----

----

----

| For the quarterly period ended | June 30, 2009 |
|--------------------------------|---------------|

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

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

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

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

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

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

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

----

----

----

ERL

| PART I FINANCIAL INFORMATION | Page    |
|------------------------------|---------|
|                         |    |   |   |
|                         | Item 1. | Financial Statements |   |
|                         |    |   |   |
|                         |    | Consolidated Financial Statements (Unaudited) | 3 |
|                         |    | Notes to Consolidated Financial Statements | 8 |
|                         |    |   |   |
|                         | Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |   |
|                         |    |   |   |
|                         |    | Overview | 28 |
|                         |    | Income Statement Analysis | 29 |
|                         |    | Balance Sheet Analysis | 35 |
|                         |    | Capital | 42 |
|                         |    | Recently Issued Accounting Pronouncements | 43 |
|                         |    | Cautionary Statement Regarding Forward-Looking Statements | 43 |
|                         |    | Average Balance Sheets | 44 |
|                         |    | Rate/Volume Analysis | 46 |
|                         |    | Regulatory Capital and Ratios | 48 |
|                         |    |   |   |
|                         | Item 3. | Quantitative and Qualitative Disclosures About Market Risk |   |
|                         |    |   |   |
|                         |    | Asset/Liability Management | 49 |
|                         |    | Interest Rate Sensitivity | 53 |
|                         |    |   |   |
|                         | Item 4. | Controls and Procedures | 54 |
|                         |    |   |   |
| PART II OTHER INFORMATION    |    |
|                         |    |   |   |
|                         | Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 55 |
|                         |    |   |   |
|                         | Item 4. | Submission of Matters to a Vote of Security Holders | 55 |
|                         |    |   |   |
|                         | Item 6. | Exhibits | 56 |

| SIGNATURES    | 57           |
|---------------|--------------|
|          |         |   |   |
| EXHIBIT INDEX |         |
|          |         |   |   |
|          | Exhibit 11   | Statement Re: Computation of Per Share Earnings | 59 |
|          |         |   |   |
|          | Exhibit 31.1 | Certification of the CEO pursuant to Exchange Act Rule 13a-14(a) | 60 |
|          |         |   |   |
|          | Exhibit 31.2 | Certification of the CFO pursuant to Exchange Act Rule 13a-14(a) | 61 |
|          |         |   |   |
|          | Exhibit 32.1 | Certification of the CEO required by Section 1350 of Chapter 63 of Title 18 of the U.S. Code | 62 |
|          |         |   |   |
|          | Exhibit 32.2 | Certification of the CFO required by Section 1350 of Chapter 63 of Title 18 of the U.S. Code | 63 |

----

STER

|                                                                                                                                       |   | June 30, |      |   | December 31, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|-----------|--------|-------------------|--------|
| ASSETS                                                                                                                                     |   | 2009          |      |   | 2008              |   |
| Cash and due from banks                                                                                                                    |   | $             | 34,816    |   |              | $      | 31,832 |   |
| Interest-bearing deposits with other banks                                                                                                 |   |          | 5,611     |   |              |   | 13,949 |   |
|                                                                                                                                       |   |          |      |   |              |   |   |   |
| Securities available for sale (at estimated fair value; pledged: $194,004 in 2009 and $334,048 in 2008)                                    |   |          | 353,736   |   |              |   | 505,762 |   |
| Securities held to maturity (pledged: $201,720 in 2009 and $206,726 in 2008) (estimated fair value: $370,844 in 2009 and $305,628 in 2008) |   |          | 363,995   |   |              |   | 301,127 |   |
| Total investment securities                                                                                                                |   |          | 717,731   |   |              |   | 806,889 |   |
|                                                                                                                                       |   |          |      |   |              |   |   |   |
| Loans held for sale                                                                                                                        |   |          | 57,385    |   |              |   | 23,403 |   |
| Loans held in portfolio, net of unearned discounts                                                                                         |   |          | 1,160,429 |   |              |   | 1,184,585 |   |
| Less allowance for loan losses                                                                                                             |   |          | 18,134    |   |              |   | 16,010 |   |
| Loans, net                                                                                                                                 |   |          | 1,142,295 |   |              |   | 1,168,575 |   |
| Customers' liability under acceptances                                                                                                     |   |          | 180       |   |              |   | 95 |   |
| Goodwill                                                                                                                                   |   |          | 22,901    |   |              |   | 22,901 |   |
| Premises and equipment, net                                                                                                                |   |          | 10,041    |   |              |   | 10,668 |   |
| Other real estate                                                                                                                          |   |          | 1,105     |   |              |   | 1,544 |   |
| Accrued interest receivable                                                                                                                |   |          | 7,772     |   |              |   | 8,917 |   |
| Cash surrender value of life insurance policies                                                                                            |   |          | 47,805    |   |              |   | 45,845 |   |
| Other assets                                                                                                                               |   |          | 78,064    |   |              |   | 43,122 |   |
|                                                                                                                                       |   | $             | 2,125,706 |   |              | $      | 2,177,740 |   |
|                                                                                                                                       |   |          |      |   |              |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                       |   |          |      |   |              |   |   |   |
| Deposits                                                                                                                                   |   |          |      |   |              |   |   |   |
| Demand deposits                                                                                                                            |   | $             | 440,626   |   |              | $      | 464,585 |   |
| Savings, NOW and money market deposits                                                                                                     |   |          | 532,275   |   |              |   | 564,205 |   |
| Time deposits                                                                                                                              |   |          | 331,766   |   |              |   | 329,034 |   |
| Total deposits                                                                                                                             |   |          | 1,304,667 |   |              |   | 1,357,824 |   |
| Securities sold under agreements to repurchase - customers                                                                                 |   |          | 55,129    |   |              |   | 44,334 |   |
| Federal funds purchased                                                                                                                    |   |          | 87,000    |   |              |   | 131,000 |   |
| Commercial paper                                                                                                                           |   |          | 11,739    |   |              |   | 11,732 |   |
| Short-term borrowings - FHLB                                                                                                               |   |          | -         |   |              |   | 75,000 |   |
| Short-term borrowings - FRB                                                                                                                |   |          | 160,000   |   |              |   | 100,000 |   |
| Short-term borrowings - other                                                                                                              |   |          | 4,262     |   |              |   | 1,338 |   |
| Long-term borrowings - FHLB                                                                                                                |   |          | 150,000   |   |              |   | 150,000 |   |
| Long-term borrowings - subordinated debentures                                                                                             |   |          | 25,774    |   |              |   | 25,774 |   |
| Total borrowings                                                                                                                           |   |          | 493,904   |   |              |   | 539,178 |   |
| Acceptances outstanding                                                                                                                    |   |          | 180       |   |              |   | 95 |   |
| Accrued interest payable                                                                                                                   |   |          | 1,874     |   |              |   | 2,046 |   |
| Accrued expenses and other liabilities                                                                                                     |   |          | 167,360   |   |              |   | 118,117 |   |
| Total liabilities                                                                                                                          |   |          | 1,967,985 |   |              |   | 2,017,260 |   |
|                                                                                                                                       |   |          |      |   |              |   |   |   |
| Shareholders' equity                                                                                                                       |   |          |      |   |              |   |   |   |
| Preferred stock, Series A, $5 par value; $1,000 liquidation value. Authorized 644,389 shares; issued 42,000 shares, respectively           |   |          | 39,869    |   |              |   | 39,440 |   |
| Common stock, $1 par value. Authorized 50,000,000 shares; issued 22,226,425 and 22,202,419 shares, respectively                            |   |          | 22,227    |   |              |   | 22,203 |   |
| Warrants to purchase common stock                                                                                                          |   |          | 2,615     |   |              |   | 2,615 |   |
| Capital surplus                                                                                                                            |   |          | 178,668   |   |              |   | 178,417 |   |
| Retained earnings                                                                                                                          |   |          | 15,343    |   |              |   | 19,088 |   |
| Accumulated other comprehensive loss                                                                                                       |   |          | (15,833   | )      |              |   | (16,259 | ) |
| Common shares in treasury at cost, 4,119,934 and 4,107,191 shares, respectively                                                            |   |          | (85,168   | )      |              |   | (85,024 | ) |
| Total shareholders' equity                                                                                                                 |   |          | 157,721   |   |              |   | 160,480 |   |
|                                                                                                                                       |   | $             | 2,125,706 |   |              | $      | 2,177,740 |   |

----

|                                                                  |   | Three Months EndedJune 30, |       |   | Six Months EndedJune 30, |   |
|-----------------------------------------------------------------------|--------|----------------------------|------------|--------|--------------------------|--------|
|                                                                  |   | 2009                       |       |   | 2008                     |   |   | 2009 |   |   | 2008 |   |
| INTEREST INCOME                                                       |   |                       |       |   |                     |   |   |   |   |   |   |   |
| Loans                                                                 |   | $                          | 18,264     |   |                     | $      | 20,001 |   |   | $ | 35,816 |   |   | $ | 40,821 |   |
| Investment securities                                                 |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Available for sale                                                    |   |                       | 4,335      |   |                     |   | 5,670 |   |   |   | 9,830 |   |   |   | 10,382 |   |
| Held to maturity                                                      |   |                       | 3,594      |   |                     |   | 4,034 |   |   |   | 7,128 |   |   |   | 8,259 |   |
| Federal funds sold                                                    |   |                       | -          |   |                     |   | 1 |   |   |   | - |   |   |   | 1 |   |
| Deposits with other banks                                             |   |                       | 9          |   |                     |   | 7 |   |   |   | 19 |   |   |   | 19 |   |
| Total interest income                                                 |   |                       | 26,202     |   |                     |   | 29,713 |   |   |   | 52,793 |   |   |   | 59,482 |   |
|                                                                  |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| INTEREST EXPENSE                                                      |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                              |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Savings, NOW and money market                                         |   |                       | 943        |   |                     |   | 1,089 |   |   |   | 2,068 |   |   |   | 2,699 |   |
| Time                                                                  |   |                       | 2,049      |   |                     |   | 4,034 |   |   |   | 4,215 |   |   |   | 9,372 |   |
| Securities sold under agreements to repurchase                        |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| - customers                                                           |   |                       | 88         |   |                     |   | 442 |   |   |   | 203 |   |   |   | 1,088 |   |
| - dealers                                                             |   |                       | -          |   |                     |   | 416 |   |   |   | - |   |   |   | 733 |   |
| Federal funds purchased                                               |   |                       | 7          |   |                     |   | 217 |   |   |   | 41 |   |   |   | 579 |   |
| Commercial paper                                                      |   |                       | 17         |   |                     |   | 117 |   |   |   | 40 |   |   |   | 312 |   |
| Short-term borrowings - FHLB                                          |   |                       | -          |   |                     |   | 311 |   |   |   | 11 |   |   |   | 526 |   |
| Short-term borrowings - FRB                                           |   |                       | 126        |   |                     |   | 1 |   |   |   | 225 |   |   |   | 1 |   |
| Short-term borrowings - other                                         |   |                       | -          |   |                     |   | 5 |   |   |   | 1 |   |   |   | 19 |   |
| Long-term borrowings - FHLB                                           |   |                       | 1,134      |   |                     |   | 1,085 |   |   |   | 2,256 |   |   |   | 1,799 |   |
| Long-term borrowings - subordinated debentures                        |   |                       | 524        |   |                     |   | 524 |   |   |   | 1,047 |   |   |   | 1,047 |   |
| Total interest expense                                                |   |                       | 4,888      |   |                     |   | 8,241 |   |   |   | 10,107 |   |   |   | 18,175 |   |
|                                                                  |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                                   |   |                       | 21,314     |   |                     |   | 21,472 |   |   |   | 42,686 |   |   |   | 41,307 |   |
|                                                                  |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                                             |   |                       | 6,800      |   |                     |   | 2,200 |   |   |   | 13,000 |   |   |   | 4,150 |   |
|                                                                  |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income after provision for loan losses                   |   |                       | 14,514     |   |                     |   | 19,272 |   |   |   | 29,686 |   |   |   | 37,157 |   |
|                                                                  |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Total noninterest income                                              |   |                       | 10,798     |   |                     |   | 8,572 |   |   |   | 21,596 |   |   |   | 17,244 |   |
|                                                                  |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Total noninterest expenses                                            |   |                       | 24,143     |   |                     |   | 21,130 |   |   |   | 44,195 |   |   |   | 41,296 |   |
|                                                                  |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Income before income taxes                                            |   |                       | 1,169      |   |                     |   | 6,714 |   |   |   | 7,087 |   |   |   | 13,105 |   |
|                                                                  |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Provision for income taxes                                            |   |                       | 394        |   |                     |   | 2,544 |   |   |   | 2,700 |   |   |   | 4,933 |   |
|                                                                  |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                            |   |                       | 775        |   |                     |   | 4,170 |   |   |   | 4,387 |   |   |   | 8,172 |   |
| Dividends on preferred shares and accretion                           |   |                       | 637        |   |                     |   | - |   |   |   | 1,479 |   |   |   | - |   |
| Net income available to common shareholders                           |   | $                          | 138        |   |                     | $      | 4,170 |   |   | $ | 2,908 |   |   | $ | 8,172 |   |
|                                                                  |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Average number of common shares outstanding                           |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                 |   |                       | 18,100,860 |   |                     |   | 17,904,100 |   |   |   | 18,099,523 |   |   |   | 17,884,662 |   |
| Diluted                                                               |   |                       | 18,125,860 |   |                     |   | 17,929,100 |   |   |   | 18,124,523 |   |   |   | 17,909,662 |   |
|                                                                  |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Net income, per average common share                                  |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                 |   | $                          | 0.04       |   |                     | $      | 0.23 |   |   | $ | 0.24 |   |   | $ | 0.46 |   |
| Diluted                                                               |   |                       | 0.04       |   |                     |   | 0.23 |   |   |   | 0.24 |   |   |   | 0.45 |   |
|                                                                  |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Net income available to common shareholders, per average common share |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                 |   |                       | 0.01       |   |                     |   | 0.23 |   |   |   | 0.16 |   |   |   | 0.46 |   |
| Diluted                                                               |   |                       | 0.01       |   |                     |   | 0.23 |   |   |   | 0.16 |   |   |   | 0.45 |   |
|                                                                  |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Dividends per common share                                            |   |                       | 0.19       |   |                     |   | 0.19 |   |   |   | 0.38 |   |   |   | 0.38 |   |

----

|                                                                                                             |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|------------------------------------------------------------------------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
|                                                                                                             |   | 2009                       |   |   | 2008                     |   |   | 2009 |   |   | 2008 |   |
|                                                                                                             |   |                       |   |   |                     |   |   |   |   |   |   |   |
| Net Income                                                                                                       |   | $                          | 775    |   |                     | $      | 4,170 |   |   | $ | 4,387 |   |   | $ | 8,172 |   |
|                                                                                                             |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss), net of tax:                                                                   |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized gains on securities:                                                                                  |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized holding gains (losses) on available for sale securities and other investments arising during the year |   |                       | 1,667  |   |                     |   | (5,159 | ) |   |   | 1,688 |   |   |   | (3,804 | ) |
| Reclassification adjustment for (gains) losses included in net income                                            |   |                       | (478   | )      |                     |   | 278 |   |   |   | (2,152 | ) |   |   | 278 |   |
|                                                                                                             |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification adjustment for amortization of:                                                                 |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Prior service cost                                                                                               |   |                       | 9      |   |                     |   | 9 |   |   |   | 18 |   |   |   | 18 |   |
| Net actuarial losses                                                                                             |   |                       | 518    |   |                     |   | 230 |   |   |   | 872 |   |   |   | 461 |   |
|                                                                                                             |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss)                                                                                |   |                       | 1,716  |   |                     |   | (4,642 | ) |   |   | 426 |   |   |   | (3,047 | ) |
|                                                                                                             |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss)                                                                                      |   | $                          | 2,491  |   |                     | $      | (472 | ) |   | $ | 4,813 |   |   | $ | 5,125 |   |

----

|                                                                     |   | Six Months EndedJune 30, |    |
|--------------------------------------------------------------------------|--------|--------------------------|---------|
|                                                                     |   | 2009                     |    |   | 2008 |   |
| Preferred Stock                                                          |   |                     |    |   |   |   |
| Balance at January 1,                                                    |   | $                        | 39,440  |   |   | $ | - |   |
| Discount accretion                                                       |   |                     | 429     |   |   |   | - |   |
| Balance at June 30,                                                      |   | $                        | 39,869  |   |   | $ | - |   |
|                                                                     |   |                     |    |   |   |   |   |   |
| Common Stock                                                             |   |                     |    |   |   |   |   |   |
| Balance at January 1,                                                    |   | $                        | 22,203  |   |   | $ | 21,278 |   |
| Common shares issued under stock incentive plan                          |   |                     | 24      |   |   |   | 535 |   |
| Balance at June 30,                                                      |   | $                        | 22,227  |   |   | $ | 21,813 |   |
|                                                                     |   |                     |    |   |   |   |   |   |
| Warrants to Purchase Common Stock                                        |   |                     |    |   |   |   |   |   |
| Balance at January 1, and June 30,                                       |   | $                        | 2,615   |   |   | $ | - |   |
|                                                                     |   |                     |    |   |   |   |   |   |
| Capital Surplus                                                          |   |                     |    |   |   |   |   |   |
| Balance at January 1,                                                    |   | $                        | 178,417 |   |   | $ | 168,869 |   |
| Common shares issued under stock incentive plan and related tax benefits |   |                     | 185     |   |   |   | 5,764 |   |
| Stock option compensation expense                                        |   |                     | 66      |   |   |   | - |   |
| Balance at June 30,                                                      |   | $                        | 178,668 |   |   | $ | 174,633 |   |
|                                                                     |   |                     |    |   |   |   |   |   |
| Retained Earnings                                                        |   |                     |    |   |   |   |   |   |
| Balance at January 1,                                                    |   | $                        | 19,088  |   |   | $ | 17,538 |   |
| Adjustment upon adoption of EITF 06-4 effective January 1, 2008          |   |                     | -       |   |   |   | (726 | ) |
| Balance at January 1, as adjusted                                        |   |                     | 19,088  |   |   |   | 16,812 |   |
| Net income                                                               |   |                     | 4,387   |   |   |   | 8,172 |   |
| Cash dividends paid - preferred shares                                   |   |                     | (828    | ) |   |   | - |   |
| Cash dividends paid - common shares                                      |   |                     | (6,875  | ) |   |   | (6,824 | ) |
| Discount accretion on series A preferred stock                           |   |                     | (429    | ) |   |   | - |   |
| Balance at June 30,                                                      |   | $                        | 15,343  |   |   | $ | 18,160 |   |
|                                                                     |   |                     |    |   |   |   |   |   |
| Accumulated Other Comprehensive Loss                                     |   |                     |    |   |   |   |   |   |
| Balance at January 1,                                                    |   | $                        | (16,259 | ) |   | $ | (10,812 | ) |
| Other comprehensive income (loss), net of tax                            |   |                     | 426     |   |   |   | (3,047 | ) |
| Balance at June 30,                                                      |   | $                        | (15,833 | ) |   | $ | (13,859 | ) |
|                                                                     |   |                     |    |   |   |   |   |   |
| Treasury Stock                                                           |   |                     |    |   |   |   |   |   |
| Balance at January 1,                                                    |   | $                        | (85,024 | ) |   | $ | (75,803 | ) |
| Surrender of shares issued under stock incentive plan                    |   |                     | (144    | ) |   |   | (5,218 | ) |
| Balance at June 30,                                                      |   | $                        | (85,168 | ) |   | $ | (81,021 | ) |
|                                                                     |   |                     |    |   |   |   |   |   |
| Total Shareholders' Equity                                               |   |                     |    |   |   |   |   |   |
| Balance at January 1,                                                    |   | $                        | 160,480 |   |   | $ | 121,070 |   |
| Net changes during the period                                            |   |                     | (2,759  | ) |   |   | (1,344 | ) |
| Balance at June 30,                                                      |   | $                        | 157,721 |   |   | $ | 119,726 |   |

----

|                                                                                    |   | Six Months EndedJune 30, |     |
|-----------------------------------------------------------------------------------------|--------|--------------------------|----------|
|                                                                                    |   | 2009                     |     |   | 2008 |   |
| Operating Activities                                                                    |   |                     |     |   |   |   |
| Net Income                                                                              |   | $                        | 4,387    |   |   | $ | 8,172 |   |
| Adjustments to reconcile net income to net cash used in operating activities:      |   |                     |     |   |   |   |   |   |
| Provision for loan losses                                                               |   |                     | 13,000   |   |   |   | 4,150 |   |
| Depreciation and amortization of premises and equipment                                 |   |                     | 1,178    |   |   |   | 1,302 |   |
| Securities (gains) losses                                                               |   |                     | (3,939   | ) |   |   | 507 |   |
| Income from life insurance policies, net                                                |   |                     | (682     | ) |   |   | (563 | ) |
| Deferred income tax benefit                                                             |   |                     | (2,062   | ) |   |   | (1,522 | ) |
| Proceeds from sale of loans                                                             |   |                     | 305,687  |   |   |   | 237,014 |   |
| Gains on sales of loans, net                                                            |   |                     | (4,644   | ) |   |   | (5,201 | ) |
| Originations of loans held for sale                                                     |   |                     | (335,026 | ) |   |   | (235,762 | ) |
| Amortization of premiums on securities                                                  |   |                     | 772      |   |   |   | 192 |   |
| Accretion of discounts on securities                                                    |   |                     | (648     | ) |   |   | (405 | ) |
| Decrease (Increase) in accrued interest receivable                                      |   |                     | 1,408    |   |   |   | (2,796 | ) |
| Decrease in accrued interest payable                                                    |   |                     | (165     | ) |   |   | (810 | ) |
| Increase (Decrease) in accrued expenses and other liabilities                           |   |                     | 10,658   |   |   |   | (408 | ) |
| Increase in other assets                                                                |   |                     | (2,408   | ) |   |   | (5,876 | ) |
| (Gain) Loss on other real estate owned                                                  |   |                     | (20      | ) |   |   | 303 |   |
| Other, net                                                                              |   |                     | -        |   |   |   | 284 |   |
| Net cash used in operating activities                                              |   |                     | (16,891  | ) |   |   | (9,591 | ) |
|                                                                                    |   |                     |     |   |   |   |   |   |
| Investing Activities                                                                    |   |                     |     |   |   |   |   |   |
| Purchase of premises and equipment                                                      |   |                     | (515     | ) |   |   | (991 | ) |
| Net decrease in interest-bearing deposits                                               |   |                     |     |   |   |   |   |   |
|      with other banks                                               |   |                     | 8,337    |   |   |   | 99 |   |
| Net increase in Federal funds sold                                            |   |                     | -        |   |   |   | (2,500 | ) |
| Net decease (increase) in loans held in portfolio                                       |   |                     | 58,256   |   |   |   | (12,606 | ) |
| Net (increase) decrease in short-term factored receivables                              |   |                     | (25,252  | ) |   |   | 2,839 |   |
| Decrease in other real estate                                                           |   |                     | 721      |   |   |   | 885 |   |
| Proceeds from prepayments, redemptions or maturities of securities - held to maturity   |   |                     | 38,272   |   |   |   | 28,741 |   |
| Purchases of securities - held to maturity                                              |   |                     | (64,878  | ) |   |   | - |   |
| Proceeds from calls/sale of securities - available for sale                             |   |                     | 223,019  |   |   |   | - |   |
| Proceeds from prepayments, redemptions or maturities of securities - available for sale |   |                     | 70,017   |   |   |   | 164,818 |   |
| Purchases of securities - available for sale                                            |   |                     | (165,154 | ) |   |   | (342,332 | ) |
| Cash paid in acquisition                                                                |   |                     | (21,333  | ) |   |   | - |   |
| Net cash provided by (used in) investing activities                                     |   |                     | 121,490  |   |   |   | (161,047 | ) |
|                                                                                    |   |                     |     |   |   |   |   |   |
| Financing Activities                                                                    |   |                     |     |   |   |   |   |   |
| Net decrease in noninterest-bearing demand deposits                                     |   |                     | (23,959  | ) |   |   | (41,743 | ) |
| Net (decrease) increase in savings, NOW and money market deposits                       |   |                     | (31,930  | ) |   |   | 19,069 |   |
| Net increase (decrease) in time deposits                                                |   |                     | 2,732    |   |   |   | (65,150 | ) |
| (Decrease) Increase in Federal funds purchased                                          |   |                     | (44,000  | ) |   |   | 5,000 |   |
| Net increase in securities sold under agreement to repurchase                           |   |                     | 10,795   |   |   |   | 67,337 |   |
| Net (decrease) increase in commercial paper and other short-term borrowings             |   |                     | (12,068  | ) |   |   | 48,093 |   |
| Increase in long-term borrowings                                                        |   |                     | -        |   |   |   | 120,000 |   |
| Proceeds from exercise of stock options                                                 |   |                     | 131      |   |   |   | 267 |   |
| Cash dividends paid on preferred stock                                                  |   |                     | (828     | ) |   |   | - |   |
| Cash dividends paid on common stock                                                     |   |                     | (6,875   | ) |   |   | (6,824 | ) |
| Net cash (used in) provided by financing activities                                     |   |                     | (106,002 | ) |   |   | 146,049 |   |
|                                                                                    |   |                     |     |   |   |   |   |   |
| Net increase (decrease) in cash and due from banks                                      |   |                     | 2,984    |   |   |   | (16,417 | ) |
| Cash and due from banks - beginning of period                                           |   |                     | 31,832   |   |   |   | 66,412 |   |
|                                                                                    |   |                     |     |   |   |   |   |   |
| Cash and due from banks - end of period                                                 |   | $                        | 34,816   |   |   | $ | 49,995 |   |
|                                                                                    |   |                     |     |   |   |   |   |   |
| Supplemental disclosures:                                                               |   |                     |     |   |   |   |   |   |
| Interest paid                                                                           |   | $                        | 10,272   |   |   | $ | 18,985 |   |
| Income taxes paid                                                                       |   |                     | 5,746    |   |   |   | 7,969 |   |
|                                                                                    |   |                     |     |   |   |   |   |   |
| Loans held for sale transferred to portfolio                                            |   |                     | -        |   |   |   | 2,531 |   |
| Loans transferred to other real estate                                                  |   |                     | 262      |   |   |   | 1,770 |   |
| Due from brokers on sale of securities - AFS                                            |   |                     | 29,825   |   |   |   | - |   |
| Due to brokers on purchases of securities - AFS                                         |   |                     | 3,918    |   |   |   | - |   |
| Due to brokers on purchases of securities - HTM                                         |   |                     | 36,286   |   |   |   | - |   |

----

ER

|                                               |   | June 30,2009   |      |   | December 31,2008 |   |
|----------------------------------------------------|--------|----------------|-----------|--------|-----------------------|--------|
|                                               |   | (in thousands) |      |
| Loans held for sale, net of valuation reserve      |   |           |      |   |                  |   |
| ($-0- at June 30, 2009 and at December 31, 2008)   |   |           |      |   |                  |   |
| Real estate-residential mortgage                   |   | $              | 57,385    |   |                  | $      | 23,403 |   |
| Loans held in portfolio                            |   |           |      |   |                  |   |   |   |
| Commercial and industrial                          |   | $              | 509,327   |   |                  | $      | 533,613 |   |
| Lease financing                                    |   |           | 258,713   |   |                  |   | 290,656 |   |
| Factored receivables                               |   |           | 134,728   |   |                  |   | 89,365 |   |
| Real estate-residential mortgage                   |   |           | 141,131   |   |                  |   | 142,135 |   |
| Real estate-commercial mortgage                    |   |           | 101,282   |   |                  |   | 96,883 |   |
| Real estate-construction and land development      |   |           | 27,235    |   |                  |   | 25,249 |   |
| Loan to individuals                                |   |           | 19,672    |   |                  |   | 18,959 |   |
| Loans to depository institutions                   |   |           | -         |   |                  |   | 25,000 |   |
|                                               |   |           |      |   |                  |   |   |   |
| Loans held in portfolio, gross                     |   |           | 1,192,088 |   |                  |   | 1,221,860 |   |
| Less unearned discounts                            |   |           | 31,659    |   |                  |   | 37,275 |   |
| Loans held in portfolio, net of unearned discounts |   | $              | 1,160,429 |   |                  | $      | 1,184,585 |   |

----

| June 30, 2009                                                                          |   | AmortizedCost  |    |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | EstimatedFairValue |   |
|----------------------------------------------------------------------------------------|--------|----------------|---------|--------|----------------------|--------|--------|-----------------------|--------|--------|--------------------|--------|
|                                                                                   |   | (in thousands) |    |
| Obligations of U.S. government corporations and government sponsored enterprises       |   |           |    |   |                 |   |   |                  |   |   |               |   |
| Mortgage-backed securities                                                             |   |           |    |   |                 |   |   |                  |   |   |               |   |
| CMO's (Federal National Mortgage Association)                                          |   | $              | 2,962   |   |                 | $      | 58     |                  |   | $      | -                  |   |   | $ | 3,020 |   |
| CMO's (Federal Home Loan Mortgage Corporation)                                         |   |           | 15,993  |   |                 |   | 267    |                  |   |   | -                  |   |   |   | 16,260 |   |
| CMO's (Government National Mortgage Association)                                       |   |           | 5,313   |   |                 |   | -      |                  |   |   | 88                 |   |   |   | 5,225 |   |
| Federal National Mortgage Association                                                  |   |           | 39,566  |   |                 |   | 1,214  |                  |   |   | 1                  |   |   |   | 40,779 |   |
| Federal Home Loan Mortgage Corporation                                                 |   |           | 18,234  |   |                 |   | 362    |                  |   |   | -                  |   |   |   | 18,596 |   |
| Government National Mortgage Association                                               |   |           | 8,943   |   |                 |   | 384    |                  |   |   | 1                  |   |   |   | 9,326 |   |
| Total mortgage-backed securities                                                       |   |           | 91,011  |   |                 |   | 2,285  |                  |   |   | 90                 |   |   |   | 93,206 |   |
|                                                                                   |   |           |    |   |                 |   |   |                  |   |   |               |   |   |   |   |   |
| Agency Notes                                                                           |   |           |    |   |                 |   |   |                  |   |   |               |   |   |   |   |   |
| Federal National Mortgage Association                                                  |   |           | 20,000  |   |                 |   | 116    |                  |   |   | -                  |   |   |   | 20,116 |   |
| Federal Home Loan Bank                                                                 |   |           | 89,963  |   |                 |   | 324    |                  |   |   | 318                |   |   |   | 89,969 |   |
| Federal Farm Credit Bank                                                               |   |           | 30,000  |   |                 |   | -      |                  |   |   | 475                |   |   |   | 29,525 |   |
| Total obligations of U.S. government corporations and government sponsored enterprises |   |           | 230,974 |   |                 |   | 2,725  |                  |   |   | 883                |   |   |   | 232,816 |   |
|                                                                                   |   |           |    |   |                 |   |   |                  |   |   |               |   |   |   |   |   |
| Obligations of state and political institutions                                        |   |           | 22,954  |   |                 |   | 689    |                  |   |   | 97                 |   |   |   | 23,546 |   |
| Single-issuer, trust preferred securities                                              |   |           | 5,602   |   |                 |   | -      |                  |   |   | 1,102              |   |   |   | 4,500 |   |
| Corporate debt securities                                                              |   |           | 83,414  |   |                 |   | 418    |                  |   |   | 654                |   |   |   | 83,178 |   |
| Other securities                                                                       |   |           | 54      |   |                 |   | 9      |                  |   |   | -                  |   |   |   | 63 |   |
| Total marketable securities                                                            |   |           | 342,998 |   |                 |   | 3,841  |                  |   |   | 2,736              |   |   |   | 344,103 |   |
| Federal Reserve Bank stock                                                             |   |           | 1,131   |   |                 |   | -      |                  |   |   | -                  |   |   |   | 1,131 |   |
| Federal Home Loan Bank stock                                                           |   |           | 8,252   |   |                 |   | -      |                  |   |   | -                  |   |   |   | 8,252 |   |
| Other securities                                                                       |   |           | 250     |   |                 |   | -      |                  |   |   | -                  |   |   |   | 250 |   |
| Total                                                                                  |   | $              | 352,631 |   |                 | $      | 3,841  |                  |   | $      | 2,736              |   |   | $ | 353,736 |   |

----

| December 31, 2008                                                                      |   | AmortizedCost  |    |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | EstimatedFairValue |   |
|----------------------------------------------------------------------------------------|--------|----------------|---------|--------|----------------------|--------|--------|-----------------------|--------|--------|--------------------|--------|
|                                                                                   |   | (in thousands) |    |
| Obligations of U.S. government corporations and government sponsored enterprises       |   |           |    |   |                 |   |   |                  |   |   |               |   |
| Mortgage-backed securities                                                             |   |           |    |   |                 |   |   |                  |   |   |               |   |
| CMO's (Federal National Mortgage Association)                                          |   | $              | 8,771   |   |                 | $      | 1      |                  |   | $      | 72                 |   |   | $ | 8,700 |   |
| CMO's (Federal Home Loan Mortgage Corporation)                                         |   |           | 22,276  |   |                 |   | 60     |                  |   |   | 223                |   |   |   | 22,113 |   |
| CMO's (Government National Mortgage Association)                                       |   |           | 6,610   |   |                 |   | -      |                  |   |   | 45                 |   |   |   | 6,565 |   |
| Federal National Mortgage Association                                                  |   |           | 100,712 |   |                 |   | 2,116  |                  |   |   | 40                 |   |   |   | 102,788 |   |
| Federal Home Loan Mortgage Corporation                                                 |   |           | 37,719  |   |                 |   | 832    |                  |   |   | 15                 |   |   |   | 38,536 |   |
| Government National Mortgage Association                                               |   |           | 31,463  |   |                 |   | 723    |                  |   |   | 6                  |   |   |   | 32,180 |   |
| Total mortgage-backed securities                                                       |   |           | 207,551 |   |                 |   | 3,732  |                  |   |   | 401                |   |   |   | 210,882 |   |
|                                                                                   |   |           |    |   |                 |   |   |                  |   |   |               |   |   |   |   |   |
| Agency Notes                                                                           |   |           |    |   |                 |   |   |                  |   |   |               |   |   |   |   |   |
| Federal Home Loan Bank                                                                 |   |           | 153,977 |   |                 |   | 1,224  |                  |   |   | 526                |   |   |   | 154,675 |   |
| Federal Farm Credit Bank                                                               |   |           | 89,918  |   |                 |   | 232    |                  |   |   | 306                |   |   |   | 89,844 |   |
| Total obligations of U.S. government corporations and government sponsored enterprises |   |           | 451,446 |   |                 |   | 5,188  |                  |   |   | 1,233              |   |   |   | 455,401 |   |
|                                                                                   |   |           |    |   |                 |   |   |                  |   |   |               |   |   |   |   |   |
| Obligations of state and political institutions                                        |   |           | 23,058  |   |                 |   | 567    |                  |   |   | 219                |   |   |   | 23,406 |   |
| Single-issuer, trust preferred securities                                              |   |           | 5,369   |   |                 |   | 224    |                  |   |   | 1,384              |   |   |   | 4,209 |   |
| Corporate debt securities                                                              |   |           | 9,962   |   |                 |   | -      |                  |   |   | 238                |   |   |   | 9,724 |   |
| Other securities                                                                       |   |           | 54      |   |                 |   | 13     |                  |   |   | -                  |   |   |   | 67 |   |
| Total marketable securities                                                            |   |           | 489,889 |   |                 |   | 5,992  |                  |   |   | 3,074              |   |   |   | 492,807 |   |
| Federal Reserve Bank stock                                                             |   |           | 1,131   |   |                 |   | -      |                  |   |   | -                  |   |   |   | 1,131 |   |
| Federal Home Loan Bank stock                                                           |   |           | 11,574  |   |                 |   | -      |                  |   |   | -                  |   |   |   | 11,574 |   |
| Other securities                                                                       |   |           | 250     |   |                 |   | -      |                  |   |   | -                  |   |   |   | 250 |   |
| Total                                                                                  |   | $              | 502,844 |   |                 | $      | 5,992  |                  |   | $      | 3,074              |   |   | $ | 505,762 |   |

----

| June 30, 2009                                                                          |   | CarryingValue  |    |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | EstimatedFairValue |   |
|----------------------------------------------------------------------------------------|--------|----------------|---------|--------|----------------------|--------|--------|-----------------------|--------|--------|--------------------|--------|
|                                                                                   |   | (in thousands) |    |
| Obligations of U.S. government corporations and government sponsored enterprises       |   |           |    |   |                 |   |   |                  |   |   |               |   |
| Mortgage-backed securities                                                             |   |           |    |   |                 |   |   |                  |   |   |               |   |
| CMO's (Federal National Mortgage Association)                                          |   | $              | 11,696  |   |                 | $      | 194    |                  |   | $      | 2                  |   |   | $ | 11,888 |   |
| CMO's (Federal Home Loan Mortgage Corporation)                                         |   |           | 18,736  |   |                 |   | 349    |                  |   |   | 22                 |   |   |   | 19,063 |   |
| Federal National Mortgage Association                                                  |   |           | 123,187 |   |                 |   | 3,851  |                  |   |   | 4                  |   |   |   | 127,034 |   |
| Federal Home Loan Mortgage Corporation                                                 |   |           | 82,230  |   |                 |   | 1,975  |                  |   |   | 79                 |   |   |   | 84,126 |   |
| Government National Mortgage Association                                               |   |           | 6,759   |   |                 |   | 429    |                  |   |   | -                  |   |   |   | 7,188 |   |
| Total mortgage-backed securities                                                       |   |           | 242,608 |   |                 |   | 6,798  |                  |   |   | 107                |   |   |   | 249,299 |   |
|                                                                                   |   |           |    |   |                 |   |   |                  |   |   |               |   |   |   |   |   |
| Agency Notes                                                                           |   |           |    |   |                 |   |   |                  |   |   |               |   |   |   |   |   |
| Federal National Mortgage Association                                                  |   |           | 39,873  |   |                 |   | 455    |                  |   |   | -                  |   |   |   | 40,328 |   |
| Federal Home Loan Bank                                                                 |   |           | 30,000  |   |                 |   | 47     |                  |   |   | -                  |   |   |   | 30,047 |   |
| Federal Home Loan Mortgage Corporation                                                 |   |           | 15,000  |   |                 |   | -      |                  |   |   | 117                |   |   |   | 14,883 |   |
| Total obligations of U.S. government corporations and government sponsored enterprises |   |           | 327,481 |   |                 |   | 7,300  |                  |   |   | 224                |   |   |   | 334,557 |   |
| Obligations of state and political institutions                                        |   |           | 36,264  |   |                 |   | 123    |                  |   |   | 350                |   |   |   | 36,037 |   |
| Debt securities issued by foreign governments                                          |   |           | 250     |   |                 |   | -      |                  |   |   | -                  |   |   |   | 250 |   |
| Total                                                                                  |   | $              | 363,995 |   |                 | $      | 7,423  |                  |   | $      | 574                |   |   | $ | 370,844 |   |

----

| December 31, 2008                                                                      |   | CarryingValue  |    |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | EstimatedFairValue |   |
|----------------------------------------------------------------------------------------|--------|----------------|---------|--------|----------------------|--------|--------|-----------------------|--------|--------|--------------------|--------|
|                                                                                   |   | (in thousands) |    |
| Obligations of U.S. government corporations and government sponsored enterprises       |   |           |    |   |                 |   |   |                  |   |   |               |   |
| Mortgage-backed securities                                                             |   |           |    |   |                 |   |   |                  |   |   |               |   |
| CMO's (Federal National Mortgage Association)                                          |   | $              | 12,099  |   |                 | $      | 11     |                  |   | $      | 65                 |   |   | $ | 12,045 |   |
| CMO's (Federal Home Loan Mortgage Corporation)                                         |   |           | 20,181  |   |                 |   | 104    |                  |   |   | 189                |   |   |   | 20,096 |   |
| Federal National Mortgage Association                                                  |   |           | 142,312 |   |                 |   | 2,929  |                  |   |   | 94                 |   |   |   | 145,147 |   |
| Federal Home Loan Mortgage Corporation                                                 |   |           | 98,901  |   |                 |   | 1,299  |                  |   |   | 296                |   |   |   | 99,904 |   |
| Government National Mortgage Association                                               |   |           | 7,384   |   |                 |   | 339    |                  |   |   | -                  |   |   |   | 7,723 |   |
| Total mortgage-backed securities                                                       |   |           | 280,877 |   |                 |   | 4,682  |                  |   |   | 644                |   |   |   | 284,915 |   |
|                                                                                   |   |           |    |   |                 |   |   |                  |   |   |               |   |   |   |   |   |
| Agency Notes                                                                           |   |           |    |   |                 |   |   |                  |   |   |               |   |   |   |   |   |
| Federal Home Loan Bank                                                                 |   |           | 20,000  |   |                 |   | 463    |                  |   |   | -                  |   |   |   | 20,463 |   |
| Total obligations of U.S. government corporations and government sponsored enterprises |   |           | 300,877 |   |                 |   | 5,145  |                  |   |   | 644                |   |   |   | 305,378 |   |
| Debt securities issued by foreign governments                                          |   |           | 250     |   |                 |   | -      |                  |   |   | -                  |   |   |   | 250 |   |
| Total                                                                                  |   | $              | 301,127 |   |                 | $      | 5,145  |                  |   | $      | 644                |   |   | $ | 305,628 |   |

----

|                                                                                   |   | Less Than 12 Months |   |   | 12 Months or Longer |   |   | Total     |   |
|----------------------------------------------------------------------------------------|--------|---------------------|--------|--------|---------------------|--------|--------|-----------|--------|
| June 30, 2009                                                                          |   | FairValue           |   |   | UnrealizedLosses    |   |   | FairValue |   |   | UnrealizedLosses |   |   | FairValue |   |   | UnrealizedLosses |   |
|                                                                                   |   | (in thousands)      |   |
| Obligations of U.S. government corporations and government sponsored enterprises       |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securities                                                             |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |
| CMO's (Government National Mortgage Association)                                       |   | $                   | -      |   |                | $      | -      |      |   | $ | 5,225 |   |   | $ | 88 |   |   | $ | 5,225 |   |   | $ | 88 |   |
| Federal National Mortgage Association                                                  |   |                | 842    |   |                |   | 1      |      |   |   | - |   |   |   | - |   |   |   | 842 |   |   |   | 1 |   |
| Government National Mortgage Association                                               |   |                | -      |   |                |   | -      |      |   |   | 131 |   |   |   | 1 |   |   |   | 131 |   |   |   | 1 |   |
| Total mortgage-backed securities                                                       |   |                | 842    |   |                |   | 1      |      |   |   | 5,356 |   |   |   | 89 |   |   |   | 6,198 |   |   |   | 90 |   |
|                                                                                   |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agency Notes                                                                           |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal Home Loan Bank                                                                 |   |                | 24,908 |   |                |   | 92     |      |   |   | 29,766 |   |   |   | 226 |   |   |   | 54,674 |   |   |   | 318 |   |
| Federal Farm Credit Bank                                                               |   |                | 29,525 |   |                |   | 475    |      |   |   | - |   |   |   | - |   |   |   | 29,525 |   |   |   | 475 |   |
| Total obligations of U.S. government corporations and government sponsored enterprises |   |                | 55,275 |   |                |   | 568    |      |   |   | 35,122 |   |   |   | 315 |   |   |   | 90,397 |   |   |   | 883 |   |
|                                                                                   |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Obligations of state and political institutions                                        |   |                | -      |   |                |   | -      |      |   |   | 5,517 |   |   |   | 97 |   |   |   | 5,517 |   |   |   | 97 |   |
| Single-issuer, trust preferred securities                                              |   |                | -      |   |                |   | -      |      |   |   | 3,775 |   |   |   | 1,102 |   |   |   | 3,775 |   |   |   | 1,102 |   |
| Corporate debt securities                                                              |   |                | 43,740 |   |                |   | 438    |      |   |   | 4,784 |   |   |   | 216 |   |   |   | 48,524 |   |   |   | 654 |   |
| Total                                                                                  |   | $                   | 99,015 |   |                | $      | 1,006  |      |   | $ | 49,198 |   |   | $ | 1,730 |   |   | $ | 148,213 |   |   | $ | 2,736 |   |
|                                                                                   |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2008                                                                      |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                   |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Obligations of U.S. government corporations and government sponsored enterprises       |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securities                                                             |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CMO's (Federal National Mortgage Association)                                          |   | $                   | -      |   |                | $      | -      |      |   | $ | 2,890 |   |   | $ | 72 |   |   | $ | 2,890 |   |   | $ | 72 |   |
| CMO's (Federal Home Loan Mortgage Corporation)                                         |   |                | 5,378  |   |                |   | 40     |      |   |   | 9,125 |   |   |   | 183 |   |   |   | 14,503 |   |   |   | 223 |   |
| CMO's (Government National Mortgage Association)                                       |   |                | -      |   |                |   | -      |      |   |   | 6,565 |   |   |   | 45 |   |   |   | 6,565 |   |   |   | 45 |   |
| Federal National Mortgage Association                                                  |   |                | 3,161  |   |                |   | 7      |      |   |   | 3,906 |   |   |   | 33 |   |   |   | 7,067 |   |   |   | 40 |   |
| Federal Home Loan Mortgage Corporation                                                 |   |                | 1,676  |   |                |   | 15     |      |   |   | - |   |   |   | - |   |   |   | 1,676 |   |   |   | 15 |   |
| Government National Mortgage Association                                               |   |                | -      |   |                |   | -      |      |   |   | 133 |   |   |   | 6 |   |   |   | 133 |   |   |   | 6 |   |
| Total mortgage-backed securities                                                       |   |                | 10,215 |   |                |   | 62     |      |   |   | 22,619 |   |   |   | 339 |   |   |   | 32,834 |   |   |   | 401 |   |
|                                                                                   |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agency Notes                                                                           |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal Home Loan Bank                                                                 |   |                | 49,466 |   |                |   | 526    |      |   |   | - |   |   |   | - |   |   |   | 49,466 |   |   |   | 526 |   |
| Federal Farm Credit Bank                                                               |   |                | 9,694  |   |                |   | 306    |      |   |   | - |   |   |   | - |   |   |   | 9,694 |   |   |   | 306 |   |
| Total obligations of U.S. government corporations and government sponsored enterprises |   |                | 69,375 |   |                |   | 894    |      |   |   | 22,619 |   |   |   | 339 |   |   |   | 91,994 |   |   |   | 1,233 |   |
|                                                                                   |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Obligations of state and political institutions                                        |   |                | 6,490  |   |                |   | 181    |      |   |   | 414 |   |   |   | 38 |   |   |   | 6,904 |   |   |   | 219 |   |
| Single-issuer, trust preferred securities                                              |   |                | 2,784  |   |                |   | 1,115  |      |   |   | 709 |   |   |   | 269 |   |   |   | 3,493 |   |   |   | 1,384 |   |
| Corporate debt securities                                                              |   |                | 9,724  |   |                |   | 238    |      |   |   | - |   |   |   | - |   |   |   | 9,724 |   |   |   | 238 |   |
| Total                                                                                  |   | $                   | 88,373 |   |                | $      | 2,428  |      |   | $ | 23,742 |   |   | $ | 646 |   |   | $ | 112,115 |   |   | $ | 3,074 |   |

----

|                                                                                   |   | Less Than 12 Months |   |   | 12 Months or Longer |   |   | Total     |   |
|----------------------------------------------------------------------------------------|--------|---------------------|--------|--------|---------------------|--------|--------|-----------|--------|
| June 30, 2009                                                                          |   | FairValue           |   |   | UnrealizedLosses    |   |   | FairValue |   |   | UnrealizedLosses |   |   | FairValue |   |   | UnrealizedLosses |   |
|                                                                                   |   | (in thousands)      |   |
| Obligations of U.S. government corporations and government sponsored enterprises       |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securities                                                             |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |
| CMO's (Federal National Mortgage Association)                                          |   | $                   | 703    |   |                | $      | 2      |      |   | $ | - |   |   | $ | - |   |   | $ | 703 |   |   | $ | 2 |   |
| CMO's (Federal Home Loan Mortgage Corporation)                                         |   |                | 6,060  |   |                |   | 22     |      |   |   | - |   |   |   | - |   |   |   | 6,060 |   |   |   | 22 |   |
| Federal National Mortgage Association                                                  |   |                | 6      |   |                |   | -      |      |   |   | 607 |   |   |   | 4 |   |   |   | 613 |   |   |   | 4 |   |
| Federal Home Loan Mortgage                                                             |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporation                                                                            |   |                | -      |   |                |   | -      |      |   |   | 7,756 |   |   |   | 79 |   |   |   | 7,756 |   |   |   | 79 |   |
| Total mortgage-backed securities                                                       |   |                | 6,769  |   |                |   | 24     |      |   |   | 8,363 |   |   |   | 83 |   |   |   | 15,132 |   |   |   | 107 |   |
|                                                                                   |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agency Notes                                                                           |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal Home Loan Mortgage Corporation                                                 |   |                | 15,000 |   |                |   | 117    |      |   |   | - |   |   |   | - |   |   |   | 15,000 |   |   |   | 117 |   |
| Total obligations of U.S. government corporations and government sponsored enterprises |   |                | 21,769 |   |                |   | 141    |      |   |   | 8,363 |   |   |   | 83 |   |   |   | 30,132 |   |   |   | 224 |   |
| Obligations of state and political institutions                                        |   |                | 21,223 |   |                |   | 350    |      |   |   | - |   |   |   | - |   |   |   | 21,223 |   |   |   | 350 |   |
| Total                                                                                  |   | $                   | 42,992 |   |                | $      | 491    |      |   | $ | 8,363 |   |   | $ | 83 |   |   | $ | 51,355 |   |   | $ | 574 |   |
|                                                                                   |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2008                                                                      |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                   |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Obligations of U.S. government corporations and government sponsored enterprises       |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securities                                                             |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CMO's (Federal National Mortgage Association)                                          |   | $                   | -      |   |                | $      | -      |      |   | $ | 8,059 |   |   | $ | 65 |   |   | $ | 8,059 |   |   | $ | 65 |   |
| CMO's (Federal Home Loan Mortgage Corporation)                                         |   |                | 937    |   |                |   | 5      |      |   |   | 14,563 |   |   |   | 184 |   |   |   | 15,500 |   |   |   | 189 |   |
| Federal National Mortgage Association                                                  |   |                | 20,942 |   |                |   | 88     |      |   |   | 781 |   |   |   | 6 |   |   |   | 21,723 |   |   |   | 94 |   |
| Federal Home Loan Mortgage Corporation                                                 |   |                | 15,381 |   |                |   | 101    |      |   |   | 19,895 |   |   |   | 195 |   |   |   | 35,276 |   |   |   | 296 |   |
| Total                                                                                  |   | $                   | 37,260 |   |                | $      | 194    |      |   | $ | 43,298 |   |   | $ | 450 |   |   | $ | 80,558 |   |   | $ | 644 |   |
|                                                                                   |   |                |   |   |                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

| Issuer                                   |   | TARPRecipient                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | CreditRating |   |   | AmortizedCost |   |   | FairValue |   |   | UnrealizedLoss |   |
|------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|--------|--------|---------------|--------|--------|-----------|--------|--------|----------------|--------|
|                                     |   |                                                                              (in thousands) |   |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |         |   |   |          |   |   |      |   |   |           |   |
| Sovereign Capital Trust V, 7.75%,        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |         |   |   |          |   |   |      |   |   |           |   |
| due 5/15/2036,                           |   | No                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | BBB+         |   |   | $             | 1,000  |   |      | $      | 850    |           |   | $ | (150 | ) |
| owned by Banco Santander Central Hispano |   | No                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |         |   |   |          |   |   |      |   |   |           |   |   |   |   |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |         |   |   |          |   |   |      |   |   |           |   |   |   |   |
| Sterling Bancorp Trust I, 8.375%,        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |         |   |   |          |   |   |      |   |   |           |   |   |   |   |
| due 3/31/2032                            |   | Yes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | NA           |   |   |          | 978    |   |      |   | 839    |           |   |   | (139 | ) |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |         |   |   |          |   |   |      |   |   |           |   |   |   |   |
| NPB Capital Trust II, 7.85%,             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |         |   |   |          |   |   |      |   |   |           |   |   |   |   |
| due 9/30/2032                            |   | Yes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | NA           |   |   |          | 127    |   |      |   | 100    |           |   |   | (27 | ) |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |         |   |   |          |   |   |      |   |   |           |   |   |   |   |
| VNB Capital Trust I, 7.75%,              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |         |   |   |          |   |   |      |   |   |           |   |   |   |   |
| due 12/15/2031                           |   | Yes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | BBB-         |   |   |          | 22     |   |      |   | 21     |           |   |   | (1 | ) |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |         |   |   |          |   |   |      |   |   |           |   |   |   |   |
| HSBC Finance, 6.875%,                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |         |   |   |          |   |   |      |   |   |           |   |   |   |   |
| due 1/30/33,                             |   | No                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | A            |   |   |          | 740    |   |      |   | 642    |           |   |   | (98 | ) |
| owned by HSBC Group, plc                 |   | No                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |         |   |   |          |   |   |      |   |   |           |   |   |   |   |   |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |         |   |   |          |   |   |      |   |   |           |   |   |   |   |   |
| Citigroup Capital VII, 7.125%,           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |         |   |   |          |   |   |      |   |   |           |   |   |   |   |   |
| due 7/31/31                              |   | Yes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | CC           |   |   |          | 1,508  |   |      |   | 957    |           |   |   | (551 | ) |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |         |   |   |          |   |   |      |   |   |           |   |   |   |   |   |
| Fleet Capital Trust VIII, 7.20%,         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |         |   |   |          |   |   |      |   |   |           |   |   |   |   |   |
| due 3/15/32,                             |   | No                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | B            |   |   |          | 1,227  |   |      |   | 1,091  |           |   |   | (136 | ) |
| owned by Bank of America Corporation     |   | Yes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |         |   |   |          |   |   |      |   |   |           |   |   |   |   |   |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |         |   |   |          |   |   |      |   |   |           |   |   |   |   |   |
|                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |         |   |   |          | $      | 5,602  |      |   | $      | 4,500          |   |   | $ | (1,102 | ) |

----

| Available for sale                                                                     |   | AmortizedCost  |    |   | FairValue |   |
|----------------------------------------------------------------------------------------|--------|----------------|---------|--------|-----------|--------|
|                                                                                   |   | (in thousands) |    |
| Obligations of U.S. government corporations and government sponsored enterprises       |   |           |    |   |      |   |
| Mortgage-backed securities                                                             |   |           |    |   |      |   |
| CMO's (Federal National Mortgage Association)                                          |   | $              | 2,962   |   |      | $      | 3,020 |   |
| CMO's (Federal Home Loan Mortgage Corporation)                                         |   |           | 15,993  |   |      |   | 16,260 |   |
| CMO's (Government National Mortgage Association)                                       |   |           | 5,313   |   |      |   | 5,225 |   |
| Federal National Mortgage Association                                                  |   |           | 39,566  |   |      |   | 40,779 |   |
| Federal Home Loan Mortgage Corporation                                                 |   |           | 18,234  |   |      |   | 18,596 |   |
| Government National Mortgage Association                                               |   |           | 8,943   |   |      |   | 9,326 |   |
| Total mortgage-backed securities                                                       |   |           | 91,011  |   |      |   | 93,206 |   |
|                                                                                   |   |           |    |   |      |   |   |   |
| Agency Notes                                                                           |   |           |    |   |      |   |   |   |
| Federal National Mortgage Association                                                  |   |           | 20,000  |   |      |   | 20,116 |   |
| Federal Home Loan Bank                                                                 |   |           |    |   |      |   |   |   |
| Due within 1 year                                                                      |   |           | 5,000   |   |      |   | 5,021 |   |
| Due after 5 years                                                                      |   |           | 84,963  |   |      |   | 84,948 |   |
| Federal Farm Credit Bank                                                               |   |           |    |   |      |   |   |   |
| Due after 5 years                                                                      |   |           | 30,000  |   |      |   | 29,525 |   |
| Total obligations of U.S. government corporations and government sponsored enterprises |   |           | 230,974 |   |      |   | 232,816 |   |
|                                                                                   |   |           |    |   |      |   |   |   |
| Obligations of state and political institutions                                        |   |           |    |   |      |   |   |   |
| Due within 1 year                                                                      |   |           | 115     |   |      |   | 116 |   |
| Due after 1 year but within 5 years                                                    |   |           | 9,896   |   |      |   | 10,300 |   |
| Due after 5 years                                                                      |   |           | 12,943  |   |      |   | 13,130 |   |
| Total obligations of state and political institutions                                  |   |           | 22,954  |   |      |   | 23,546 |   |
|                                                                                   |   |           |    |   |      |   |   |   |
| Single-issuer, trust preferred securities                                              |   |           |    |   |      |   |   |   |
| Due after 5 years                                                                      |   |           | 5,602   |   |      |   | 4,500 |   |
|                                                                                   |   |           |    |   |      |   |   |   |
| Corporate debt securities                                                              |   |           |    |   |      |   |   |   |
| Due within 1 year                                                                      |   |           | 4,237   |   |      |   | 4,242 |   |
| Due after 1 year but within 5 years                                                    |   |           | 74,177  |   |      |   | 74,152 |   |
| Due after 5 years                                                                      |   |           | 5,000   |   |      |   | 4,784 |   |
| Total corporate debt securities                                                        |   |           | 83,414  |   |      |   | 83,178 |   |
|                                                                                   |   |           |    |   |      |   |   |   |
| Other securities                                                                       |   |           | 54      |   |      |   | 63 |   |
| Total marketable securities                                                            |   |           | 342,998 |   |      |   | 344,103 |   |
| Federal Reserve Bank stock                                                             |   |           | 1,131   |   |      |   | 1,131 |   |
| Federal Home Loan Bank stock                                                           |   |           | 8,252   |   |      |   | 8,252 |   |
| Other securities                                                                       |   |           | 250     |   |      |   | 250 |   |
| Total                                                                                  |   | $              | 352,631 |   |      | $      | 353,736 |   |

----

| Held to maturity                                                                       |   | CarryingValue  |    |   | FairValue |   |
|----------------------------------------------------------------------------------------|--------|----------------|---------|--------|-----------|--------|
|                                                                                   |   | (in thousands) |    |
| Obligations of U.S. government corporations and government sponsored enterprises       |   |           |    |   |      |   |
| Mortgage-backed securities                                                             |   |           |    |   |      |   |
| CMO's (Federal National Mortgage Association)                                          |   | $              | 11,696  |   |      | $      | 11,888 |   |
| CMO's (Federal Home Loan Mortgage Corporation)                                         |   |           | 18,736  |   |      |   | 19,063 |   |
| Federal National Mortgage Association                                                  |   |           | 123,187 |   |      |   | 127,034 |   |
| Federal Home Loan Mortgage Corporation                                                 |   |           | 82,230  |   |      |   | 84,126 |   |
| Government National Mortgage Association                                               |   |           | 6,759   |   |      |   | 7,188 |   |
| Total mortgage-backed securities                                                       |   |           | 242,608 |   |      |   | 249,299 |   |
|                                                                                   |   |           |    |   |      |   |   |   |
| Agency Notes                                                                           |   |           |    |   |      |   |   |   |
| Federal National Mortgage Association                                                  |   |           | 39,873  |   |      |   | 40,328 |   |
| Due after 5 years                                                                      |   |           |    |   |      |   |   |   |
| Federal Home Loan Bank                                                                 |   |           |    |   |      |   |   |   |
| Due after 5 years                                                                      |   |           | 30,000  |   |      |   | 30,047 |   |
| Federal Home Loan Mortgage Corporation                                                 |   |           |    |   |      |   |   |   |
| Due after 5 years                                                                      |   |           | 15,000  |   |      |   | 14,883 |   |
| Total obligations of U.S. government corporations and government sponsored enterprises |   |           | 327,481 |   |      |   | 334,557 |   |
| Obligations of state and political institutions                                        |   |           |    |   |      |   |   |   |
| Due after 5 years                                                                      |   |           | 36,264  |   |      |   | 36,037 |   |
| Total obligations of state and political institutions                                  |   |           | 36,264  |   |      |   | 36,037 |   |
| Debt securities issued by foreign governments                                          |   |           |    |   |      |   |   |   |
| Due after 1 year but within 5 years                                                    |   |           | 250     |   |      |   | 250 |   |
| Total                                                                                  |   | $              | 363,995 |   |      | $      | 370,844 |   |

----

|         |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|--------------|--------|----------------------------|--------|--------|--------------------------|--------|
|         |   | 2009                       |   |   | 2008                     |   |   | 2009 |   |   | 2008 |   |
|         |   | (in thousands)             |   |
|         |   |                       |   |   |                     |   |   |   |   |   |   |   |
| Proceeds     |   | $                          | 48,871 |   |                     | $      | - |   |   | $ | 252,844 |   |   | $ | - |   |
| Gross gains  |   |                       | 874    |   |                     |   | - |   |   |   | 3,939 |   |   |   | - |   |
| Gross losses |   |                       | -      |   |                     |   | - |   |   |   | - |   |   |   | - |   |
|         |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |

|                                                                |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|---------------------------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
|                                                                |   | 2009                       |   |   | 2008                     |   |   | 2009 |   |   | 2008 |   |
|                                                                |   | (in thousands)             |   |
| NONINTEREST INCOME                                                  |   |                       |   |   |                     |   |   |   |   |   |   |   |
| Accounts receivable management/factoring commissions and other fees |   | $                          | 4,858  |   |                     | $      | 3,799 |   |   | $ | 8,101 |   |   | $ | 7,364 |   |
| Service charges on deposit accounts                                 |   |                       | 1,360  |   |                     |   | 1,331 |   |   |   | 2,743 |   |   |   | 2,683 |   |
| Other customer related service charges and fees                     |   |                       | 639    |   |                     |   | 737 |   |   |   | 1,319 |   |   |   | 1,412 |   |
| Mortgage banking income                                             |   |                       | 2,541  |   |                     |   | 2,702 |   |   |   | 4,647 |   |   |   | 5,201 |   |
| Trust fees                                                          |   |                       | 117    |   |                     |   | 124 |   |   |   | 256 |   |   |   | 259 |   |
| Income from life insurance policies                                 |   |                       | 290    |   |                     |   | 294 |   |   |   | 548 |   |   |   | 563 |   |
| Securities gains (losses)                                           |   |                       | 874    |   |                     |   | (507 | ) |   |   | 3,939 |   |   |   | (507 | ) |
| Gain (Loss) on other real estate owned                              |   |                       | 22     |   |                     |   | (75 | ) |   |   | 20 |   |   |   | (303 | ) |
| Other income                                                        |   |                       | 97     |   |                     |   | 167 |   |   |   | 23 |   |   |   | 572 |   |
| Total noninterest income                                            |   | $                          | 10,798 |   |                     | $      | 8,572 |   |   | $ | 21,596 |   |   | $ | 17,244 |   |
|                                                                |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| NONINTEREST EXPENSES                                                |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Salaries                                                            |   | $                          | 9,985  |   |                     | $      | 9,491 |   |   | $ | 19,974 |   |   | $ | 18,839 |   |
| Employee benefits                                                   |   |                       | 3,268  |   |                     |   | 2,252 |   |   |   | 5,945 |   |   |   | 5,088 |   |
| Total personnel expense                                             |   |                       | 13,253 |   |                     |   | 11,743 |   |   |   | 25,919 |   |   |   | 23,927 |   |
| Occupancy and equipment expenses, net                               |   |                       | 2,903  |   |                     |   | 2,774 |   |   |   | 5,575 |   |   |   | 5,783 |   |
| Advertising and marketing                                           |   |                       | 1,026  |   |                     |   | 1,353 |   |   |   | 1,680 |   |   |   | 1,988 |   |
| Professional fees                                                   |   |                       | 1,900  |   |                     |   | 1,874 |   |   |   | 3,023 |   |   |   | 3,238 |   |
| Communications                                                      |   |                       | 435    |   |                     |   | 405 |   |   |   | 866 |   |   |   | 861 |   |
| Deposit insurance                                                   |   |                       | 1,513  |   |                     |   | 185 |   |   |   | 1,864 |   |   |   | 269 |   |
| Other expenses                                                      |   |                       | 3,113  |   |                     |   | 2,796 |   |   |   | 5,268 |   |   |   | 5,230 |   |
| Total noninterest expenses                                          |   | $                          | 24,143 |   |                     | $      | 21,130 |   |   | $ | 44,195 |   |   | $ | 41,296 |   |

----

|                               |   | Three Months Ended June 30, |         |   | Six Months Ended June 30, |   |
|------------------------------------|--------|-----------------------------|--------------|--------|---------------------------|--------|
|                               |   | 2009                        |         |   | 2008                      |   |   | 2009 |   |   | 2008 |   |
|                               |   | (in thousands)              |         |
|                               |   |                        |         |   |                      |   |   |   |   |   |   |   |
| Service cost                       |   | $                           | 615          |   |                      | $      | 497 |   |   | $ | 1,006 |   |   | $ | 993 |   |
| Interest cost                      |   |                        | 928          |   |                      |   | 752 |   |   |   | 1,508 |   |   |   | 1,504 |   |
| Expected return on plan assets     |   |                        | (700         | )      |                      |   | (648 | ) |   |   | (1,146 | ) |   |   | (1,295 | ) |
| Amortization of prior service cost |   |                        | 16           |   |                      |   | 16 |   |   |   | 33 |   |   |   | 33 |   |
| Recognized actuarial loss          |   |                        | 948          |   |                      |   | 420 |   |   |   | 1,596 |   |   |   | 840 |   |
| Net periodic benefit cost          |   | $                           | $ 1,807 |   |                      | $      | 1,037 |   |   | $ | 2,997 |   |   | $ | 2,075 |   |

----

|                               |   | Corporate      |    |   | Real Estate |   |    | Company-wide |   |   |    |   |
|------------------------------------|--------|----------------|---------|--------|-------------|--------|---------|--------------|--------|--------|---------|--------|
|                               |   | Lending        |    |   | Lending     |   |    | Treasury     |   |   | Totals  |   |
|                               |   | (in thousands) |    |
| Three Months Ended June 30,2009    |   |           |    |   |        |   |    |         |   |   |    |   |
| Net interest income                |   | $              | 9,685   |   |        | $      | 5,070   |         |   | $      | 6,366   |   |   | $ | 21,121 |   |
| Noninterest income                 |   |           | 6,587   |   |        |   | 2,614   |         |   |   | 1,189   |   |   |   | 10,390 |   |
| Depreciation and amortization      |   |           | 178     |   |        |   | 38      |         |   |   | 1       |   |   |   | 217 |   |
| Segment income before income taxes |   |           | 6,564   |   |        |   | 4,612   |         |   |   | 7,256   |   |   |   | 18,432 |   |
| Segment assets                     |   |           | 806,080 |   |        |   | 430,784 |         |   |   | 857,307 |   |   |   | 2,094,171 |   |
|                               |   |           |    |   |        |   |    |         |   |   |    |   |   |   |   |   |
| Three Months Ended June 30,2008    |   |           |    |   |        |   |    |         |   |   |    |   |   |   |   |   |
| Net interest income                |   | $              | 9,299   |   |        | $      | 5,183   |         |   | $      | 6,781   |   |   | $ | 21,263 |   |
| Noninterest income                 |   |           | 5,532   |   |        |   | 2,786   |         |   |   | (137    | )      |   |   | 8,181 |   |
| Depreciation and amortization      |   |           | 213     |   |        |   | 91      |         |   |   | 1       |   |   |   | 305 |   |
| Segment income before income taxes |   |           | 6,355   |   |        |   | 3,798   |         |   |   | 6,500   |   |   |   | 16,653 |   |
| Segment assets                     |   |           | 788,593 |   |        |   | 402,638 |         |   |   | 906,626 |   |   |   | 2,097,857 |   |
|                               |   |           |    |   |        |   |    |         |   |   |    |   |   |   |   |   |
| Six Months Ended June 30,2009      |   |           |    |   |        |   |    |         |   |   |    |   |   |   |   |   |
| Net interest income                |   | $              | 18,678  |   |        | $      | 9,918   |         |   | $      | 13,723  |   |   | $ | 42,319 |   |
| Noninterest income                 |   |           | 11,681  |   |        |   | 4,738   |         |   |   | 4,369   |   |   |   | 20,788 |   |
| Depreciation and amortization      |   |           | 354     |   |        |   | 77      |         |   |   | 1       |   |   |   | 432 |   |
| Segment income before income taxes |   |           | 12,108  |   |        |   | 8,766   |         |   |   | 17,502  |   |   |   | 38,376 |   |
| Segment assets                     |   |           | 806,080 |   |        |   | 430,784 |         |   |   | 857,307 |   |   |   | 2,094,171 |   |
|                               |   |           |    |   |        |   |    |         |   |   |    |   |   |   |   |   |
| Six Months Ended June 30,2008      |   |           |    |   |        |   |    |         |   |   |    |   |   |   |   |   |
| Net interest income                |   | $              | 17,363  |   |        | $      | 10,529  |         |   | $      | 12,954  |   |   | $ | 40,846 |   |
| Noninterest income                 |   |           | 10,779  |   |        |   | 5,141   |         |   |   | 424     |   |   |   | 16,344 |   |
| Depreciation and amortization      |   |           | 405     |   |        |   | 181     |         |   |   | 2       |   |   |   | 588 |   |
| Segment income before income taxes |   |           | 14,535  |   |        |   | 6,507   |         |   |   | 12,855  |   |   |   | 33,897 |   |
| Segment assets                     |   |           | 788,593 |   |        |   | 402,638 |         |   |   | 906,626 |   |   |   | 2,097,857 |   |

|                                    |   | Three Months Ended |      |   | Six Months Ended |   |
|-----------------------------------------|--------|--------------------|-----------|--------|------------------|--------|
|                                    |   | June 30,           |      |   | June 30,         |   |
|                                    |   | 2009               |      |   | 2008             |   |   | 2009 |   |   | 2008 |   |
|                                    |   | (in thousands)     |      |
| Net interest income:                    |   |               |      |   |             |   |   |   |   |   |   |   |
| Total for reportable operating segments |   | $                  | 21,121    |   |             | $      | 21,263 |   |   | $ | 42,319 |   |   | $ | 40,846 |   |
| Other [1]                               |   |               | 193       |   |             |   | 209 |   |   |   | 367 |   |   |   | 461 |   |
| Consolidated net interest income        |   | $                  | 21,314    |   |             | $      | 21,472 |   |   | $ | 42,686 |   |   | $ | 41,307 |   |
|                                    |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest income:                     |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Total for reportable operating segments |   | $                  | 10,390    |   |             | $      | 8,181 |   |   | $ | 20,788 |   |   | $ | 16,344 |   |
| Other [1]                               |   |               | 408       |   |             |   | 391 |   |   |   | 808 |   |   |   | 900 |   |
| Consolidated noninterest income         |   | $                  | 10,798    |   |             | $      | 8,572 |   |   | $ | 21,596 |   |   | $ | 17,244 |   |
|                                    |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Income before taxes:                    |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Total for reportable operating segments |   | $                  | 18,432    |   |             | $      | 16,653 |   |   | $ | 38,376 |   |   | $ | 33,897 |   |
| Other [1]                               |   |               | (17,263   | )      |             |   | (9,939 | ) |   |   | (31,289 | ) |   |   | (20,792 | ) |
| Consolidated income before income taxes |   | $                  | 1,169     |   |             | $      | 6,714 |   |   | $ | 7,087 |   |   | $ | 13,105 |   |
|                                    |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Assets:                                 |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Total for reportable operating segments |   | $                  | 2,094,171 |   |             | $      | 2,097,857 |   |   | $ | 2,094,171 |   |   | $ | 2,097,857 |   |
| Other [1]                               |   |               | 31,535    |   |             |   | 30,633 |   |   |   | 31,535 |   |   |   | 30,633 |   |
| Consolidated assets                     |   | $                  | 2,125,706 |   |             | $      | 2,128,490 |   |   | $ | 2,125,706 |   |   | $ | 2,128,490 |   |

----

|                                                                                   |   | Three Months Ended |   |   | Six Months Ended |   |
|----------------------------------------------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                                                                   |   | June 30,           |   |   | June 30,         |   |
|                                                                                   |   | 2009               |   |   | 2008             |   |   | 2009 |   |   | 2008 |   |
|                                                                                   |   | (in thousands)     |   |
| Other Comprehensive Income (Loss)                                                      |   |               |   |   |             |   |   |   |   |   |
| Unrealized holding gains (losses) on securities, arising during the period:            |   |               |   |   |             |   |   |   |   |   |   |   |
| Before tax                                                                             |   | $                  | 3,051  |   |             | $      | (9,410 | ) |   | $ | 3,090 |   |   | $ | (6,939 | ) |
| Tax effect                                                                             |   |               | (1,384 | )      |             |   | 4,251 |   |   |   | (1,402 | ) |   |   | 3,135 |   |
| Net of tax                                                                             |   |               | 1,667  |   |             |   | (5,159 | ) |   |   | 1,688 |   |   |   | (3,804 | ) |
|                                                                                   |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification adjustment for securities (gains) losses included in net income: |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Before tax                                                                             |   |               | (874   | )      |             |   | 507 |   |   |   | (3,939 | ) |   |   | 507 |   |
| Tax effect                                                                             |   |               | 396    |   |             |   | (229 | ) |   |   | 1,787 |   |   |   | (229 | ) |
| Net of tax                                                                             |   |               | (478   | )      |             |   | 278 |   |   |   | (2,152 | ) |   |   | 278 |   |
|                                                                                   |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification adjustment for amortization of prior service cost:                    |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Before tax                                                                             |   |               | 16     |   |             |   | 16 |   |   |   | 33 |   |   |   | 33 |   |
| Tax effect                                                                             |   |               | (7     | )      |             |   | (7 | ) |   |   | (15 | ) |   |   | (15 | ) |
| Net of tax                                                                             |   |               | 9      |   |             |   | 9 |   |   |   | 18 |   |   |   | 18 |   |
|                                                                                   |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification adjustment for amortization of net actuarial losses:                  |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Before tax                                                                             |   |               | 948    |   |             |   | 420 |   |   |   | 1,596 |   |   |   | 840 |   |
| Tax effect                                                                             |   |               | (430   | )      |             |   | (190 | ) |   |   | (724 | ) |   |   | (379 | ) |
| Net of tax                                                                             |   |               | 518    |   |             |   | 230 |   |   |   | 872 |   |   |   | 461 |   |
|                                                                                   |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                   |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss)                                                      |   | $                  | 1,716  |   |             | $      | (4,642 | ) |   | $ | 426 |   |   | $ | (3,047 | ) |

----

|   | — | Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.  Examples of financial instruments generally included in this level are U.S. Treasury securities, equity and trust preferred securities that trade in active markets and listed derivativeinstruments. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | — | Level 2 Inputs - Inputs other than quoted prices included in Level I that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices thatare observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.  Examples of financial instruments generally included in this level are corporate debt, mortgage-backed certificates issued by U.S. government corporations and government sponsored enterprises, equity securities that trade in less active markets and certain derivative instruments. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | — | Level 3 Inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own judgments about the assumptions that market participants would use in pricing the assets or liabilities.  Examples of financial instruments generally included in this level are private equities, certain loans held for saleand other alternative investments. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| STERLING BANCORP AND SUBSIDIARIES |
|-----------------------------------|

| Notes to Consolidated Financial Statements |
|--------------------------------------------|

| (Unaudited) |
|-------------|

| June 30, 2009 (in thousands)                                                                                                  |   | Level 1Inputs |   |   | Level 2Inputs |   |                 | Level 3Inputs |   |   | TotalFair Value |   |
|-------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|--------|---------------|--------|----------------------|---------------|--------|--------|-----------------|--------|
| Securities available for sale:                                                                                                |   |          |   |   |          |   |                 |          |   |   |            |   |
|     Obligations of U.S. government corporations and government sponsoredenterprises Mortgage-backed securities |   | $             | -      |   |          | $      | 93,206               |          |   | $      | -               |   |   | $ | 93,206 |   |
| Agency Notes                                                                                                                  |   |          | -      |   |          |   | 139,610              |          |   |   |            |   |   |   | 139,610 |   |
| Total obligations of U.S. government corporations and government sponsored enterprises                                        |   |          | -      |   |          |   | 232,816              |          |   |   | -               |   |   |   | 232,816 |   |
|  Obligations of state and political institutions                                                                         |   |          | -      |   |          |   | 23,546               |          |   |   | -               |   |   |   | 23,546 |   |
|  Single-issuer, trust preferred securities                                                                               |   |          | 4,500  |   |          |   | -                    |          |   |   | -               |   |   |   | 4,500 |   |
|  Corporate debt securities                                                                                               |   |          | -      |   |          |   | 83,178               |          |   |   | -               |   |   |   | 83,178 |   |
|  Equity and other securities                                                                                             |   |          | 53     |   |          |   | 10                   |          |   |   | -               |   |   |   | 63 |   |
| Total marketable securities                                                                                                   |   | $             | 4,553  |   |          | $      | 339,550              |          |   |   | -               |   |   | $ | 344,103 |   |
|                                                                                                                          |   |          |   |   |          |   |                 |          |   |   |            |   |   |   |   |   |
|  Other investments                                                                                                       |   | $             | 7,907  |   |          | $      | 3,267                |          |   | $      | -               |   |   | $ | 11,174 |   |
|                                                                                                                          |   |          |   |   |          |   |                 |          |   |   |            |   |   |   |   |   |
| December 31, 2009 (in thousands)                                                                                              |   |          |   |   |          |   |                 |          |   |   |            |   |   |   |   |   |
|                                                                                                                          |   |          |   |   |          |   |                 |          |   |   |            |   |   |   |   |   |
| Securities available for sale:                                                                                                |   |          |   |   |          |   |                 |          |   |   |            |   |   |   |   |   |
| Obligations of U.S. government corporations and government sponsoredenterprises Mortgage-backed securities                    |   | $             | -      |   |          | $      | 210,882              |          |   | $      | -               |   |   | $ | 210,882 |   |
| Agency Notes                                                                                                                  |   |          | -      |   |          |   | 244,519              |          |   |   | -               |   |   | $ | 244,519 |   |
| Total obligations of U.S. government corporations and government sponsored enterprises                                        |   |          | -      |   |          |   | 455,401              |          |   |   | -               |   |   |   | 455,401 |   |
| Obligations of state and political institutions                                                                               |   |          | -      |   |          |   | 23,406               |          |   |   | -               |   |   |   | 23,406 |   |
| Single-issuer, trust preferred securities                                                                                     |   |          | 4,209  |   |          |   | -                    |          |   |   | -               |   |   |   | 4,209 |   |
|     Corporate debt securities                                                                             |   |          | -      |   |          |   | 9,724                |          |   |   | -               |   |   |   | 9,724 |   |
| Equity and other securities                                                                                                   |   |          | 57     |   |          |   | 10                   |          |   |   | -               |   |   |   | 67 |   |
| Total marketable securities                                                                                                   |   | $             | 4,266  |   |          | $      |    488,541 |          |   | $      | -               |   |   | $ | 492,807 |   |
|                                                                                                                          |   |          |   |   |          |   |                 |          |   |   |            |   |   |   |   |   |
|  Other investments                                                                                                       |   | $             | 7,266  |   |          | $      | 3,116                |          |   | $      | -               |   |   | $ | 10,382 |   |

|           |   | June 30,       |   |   | December 31, |   |
|----------------|--------|----------------|--------|--------|--------------|--------|
|           |   | 2009           |   |   | 2008         |   |
|           |   | (in thousands) |   |
| Impaired loans |   | $              | 1,657  |   |         | $      | 4,203 |   |

----

|                                           |   | June 30, 2009   |      |
|------------------------------------------------|--------|-----------------|-----------|
|                                           |   | Carrying Amount |      |   | Fair Value |   |
|                                           |   | (in thousands)  |      |
| FINANCIAL ASSETS                               |   |            |      |   |   |   |
| Cash and due from banks                        |   | $               | 34,816    |   |   | $ | 34,816 |   |
| Interest-bearing deposits with other banks     |   |            | 5,611     |   |   |   | 5,609 |   |
| Investment securities                          |   |            | 717,731   |   |   |   | 724,580 |   |
| Loans held for sale                            |   |            | 57,385    |   |   |   | 57,385 |   |
| Loans held in portfolio, net                   |   |            | 1,142,295 |   |   |   | 1,138,254 |   |
| Customers' liability under acceptances         |   |            | 180       |   |   |   | 180 |   |
| Accrued interest receivable                    |   |            | 7,772     |   |   |   | 7,772 |   |
| FINANCIAL LIABILITIES                          |   |            |      |   |   |   |   |   |
| Demand, NOW, savings and money market deposits |   |            | 972,901   |   |   |   | 972,901 |   |
| Time deposits                                  |   |            | 331,766   |   |   |   | 333,809 |   |
| Securities sold under agreements to repurchase |   |            | 55,129    |   |   |   | 55,129 |   |
| Federal funds purchased                        |   |            | 87,000    |   |   |   | 87,000 |   |
| Commercial paper                               |   |            | 11,739    |   |   |   | 11,739 |   |
| Short-term borrowings-FRB                      |   |            | 160,000   |   |   |   | 160,000 |   |
| Other short-term borrowings                    |   |            | 4,262     |   |   |   | 4,262 |   |
| Acceptances outstanding                        |   |            | 180       |   |   |   | 180 |   |
| Accrued interest payable                       |   |            | 1,874     |   |   |   | 1,874 |   |
| Long-term borrowings                           |   |            | 175,774   |   |   |   | 180,999 |   |

----

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----

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LA

|                                                                    |   | Weighted Average Life |   | Weighted Average Yield |   |
|-------------------------------------------------------------------------|--------|-----------------------|--------|------------------------|--------|
| June 30, 2009                                                           |   | AFS                   |   | HTM                    |   | AFS |   |   | HTM |   |
| Mortgage-backed securities                                              |   | 2.8 Years             |   | 2.7 Years              |   |   | 4.40% |   |   |   | 4.32% |   |
| Agency notes (with original call dates ranging between 3 and 36 months) |   | 8.9 Years             |   | 1.9 Years              |   |   | 4.79% |   |   |   | 5.16% |   |
| Obligations of state and political subdivisions                         |   | 6.3 Years             |   | 12.9 Years             |   |   | 5.98% | [1]  |   |   | 6.43% | [1]  |

----

|                                                                                   |   | June 30, 2009  |    |   | December 31, 2008 |   |
|----------------------------------------------------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
|                                                                                   |   | Balances       |    |   | % of Total        |   |   | Balances |   |   | % of Total |   |
|                                                                                   |   | (in thousands) |    |
| Obligations of U.S. government corporations and government sponsored enterprises       |   |           |    |   |              |   |   |   |   |   |   |   |
| Mortgage-backed securities                                                             |   |           |    |   |              |   |   |   |   |   |   |   |
| CMO's (Federal National  Mortgage Association)                               |   | $              | 14,716  |   |              |   | 2.05 | % |   | $ | 20,799 |   |   |   | 2.58 | % |
| CMO's (Federal Home Loan Mortgage Corporation)                                         |   |           | 34,996  |   |              |   | 4.88 |   |   |   | 42,294 |   |   |   | 5.24 |   |
| CMO's (Government National Mortgage Association)                                       |   |           | 5,225   |   |              |   | 0.73 |   |   |   | 6,565 |   |   |   | 0.81 |   |
| Federal National Mortgage Association                                                  |   |           | 163,966 |   |              |   | 22.84 |   |   |   | 245,100 |   |   |   | 30.38 |   |
| Federal Home Loan Mortgage Corporation                                                 |   |           | 100,826 |   |              |   | 14.05 |   |   |   | 137,437 |   |   |   | 17.04 |   |
| Government National Mortgage Association                                               |   |           | 16,085  |   |              |   | 2.24 |   |   |   | 39,564 |   |   |   | 4.90 |   |
| Total mortgage-backed securities                                                       |   |           | 335,814 |   |              |   | 46.79 |   |   |   | 491,759 |   |   |   | 60.95 |   |
|                                                                                   |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Agency Notes                                                                           |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Federal National Mortgage Association                                                  |   |           | 59,989  |   |              |   | 8.36 |   |   |   | - |   |   |   | - |   |
| Federal Home Loan Bank                                                                 |   |           | 119,969 |   |              |   | 16.72 |   |   |   | 174,675 |   |   |   | 21.65 |   |
| Federal Home Loan Mortgage Corporation                                                 |   |           | 15,000  |   |              |   | 2.09 |   |   |   | -  |   |   |   | - |   |
| Federal Farm Credit Bank                                                               |   |           | 29,525  |   |              |   | 4.11 |   |   |   | 89,844 |   |   |   | 11.13 |   |
| Total obligations of U.S. government corporations and government sponsored enterprises |   |           | 560,297 |   |              |   | 78.07 |   |   |   | 756,278 |   |   |   | 93.73 |   |
|                                                                                   |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Obligations of state and political institutions                                        |   |           | 59,810  |   |              |   | 8.33 |   |   |   | 23,406 |   |   |   | 2.90 |   |
| Single-issuer, trust preferred securities                                              |   |           | 4,500   |   |              |   | 0.63 |   |   |   | 4,209 |   |   |   | 0.52 |   |
| Corporate debt securities                                                              |   |           | 83,178  |   |              |   | 11.59 |   |   |   | 9,724 |   |   |   | 1.21 |   |
| Other securities                                                                       |   |           | 63      |   |              |   | 0.01 |   |   |   | 67 |   |   |   | 0.01 |   |
| Total marketable securities                                                            |   |           | 707,848 |   |              |   | 98.63 |   |   |   | 793,684 |   |   |   | 98.37 |   |
| Federal Reserve Bank stock                                                             |   |           | 1,131   |   |              |   | 0.16 |   |   |   | 1,131 |   |   |   | 0.14 |   |
| Federal Home Loan Bank stock                                                           |   |           | 8,252   |   |              |   | 1.15 |   |   |   | 11,574 |   |   |   | 1.43 |   |
| Other securities                                                                       |   |           | 250     |   |              |   | 0.03 |   |   |   | 250 |   |   |   | 0.03 |   |
| Debt securities issued by foreign governments                                          |   |           | 250     |   |              |   | 0.03 |   |   |   | 250 |   |   |   | 0.03 |   |
| Total                                                                                  |   | $              | 717,731 |   |              |   | 100.00 | % |   | $ | 806,889 |   |   |   | 100.00 | % |

----

|                                                             |   | June 30,               |      |
|------------------------------------------------------------------|--------|------------------------|-----------|
|                                                             |   | 2009                   |      |   | 2008 |   |
|                                                             |   | (dollars in thousands) |      |
|                                                             |   |                   |      |   | % of |   |   |   |   |   | % of |   |
|                                                             |   | Balances               |      |   | Total |   |   | Balances |   |   | Total |   |
| Domestic                                                         |   |                   |      |   |   |   |   |   |   |   |   |   |
| Commercial and industrial                                        |   | $                      | 507,635   |   |   |   | 41.68 | % |   | $ | 513,363 |   |   |   | 43.33 | % |
| Lease financing receivables                                      |   |                   | 229,024   |   |   |   | 18.81 |   |   |   | 261,628 |   |   |   | 22.08 |   |
| Factored receivables                                             |   |                   | 134,450   |   |   |   | 11.04 |   |   |   | 77,169 |   |   |   | 6.52 |   |
| Real estate - residential mortgage                               |   |                   | 198,516   |   |   |   | 16.30 |   |   |   | 169,774 |   |   |   | 14.33 |   |
| Real estate - commercial mortgage                                |   |                   | 101,282   |   |   |   | 8.32 |   |   |   | 95,155 |   |   |   | 8.03 |   |
| Real estate - construction and land   development |   |                   | 27,235    |   |   |   | 2.24 |   |   |   | 30,212 |   |   |   | 2.55 |   |
| Loans to individuals                                             |   |                   | 19,672    |   |   |   | 1.61 |   |   |   | 17,443 |   |   |   | 1.47 |   |
| Loans to depository institutions                                 |   |                   | -         |   |   |   | - |   |   |   | 20,000 |   |   |   | 1.69 |   |
|                                                             |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans, net of unearned discounts                                 |   | $                      | 1,217,814 |   |   |   | 100.00 | % |   | $ | 1,184,744 |   |   |   | 100.00 | % |

----

|                                              |   | June 30,       |      |
|---------------------------------------------------|--------|----------------|-----------|
|                                              |   | 2009           |      |   | 2008 |   |
|                                              |   | (in thousands) |      |
| Gross Loans                                       |   | $              | 1,249,473 |   |   | $ | 1,222,866 |   |
| Nonaccrual loans                                  |   |           |      |   |   |   |   |   |
| Commercial and industrial                         |   | $              | 2,835     |   |   | $ | 836 |   |
| Lease financing                                   |   |           | 14,256    |   |   |   | 2,600 |   |
| Factored receivables                              |   |           | -         |   |   |   | - |   |
| Real estate-residential mortgage                  |   |           | 3,380     |   |   |   | 3,487 |   |
| Real estate-commercial mortgage                   |   |           | -         |   |   |   | - |   |
| Real estate-construction and land development     |   |           | -         |   |   |   | - |   |
| Loans to individuals                              |   |           | 136       |   |   |   | 47 |   |
|                                              |   |           |      |   |   |   |   |   |
| Total nonaccrual loans                            |   |           | 20,607    |   |   |   | 6,970 |   |
|                                              |   |           |      |   |   |   |   |   |
| Other real estate owned                           |   |           | 1,105     |   |   |   | 2,252 |   |
| Total non-performing assets                       |   | $              | 21,712    |   |   | $ | 9,222 |   |
|                                              |   |           |      |   |   |   |   |   |
| Loans past due 90 days or more and still accruing |   | $              | 1,683     |   |   | $ | 224 |   |

----

----

|                                                                                              |   | Three Months Ended     |      |   | Six Months Ended |   |
|---------------------------------------------------------------------------------------------------|--------|------------------------|-----------|--------|------------------|--------|
|                                                                                              |   | June 30,               |      |   | June 30,         |   |
|                                                                                              |   | 2009                   |      |   | 2008             |   |   | 2009 |   |   | 2008 |   |
|                                                                                              |   | (dollars in thousands) |      |
|                                                                                              |   |                   |      |   |             |   |   |   |   |   |   |   |
| Average loans held in portfolio, net of unearned discounts, during period                         |   | $                      | 1,910,289 |   |             | $      | 1,917,116 |   |   | $ | 1,916,836 |   |   | $ | 1,862,826 |   |
|                                                                                              |   |                   |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses:                                                                        |   |                   |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Balance at beginning of period                                                                    |   | $                      | 17,158    |   |             | $      | 15,162 |   |   | $ | 16,010 |   |   | $ | 15,085 |   |
|                                                                                              |   |                   |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Charge-offs:                                                                                      |   |                   |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Commercial and industrial                                                                         |   |                   | 518       |   |             |   | 454 |   |   |   | 877 |   |   |   | 1,288 |   |
| Lease financing                                                                                   |   |                   | 5,083     |   |             |   | 1,216 |   |   |   | 9,627 |   |   |   | 1,967 |   |
| Factored receivables                                                                              |   |                   | 142       |   |             |   | 110 |   |   |   | 309 |   |   |   | 195 |   |
| Real estate - residential mortgage                                                                |   |                   | -         |   |             |   | 15 |   |   |   | - |   |   |   | 15 |   |
| Real estate - commercial mortgage                                                  |   |                   | -         |   |             |   | - |   |   |   | - |   |   |   | - |   |
| Real estate - construction and land development                                         |   |                   | -         |   |             |   | - |   |   |   | - |   |   |   | - |   |
| Loans to individuals                                                                              |   |                   | -         |   |             |   | - |   |   |   | - |   |   |   | - |   |
| Total charge-offs                                                                                 |   |                   | 5,743     |   |             |   | 1,795 |   |   |   | 10,813 |   |   |   | 3,465 |   |
|                                                                                              |   |                   |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Recoveries:                                                                                       |   |                   |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Commercial and industrial                                                                         |   |                   | 5         |   |             |   | 108 |   |   |   | 16 |   |   |   | 111 |   |
| Lease financing                                                                                   |   |                   | 98        |   |             |   | 64 |   |   |   | 142 |   |   |   | 161 |   |
| Factored receivables                                                                              |   |                   | 5         |   |             |   | 10 |   |   |   | 23 |   |   |   | 15 |   |
| Real estate - residential mortgage                                                                |   |                   | -         |   |             |   | - |   |   |   | - |   |   |   | - |   |
|     Real estate - commercial mortgage                                              |   |                   | -         |   |             |   | - |   |   |   | - |   |   |   | - |   |
|     Real estate - construction and land development                                |   |                   | -         |   |             |   | - |   |   |   | - |   |   |   | - |   |
| Loans to individuals                                                                              |   |                   | -         |   |             |   | 2 |   |   |   | - |   |   |   | 69 |   |
| Total recoveries                                                                                  |   |                   | 108       |   |             |   | 184 |   |   |   | 181 |   |   |   | 356 |   |
|                                                                                              |   |                   |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Subtract:                                                                                         |   |                   |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Net charge-offs                                                                                   |   |                   | 5,635     |   |             |   | 1,611 |   |   |   | 10,632 |   |   |   | 3,109 |   |
|                                                                                              |   |                   |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                                                                         |   |                   | 6,800     |   |             |   | 2,200 |   |   |   | 13,000 |   |   |   | 4,150 |   |
|                                                                                              |   |                   |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Less losses on transfers to other real estate owned                                               |   |                   | 189       |   |             |   | 271 |   |   |   | 244 |   |   |   | 646 |   |
|                                                                                              |   |                   |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Balance at end of period                                                                          |   | $                      | 18,134    |   |             | $      | 15,480 |   |   | $ | 18,134 |   |   | $ | 15,480 |   |
|                                                                                              |   |                   |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Ratio of annualized net charge-offs to average loans held in portfolio, net of unearned discounts |   |                   | 1.18      | %      |             |   | 0.34 | % |   |   | 1.11 | % |   |   | 0.33 | % |

----

| June 30,                                        |   | 2009                   |   |   | 2008                                                         |   |
|-------------------------------------------------|--------|------------------------|--------|--------|--------------------------------------------------------------|--------|
|                                            |   | Amount                 |   |   | % of Loans in each category to total loans held in portfolio |   |   | Amount |   |   | % of Loans in each category to total loans held in portfolio |   |
|                                            |   | (dollars in thousands) |   |
|                                            |   |                   |   |   |                                                         |   |   |   |   |   |   |   |
| Domestic                                        |   |                   |   |   |                                                         |   |   |   |   |   |   |   |
|                                            |   |                   |   |   |                                                         |   |   |   |   |   |   |   |
| Commercial and industrial                       |   | $                      | 4,554  |   |                                                         |   | 43.74 | % |   | $ | 5,495 |   |   |   | 44.25 | % |
| Loans to depository institutions                |   |                   | -      |   |                                                         |   | - |   |   |   | 40 |   |   |   | 1.72 |   |
| Lease financing                                 |   |                   | 10,014 |   |                                                         |   | 19.74 |   |   |   | 5,674 |   |   |   | 22.56 |   |
| Factored receivables                            |   |                   | 1,007  |   |                                                         |   | 11.59 |   |   |   | 916 |   |   |   | 6.64 |   |
| Real estate - residential mortgage              |   |                   | 1,419  |   |                                                         |   | 12.16 |   |   |   | 2,380 |   |   |   | 12.53 |   |
| Real estate - commercial mortgage               |   |                   | 699    |   |                                                         |   | 8.73 |   |   |   | 607 |   |   |   | 8.20 |   |
| Real estate - construction and land development |   |                   | 191    |   |                                                         |   | 2.35 |   |   |   | 196 |   |   |   | 2.60 |   |
| Loans to individuals                            |   |                   | 138    |   |                                                         |   | 1.69 |   |   |   | 113 |   |   |   | 1.50 |   |
| Unallocated                                     |   |                   | 112    |   |                                                         |   | - |   |   |   | 59 |   |   |   | - |   |
| Total                                           |   | $                      | 18,134 |   |                                                         |   | 100.00 | % |   | $ | 15,480 |   |   |   | 100.00 | % |

----

|                    |   | June 30,               |      |
|-------------------------|--------|------------------------|-----------|
|                    |   | 2009                   |      |   | 2008 |   |
|                    |   | (dollars in thousands) |      |
|                    |   |                   |      |   | % of |   |   |   |   |   | % of |   |
|                    |   | Balances               |      |   | Total |   |   | Balances |   |   | Total |   |
| Domestic                |   |                   |      |   |   |   |   |   |   |   |   |   |
| Demand                  |   | $                      | 440,626   |   |   |   | 33.77 | % |   | $ | 459,279 |   |   |   | 32.69 | % |
| NOW                     |   |                   | 186,958   |   |   |   | 14.33 |   |   |   | 254,418 |   |   |   | 18.11 |   |
| Savings                 |   |                   | 17,991    |   |   |   | 1.38 |   |   |   | 18,364 |   |   |   | 1.31 |   |
| Money market            |   |                   | 327,326   |   |   |   | 25.10 |   |   |   | 213,734 |   |   |   | 15.21 |   |
| Time deposits           |   |                   | 331,187   |   |   |   | 25.38 |   |   |   | 458,462 |   |   |   | 32.64 |   |
|                    |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total domestic deposits |   |                   | 1,304,088 |   |   |   | 99.96 |   |   |   | 1,404,257 |   |   |   | 99.96 |   |
| Foreign                 |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Time deposits           |   |                   | 579       |   |   |   | 0.04 |   |   |   | 577 |   |   |   | 0.04 |   |
|                    |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total deposits          |   | $                      | 1,304,667 |   |   |   | 100.00 | %   $ |   |   | 1,404,834 |   |   |   | 100.00 | % |

A

----

EC

U

----

RL

| (dollars in thousands)                                     |   |
|------------------------------------------------------------|--------|
|                                                       |   |
|                                                       |   | 2009 |   |   | 2008 |   |
|                                                       |   | Average |   |   |   |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |
| ASSETS                                                     |   | Balance |   |   | Interest |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits with other banks                 |   | $ | 26,498 |   |   | $ | 9 |   |   |   | 0.14 | % |   | $ | 2,474 |   |   | $ | 7 |   |   |   | 1.14 | % |
| Securities available for sale                              |   |   | 351,378 |   |   |   | 4,119 |   |   |   | 4.69 |   |   |   | 417,409 |   |   |   | 5,462 |   |   |   | 5.23 |   |
| Securities held to maturity                                |   |   | 292,956 |   |   |   | 3,477 |   |   |   | 4.75 |   |   |   | 341,662 |   |   |   | 4,034 |   |   |   | 4.72 |   |
| Securities tax-exempt [2]                                  |   |   | 34,889 |   |   |   | 536 |   |   |   | 6.15 |   |   |   | 22,178 |   |   |   | 340 |   |   |   | 6.13 |   |
| Total investment securities                                |   |   | 679,223 |   |   |   | 8,132 |   |   |   | 4.79 |   |   |   | 781,249 |   |   |   | 9,836 |   |   |   | 5.04 |   |
| Federal funds sold                                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 357 |   |   |   | 1 |   |   |   | 1.79 |   |
| Loans, net of unearned discounts [3]                       |   |   | 1,204,568 |   |   |   | 18,264 |   |   |   | 6.19 |   |   |   | 1,133,036 |   |   |   | 20,001 |   |   |   | 7.16 |   |
| TOTAL INTEREST-EARNING ASSETS                              |   |   | 1,910,289 |   |   |   | 26,405 |   |   |   | 5.59 | % |   |   | 1,917,116 |   |   |   | 29,845 |   |   |   | 6.26 | % |
| Cash and due from banks                                    |   |   | 29,623 |   |   |   |   |   |   |   |   |   |   |   | 47,695 |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses                                  |   |   | (17,994 | ) |   |   |   |   |   |   |   |   |   |   | (15,948 | ) |   |   |   |   |   |   |   |   |
| Goodwill                                                   |   |   | 22,901 |   |   |   |   |   |   |   |   |   |   |   | 22,901 |   |   |   |   |   |   |   |   |   |
| Other assets                                               |   |   | 114,112 |   |   |   |   |   |   |   |   |   |   |   | 105,348 |   |   |   |   |   |   |   |   |   |
| TOTAL ASSETS                                               |   | $ | 2,058,931 |   |   |   |   |   |   |   |   |   |   | $ | 2,077,112 |   |   |   |   |   |   |   |   |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                                                    |   | $ | 18,080 |   |   |   | 6 |   |   |   | 0.13 | % |   | $ | 19,735 |   |   |   | 17 |   |   |   | 0.36 | % |
| NOW                                                        |   |   | 196,441 |   |   |   | 126 |   |   |   | 0.26 |   |   |   | 256,316 |   |   |   | 542 |   |   |   | 0.85 |   |
| Money market                                               |   |   | 341,886 |   |   |   | 811 |   |   |   | 0.95 |   |   |   | 195,131 |   |   |   | 530 |   |   |   | 1.09 |   |
| Time                                                       |   |   | 334,680 |   |   |   | 2,047 |   |   |   | 2.45 |   |   |   | 507,839 |   |   |   | 4,032 |   |   |   | 3.19 |   |
| Foreign                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Time                                                       |   |   | 578 |   |   |   | 2 |   |   |   | 1.09 |   |   |   | 576 |   |   |   | 2 |   |   |   | 1.09 |   |
| Total interest-bearing deposits                            |   |   | 891,665 |   |   |   | 2,992 |   |   |   | 1.35 |   |   |   | 979,597 |   |   |   | 5,123 |   |   |   | 2.10 |   |
| Borrowings                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities sold under agreements to repurchase - customers |   |   | 77,261 |   |   |   | 88 |   |   |   | 0.45 |   |   |   | 89,187 |   |   |   | 442 |   |   |   | 1.99 |   |
| Securities sold under agreements to repurchase - dealers   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 66,527 |   |   |   | 416 |   |   |   | 2.52 |   |
| Federal funds purchased                                    |   |   | 12,309 |   |   |   | 7 |   |   |   | 0.22 |   |   |   | 39,302 |   |   |   | 217 |   |   |   | 2.19 |   |
| Commercial paper                                           |   |   | 11,101 |   |   |   | 17 |   |   |   | 0.62 |   |   |   | 19,547 |   |   |   | 117 |   |   |   | 2.42 |   |
| Short-term borrowings - FHLB                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 53,758 |   |   |   | 311 |   |   |   | 2.32 |   |
| Short-term borrowings - FRB                                |   |   | 202,857 |   |   |   | 126 |   |   |   | 0.25 |   |   |   | 264 |   |   |   | 1 |   |   |   | 1.29 |   |
| Short-term borrowings - other                              |   |   | 1,752 |   |   |   | - |   |   |   | - |   |   |   | 1,472 |   |   |   | 5 |   |   |   | 2.27 |   |
| Long-term borrowings - FHLB                                |   |   | 150,000 |   |   |   | 1,134 |   |   |   | 3.03 |   |   |   | 156,154 |   |   |   | 1,085 |   |   |   | 2.78 |   |
| Long-term borrowings - sub debt                            |   |   | 25,774 |   |   |   | 524 |   |   |   | 8.37 |   |   |   | 25,774 |   |   |   | 524 |   |   |   | 8.37 |   |
| Total borrowings                                           |   |   | 481,054 |   |   |   | 1,896 |   |   |   | 1.58 |   |   |   | 451,985 |   |   |   | 3,118 |   |   |   | 2.77 |   |
| TOTAL INTEREST-BEARING LIABILITIES                         |   |   | 1,372,719 |   |   |   | 4,888 |   |   |   | 1.43 | % |   |   | 1,431,582 |   |   |   | 8,241 |   |   |   | 2.31 | % |
| Noninterest-bearing deposits                               |   |   | 417,509 |   |   |   |   |   |   |   |   |   |   |   | 424,658 |   |   |   |   |   |   |   |   |   |
| Other liabilities                                          |   |   | 109,796 |   |   |   |   |   |   |   |   |   |   |   | 100,128 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                          |   |   | 1,900,024 |   |   |   |   |   |   |   |   |   |   |   | 1,956,368 |   |   |   |   |   |   |   |   |   |
| Shareholders' equity                                       |   |   | 158,907 |   |   |   |   |   |   |   |   |   |   |   | 120,744 |   |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                 |   | $ | 2,058,931 |   |   |   |   |   |   |   |   |   |   | $ | 2,077,112 |   |   |   |   |   |   |   |   |   |
| Net interest income/spread                                 |   |   |   |   |   |   | 21,517 |   |   |   | 4.16 | % |   |   |   |   |   |   | 21,604 |   |   |   | 3.95 | % |
| Net yield on interest-earning assets (margin)              |   |   |   |   |   |   |   |   |   |   | 4.53 | % |   |   |   |   |   |   |   |   |   |   | 4.49 | % |
| Less: Tax equivalent adjustment                            |   |   |   |   |   |   | 203 |   |   |   |   |   |   |   |   |   |   |   | 132 |   |   |   |   |   |
| Net interest income                                        |   |   |   |   |   | $ | 21,314 |   |   |   |   |   |   |   |   |   |   | $ | 21,472 |   |   |   |   |   |

| [1] | The average balances of assets, liabilities and shareholders' equity are computed on the basis of daily averages. Average rates are presented on a tax-equivalent basis. Certain reclassifications have been made to amounts for prior periods to conform to the current presentation. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| [3] | Includes loans held for sale and loans held in portfolio; all loans are domestic. Nonaccrual loans are included in amounts outstanding and income has been included to the extent earned. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (dollars in thousands)                                     |   |
|------------------------------------------------------------|--------|
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                       |   | 2009 |   |   | 2008 |   |
|                                                       |   | Average |   |   |   |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |
| ASSETS                                                     |   | Balance |   |   | Interest |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits with other banks                 |   | $ | 19,278 |   |   | $ | 19 |   |   |   | 0.21 | % |   | $ | 2,968 |   |   | $ | 19 |   |   |   | 1.26 | % |
| Securities available for sale                              |   |   | 389,715 |   |   |   | 9,398 |   |   |   | 4.82 |   |   |   | 381,222 |   |   |   | 9,996 |   |   |   | 5.24 |   |
| Securities held to maturity                                |   |   | 295,245 |   |   |   | 6,999 |   |   |   | 4.74 |   |   |   | 348,991 |   |   |   | 8,259 |   |   |   | 4.73 |   |
| Securities tax-exempt [2]                                  |   |   | 29,610 |   |   |   | 902 |   |   |   | 6.09 |   |   |   | 20,655 |   |   |   | 633 |   |   |   | 6.13 |   |
| Total investment securities                                |   |   | 714,570 |   |   |   | 17,299 |   |   |   | 4.84 |   |   |   | 750,868 |   |   |   | 18,888 |   |   |   | 5.03 |   |
| Federal funds sold                                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 179 |   |   |   | 1 |   |   |   | 1.78 |   |
| Loans, net of unearned discounts [3]                       |   |   | 1,182,988 |   |   |   | 35,816 |   |   |   | 6.24 |   |   |   | 1,108,811 |   |   |   | 40,821 |   |   |   | 7.55 |   |
| TOTAL INTEREST-EARNING ASSETS                              |   |   | 1,916,836 |   |   |   | 53,134 |   |   |   | 5.64 | % |   |   | 1,862,826 |   |   |   | 59,729 |   |   |   | 6.50 | % |
| Cash and due from banks                                    |   |   | 31,017 |   |   |   |   |   |   |   |   |   |   |   | 57,594 |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses                                  |   |   | (17,445 | ) |   |   |   |   |   |   |   |   |   |   | (15,759 | ) |   |   |   |   |   |   |   |   |
| Goodwill                                                   |   |   | 22,901 |   |   |   |   |   |   |   |   |   |   |   | 22,901 |   |   |   |   |   |   |   |   |   |
| Other assets                                               |   |   | 113,069 |   |   |   |   |   |   |   |   |   |   |   | 104,070 |   |   |   |   |   |   |   |   |   |
| TOTAL ASSETS                                               |   | $ | 2,066,378 |   |   |   |   |   |   |   |   |   |   | $ | 2,031,632 |   |   |   |   |   |   |   |   |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                                                    |   | $ | 18,148 |   |   |   | 12 |   |   |   | 0.14 | % |   | $ | 19,192 |   |   |   | 33 |   |   |   | 0.35 | % |
| NOW                                                        |   |   | 211,650 |   |   |   | 294 |   |   |   | 0.28 |   |   |   | 246,514 |   |   |   | 1,368 |   |   |   | 1.12 |   |
| Money market                                               |   |   | 340,020 |   |   |   | 1,762 |   |   |   | 1.04 |   |   |   | 202,321 |   |   |   | 1,298 |   |   |   | 1.29 |   |
| Time                                                       |   |   | 331,266 |   |   |   | 4,212 |   |   |   | 2.56 |   |   |   | 529,327 |   |   |   | 9,369 |   |   |   | 3.56 |   |
| Foreign                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Time                                                       |   |   | 578 |   |   |   | 3 |   |   |   | 1.09 |   |   |   | 576 |   |   |   | 3 |   |   |   | 1.09 |   |
| Total interest-bearing deposits                            |   |   | 901,662 |   |   |   | 6,283 |   |   |   | 1.41 |   |   |   | 997,930 |   |   |   | 12,071 |   |   |   | 2.43 |   |
| Borrowings                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities sold under agreements to repurchase - customers |   |   | 75,987 |   |   |   | 203 |   |   |   | 0.54 |   |   |   | 85,824 |   |   |   | 1,088 |   |   |   | 2.55 |   |
| Securities sold under agreements to repurchase - dealers   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 51,277 |   |   |   | 733 |   |   |   | 2.88 |   |
| Federal funds purchased                                    |   |   | 34,783 |   |   |   | 41 |   |   |   | 0.23 |   |   |   | 44,129 |   |   |   | 579 |   |   |   | 2.60 |   |
| Commercial paper                                           |   |   | 11,487 |   |   |   | 40 |   |   |   | 0.70 |   |   |   | 20,349 |   |   |   | 312 |   |   |   | 3.09 |   |
| Short-term borrowings - FHLB                               |   |   | 6,878 |   |   |   | 11 |   |   |   | 0.31 |   |   |   | 39,813 |   |   |   | 526 |   |   |   | 2.65 |   |
| Short-term borrowings - FRB                                |   |   | 172,405 |   |   |   | 225 |   |   |   | 0.26 |   |   |   | 132 |   |   |   | 1 |   |   |   | 2.27 |   |
| Short-term borrowings - other                              |   |   | 1,603 |   |   |   | 1 |   |   |   | 0.07 |   |   |   | 1,655 |   |   |   | 19 |   |   |   | 2.29 |   |
| Long-term borrowings - FHLB                                |   |   | 150,000 |   |   |   | 2,256 |   |   |   | 3.03 |   |   |   | 122,308 |   |   |   | 1,799 |   |   |   | 2.94 |   |
| Long-term borrowings - sub debt                            |   |   | 25,774 |   |   |   | 1,047 |   |   |   | 8.38 |   |   |   | 25,774 |   |   |   | 1,047 |   |   |   | 8.38 |   |
| Total borrowings                                           |   |   | 478,917 |   |   |   | 3,824 |   |   |   | 1.61 |   |   |   | 391,261 |   |   |   | 6,104 |   |   |   | 3.13 |   |
| TOTAL INTEREST-BEARING LIABILITIES                         |   |   | 1,380,579 |   |   |   | 10,107 |   |   |   | 1.48 | % |   |   | 1,389,191 |   |   |   | 18,175 |   |   |   | 2.63 | % |
| Noninterest-bearing deposits                               |   |   | 416,847 |   |   |   |   |   |   |   |   |   |   |   | 422,814 |   |   |   |   |   |   |   |   |   |
| Other liabilities                                          |   |   | 110,728 |   |   |   |   |   |   |   |   |   |   |   | 99,115 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                          |   |   | 1,908,154 |   |   |   |   |   |   |   |   |   |   |   | 1,911,120 |   |   |   |   |   |   |   |   |   |
| Shareholders' equity                                       |   |   | 158,224 |   |   |   |   |   |   |   |   |   |   |   | 120,512 |   |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                 |   | $ | 2,066,378 |   |   |   |   |   |   |   |   |   |   | $ | 2,031,632 |   |   |   |   |   |   |   |   |   |
| Net interest income/spread                                 |   |   |   |   |   |   | 43,027 |   |   |   | 4.16 | % |   |   |   |   |   |   | 41,554 |   |   |   | 3.87 | % |
| Net yield on interest-earning assets (margin)              |   |   |   |   |   |   |   |   |   |   | 4.55 | % |   |   |   |   |   |   |   |   |   |   | 4.49 | % |
| Less: Tax equivalent adjustment                            |   |   |   |   |   |   | 341 |   |   |   |   |   |   |   |   |   |   |   | 247 |   |   |   |   |   |
| Net interest income                                        |   |   |   |   |   | $ | 42,686 |   |   |   |   |   |   |   |   |   |   | $ | 41,307 |   |   |   |   |   |

| [1] | The average balances of assets, liabilities and shareholders' equity are computed on the basis of daily averages. Average rates are presented on a tax-equivalent basis. Certain reclassifications have been made to amounts for prior periods to conform to the current presentation. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| [3] | Includes loans held for sale and loans held in portfolio; all loans are domestic. Nonaccrual loans are included in amounts outstanding and income has been included to the extent earned. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

ER

| (in thousands)                                             |   |
|------------------------------------------------------------|--------|
|                                                       |   |   |   |
|                                                       |   | Increase/(Decrease) |   |
|                                                       |   | Three Months Ended |   |
|                                                       |   | June 30, 2009 to June 30, 2008 |   |
|                                                       |   |   |   |   |   |   |   |   |   |
|                                                       |   | Volume |   |   | Rate |   |   | Net [2] |   |
| INTEREST INCOME                                            |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits with other banks                 |   | $ | 13 |   |   | $ | (11 | ) |   | $ | 2 |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities available for sale                              |   |   | (813 | ) |   |   | (530 | ) |   |   | (1,343 | ) |
| Securities held to maturity                                |   |   | (583 | ) |   |   | 26 |   |   |   | (557 | ) |
| Securities tax-exempt                                      |   |   | 195 |   |   |   | 1 |   |   |   | 196 |   |
| Total investment securities                                |   |   | (1,201 | ) |   |   | (503 | ) |   |   | (1,704 | ) |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold                                         |   |   | (1 | ) |   |   | - |   |   |   | (1 | ) |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans, net of unearned discounts [3]                       |   |   | 1,190 |   |   |   | (2,927 | ) |   |   | (1,737 | ) |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL INTEREST INCOME                                      |   | $ | 1 |   |   | $ | (3,441 | ) |   | $ | (3,440 | ) |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| INTEREST EXPENSE                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                                                    |   | $ | (1 | ) |   | $ | (10 | ) |   | $ | (11 | ) |
| NOW                                                        |   |   | (105 | ) |   |   | (311 | ) |   |   | (416 | ) |
| Money market                                               |   |   | 356 |   |   |   | (75 | ) |   |   | 281 |   |
| Time                                                       |   |   | (1,181 | ) |   |   | (804 | ) |   |   | (1,985 | ) |
| Foreign                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Time                                                       |   |   | - |   |   |   | - |   |   |   | - |   |
| Total interest-bearing deposits                            |   |   | (931 | ) |   |   | (1,200 | ) |   |   | (2,131 | ) |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Borrowings                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities sold under agreements to repurchase - customers |   |   | (52 | ) |   |   | (302 | ) |   |   | (354 | ) |
| Securities sold under agreements to repurchase - dealers   |   |   | (416 | ) |   |   | - |   |   |   | (416 | ) |
| Federal funds purchased                                    |   |   | (91 | ) |   |   | (119 | ) |   |   | (210 | ) |
| Commercial paper                                           |   |   | (37 | ) |   |   | (63 | ) |   |   | (100 | ) |
| Short-term borrowings - FHLB                               |   |   | (311 | ) |   |   | - |   |   |   | (311 | ) |
| Short-term borrowings - FRB                                |   |   | 127 |   |   |   | (2 | ) |   |   | 125 |   |
| Short-term borrowings - other                              |   |   | 2 |   |   |   | (7 | ) |   |   | (5 | ) |
| Long-term borrowings - FHLB                                |   |   | (45 | ) |   |   | 94 |   |   |   | 49 |   |
| Long-term borrowings - sub debt                            |   |   | - |   |   |   | - |   |   |   | - |   |
| Total borrowings                                           |   |   | (823 | ) |   |   | (399 | ) |   |   | (1,222 | ) |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL INTEREST EXPENSE                                     |   | $ | (1,754 | ) |   | $ | (1,599 | ) |   | $ | (3,353 | ) |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INTEREST INCOME                                        |   | $ | 1,755 |   |   | $ | (1,842 | ) |   | $ | (87 | ) |

| [1] | This table is presented on a tax-equivalent basis. |
|-----|----------------------------------------------------|

| [2] | Changes in interest income and interest expense due to a combination of both volume and rate have been allocated to the change due to volume and the change due to rate in proportion to the relationship of the change due solely to each. The change in interest income for Federal funds sold and in interest expense for securities sold under agreements to repurchase-dealers, short-term borrowings-FRBand short-term borrowings-FHLB has been allocated entirely to the volume variance. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| [3] | Includes loans held for sale and loans held in portfolio; all loans are domestic. Nonaccrual loans are included in amounts outstanding and income has been included to the extent earned. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                       |   | Increase/(Decrease)            |   |
|------------------------------------------------------------|--------|--------------------------------|--------|
|                                                       |   | Six Months Ended               |   |
|                                                       |   | June 30, 2009 to June 30, 2008 |   |
|                                                       |   |                           |   |
|                                                       |   | Volume                         |   |   | Rate |   |   | Net [2] |   |
| INTEREST INCOME                                            |   |                           |   |   |   |   |   |   |   |
| Interest-bearing deposits with other banks                 |   | $                              | 26     |   |   | $ | (26 | ) |   | $ | - |   |
|                                                       |   |                           |   |   |   |   |   |   |   |   |   |   |
| Securities available for sale                              |   |                           | 174    |   |   |   | (772 | ) |   |   | (598 | ) |
| Securities held to maturity                                |   |                           | (1,277 | ) |   |   | 17 |   |   |   | (1,260 | ) |
| Securities tax-exempt                                      |   |                           | 273    |   |   |   | (4 | ) |   |   | 269 |   |
| Total investment securities                                |   |                           | (830   | ) |   |   | (759 | ) |   |   | (1,589 | ) |
|                                                       |   |                           |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold                                         |   |                           | (1     | ) |   |   | - |   |   |   | (1 | ) |
|                                                       |   |                           |   |   |   |   |   |   |   |   |   |   |
| Loans, net of unearned discounts [3]                       |   |                           | 2,449  |   |   |   | (7,454 | ) |   |   | (5,005 | ) |
|                                                       |   |                           |   |   |   |   |   |   |   |   |   |   |
| TOTAL INTEREST INCOME                                      |   | $                              | 1,644  |   |   | $ | (8,239 | ) |   | $ | (6,595 | ) |
|                                                       |   |                           |   |   |   |   |   |   |   |   |   |   |
| INTEREST EXPENSE                                           |   |                           |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits                                  |   |                           |   |   |   |   |   |   |   |   |   |   |
| Domestic                                                   |   |                           |   |   |   |   |   |   |   |   |   |   |
| Savings                                                    |   | $                              | (2     | ) |   | $ | (19 | ) |   | $ | (21 | ) |
| NOW                                                        |   |                           | (177   | ) |   |   | (897 | ) |   |   | (1,074 | ) |
| Money market                                               |   |                           | 750    |   |   |   | (286 | ) |   |   | 464 |   |
| Time                                                       |   |                           | (2,964 | ) |   |   | (2,193 | ) |   |   | (5,157 | ) |
| Foreign                                                    |   |                           |   |   |   |   |   |   |   |   |   |   |
| Time                                                       |   |                           | -      |   |   |   | - |   |   |   | - |   |
| Total interest-bearing deposits                            |   |                           | (2,393 | ) |   |   | (3,395 | ) |   |   | (5,788 | ) |
|                                                       |   |                           |   |   |   |   |   |   |   |   |   |   |
| Borrowings                                                 |   |                           |   |   |   |   |   |   |   |   |   |   |
| Securities sold under agreements to repurchase - customers |   |                           | (117   | ) |   |   | (768 | ) |   |   | (885 | ) |
| Securities sold under agreements to repurchase - dealers   |   |                           | (733   | ) |   |   | - |   |   |   | (733 | ) |
| Federal funds purchased                                    |   |                           | (103   | ) |   |   | (435 | ) |   |   | (538 | ) |
| Commercial paper                                           |   |                           | (99    | ) |   |   | (173 | ) |   |   | (272 | ) |
| Short-term borrowings - FHLB                               |   |                           | (250   | ) |   |   | (265 | ) |   |   | (515 | ) |
| Short-term borrowings - FRB                                |   |                           | 226    |   |   |   | (2 | ) |   |   | 224 |   |
| Short-term borrowings - other                              |   |                           | 1      |   |   |   | (19 | ) |   |   | (18 | ) |
| Long-term borrowings - FHLB                                |   |                           | 401    |   |   |   | 56 |   |   |   | 457 |   |
| Long-term borrowings - sub debt                            |   |                           | -      |   |   |   | - |   |   |   | - |   |
| Total borrowings                                           |   |                           | (674   | ) |   |   | (1,606 | ) |   |   | (2,280 | ) |
|                                                       |   |                           |   |   |   |   |   |   |   |   |   |   |
|                                                       |   |                           |   |   |   |   |   |   |   |   |   |   |
| TOTAL INTEREST EXPENSE                                     |   | $                              | (3,067 | ) |   | $ | (5,001 | ) |   | $ | (8,068 | ) |
|                                                       |   |                           |   |   |   |   |   |   |   |   |   |   |
| NET INTEREST INCOME                                        |   | $                              | 4,711  |   |   | $ | (3,238 | ) |   | $ | 1,473 |   |

| [1] | This table is presented on a tax-equivalent basis. |
|-----|----------------------------------------------------|

| [2] | Changes in interest income and interest expense due to a combination of both volume and rate have been allocated to the change due to volume and the change due to rate in proportion to the relationship of the change due solely to each. The change in interest income for Federal funds sold and in interest expense for securities sold under agreements to repurchase-dealers and short-term borrowings-FRBhas been allocated entirely to the volume variance. The effect of the extra day in 2008 has also been allocated entirely to the volume variance. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| [3] | Includes loans held for sale and loans held in portfolio; all loans are domestic. Nonaccrual loans are included in amounts outstanding and income has been included to the extent earned. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

ER

| Ratios and Minimums                         |   |   |    |   |             |   |   |        |   |
|---------------------------------------------|--------|--------|---------|--------|------------------|--------|--------|-------------|--------|
| (dollars in thousands)                      |   |   |    |   |             |   |   |        |   |
|                                        |   |   |    |   |             |   |   |        |   |
|                                        |   |   |    |   |             |   |   |        |   |
|                                        |   |   |    |   | For Capital      |   |   | To Be Well  |   |
|                                        |   | Actual |    |   | Adequacy Minimum |   |   | Capitalized |   |
| As of June 30, 2009                         |   | Amount |    |   | Ratio            |   |   | Amount      |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
| Total Capital(to Risk-Weighted Assets):     |   |   |    |   |             |   |   |        |   |   |   |   |   |   |   |   |   |   |
| The Company                                 |   | $      | 191,905 |   |             |   | 12.89  | %           |   | $ | 119,098 |   |   |   | 8.00 | % |   | $ | 148,872 |   |   |   | 10.00 | % |
| The bank                                    |   |   | 161,579 |   |             |   | 10.88  |        |   |   | 118,784 |   |   |   | 8.00 |   |   |   | 148,480 |   |   |   | 10.00 |   |
|                                        |   |   |    |   |             |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier 1 Capital(to Risk-Weighted Assets):    |   |   |    |   |             |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The Company                                 |   |   | 173,677 |   |             |   | 11.67  |        |   |   | 59,549 |   |   |   | 4.00 |   |   |   | 89,323 |   |   |   | 6.00 |   |
| The bank                                    |   |   | 143,351 |   |             |   | 9.65   |        |   |   | 59,392 |   |   |   | 4.00 |   |   |   | 89,088 |   |   |   | 6.00 |   |
|                                        |   |   |    |   |             |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier 1 Leverage Capital(to Average Assets): |   |   |    |   |             |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The Company                                 |   |   | 173,677 |   |             |   | 8.53   |        |   |   | 81,403 |   |   |   | 4.00 |   |   |   | 101,753 |   |   |   | 5.00 |   |
| The bank                                    |   |   | 143,351 |   |             |   | 7.06   |        |   |   | 81,227 |   |   |   | 4.00 |   |   |   | 101,534 |   |   |   | 5.00 |   |
|                                        |   |   |    |   |             |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   |   |    |   |             |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| As of December 31, 2008                     |   |   |    |   |             |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Capital(to Risk-Weighted Assets):     |   |   |    |   |             |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The Company                                 |   | $      | 193,991 |   |             |   | 13.90  | %           |   | $ | 111,614 |   |   |   | 8.00 | % |   | $ | 139,518 |   |   |   | 10.00 | % |
| The bank                                    |   |   | 154,619 |   |             |   | 11.05  |        |   |   | 111,924 |   |   |   | 8.00 |   |   |   | 139,905 |   |   |   | 10.00 |   |
|                                        |   |   |    |   |             |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier 1 Capital(to Risk-Weighted Assets):    |   |   |    |   |             |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The Company                                 |   |   | 177,825 |   |             |   | 12.75  |        |   |   | 55,807 |   |   |   | 4.00 |   |   |   | 83,711 |   |   |   | 6.00 |   |
| The bank                                    |   |   | 138,453 |   |             |   | 9.90   |        |   |   | 55,962 |   |   |   | 4.00 |   |   |   | 83,943 |   |   |   | 6.00 |   |
|                                        |   |   |    |   |             |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier 1 Leverage Capital(to Average Assets): |   |   |    |   |             |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The Company                                 |   |   | 177,825 |   |             |   | 8.60   |        |   |   | 82,663 |   |   |   | 4.00 |   |   |   | 103,328 |   |   |   | 5.00 |   |
| The bank                                    |   |   | 138,453 |   |             |   | 6.69   |        |   |   | 82,779 |   |   |   | 4.00 |   |   |   | 103,474 |   |   |   | 5.00 |   |

----

| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
|---------|------------------------------------------------------------|

SS

----

----

----

|                               |   | Payments Due by Period |    |
|------------------------------------|--------|------------------------|---------|
| Contractual                        |   |                   |    |   | Less than |   |   | 1-3 |   |   | 4-5 |   |   | After 5 |   |
| Obligations (1)                    |   | Total                  |    |   | 1 Year |   |   | Years |   |   | Years |   |   | Years |   |
|                               |   | (in thousands)         |    |
|                               |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-Term Debt                     |   | $                      | 175,774 |   |   | $ | 40,000 |   |   | $ | 70,000 |   |   | $ | 20,000 |   |   | $ | 45,774 |   |
| Operating Leases                   |   |                   | 19,253  |   |   |   | 5,599 |   |   |   | 4,832 |   |   |   | 4,368 |   |   |   | 4,454 |   |
|                               |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Contractual Cash Obligations |   | $                      | 195,027 |   |   | $ | 45,599 |   |   | $ | 74,832 |   |   | $ | 24,368 |   |   | $ | 50,228 |   |

|                         |   | Amount of Commitment Expiration Per Period |    |
|------------------------------|--------|--------------------------------------------|---------|
| Other Commercial             |   | Total Amount                               |    |   | Less than |   |   | 1-3 |   |   | 4-5 |   |   | After 5 |   |
| Commitments                  |   | Committed                                  |    |   | 1 Year |   |   | Years |   |   | Years |   |   | Years |   |
|                         |   |  (in thousands)                       |    |
|                         |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential Loans            |   | $                                          | 29,450  |   |   | $ | 29,450 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Commercial Loans             |   |                                       | 11,190  |   |   |   | 984 |   |   |   | 3,272 |   |   |   | - |   |   |   | 6,934 |   |
| Total Loans                  |   |                                       | 40,640  |   |   |   | 30,434 |   |   |   | 3,272 |   |   |   | - |   |   |   | 6,934 |   |
| Standby Letters of Credit    |   |                                       | 24,606  |   |   |   | 23,473 |   |   |   | 1,133 |   |   |   | - |   |   |   | - |   |
| Other Commercial Commitments |   |                                       | 39,665  |   |   |   | 39,292 |   |   |   | - |   |   |   | - |   |   |   | 373 |   |
|                         |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Commercial Commitments |   | $                                          | 104,911 |   |   | $ | 93,199 |   |   | $ | 4,405 |   |   | $ | - |   |   | $ | 7,307 |   |

----

ER

|                                                       |   | Repricing Date   |    |
|------------------------------------------------------------|--------|------------------|---------|
|                                                       |   | 3 Months or Less |    |   | More than 3 Months to 1 Year |   |   | More than 1 Year to 5 Years |   |   | More than 5 Years to 10 Years |   |   | Over 10 Years |   |   | Nonrate Sensitive |   |   | Total |   |
|                                                       |   |             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ASSETS                                                     |   |             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits with other banks                 |   | $                | 5,611   |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 5,611 |   |
| Investment securities                                      |   |             | 76,101  |   |   |   | 58,944 |   |   |   | 107,080 |   |   |   | 113,312 |   |   |   | 352,652 |   |   |   | 9,642 |   |   |   | 717,731 |   |
| Commercial and industrial loans                            |   |             | 438,565 |   |   |   | 14,568 |   |   |   | 56,194 |   |   |   | - |   |   |   | - |   |   |   | (1,692 | ) |   |   | 507,635 |   |
| Equipment lease financing                                  |   |             | 1,295   |   |   |   | 12,608 |   |   |   | 238,883 |   |   |   | 5,927 |   |   |   | - |   |   |   | (29,689 | ) |   |   | 229,024 |   |
| Factored receivables                                       |   |             | 134,728 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (278 | ) |   |   | 134,450 |   |
| Real estate-residential mortgage                           |   |             | 51,570  |   |   |   | 26,640 |   |   |   | 24,537 |   |   |   | 7,800 |   |   |   | 87,969 |   |   |   | - |   |   |   | 198,516 |   |
| Real estate-commercial mortgage                            |   |             | 36,166  |   |   |   | 36,817 |   |   |   | 8,825 |   |   |   | 18,935 |   |   |   | 539 |   |   |   | - |   |   |   | 101,282 |   |
| Real estate-construction and land development              |   |             | -       |   |   |   | - |   |   |   | 27,235 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 27,235 |   |
| Loans to individuals                                       |   |             | 19,672  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 19,672 |   |
| Loans to depository institutions                           |   |             | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Noninterest-earning assets & allowance for loan losses |   |             | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 184,550 |   |   |   | 184,550 |   |
| Total Assets                                               |   |             | 763,708 |   |   |   | 149,577 |   |   |   | 462,754 |   |   |   | 145,974 |   |   |   | 441,160 |   |   |   | 162,533 |   |   |   | 2,125,706 |   |
|                                                       |   |             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                       |   |             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits                                  |   |             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings  [1]                                     |   |             | -       |   |   |   | - |   |   |   | 17,991 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 17,991 |   |
| NOW  [1]                                         |   |             | -       |   |   |   | - |   |   |   | 186,958 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 186,958 |   |
| Money market  [1]                                |   |             | 283,307 |   |   |   | - |   |   |   | 44,019 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 327,326 |   |
| Time - domestic                                            |   |             | 147,457 |   |   |   | 165,026 |   |   |   | 18,704 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 331,187 |   |
|   - foreign                                      |   |             | 184     |   |   |   | 395 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 579 |   |
| Securities sold under agreement to repurchase - customer   |   |             | 55,129  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 55,129 |   |
| Federal funds purchased                                    |   |             | 87,000  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 87,000 |   |
| Commercial paper                                           |   |             | 11,739  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 11,739 |   |
| Short-term borrowings - FHLB                               |   |             | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Short-term borrowings - FRB                                |   |             | 160,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 160,000 |   |
| Short-term borrowings - other                              |   |             | 4,262   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,262 |   |
| Long-term borrowings - FHLB                                |   |             | -       |   |   |   | 40,000 |   |   |   | 90,000 |   |   |   | 20,000 |   |   |   | - |   |   |   | - |   |   |   | 150,000 |   |
| Long-term borrowings -subordinated debentures              |   |             | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 25,774 |   |   |   | - |   |   |   | 25,774 |   |
| Noninterest-bearing liabilities & shareholders' equity |   |             | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 767,761 |   |   |   | 767,761 |   |
|                                                       |   |             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Liabilities and Shareholders' Equity                 |   |             | 749,078 |   |   |   | 205,421 |   |   |   | 357,672 |   |   |   | 20,000 |   |   |   | 25,774 |   |   |   | 767,761 |   |   |   | 2,125,706 |   |
|                                                       |   |             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Interest Rate Sensitivity Gap                          |   | $                | 14,630  |   |   | $ | (55,844 | ) |   | $ | 105,082 |   |   | $ | 125,974 |   |   | $ | 415,386 |   |   | $ | (605,228 | ) |   | $ | - |   |
|                                                       |   |             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative Gap June 30, 2009                               |   | $                | 14,630  |   |   | $ | (41,214 | ) |   | $ | 63,868 |   |   | $ | 189,842 |   |   | $ | 605,228 |   |   | $ | - |   |   | $ | - |   |
|                                                       |   |             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative Gap June 30, 2008[3]                            |   | $                | (79,768 | ) |   | $ | (211,902 | ) |   | $ | (139,736 | ) |   | $ | N/A |   |   | $ | 523,371 | [2] |   | $ | - |   |   | $ | - |   |
|                                                       |   |             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative Gap December 31, 2008[3]                        |   | $                | (1,506  | ) |   | $ | (119,864 | ) |   | $ | (67,838 | ) |   | $ | 121,095 |   |   | $ | 620,719 |   |   | $ | - |   |   | $ | - |   |

----

EM

----

| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
|---------|-------------------------------------------------------------|

| Item 4. | Submission of Matters to a Vote of Security Holders |
|---------|-----------------------------------------------------|

|   | (a) | The following sets forth the voting results as to each matter voted upon at the Annual Meeting of shareholders of the Company held on May 7, 2009: |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (1) | Election of Directors |
|--------|-----|-----------------------|

| Nominee             |   | Total Votes for |       |   | Total Votes Withheld |   |
|---------------------|--------|-----------------|------------|--------|----------------------|--------|
|                |   |            |       |   |                 |   |
| Robert Abrams       |   |            | 15,874,580 |   |                 |   | 398,150 |   |
| Joseph Adamko       |   |            | 15,665,678 |   |                 |   | 607,052 |   |
| Louis J. Cappelli   |   |            | 15,658,186 |   |                 |   | 614,544 |   |
| Fernando Ferrer     |   |            | 15,495,673 |   |                 |   | 777,057 |   |
| Allan F. Hershfield |   |            | 15,348,412 |   |                 |   | 924,318 |   |
| Henry J. Humphreys  |   |            | 15,290,938 |   |                 |   | 981,792 |   |
| Robert Lazar        |   |            | 15,807,957 |   |                 |   | 464,773 |   |
| John C. Millman     |   |            | 15,721,508 |   |                 |   | 551,222 |   |
| Eugene T. Rossides  |   |            | 15,465,551 |   |                 |   | 816,179 |   |

|   | (2) | Advisory approval of the compensation of the Company’s named executive officers. |
|--------|-----|----------------------------------------------------------------------------------------|

| Total Votes for     |   |   | 14,866,277 |   |
|---------------------|--------|--------|------------|--------|
| Total Votes Against |   |   | 1,204,391  |   |
| Total Absentions    |   |   | 202,061    |   |

|   | (3) | Ratification of the appointment by the Audit Committee of the Board of Directors of Crowe Horwath LLP as the Company’s independent public accounts for fiscal year 2009. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Total Votes For     |   |   | 15,580,801 |   |
|---------------------|--------|--------|------------|--------|
| Total Votes Against |   |   | 612,049    |   |
| Total Absentions    |   |   | 79,880     |   |

----

| Item 6. | Exhibits |
|---------|----------|

|   | 3. | (i) | Restated Certificate of Incorporation filed with the State of New York Department of State, October 28, 2004 (Filed as Exhibit 3(i)to the Registrant’s Form 10-K for the year ended December 31, 2008 and incorporated here in by reference). |
|--------|----|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | Certificate of Amendment of Certificate of Incorporation filed with the State of New York Department of State on December 18, 2008 (Filed as Exhibit 3(ii) to the Registrant’s Form 10-K for the year ended December 31, 2008 and incorporated herein by reference). |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | By-Laws as in effect on November 15, 2007 (Filed as Exhibit 3(ii)(A) to the Registrant’s Form 8-K dated November 15, 2007 and filed on November 19, 2007 and incorporated herein by reference). |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | 31.1 | Certification of the CEO pursuant to Exchange Act Rule 13a-14(a). |
|--------|------|-------------------------------------------------------------------|

|   | 31.2 | Certification of the CFO pursuant to Exchange Act Rule 13a-14(a). |
|--------|------|-------------------------------------------------------------------|

|   | 32.1 | Certification of the CEO required by Section 1350 of Chapter 63 of Title 18 of the U.S. Code. |
|--------|------|-----------------------------------------------------------------------------------------------|

|   | 32.2 | Certification of the CFO required by Section 1350 of Chapter 63 of Title 18 of the U.S. Code. |
|--------|------|-----------------------------------------------------------------------------------------------|

----

GN

|   |           |   |      | STERLING BANCORP                                     |
|--------|----------------|--------|-----------|------------------------------------------------------|
|   |           |   |      |                                                 |
|   |           |   |      | (Registrant)                                         |
|   |           |   |      |                                                 |
|   |           |   |      |                                                 |
| Date:  | August 7, 2009 |   | /s/  | Louis J. Cappelli                                    |
|   |           |   |      | Louis J. Cappelli                                    |
|   |           |   |      | Chairman and Chief Executive Officer                 |
|   |           |   |      |                                                 |
|   |           |   |      |                                                 |
| Date:  | August 7, 2009 |   | /s/  | John W. Tietjen                                      |
|   |           |   |      | John W. Tietjen                                      |
|   |           |   |      | Executive Vice President and Chief Financial Officer |

----

CO

| ExhibitNumber |   | Description                                                                                   | SequentialPage No. |
|---------------|--------|-----------------------------------------------------------------------------------------------|--------------------|
|          |   |                                                                                          |               |
| 11            |   | Statement re: Computation of Per Share Earnings.                                              | 59                 |
|          |   |                                                                                          |               |
| 31.1          |   | Certification of the CEO pursuant to Exchange Act Rule 13a-14(a).                             | 60                 |
|          |   |                                                                                          |               |
| 31.2          |   | Certification of the CFO pursuant to Exchange Act Rule 13a-14(a).                             | 61                 |
|          |   |                                                                                          |               |
| 32.1          |   | Certification of the CEO required by Section 1350 of Chapter 63 of Title 18 of the U.S. Code. | 62                 |
|          |   |                                                                                          |               |
| 32.2          |   | Certification of the CFO required by Section 1350 of Chapter 63 of Title 18 of the U.S. Code. | 63                 |

----