         |           |        |        |       |       |      |      
|Allowance for loan losses                                             |                                                                                |              | (14,481                                    | )        |         |           |        |         |       |          |      |         |      |      | (13,210   | )       |         |           |        |        |       |       |      |      
|Goodwill                                                              |                                                                                |              | 21,158                                     |          |         |           |        |         |       |          |      |         |      |      | 21,158    |         |         |           |        |        |       |       |      |      
|Other assets                                                          |                                                                                |              | 47,690                                     |          |         |           |        |         |       |          |      |         |      |      | 25,719    |         |         |           |        |        |       |       |      |      
|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|                                                                      |                                                                                |              | TOTAL ASSETS                               |          | $       | 1,441,323 |        |         |       |          |      |         |      |      |           |         | $       | 1,198,757 |        |        |       |       |      |       |      |      | 
|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|LIABILITIES AND SHAREHOLDERS EQUITY                                  |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|Interest-bearing deposits                                             |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|                                                                      | Domestic                                                                       |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |       |     
|                                                                      |                                                                                | Savings      |                                            | $        | 27,344  |           |        |         | 43    |          |      |         | 0.63 | %    |           | $       | 24,932  |           |        |        | 146   |       |      |       | 2.38 | %   
|                                                                      |                                                                                | NOW          |                                            |          | 100,402 |           |        |         | 229   |          |      |         | 0.93 |      |           |         | 72,244  |           |        |        | 435   |       |      |       | 2.44 |     
|                                                                      |                                                                                | Money market |                                            |          | 170,025 |           |        |         | 396   |          |      |         | 0.95 |      |           |         | 181,670 |           |        |        | 1,311 |       |      |       | 2.93 |     
|                                                                      |                                                                                | Time         |                                            |          | 354,522 |           |        |         | 2,637 |          |      |         | 3.02 |      |           |         | 255,852 |           |        |        | 3,419 |       |      |       | 5.42 |     
|                                                                      | Foreign                                                                        |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |       |     
|                                                                      |                                                                                | Time         |                                            |          | 2,998   |           |        |         | 18    |          |      |         | 2.39 |      |           |         | 2,975   |           |        |        | 37    |       |      |       | 5.05 |     
|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|                                                                      |                                                                                |              | Total interest-bearing deposits            |          |         | 655,291   |        |         |       | 3,323    |      |         |      | 2.06 |           |         |         | 537,673   |        |        |       | 5,348 |      |       |      | 4.03 | 
|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|Borrowings                                                            |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|                                                                      | Federal funds purchased and securities sold under
    agreements to repurchase |              |                                            | 95,287   |         |           |        | 447     |       |          |      | 1.90    |      |      |           | 129,559 |         |           |        | 1,799  |       |       |      | 5.63  |     
|                                                                      | Commercial paper                                                               |              |                                            | 38,634   |         |           |        | 206     |       |          |      | 2.17    |      |      |           | 31,672  |         |           |        | 415    |       |       |      | 5.31  |     
|                                                                      | Other short-term debt                                                          |              |                                            | 18,983   |         |           |        | 108     |       |          |      | 2.30    |      |      |           | 4,073   |         |           |        | 59     |       |       |      | 5.10  |     
|                                                                      | Long-term debt                                                                 |              |                                            | 111,920  |         |           |        | 1,060   |       |          |      | 3.79    |      |      |           | 25,488  |         |           |        | 295    |       |       |      | 4.63  |     
|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|                                                                      |                                                                                |              | Total borrowings                           |          |         | 264,824   |        |         |       | 1,821    |      |         |      | 2.77 |           |         |         | 190,792   |        |        |       | 2,568 |      |       |      | 5.45 | 
|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|TOTAL INTEREST-BEARING LIABILITIES                                    |                                                                                |              | 920,115                                    |          |         |           | 5,144  |         |       |          | 2.26 | %       |      |      | 728,465   |         |         |           | 7,916  |        |       |       | 4.40 | %    
|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|Noninterest-bearing deposits                                          |                                                                                |              | 304,879                                    |          |         |           |        |         |       |          |      |         |      |      | 285,183   |         |         |           |        |        |       |       |      |      
|Other liabilities                                                     |                                                                                |              | 79,035                                     |          |         |           |        |         |       |          |      |         |      |      | 68,384    |         |         |           |        |        |       |       |      |      
|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|                                                                      |                                                                                |              | Total liabilities                          |          |         | 1,304,029 |        |         |       |          |      |         |      |      |           |         |         | 1,082,032 |        |        |       |       |      |       |      |      | 
|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|Corporation Obligated Mandatorily
    Redeemable Preferred Securities |                                                                                |              | 9,167                                      |          |         |           |        |         |       |          |      |         |      |      |          |         |         |           |        |        |       |       |      |      
|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|Shareholders equity                                                  |                                                                                |              | 128,127                                    |          |         |           |        |         |       |          |      |         |      |      | 116,725   |         |         |           |        |        |       |       |      |      
|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|                                                                      |                                                                                |              | TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |          | $       | 1,441,323 |        |         |       |          |      |         |      |      |           |         | $       | 1,198,757 |        |        |       |       |      |       |      |      | 
|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|Net interest income/spread                                            |                                                                                |              |                                            |          |         |           | 18,563 |         |       |          | 5.06 | %       |      |      |           |         |         |           | 16,916 |        |       |       | 4.92 | %    
|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|Net yield on interest-earning assets (margin)                         |                                                                                |              |                                            |          |         |           |        |         |       |          | 5.69 | %       |      |      |           |         |         |           |        |        |       |       | 6.28 | %    
|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|Less: Tax equivalent adjustment                                       |                                                                                |              |                                            |          |         |           | 264    |         |       |          |      |         |      |      |           |         |         |           | 250    |        |       |       |      |      
|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      
|Net interest income                                                   |                                                                                |              |                                            |          |         | $         | 18,299 |         |       |          |      |         |      |      |           |         |         | $         | 16,666 |        |       |       |      |      
|                                                                      |                                                                                |              |                                            |          |         |           |        |         |       |          |      |         |      |      |           |         |         |           |        |        |       |       |      |      



---



| |     |                                                                                                                                                                                                                                                                                          
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (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 earned.                                                                                                                                                                              

20



---



##### Table of Contents






STERLING BANCORP AND SUBSIDIARIES

Rate/Volume Analysis(1)


(in thousands)


|                                           |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |        |      |        |  
|------------------------------------------ | ------------------------------------------------------------------------------ | -------------------------------- | ------------------------------------- | ----- | ----- | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ---- | ------ | -
|                                           |                                                                                |                                 
|                                           |                                                                                | Increase/(Decrease)             
|                                           |                                                                                | Three Months Ended              
|                                           |                                                                                | March 31, 2002 to March 31, 2001
|                                           |                                                                                |                                 
|                                           |                                                                                | Volume                           |                                       | Rate  |       | Net(2)
|                                           |                                                                                |                                  |                                       |       |       |       
|INTEREST INCOME                            |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |       
|Interest-bearing deposits with other banks |                                                                                | $                                | 7                                     |       |       | $      | (34    | )      |        | $      | (27    | )     
|                                           |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |       
|Investment securities                      |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |       
|                                           | Available for sale                                                             |                                  |                                       | 1,827 |       |        |        | (232   | )      |        |        | 1,595  |     
|                                           | Held to maturity                                                               |                                  |                                       | 547   |       |        |        | (309   | )      |        |        | 238    |     
|                                           | Tax-exempt                                                                     |                                  |                                       | 31    |       |        |        | 2      |        |        |        | 33     |     
|                                           |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |       
|                                           |                                                                                |                                  | Total investment securities           |       |       | 2,405  |        |        |        | (539   | )      |        |      | 1,866  |  
|                                           |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |       
|Federal funds sold                         |                                                                                |                                  | 153                                   |       |       |        | (24    | )      |        |        | 129    |       
|                                           |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |       
|Loans, net of unearned discounts           |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |       
|                                           | Domestic(3)                                                                    |                                  |                                       | 911   |       |        |        | (3,989 | )      |        |        | (3,078 | )   
|                                           | Foreign                                                                        |                                  |                                       | (15   | )     |        |        |       |        |        |        | (15    | )   
|                                           |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |       
|                                           |                                                                                |                                  | Total loans, net of unearned discount |       |       | 896    |        |        |        | (3,989 | )      |        |      | (3,093 | )
|                                           |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |       
|TOTAL INTEREST INCOME                      |                                                                                | $                                | 3,461                                 |       |       |        | (4,586 | )      |        |        | (1,125 | )     
|                                           |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |       
|INTEREST EXPENSE                           |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |       
|Interest-bearing deposits                  |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |       
|                                           | Domestic                                                                       |                                  |                                       |       |       |        |        |        |        |        |        |        |     
|                                           |                                                                                | Savings                          |                                       | $     | 13    |        |        | $      | (116   | )      |        | $      | (103 | )     
|                                           |                                                                                | NOW                              |                                       |       | 128   |        |        |        | (334   | )      |        |        | (206 | )     
|                                           |                                                                                | Money market                     |                                       |       | (79   | )      |        |        | (836   | )      |        |        | (915 | )     
|                                           |                                                                                | Time                             |                                       |       | 1,046 |        |        |        | (1,828 | )      |        |        | (782 | )     
|                                           | Foreign                                                                        |                                  |                                       |       |       |        |        |        |        |        |        |        |     
|                                           |                                                                                | Time                             |                                       |       |      |        |        |        | (19    | )      |        |        | (19  | )     
|                                           |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |       
|                                           |                                                                                |                                  | Total interest-bearing deposits       |       |       | 1,108  |        |        |        | (3,133 | )      |        |      | (2,025 | )
|                                           |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |       
|Borrowings                                 |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |       
|                                           | Federal funds purchased and securities sold under
    agreements to repurchase |                                  |                                       | (386  | )     |        |        | (966   | )      |        |        | (1,352 | )   
|                                           | Commercial paper                                                               |                                  |                                       | 76    |       |        |        | (285   | )      |        |        | (209   | )   
|                                           | Other short-term debt                                                          |                                  |                                       | 104   |       |        |        | (55    | )      |        |        | 49     |     
|                                           | Long-term debt                                                                 |                                  |                                       | 827   |       |        |        | (62    | )      |        |        | 765    |     
|                                           |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |       
|                                           |                                                                                |                                  | Total borrowings                      |       |       | 621    |        |        |        | (1,368 | )      |        |      | (747   | )
|                                           |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |       
|TOTAL INTEREST EXPENSE                     |                                                                                | $                                | 1,729                                 |       |       | $      | (4,501 | )      |        | $      | (2,772 | )     
|                                           |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |       
|NET INTEREST INCOME                        |                                                                                | $                                | 1,732                                 |       |       | $      | (85    | )      |        | $      | 1,647  |       
|                                           |                                                                                |                                  |                                       |       |       |        |        |        |        |        |        |       



---

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

21



---



##### Table of Contents






STERLING BANCORP AND SUBSIDIARIES

Regulatory Capital and Ratios


Ratios and Minimums

(dollars in thousands)


|                                             |             |        |   |          |  |             |  |       |   |        |  |        |  |  |  |      |   |  |   |        |  |  |  |       |  
|-------------------------------------------- | ----------- | ------ | - | -------- |  | ----------- |  | ----- | - | ------ |  | ------ |  |  |  | ---- | - |  | - | ------ |  |  |  | ----- | -
|                                             |             |        |   |          |  |             |  |       |   |       
|                                             |             |        |   |          |  | For Capital |  |      
|                                             |             |        |   | Adequacy |  | To Be Well 
|                                             |             | Actual |   | Minimum  |  | Capitalized
|                                             |             |        |   |          |  |            
|As of March 31, 2002                         |             | Amount |   | Ratio    |  | Amount      |  | Ratio |   | Amount |  | Ratio 
|                                             |             |        |   |          |  |             |  |       |   |        |  |       
|Total Capital (to Risk Weighted Assets):     |             |        |   |          |  |             |  |       |   |        |  |        |  |  |  |      |   |  |   |        |  |  |  |      
|                                             | The Company |        | $ | 140,076  |  |             |  | 16.59 | % |        |  | 67,536 |  |  |  | 8.00 | % |  | $ | 84,420 |  |  |  | 10.00 | %
|                                             | The bank    |        |   | 100,521  |  |             |  | 12.67 |   |        |  | 63,490 |  |  |  | 8.00 |   |  |   | 79,362 |  |  |  | 10.00 |  
|Tier 1 Capital (to Risk Weighted Assets):    |             |        |   |          |  |             |  |       |   |        |  |        |  |  |  |      |   |  |   |        |  |  |  |      
|                                             | The Company |        |   | 129,477  |  |             |  | 15.34 |   |        |  | 33,768 |  |  |  | 4.00 |   |  |   | 50,652 |  |  |  | 6.00  |  
|                                             | The bank    |        |   | 90,566   |  |             |  | 11.41 |   |        |  | 31,745 |  |  |  | 4.00 |   |  |   | 47,617 |  |  |  | 6.00  |  
|Tier 1 Leverage Capital (to Average Assets): |             |        |   |          |  |             |  |       |   |        |  |        |  |  |  |      |   |  |   |        |  |  |  |      
|                                             | The Company |        |   | 129,477  |  |             |  | 9.12  |   |        |  | 56,807 |  |  |  | 4.00 |   |  |   | 71,008 |  |  |  | 5.00  |  
|                                             | The bank    |        |   | 90,566   |  |             |  | 6.61  |   |        |  | 54,802 |  |  |  | 4.00 |   |  |   | 68,502 |  |  |  | 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  |  

22



---



##### Table of Contents






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 (ALCO). ALCO, which is comprised of members of
senior management and the Board, meets to review among other things, economic
conditions, interest rates, yield curve, cash flow projections, expected
customer actions, liquidity levels, capital ratios and repricing
characteristics of assets, liabilities and off-balance sheet financial
instruments.

Market Risk

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

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

The Companys balance sheet structure is primarily short-term in nature
with a substantial portion of assets and liabilities repricing or maturing
within one year. The Companys gap analysis at March 31, 2002, is presented
on page 26. The results of both the income simulation analysis and the gap
analysis, reveal that net interest income would increase during periods of
rising interest rates and decrease during periods of falling interest rates.

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

23



---



##### Table of Contents



internal control procedures. The credit risk of derivatives arises principally
from the potential for a counterparty to fail to meet its obligation to settle
a contract on a timely basis.

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

At March 31, 2002, the Companys financial instruments consisted of four
interest rate floor contracts having a notional amount totaling $100 million
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 March 31, 2002, all counterparties have investment grade
credit ratings from the major rating agencies. Each counterparty is
specifically approved for applicable credit exposure.

The interest rate floor contracts require the Company to pay a fee for the
right to receive a fixed interest payment. The Company paid up-front premiums
of $305,000 which are amortized monthly against interest income from the
designated assets. At March 31, 2002, the unamortized premiums on these
contracts totaled $114,000 and are included in other assets. At March 31,
2002, there was $303,000 receivable under these contracts.

The Company utilizes income simulation models to complement its
traditional gap analysis. While ALCO routinely monitors simulated net interest
income sensitivity over a rolling two-year horizon, it also utilizes additional
tools to monitor potential longer-term interest rate risk. The income
simulation models measure the Companys net interest income sensitivity or
volatility to interest rate changes utilizing statistical techniques that allow
the Company to consider various factors which impact net interest income.
These factors include actual maturities, estimated cash flows, repricing
characteristics, deposits growth/retention and, most importantly, the relative
sensitivity of the Companys assets and liabilities to changes in market
interest rates. This relative sensitivity is important to consider as the
Companys core deposit base is not subject to the same degree of interest rate
sensitivity as its assets. The core deposit costs are internally managed and
tend to exhibit less sensitivity to changes in interest rates than the
Companys adjustable rate assets whose yields are based on external indices and
change in concert with market interest rates.

The Companys interest rate sensitivity is determined by identifying the
probable impact of changes in market interest rates on the yields on the
Companys assets and the rates which would be paid on its liabilities. This
modeling technique involves a degree of estimation based on certain assumptions
that management believes to be reasonable. Utilizing this process, management
can project the impact of changes in interest rates on net interest margin.
The estimated effects of the Companys interest rate floors are included in the
results of the sensitivity analysis. The Company has established certain
limits for the potential volatility of its net interest margin assuming certain
levels of changes in market interest rates with the objective of maintaining a
stable net interest margin under various probable rate scenarios. Management
generally has maintained a risk position well within the policy limits. As of
March 31, 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% ($1,582,000) increase in net interest income,
while the impact of a 200 basis point decline in rates over the same period
would approximate a 4.51% ($3,266,000) decline from an unchanged rate
environment.

24



---



##### Table of Contents



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

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

Liquidity Risk

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

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

The banks ability to supply funds to the parent company and its nonbank
subsidiaries is 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 March 31, 2002, the parent companys short-term debt, consisting
principally of commercial paper used to finance ongoing current business
activities, was approximately $31,033,000. The parent company had cash,
interest-bearing deposits with banks and other current assets aggregating
$45,159,000 and back-up credit lines with banks of $24,000,000. Since
1979, the parent company has had no need to use available back-up lines of
credit.

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

25



---



##### Table of Contents






STERLING BANCORP AND SUBSIDIARIES

Interest Rate Sensitivity

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

|                                                             |                                                              |                                              |   |           |         |           |   |         |         |           |   |          |         |  |   |         |         |  |        |          |         |   |        |         |           | 
|------------------------------------------------------------ | ------------------------------------------------------------ | -------------------------------------------- | - | --------- | ------- | --------- | - | ------- | ------- | --------- | - | -------- | ------- |  | - | ------- | ------- |  | ------ | -------- | ------- | - | ------ | ------- | --------- | 
|                                                             |                                                              |                                             
|                                                             |                                                              | Repricing Date                              
|                                                             |                                                              |                                             
|                                                             |                                                              |                                              |   | More than |         | More than |   |         |         | Non       |   |         
|                                                             |                                                              | 3 months                                     |   | 3 months  |         | 1 Year to |   | Over    |         | Rate      |   |         
|                                                             |                                                              | or less                                      |   | to 1 Year |         | 5 years   |   | 5 years |         | Sensitive |   | Total   
|                                                             |                                                              |                                              |   |           |         |           |   |         |         |           |   |         
|ASSETS                                                       |                                                              |                                              |   |           |         |           |   |         |         |           |   |          |         |  |   |         |         |  |        |          |         |   |        |        
|                                                             | Interest-bearing deposits with other banks                   |                                              | $ | 1,851     |         |           | $ |        |         |           | $ |         |         |  | $ |        |         |  | $      |         |         |   | $      | 1,851   |          
|                                                             | Investment securities                                        |                                              |   | 2,745     |         |           |   | 283     |         |           |   | 29,476   |         |  |   | 577,198 |         |  |        | 6,221    |         |   |        | 615,923 |          
|                                                             | Loans, net of unearned discounts                             |                                              |   |           |         |           |   |         |         |           |   |          |         |  |   |         |         |  |        |          |         |   |        |         |          
|                                                             |                                                              | Commercial and industrial                    |   |           | 478,155 |           |   |         | 2,572   |           |   |          | 8,823   |  |   |         | 41      |  |        |          | (741    | ) |        |         | 488,850   | 
|                                                             |                                                              | Loans to depository institutions             |   |           | 34,000  |           |   |         |        |           |   |          |        |  |   |         |        |  |        |          |        |   |        |         | 34,000    | 
|                                                             |                                                              | Lease financing                              |   |           | 39,015  |           |   |         | 3,373   |           |   |          | 64,750  |  |   |         | 2,229   |  |        |          | (12,621 | ) |        |         | 96,746    | 
|                                                             |                                                              | Real estate                                  |   |           | 36,474  |           |   |         | 27,703  |           |   |          | 42,863  |  |   |         | 44,049  |  |        |          | (27     | ) |        |         | 151,062   | 
|                                                             |                                                              | Installment                                  |   |           | 4,661   |           |   |         | 913     |           |   |          | 1,316   |  |   |         | 1,406   |  |        |          | (27     | ) |        |         | 8,269     | 
|                                                             |                                                              | Foreign government and official institutions |   |           |        |           |   |         |        |           |   |          |        |  |   |         |        |  |        |          |        |   |        |         |          | 
|Noninterest-earning assets and allowance for
    loan losses |                                                              |                                              |  |           |         |           |  |         |         |           |  |          |         |  |  |         |         |  | 91,903 |          |         |   | 91,903 |        
|                                                             |                                                              |                                              |   |           |         |           |   |         |         |           |   |          |         |  |   |         |         |  |        |          |         |   |        |        
|                                                             |                                                              | Total Assets                                 |   |           | 596,901 |           |   |         | 34,844  |           |   |          | 147,228 |  |   |         | 624,923 |  |        |          | 84,708  |   |        |         | 1,488,604 | 
|                                                             |                                                              |                                              |   |           |         |           |   |         |         |           |   |          |         |  |   |         |         |  |        |          |         |   |        |        
|LIABILITIES AND SHAREHOLDERS EQUITY                         |                                                              |                                              |   |           |         |           |   |         |         |           |   |          |         |  |   |         |         |  |        |          |         |   |        |        
|                                                             | Interest-bearing deposits                                    |                                              |   |           |         |           |   |         |         |           |   |          |         |  |   |         |         |  |        |          |         |   |        |         |          
|                                                             |                                                              | Savings(1)                                   |   |           |        |           |   |         |        |           |   |          | 26,902  |  |   |         |        |  |        |          |        |   |        |         | 26,902    | 
|                                                             |                                                              | NOW(1)                                       |   |           |        |           |   |         |        |           |   |          | 107,896 |  |   |         |        |  |        |          |        |   |        |         | 107,896   | 
|                                                             |                                                              | Money market(1)                              |   |           | 137,456 |           |   |         |        |           |   |          | 33,987  |  |   |         |        |  |        |          |        |   |        |         | 171,443   | 
|                                                             |                                                              | Time  domestic                              |   |           | 232,643 |           |   |         | 75,779  |           |   |          | 74,755  |  |   |         | 251     |  |        |          |        |   |        |         | 383,428   | 
|                                                             |                                                              |  foreign                                    |   |           | 1,180   |           |   |         | 1,820   |           |   |          |        |  |   |         |        |  |        |          |        |   |        |         | 3,000     | 
|                                                             | Federal funds purchased & securities sold
    u/a/r          |                                              |   | 81,291    |         |           |   | 8,038   |         |           |   |         |         |  |   |        |         |  |        |         |         |   |        | 89,329  |          
|                                                             | Commercial paper                                             |                                              |   | 31,033    |         |           |   |        |         |           |   |         |         |  |   |        |         |  |        |         |         |   |        | 31,033  |          
|                                                             | Other short-term borrowings                                  |                                              |   | 2,357     |         |           |   | 20,350  |         |           |   |         |         |  |   |        |         |  |        |         |         |   |        | 22,707  |          
|                                                             | Long-term borrowings  FHLB                                  |                                              |   |          |         |           |   |        |         |           |   | 15,000   |         |  |   | 100,000 |         |  |        |         |         |   |        | 115,000 |          
|                                                             | Noninterest-bearing liabilities and
    shareholders equity |                                              |   |          |         |           |   |        |         |           |   |         |         |  |   |        |         |  |        | 537,866  |         |   |        | 537,866 |          
|                                                             |                                                              |                                              |   |           |         |           |   |         |         |           |   |          |         |  |   |         |         |  |        |          |         |   |        |        
|                                                             |                                                              | Total Liabilities and Shareholders Equity   |   |           | 485,960 |           |   |         | 105,987 |           |   |          | 258,540 |  |   |         | 100,251 |  |        |          | 537,866 |   |        |         | 1,488,604 | 
|                                                             |                                                              |                                              |   |           |         |           |   |         |         |           |   |          |         |  |   |         |         |  |        |          |         |   |        |        
|Net Interest Rate                                            |                                                              |                                              |   |           |         |           |   |         |         |           |   |          |         |  |   |         |         |  |        |          |         |   |        |        
|                                                             | Sensitivity Gap                                              |                                              | $ | 110,941   |         |           | $ | (71,143 | )       |           | $ | (111,312 | )       |  | $ | 524,672 |         |  | $      | (453,158 | )       |   | $      |        |          
|                                                             |                                                              |                                              |   |           |         |           |   |         |         |           |   |          |         |  |   |         |         |  |        |          |         |   |        |        
|Cumulative Gap                                               |                                                              |                                              |   |           |         |           |   |         |         |           |   |          |         |  |   |         |         |  |        |          |         |   |        |        
|                                                             | March 31, 2002                                               |                                              | $ | 110,941   |         |           | $ | 39,798  |         |           | $ | (71,514  | )       |  | $ | 453,158 |         |  | $      |         |         |   | $      |        |          
|                                                             |                                                              |                                              |   |           |         |           |   |         |         |           |   |          |         |  |   |         |         |  |        |          |         |   |        |        
|Cumulative Gap                                               |                                                              |                                              |   |           |         |           |   |         |         |           |   |          |         |  |   |         |         |  |        |          |         |   |        |        
|                                                             | March 31, 2001                                               |                                              | $ | 91,044    |         |           | $ | 30,389  |         |           | $ | (38,494  | )       |  | $ | 410,666 |         |  | $      |         |         |   | $      |        |          
|                                                             |                                                              |                                              |   |           |         |           |   |         |         |           |   |          |         |  |   |         |         |  |        |          |         |   |        |        
|Cumulative Gap                                               |                                                              |                                              |   |           |         |           |   |         |         |           |   |          |         |  |   |         |         |  |        |          |         |   |        |        
|                                                             | December 31, 2001                                            |                                              | $ | 129,150   |         |           | $ | 64,668  |         |           | $ | (47,649  | )       |  | $ | 48,318  |         |  | $      |         |         |   | $      |        |          
|                                                             |                                                              |                                              |   |           |         |           |   |         |         |           |   |          |         |  |   |         |         |  |        |          |         |   |        |        



---



|    |                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.

26



---



##### Table of Contents






STERLING BANCORP AND SUBSIDIARIES




Item 6. Exhibits and Reports on Form 8-K

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



| |                                                                           
| | --------------------------------------------------------------------------
| | 10.    (i) Amended and Restated Employment Agreements dated March 22, 2002



| |                          
| | -------------------------
| | (a) For Louis J. Cappelli



| |                        
| | -----------------------
| | (b) For John C. Millman



| |                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) Amendment to Form of Change of Control Severance Agreements dated
February 6, 2002 entered into between the Registrant and each of
four executives



| |                                                    
| | ---------------------------------------------------
| | 11. Statement Re: Computation of Per Share Earnings



| | 
| | 

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






SIGNATURES





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

STERLING BANCORP
...........................................................
(Registrant)

|     |  |          |  |     |  |                                    
|---- |  | -------- |  | --- |  | -----------------------------------
|Date |  | 05/14/02 |  | /s/ |  | Louis J. Cappelli                  
|    
|    
|    
|    
|     |  |          |  |     |  |                                    
|    
|    
|    
|    
|     |  |          |  |     |  | Louis J. Cappelli                  
|    
|    
|    
|    
|     |  |          |  |     |  | Chairman and                       
|    
|    
|    
|    
|     |  |          |  |     |  | Chief Executive Officer            
|    
|    
|    
|    
|     |  |          |  |     |  |                                    
|    
|    
|    
|    
|Date |  | 05/14/02 |  | /s/ |  | John W. Tietjen                    
|    
|    
|    
|    
|     |  |          |  |     |  |                                    
|    
|    
|    
|    
|     |  |          |  |     |  | John W. Tietjen                    
|    
|    
|    
|    
|     |  |          |  |     |  | Executive Vice President, Treasurer
|    
|    
|    
|    
|     |  |          |  |     |  | and Chief Financial Officer        

27



---



##### Table of Contents



STERLING BANCORP AND SUBSIDIARIES




EXHIBIT INDEX

|        |  |                                                                                                                  |  |          |  |            |  | 
|------- |  | ---------------------------------------------------------------------------------------------------------------- |  | -------- |  | ---------- |  | 
|        |  |                                                                                                                  |  |          |  | Sequential
|Exhibit |  |                                                                                                                  |  | Filed    |  | Page      
|Number  |  | Description                                                                                                      |  | Herewith |  | No.       
|        |  |                                                                                                                  |  |          |  |           
|10.     |  | (i) Amended and Restated Employment Agreements dated March 22, 2002                                              |  | X       
|       
|       
|       
|       
|        |  | (a) For Louis J. Cappelli                                                                                        |  |         
|       
|       
|       
|       
|        |  | (b) For John C. Millman                                                                                          |  |         
|       
|       
|       
|       
|        |  | (ii) Amendment to Form of Change of Control                                                                      |  | X       
|       
|       
|       
|       
|        |  | Severance Agreement dated
February 6, 2002 Entered into Between the Registrant and
      Each of
Four Executives |  |         
|       
|       
|       
|       
|11.     |  | Computation of Per Share Earnings                                                                                |  | X       

28